Chapter 627 Thunder Strike on the Other Side of the Pacific
four days later
Vice Chairman Huo Jiaguang, who urgently flew back from the United States, presided over the formal merger negotiations with AIG. Wang Yaocheng irresponsibly walked away again and pushed all the specific negotiation work to Vice Chairman Huo Jiaguang.
Professional things must be done by professional people. In terms of corporate mergers and acquisitions, Vice Chairman Huo Jiaguang has rich experience that others cannot match.
Wang Yaocheng just needs them to follow the framework he has set in advance. Who has the patience to do it with lip service?
As the saying goes; good things come in pairs.
Rio Tinto did not support us for long, and soon came to ask for help.
As the subprime mortgage crisis gradually develops, the dark clouds hanging over the world economy are getting thicker and thicker. In this hot July, a cold wind blows, and all the reports in financial magazines are bad news.
The joys and sorrows should be understood by oneself.
Due to the intensifying financial crisis, BHP Billiton officially gave up its US$145 billion plan to acquire Rio Tinto. However, Rio Tinto's crisis has not been resolved because US$28 billion of debt will mature at the end of July.
After searching the entire world market, no one was willing to lend to Rio Tinto. They were busy for more than a month and only secured US$3.8 billion in financing.
On September 16, Rio Tinto will have a loan of US$11 billion due.
Negotiations on loan extensions were rejected by banks without exception, and everyone demanded repayment of principal and interest on schedule to supplement bank liquidity.
At this time, Rio Tinto experienced the pain of large-scale mergers and acquisitions. It spent all its own cash flow before the financial crisis hit. Now it is not easy to expect to borrow from others!
Rio Tinto, which is in trouble, is facing liability for breach of contract, and its stock price has plummeted by three thousand feet. Based on Chinalco's US$14 billion purchase of 9% of the shares at the beginning of the year, the loss has now reached 70%.
When news of such a huge loss reached China, Chinalco felt even more pressured.
Regarding Rio Tinto's request to continue to raise US$19.5 billion in financing, I hesitated over and over again and have been unable to make a decision.
The international financial situation is getting worse and worse, and all the news that reaches our ears is bad.
In just over half a year, 11 large and medium-sized banks in North America have collapsed, as well as dozens of large financial institutions dealing in subprime loans.
Multinational banks as far away as Europe have not escaped. Deutsche Bank, UBS, Barclays, Royal Bank of Scotland and Banco de Madrid have all suffered huge losses and are trembling under the cloud of subprime mortgages.
These multinational financial institutions, not to mention small and medium-sized banks, are always on the verge of bankruptcy as they carefully maintain their cash flow and prevent customers from running on them.
Borrow money to finance?
Lend me your sister!
At this time, we can see the importance of cash being king. The boss of HSBC is guarding his treasury and picking and choosing bankrupt banks all over Europe and the United States. So far, he has not made any move to acquire any of them.
HSBC is like a demanding grocery shopper who is dissatisfied with the selection of bankrupt bank assets. There are too many choices in the messy market, spoiling his appetite.
In fact, HSBC is really aggrieved.
It was firmly held back by Wang Yaocheng. Before the AIG project came to light, no mergers and acquisitions could be made. This included all consortium companies, and no one was allowed to act rashly.
According to HSBC's past temperament, there were so many bank assets that were so cheap that people were impressed, and there was no boss to suppress them, so they rushed forward like an excited little teddy.
Wang Yaocheng cannot allow any mergers and acquisitions to interfere with the AIG project. This is the most important piece of the consortium's future territory and ranks first in the priority of mergers and acquisitions.
No one in the world's financial circles is stupid. Everyone knows that there is a landlord in Hong Kong. He is very rich and his family's wealth is as great as gold and silver.
A rough estimate is that the assets exceed three trillion US dollars.
Requests for equity participation, merger negotiations, financial assistance, and acquisition requests came like a snowflake, almost burying the busy business elites like the Secretariat.
UBS Group and Rio Tinto's negotiation requests were sent to Wang Yaocheng, but Wang Yaocheng held them back and waited for the AIG project to come to light. This shows how seriously he attaches importance to it.
It's too urgent and too late...
Vice Chairman Huo Jiaguang has been negotiating with the AIG-related team for a week. Due to huge differences in terms of bailout funds and shareholding ratios, the progress of the two teams has been extremely difficult and they are stuck in a stagnant dilemma.
AIG is not a soft persimmon that can be manipulated by others. Even if the fire is imminent in the backyard, it still behaves tough on its core interests. It is quite a kind of bachelor who will die in order to find relief.
What's more, AIG also hopes for rescue from the government, which is another way out.
However, this hope is very slim. The government has not relented yet. Now it seems to be a bit casual, which makes the relevant AIG negotiation team completely unsure.
The U.S. government is also hard to say. After all, the trap that Wall Street is poking at this time is too big. They have much more information than ordinary people, and they know that the situation is extremely bad.
Based on AIG's huge size and the huge social influence of the insurance industry, the federal government will still lend a hand to provide full rescue when necessary, but this cannot be said.
