The American Kill Line: I Can Predict the Future

Chapter 89 Conspiracy at the Hilton Hotel (Seeking monthly votes)

Blackstone Group acquired Hilton Hotels and delisted it from the public market by investing $56 billion plus $204 billion in highly leveraged financing.

Of this $204 billion debt, a portion is mortgage debt, which is senior debt and has the highest priority in the repayment sequence.

They are held by three institutions: Bank of America, Goldman Sachs, and the Federal Reserve.

Another type is subprime debt, with an annualized interest rate of 12%.

In April of this year, in order to alleviate debt pressure, Blackstone invested $800 million to repurchase $19 billion of subordinated debt at a price of 45-52 cents.

Furthermore, it converted its $21 billion in subordinated debt in Hilton Hotels into preferred stock.

Once Hilton goes public, its preferred shares will automatically convert to common shares.

There are two purposes for doing this: First, to demonstrate Blackstone Group's determination to repay the loan.

Second, warn creditors that everyone is in the same boat.

Of course, determination and warnings alone are not enough.

We also need to have a plan.

Blackstone has pledged to enable Hilton Hotels to launch an IPO within the next five years.

This three-pronged approach not only stabilized Hilton's creditors but also effectively "dissolved" $40 billion in debt.

What Ron needs to do now is to transform the intangible into the tangible.

These $21 billion in preferred shares are held by institutions like Paulson & Hyman Capital, which are long-term bond buyers.

Another portion of the subordinated debt, totaling $23 billion, is held by Merrill Lynch and Goldman Sachs.

Sain pushed the document in front of Ron.

Ron carefully examined the list of debts.

"This is a great opportunity, Ron." Thane took the cigar from his mouth. "If you need a portion of the subprime debt held by the Federal Reserve, I can help you negotiate."

John Thane's idea was to have Ron acquire the $23 billion in subprime debt held by Bank of America and Goldman Sachs as well.

Ron looked up speechlessly and said, "John, thank you for your kindness. However, I don't have that much money right now."

His best option was actually to buy the preferred stock held by Paulson and his associates.

Don't be fooled by the fact that preferred stock can be converted into common stock later; that's only possible if Hilton successfully completes its IPO.

Otherwise, it's just waste paper.

According to the repayment sequence, the mortgage debt is repaid first, followed by the subordinated mezzanine debt.

As for the last preferred shares—they can't even be listed on the stock exchange, so what value do they have?

Currently, apart from Ron, even within Blackstone Group, there is no clear timeline for Hilton Hotels' IPO.

Therefore, he could have bought these preferred shares at minimal cost.

He was also confident that these institutions holding preferred shares would be happy to sell.

After all, they were forced to convert the preferred shares.

However, buying up subordinated debt is different; at the very least, it must be done in the same way Blackstone initially resolved its debt, which is 45%—

52 cents.

The $23 billion in subordinated debt requires at least $9 million in cash.

He does want to buy it, but he doesn't have that much cash right now.

Don't be fooled by how much you earn; you spend it just as fast.

I just paid over 300 million yuan to buy a building a few days ago, and I still have 400 million yuan in taxes to pay at the end of the month.

Damn it, if we don't make some money this month, we won't even have the money for the preferred shares.

The oil fields and sand dunes are also burning through money every month.

He's been thinking lately about whether to borrow bridge financing from an American bank.

"Don't worry, you won't have to pay a single dollar," John said confidently.

Ron's fingers stopped abruptly. He pulled himself out of the sofa, his back lifting off the cushion, and looked at Sain: "Can CIT lend money?"

"Uh, no, that's not it." Saine's expression stiffened. Ron had already borrowed $5 million; it was impossible for him to borrow such a large sum again.

Ron looked at him with disdain, but then he turned his gaze to old Barron.

John coughed lightly and glanced at Montag, the president of Merrill Lynch, beside him.

