Chapter 59
Chapter 59
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Translator: Vine
Chapter: 59
Chapter Title: A Bold Exchange
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In truth, it wasn't entirely out of the question.
At this time, KAI had just been launched after the merger of three major aerospace companies. A deal was certainly possible if we offered the government a guaranteed stake.
‘How much do we have in cash reserves?’
The thought sparked his curiosity.
Fortunately, the businesses he had recently launched were starting to show results, and a considerable amount of money had accumulated.
At the very least, he should have enough to acquire a company the size of KAI.
He decided to check the current status of their accumulated cash reserves since it was on his mind.
He turned on his laptop and logged into the company's internal network. The first thing that caught his eye was the progress of Jaewoo's ongoing projects.
The export and domestic military delivery quantities of armor-piercing and smart munitions.
The progress of the attack helicopter development project and the status of the HVP deployment project.
Notably, the progress of the Hyunmoo ballistic missile development, the fighter jet component material development, and the anti-aircraft missile project with Russia were all missing. They were likely omitted because they were classified.
‘The cash reserves section…’
He scrolled down and clicked on the financial status.
The figure that instantly appeared was an enormous amount of cash reserves.
Just in case, he checked and rechecked the number several times.
“Three trillion?”
It was an amount that far exceeded my expectations.
Then again, considering all the dollars, export revenue, and money from military deliveries, it made sense.
Moreover, recent export items all had operating profit margins close to thirty percent, so the cash reserves would have been accumulating at an exponential rate.
‘To have this much in reserve even with so many projects still unfinished…’
Seeing the sheer size of the overflowing reserves, his ambition began to stir again.
If he were short on cash, it would be a different story, but with three trillion won in the bank, wasn't it natural to feel the desire for business expansion?
The problem was that other, more realistic business sectors that had emerged in the meantime were constantly vying for his attention.
‘Realistically, even if we acquire KAI now, there's no way to escape deficits for the time being. Plus, negotiating with the government will take a significant amount of time. So, what's the plan? Should I make a deal after our own development projects are confirmed? In the meantime, maybe I should expand into other sectors…’
On second thought, that seemed like a pretty good idea.
Since it was unclear how many years it would take, it was better to use the cash reserves for something else in the interim rather than letting them sit idle.
In the worst-case scenario, if negotiations with the government over KAI proceeded faster than expected and created a cash crunch, he could always mobilize his personal funds.
‘Come to think of it, how much profit is the research institute making?’
Since he was already checking the financials, he felt he should look into the institute's profits as well.
He'd been using his busy schedule as an excuse and hadn't even glanced at the recent financial reports.
As he decrypted the file and carefully reviewed it, his eyes widened.
“The institute's operating profit is over one trillion won?”
Stunned, he scanned the line items.
Thanks to the private sector supply of carbon fiber and other materials, it was experiencing explosive monthly growth.
Additionally, the development of the HVP had led to a huge increase in demand for military-grade semiconductors, which played a significant part.
‘So what happens when the U.S. starts deploying the HVP in earnest?’
The institute's profits would likely jump several levels then.
Key components, including the military-grade semiconductors, belonged to the research institute, not Jaewoo, so they had been excluded from the technology transfer clause during negotiations.
Ultimately, they would have to import all of them from us, and the cost would run into the trillions of won.
The U.S. was surely disappointed by that fact, but what could they do?
Jaewoo and the research institute were strictly separate entities.
“Hmm…”
Come to think of it, the income from Samjung was also substantial.
The amount received in royalties alone was already around four hundred billion won.
Considering Samjung's explosive growth, it was possible that trillions of won could be deposited by next year.
‘At this rate, it really seems like there'd be no problem expanding into other areas first…’
The thought suddenly crossed his mind.
A staggering three trillion won in cash reserves.
And four hundred billion won of my own personal funds.
No, since the funds held by the research institute were also effectively money I could move, did that mean my personal funds totaled one-point-four trillion won?
Then the money at my disposal was effectively four-point-four trillion won. With that much, it was possible to acquire two or three decent-sized companies in this era.