A rough estimate shows that the rescue of American International Group will cost between 160 billion and 200 billion US dollars. If this huge amount of money is to rescue the financial system, it will be enough to save more than a dozen large and medium-sized banks from the predicament of bankruptcy and save hundreds of thousands of high-paying jobs.
Chance.
Now that the private sector has come forward, the federal government is also happy to reduce the burden of rescue. The federal government will invest hundreds of billions of dollars in bailout just for Fannie Mae and Freddie Mac, two very large real estate companies, not to mention other companies that are waiting for help.
Senators and representatives on Capitol Hill have all taken action to lobby relevant departments to rescue large and medium-sized enterprises in their states. The fermentation of the subprime mortgage crisis has spread to the manufacturing and high-tech industries, and thousands of companies are in trouble.
Seeing this situation, Wang Yaocheng knew that he could no longer hesitate and had to resort to a murderous weapon.
As time goes by, a shocking reversal may occur every day, and the victory that cannot be firmly won may fly away at any time. The negotiating team turned a deaf ear to the request of American International Group to inject capital in advance, and in turn began to kill.
July 15, 2008
The Royal Family Fund negotiation team announced a one-day cessation of negotiations, and the AIG-related negotiation team all visited the Royal Family Building. In the consortium secretariat and review and audit office offices, they saw a mountain of negotiation requests.
Among them, there are many well-known world's top financial companies, including Wall Street's top Lehman Brothers, Bear Stearns, IP Morgan, HBOS, Washington Mutual Bank, Goldman Sachs Securities, Rio Tinto, British Bradford Bentley Bank,
Royal Bank of Scotland, ABB Group, EDF, Telefonica, Allied Irish Bank, Fortis Financial Group. World-renowned companies such as Barclays Bank, General Motors, Ford, Chrysler and other major automakers are on the list. The list is endless.
…
All this made the AIG negotiation team far away in the Pacific feel first-hand that the financial crisis sweeping the world has affected every industry in the world economy, and this bone-chilling chill has almost swept across the entire planet.
The crisis is more intense and vast than imagined, and the consequences will inevitably be more tragic.
The two super large real estate companies Fannie Mae and Freddie Mac have spent most of the US$700 billion bailout plan announced by the US government in the first phase of US$290 billion, and the effect of the rescue is not obvious.
How can this feeling and scene not make people feel chilly in their hearts?
He Chen, director of the Royal Family Fund Secretariat, accompanied Mo Yuxuan, president of HSBC Bank, and announced that the short-term loan borrowed by American International Group from HSBC expired and would not be extended.
If the US$7.4 billion loan cannot be repaid with interest within three days, the mortgaged corporate debt will be disposed of in accordance with the law.
In other words, AIG will be dismembered. This may seem innocuous to AIG, which has a scale of hundreds of billions of dollars. In fact, you are wrong.
Because of the continued decline in stock prices, AIG's huge borrowing funds faced requests from banks to increase reserves. The scale of this amount was as high as more than 70 billion U.S. dollars, which was enough to be the last straw that crushed AIG.
After leaving the majestic Royal Building with a heavy heart, He Chen, director of the Royal Family Fund Secretariat, announced expressionlessly;
In view of the increasingly severe financial crisis, Wang Yaocheng, chairman of the consortium, issued a strict order;
Negotiations must be completed before 6 p.m. on July 16, otherwise, the negotiation window will be closed and this meaningless tug-of-war will end.
The time left for the negotiation team is only 24 hours from now.
A series of combination punches knocked out the minds of the senior management headed by Chairman Douglas. They seemed to hear the death knell ringing in their ears. If it really reached the final step of bankruptcy and liquidation, the worth of everyone here would return to zero. It can be announced that individuals have also
Bankrupt.
The consortium chairman Wang Yaocheng had not yet made his most ruthless move. At 10 o'clock that night, at 10:00 a.m. Washington time, a phone call from Treasury Secretary Paulson completely extinguished Chairman Douglas's last trace of luck;
Unfortunately, in view of the current serious situation, there are too many companies in need of assistance, and your request cannot be considered at the moment.
Chairman Douglas was shaking violently as he held the microphone in his hand, and asked with a hint of luck, "So... how long will this temporarily last?"
There was a slight pause on the other side of the microphone, and a desperate reply came: "Perhaps when the financial crisis eases a little and the government has spare power, but it is best not to have too much hope, because this possibility is less than one in ten thousand.
Sorry, Mr. Douglas, you'd better seek practical help."
After saying that, the phone was hung up, extinguishing Mr. Douglas's last hope.
No one knew how he spent this long night.
The next day, the negotiation team was shocked when they saw Mr. Douglas, the chairman, in the lobby of the Peninsula Hotel. This stubborn old man with gray hair had turned white overnight and his figure had become stooped. He seemed to have aged 20 years in an instant.
A thunderous blow from the other side of the Pacific completely destroyed this old man who had been struggling in the business world for decades. His confidence and spiritual support completely collapsed.