Montag, who had been sipping his whiskey, seemed to only just hear him. He paused for a moment, then smiled and said, "Ron, have you heard of the Singapore sovereign wealth fund, the Norwegian sovereign wealth fund, and the Abu Dhabi Investment Authority?"

Ron turned his gaze away from Barron and shook his head slightly: "I don't know much about them. These three sovereign wealth funds seem to have a very wide range of industries."

"Stocks, bonds, real estate, oil, natural gas, commodities, and so on." Montag put down his cup. "Basically, they're buying into every profitable industry in the world."

"Especially the Norwegian sovereign wealth fund. Although Norway is not a member of the EU, they are highly integrated with the EU's financial system through the European Economic Area agreement."

After saying that, Montag looked up at Ron, a faint smile appearing on his lips: "You should know what I mean, right?"

Ron pondered for a moment, then vaguely understood: "You mean the European Union's regulatory authority?"

“It’s not just the European Commission.” Montag leaned forward, resting his elbows on his knees and spreading his hands in front of him. “They also cover the Asia-Pacific region. Their network extends to China, India, Indonesia—all the major emerging markets.”

"You mean, they want to cooperate with me?" Ron understood immediately.

He also roughly understood why the president of Merrill Lynch had come in person.

To put it bluntly, these three sovereign wealth funds are Montag's clients.

And that's all that I have that makes these top international sovereign wealth funds want to keep an eye on me.

"Let me be blunt, Ron," John Thain said, putting his cigar back in the jar, placing his hands on the table, and leaning forward. "First, these three sovereign wealth funds can provide you with advantages in the EU market—and the same applies if this extends to the Asia-Pacific region in the future."

"Secondly, they can provide a low-interest loan for ten years."

"Third," he paused, tapping his fingertips lightly on the table, "If it's inconvenient for you to negotiate directly with Blackstone, you can sign an AB agreement, where they will nominally act as your agents for these debts."

Ron laughed after hearing that.

It wasn't a polite laugh; it was a genuine laugh, a laugh that came from being genuinely amused by something, causing his shoulders to twitch slightly.

"In that case, I really have no reason to refuse."

rich.

There are channels.

There is a body double.

Three things were placed in front of him, neatly arranged.

This wasn't negotiation; this was a tycoon handing him the menu directly.

He then turned his gaze to Barron: "So, I still need a proxy, someone who can actually get Blackstone to shift its focus?"

Old Barron smiled; this young man was truly intelligent.

If possible, he genuinely hoped for a marriage alliance.

"Ron, the Hilton family is the most suitable. No one will doubt that you can take back the family business in the name of legitimacy."

Philip spoke up for his old friend.

But it's also true, it's a feint.

With Hilton's second-generation successor providing cover, Blackstone Group would never suspect Ron.

Ron could have used other methods to gradually erode Hilton's stake.

How similar this scene is!

They once chose Blackstone Group.

Now, faced with greater interests, they choose Ron.

This is Wall Street.

There's no such thing as friendship.

It's all about interests.

There was no reason to refuse, so Ron said to old Barron, "Mr. Hilton, what are your terms?"

In an instant, old Barron thought of many things. His hands were on his knees, his fingers curled slightly, and he opened his mouth, his lips moving twice.

Finally, he held back and sighed, "I'm over eighty years old. If the Hilton family's descendants were successful, I'd be willing to fight for it. But now—"

He didn't continue, but instead composed himself and said in a calm and confident voice, "Ron, I can represent you fully, providing comprehensive support in legal, media, and public spheres. There are only two small conditions."

"Please speak."

"First, to permanently retain the Hilton name. Second, I hope that my family trust will acquire a 3% stake in the future."

"Sure," Ron nodded without hesitation, "provided I can control the Hilton Hotel."

"Thanks."

Barron spoke those two words with obvious ease.

Then the lines at the corners of his mouth curved upwards.

"Actually—" He picked up his glass, looking up at Ron from above the rim, "you and Nikki are a really good match. If you have the chance, you two should get to know each other better."

Ron's face instantly darkened.

Upon seeing this, everyone burst into laughter.