‘So, the only thing left is to decide which sector to expand into first…’
In truth, the answer to that was already decided.
A specialized ground-based defense contractor that already had a solid profit structure.
And a heavy industries company that I would desperately need in the future.
Namely, Samjung Techwin and Wooyoung Heavy Industries.
‘Right, getting my hands on the K9 is the priority.’
The reason he wanted to make the K9 his at this point was because of the massive future volume of domestic military deliveries and exports.
It might not be apparent now, but the K9's performance was so guaranteed that it would eventually be exported all over the world.
Especially since Germany had not yet imposed its export ban on domestically produced power packs to certain parts of the Middle East.
If he could acquire just Techwin from Samjung, he could dramatically expand exchanges with friendly nations in the Middle East, using the UAE as a foothold.
And not just there. All the countries we historically exported the K9 to could become potential customers.
‘The problem is the power pack…’
That part would definitely be an obstacle.
Well, in this era, it was fine to export it with a German power pack, but in the future, without in-house development, there was a high risk of exports falling through due to the political interests of various countries.
That was, in fact, why he needed Wooyoung and why it was on his acquisition list.
Before his regression—or more precisely, when the path to exporting the K9 equipped with their power pack to the Middle East was blocked by German sanctions…
Wooyoung had developed a 1000-horsepower engine for the K9 based on the 1500-horsepower engine developed for the K2 tank, and he already possessed that technology.
The transmission would still be an issue, of course, but that was a problem to be solved gradually anyway.
‘But I don't just need Wooyoung for that reason. Power generation turbines. I have superalloy technology far more advanced than what Wooyoung will develop in the future, which means I can compete with developed nations in that field right away. Doesn't that effectively open up a private sector market worth tens of trillions of won?’
Having made his decision, he felt a sense of relief.
Now, what he had to do was persuade Chairman Lee Yong-moon.
He immediately called him and scheduled a meeting.
******
“Welcome.”
A few days later, Chairman Lee Yong-moon and I met at a hotel in Gangnam.
The conversation, which began as simple small talk, soon evolved into a discussion about the succession of Samjung Group's leadership. Only after a good while longer did we finally get to the main point.
“What you said before… are you still of the same mind?”
“What are you referring to? Ah! About divesting the defense division? I still feel the same way, but why the sudden question?”
“I was wondering if you had any intention of selling it to me.”
“…”
For a moment, Chairman Lee wore a blank expression.
He seemed taken aback, as if startled that words he had once uttered were now becoming a reality.
After a long silence, he suddenly burst into a hearty laugh.
“I knew this day would come, but I didn't expect it to be so soon. The acquisition price won't be cheap, though. As you know, the K9 is currently in the middle of its deployment.”
“I'm aware. That's why I'm about to say something you might not like to hear, Chairman. The truth is, my capital is limited, but the number of companies I need to acquire is endless.”
“…”
Chairman Lee simply stared at me.
“So, before I make my regrettable request, I suppose I should start by pointing out some flaws. They say you have to find fault in the other party's goods to get a lower price, don't they?”
Letting out a dry chuckle, Chairman Lee lifted his teacup.
Meanwhile, I began my critique in earnest.
“Over a hundred companies are involved in the production of the K9. To put it simply, there are too many forks in the pie. So, unless you sell an enormous number of them, it's just not profitable.”
“Go on. I'm listening.”
“Besides, Samjung is already overwhelmed with just semiconductors. As you said yourself, Chairman, it's all hassle for barely any return.”
“Wouldn't that be the same for you? Even if we hand over Techwin, do you have some brilliant way to increase its profits?”
“Profits have always followed sales volume. That's why I plan to improve the K9 and increase sales to a level incomparable to the present.”
“Considering the timeline for our military's deliveries, a significant immediate increase in production is impossible… Tsk, so you're talking about exports.”
As expected, Chairman Lee was quick on the uptake.
When I gave a silent nod, a faint smile returned to his lips.
