America: My Time

Chapter 288 Entering the Trap
Chapter 288 Falling into the Pit

When the banks in Japan heard John's crazy spin-off plan, they were stunned. Such a spin-off made them feel a bit of pressure, especially the spin-off of Hughes Aircraft Company. It was too ruthless. You have to know that Hughes' largest market value is not in helicopters, but in aerospace and communications. How could they not worry about spinning off the main business?

“Sanwa accepts. If everyone is worried, then we will assume the loan for Hughes’ acquisition!” Before long, the Sanwa Bank representative still chose to accept John’s plan. Although it seemed risky, what loan is risk-free? Moreover, compared to other Japanese banks, Sanwa’s interests were the smallest. If they didn’t take the risk at this time, they would have no chance at all.

“Alright, if the other banks have no problems, then it’s settled. As for Puhui, we can entrust it to you all; this way, everyone can accept it!” Seeing that the representatives from Mitsui and the other banks hadn’t voiced their objections for a long time, John no longer hesitated and made the decision directly: to give the five billion dollars needed for the Hughes acquisition to Sanwa, and to give the loan for Puhui to the other five banks. John understood their concerns; they were all afraid that they had too much debt on their shoulders, and with the company being split up, they were inevitably afraid of unforeseen circumstances!
Are Sanhe not afraid? Yes, they are, but they have even more faith in John's reputation. They understand that in such a large acquisition, without a breakup and restructuring—reorganizing the entire Gulfstream Aerospace—there would be no future development. A breakup inevitably brings pressure and risks; this was the case with Universal Pictures before, and now it's the same with Hughes. With the breakup of Universal Pictures, other assets were distributed to other companies within Legendary Entertainment, and Legendary Entertainment will also assume the loans. Does this mean that the breakup of Hughes Aerospace will bring other changes? Has John not considered the issue of repaying the loans?
It wasn't just Sanwa Bank that thought of this; other banks in Japan had as well. However, they were hesitant to take the risk. Other banks that had previously worked with John were under considerable loan pressure, as John already had a significant amount of debt with them. Taking on another loan like this would put too much strain on their own resources. Banks that hadn't worked with John before were worried that it might be a trap. Therefore, only Sanwa Bank, which had worked with John but had the least financial burden, was willing to take on this loan responsibility.

Thus, the inclusive finance loan was undertaken by five other banks, while Sanhe Bank took on Hughes' acquisition on its own. Next, they needed to prepare five billion US dollars for John to complete the acquisition.

“Jimmy, if we have time, we should sit down and have a proper talk about the acquisition. The funds are in place, and as long as you agree, the deal can start anytime. Also, tell those old guys that I accept their proposal and I'm willing to take over Pratt & Whitney. Let them give us a suitable price. As long as the price is right, we can complete the acquisition!”

Jimmy was shocked when he received John's call. How long had it been? John, that little fox, had already raised the funds. Those Japanese colleagues were too crazy. They agreed to John's loan request after only one conversation. This was terrifying. Those Japanese guys were too insane.

“Boss, John has completed the fundraising and is ready to finalize the deal with Hughes with us at any time. He also told us to inform those old guys that we are willing to take over Pratt & Whitney!”

"It seems my fears have come true. John is indeed ambitious about the aviation industry. He agreed to the acquisition so quickly. It seems he has ideas about the aviation industry that we don't know about. Oh well, since he has accepted, there's no need for us to be the bad guys and tell those old guys everything. Hopefully, they won't regret it later!"

“Boss, I don’t think there’s any danger in this acquisition. If John completes this acquisition, the debt he’s carrying will be terrifying, with total liabilities exceeding ten billion dollars. Even the slightest problem with that debt could plunge him into crisis and make him pay a heavy price!”

"What price? Do you think that little fox can't see through everything? If a real problem arises, this little fox will probably abandon the game world. Selling one game world would be enough to repay most of the loan, and even more. The market value of game worlds is too big now. If there are no accidents, doubling the market value is not a problem. If he sells them all, will he still have pressure?"

"Boss, this is impossible. Unless John, that little fox, has gone mad, he would never make such a choice. A market value of seven billion US dollars is not the end of the game world. If we go public and raise funds early next year, a market value of 10 billion will definitely not be a problem. If new products appear in the game world, it may be even higher. After all, the profits of the game world are too amazing."

"Yes, the profits in the gaming world are astonishing. Even if Hughes and Pratt & Whitney were combined, or even if Sikorsky were added, they wouldn't make as much as the profits of just one company, the gaming world. The reason those old guys were tempted to sell Pratt & Whitney to that little fox John was because they were eyeing the incredible profits in the gaming world. Don't say they were tempted, I was tempted too! When you ask if new gaming worlds have been created, I'm not referring to games, but game consoles!"

"Yes, the gaming world has never given up on developing new game consoles. Whether it's arcade consoles, home consoles, or even handheld consoles, they are constantly developing them. Moreover, Nvidia's success in chips will definitely change things for them. If this little fox releases a new game console before its IPO, its market value will not be what it is now."

"Perhaps those old guys are so tempted and willing to pay such a high price to acquire shares in the game world precisely because they know about it!"

"Boss, there's something I'm not sure if I should say." "Go ahead, what's there to hide? Does that little fox John have more to hide?"

"No, it's not about John, that little fox. It's about those old foxes. They acquired Warner's gaming division!"

"What did you say? Those old guys are acquiring Warner's gaming division?" At this moment, Morgan understood the old guys' intentions. It seemed they wanted to wrest control of game world production from those Japanese companies. They wanted to share the contract manufacturing and even the patents for game worlds!

"These old guys are really cunning. Now I understand their intentions a little better. No wonder they can make such a sacrifice. If they hold enough shares after the IPO, they will have the opportunity to obtain licenses from the game world and interfere in the production of game consoles. They want to cut off Japan's source of income!"

"Boss, do you think we should tell John, that little fox, about this?"

"There's no need. Let's pretend we know nothing about this and let these old guys fight it out with that little fox John, and let them compete with those guys from Japan for the profits from licensing and production. If these old guys can really take back the North American game market, we'll naturally be happy for it!"

"Boss, I don't think they have that capability. Even if they can get patent licenses from the game world, their production costs will be far higher than those guys in Japan, unless they also move their production to Asia!"

“Jimmy, low production costs aren’t just in Asia; there are plenty of places like that around us. Mexico is a good example. Even that kid John has put his car production base there. If they can produce cars, surely they can produce game consoles, right? It’s cheaper than Japan in terms of labor costs, and easier to manage! Those old guys haven’t given up on semiconductors after all; it seems they’ve already planned ahead. I just wonder if they can compete with those guys in Japan. If they can, maybe they can recoup some of their profits without even needing the White House’s pressure!”

"Boss, are you saying those old guys want to join forces to seize control of downstream semiconductor foundry and manufacturing? How is that possible? Could it be that these old guys have convinced semiconductor manufacturers like Intel to invest heavily in R&D and regain their advantage in memory chips? That would be a huge price to pay!"

At this moment, Jimmy finally understood the problem behind it all. If these old guys obtained the patent licenses for the game world, they could completely use the production of game consoles to reclaim the market for memory chips and help Intel and others stand up again. But would those guys in Japan really not react at all? Did John, this little fox, really not see through these old guys' schemes, or was this little fox trying to use these old guys to suppress Japanese companies?

Jimmy didn't doubt John's determination to suppress the Japanese semiconductor industry; otherwise, the little fox wouldn't have said those things to them. But were these guys at Intel really willing to make such a decision and really wanted to have another showdown with the Japanese in memory chips? Could this just be the beginning, and would these old guys continue to focus on home appliances?

The more Jimmy thought about it, the more likely it seemed. After all, profit is a powerful motivator. Previously, no one had paid much attention to the profits in the home appliance industry, but now, with John, the little fox, reminding them, those old guys have realized the huge profits in home appliances and semiconductors. It's not impossible that they might want to get involved.

Is selling Sikorsky really just a superficial calculation? Is selling Pratt & Whitney really without any other intentions? Perhaps all of this is just the beginning of their involvement in the home appliance and semiconductor industries. They are eager to compete with Japan for these profits. With the emergence of gaming, dream worlds, and Nvidia, those old guys have seen the enormous potential and allure in this field!
(End of this chapter)