“Improving the K9… Fine, that's a good enough justification. Now, present your offer. I need to know just how much you plan on giving me after all this fault-finding.”
“I'm sorry… but I have no intention of giving you any money.”
“…”
A look of utter bewilderment flashed across his face.
But he didn't say anything right away, likely because he knew I wasn't the type to spout nonsense.
I slid a manila envelope onto the table, and he quickly examined it.
“Isn't this the status report for Jaewoo Group's distribution company? Why are you showing me this now…?”
“Let's make a trade. Jaewoo Distribution for Samjung Techwin.”
“…”
“I've done a rough calculation, and it's true that you would be taking a loss, Chairman.”
“Is that even a serious proposal? This is more than just a loss… Honestly, you call it a distribution company, but you want to trade a business with only two department stores for Techwin? Do you have any idea what Techwin is worth?”
“Including its affiliated chemical company, I understand it's worth around three trillion won. And the value of Jaewoo Distribution doesn't come close to that. However, you need to consider the location of the department stores. Both of them occupy prime real estate in Seoul.”
“…”
In truth, a corporate exchange wasn't part of my original plan.
Then, the idea struck me like a bolt of lightning, followed by the thought that it wasn't entirely impossible.
The conclusion I reached was that if this deal succeeded, I could save an enormous amount of cash.
I was now determined to make this happen, no matter what.
“Heh…”
Of course, it was a shame to lose the land.
But it would take at least twenty years for the land's value to rise enough to match the exchange value of Techwin.
In that case, it was better to give it up for now and invest elsewhere.
After all, as long as you had money, you could always buy more land.
“But do you really think it's possible to get a corporate exchange like this approved by the board of directors?”
“The board can be persuaded.”
“How?”
“The reason is whatever you make it, Chairman, isn't it? If all else fails, you could use the ongoing government-led corporate consolidation as an excuse, just like with Samjung Aerospace. You could say the government demanded a merger of Samjung's and Jaewoo's defense divisions.”
“…”
Chairman Lee's eyes widened for a moment.
He soon shook his head and let out a sigh of disbelief.
“That sounds an awful lot like you're threatening to use the government to pressure me if I don't give you Techwin.”
“Of course not. I'm merely suggesting it's one possible method.”
“No need to be so serious. I know better than anyone that you're not that kind of person. Anyway, I really should have brought my son with me.”
“What do you mean by that…?”
“He missed a great spectacle. A chance to see firsthand how to successfully conduct a negotiation.”
“…”
“This fellow is still playing coy. With the leash you have on me right now, is there any chance this negotiation could fall through? In other words, did you ever for a moment think this deal would fail?”
“No.”
I answered immediately, taking his cue to be honest.
Letting out another dry chuckle, Chairman Lee smacked his lips and continued.
“Let's be clear on one thing.”
“Please, go ahead.”
“I'll take care of persuading the board and everything else. Just sign one document for me.”
“…”
“That if you succeed in developing the 45-nanometer process, you will once again select Samjung as the priority technology recipient.”
“I've already promised you that, haven't I?”
“That was a verbal promise. I'm saying let's get it down in writing. To be blunt, who can guarantee that you won't change your mind?”
His urgency was palpable.
It was no wonder. Right now, Samjung was virtually unrivaled in both the foundry and memory sectors.
Whether they could maintain that position was in my hands, so it was only natural for him to be anxious.
“I agree.”
At my words, Chairman Lee's face brightened.
Sorry, but since he brought it up, I had to say my piece as well.
“However, the royalty scale for the 45-nanometer process will be a bit different from the 90-nanometer.”
“…”
“Why are you looking at me like that? No matter our partnership, I still need to make my fair share.”
“Have you calculated how much money you're going to make from the 90-nanometer process? Honestly, in about three years, you might be one of the top three wealthiest individuals in this country. Do you realize that?”
“You also have to consider how enormously Samjung will have grown in that time.”
He pressed his lips together and glared at me.
Just as I began to wonder if I'd offended him, he clicked his tongue and spoke.
“…Tsk. The more I think about it, the more I regret not dragging my son here.”