A Third-Party Capital Increase (1)
I went straight to KSGI.
After I told Kim Sung-gwun what was going on, he looked at me as if I’d just started talking nonsense.
“Isn’t a third-party allotment capital increase forbidden in the middle of a management-control dispute?”
“Legally, yes. But who decides whether there’s a management-control dispute in the first place?”
“Pardon?”
“At what exact percentage of shares does a dispute officially begin?”
“So you’re saying this isn’t actually in the middle of a management-control dispute?”
“Call it a nose peg and it’s a nose peg; call it an earring and it’s an earring. If it were just a deal between private companies, we might be able to file for an injunction against the new share issuance. But if the other side is the government, do you really think that would amount to much?”
Kim Sung-gwun’s expression went rigid.
Only then did he understand how serious this was.
“That does sound entirely possible now that I hear it. I suppose I was thinking too much in terms of global standards.”
“It’s the sort of thing that wouldn’t happen overseas.”
But this was Dynamic Korea.
When a chaebol and the government joined hands, there was no such thing as impossible.
Given President Oh Young-hwan’s personality, he would never spit back money he’d already taken. And he probably wouldn’t have any decent way to return it even if he wanted to.
So once he’d accepted the money, he would try to provide some kind of help in return.
In the market, the state was supposed to be the fair referee. But what if the referee was on the other team? The game would get a lot harder.
“The recipient of the capital increase will be the Korea Development Bank, and they’ll probably dump one of the companies the bank owns onto Hanjeong Mulsan.”
I nodded and asked, “If you were in their position, which company would you merge in?”
He didn’t need to think long.
“Daejun Construction.”
“Exactly.”
David gave the same answer.
Daejun Construction had once risen as high as fifth in the national contractor rankings.
But it went under because of reckless borrowing and a huge number of unsold units. Under normal circumstances, it should have died there and then, but according to the national principle of too-big-to-fail, they poured in public funds and kept it alive.
A construction company that large could shoot a group’s ranking upward overnight if you acquired it. That was why so many conglomerates had wanted it.
After a brutal bidding war, it was Hoeun Group that ended up with Daejun Construction.
The problem was that they had bid far too high. Hoeun Group couldn’t withstand the strain of its own reckless investment and debt, the entire group shattered apart, and Daejun Construction came back on the market.
The current largest shareholder was the Korea Development Bank.
Its liabilities ran into the trillions, and even though it had been receiving hundreds of billions of won every year, its management only deteriorated further. That didn’t mean they could simply let it collapse, though.
Not only had too much money already been sunk into it, but in the construction industry, the ripple effects on subcontractors and the broader economy were enormous.
Since it was being run on taxpayer money, the parachuted-in CEOs and executives kept collecting their salaries and bonuses on time despite the quarterly losses.
Naturally, management grew even more of a mess, and the company’s competitiveness plunged.
Its fifth-place ranking was a thing of the past.
It was still huge, but its brand had fallen and its construction capacity had steadily slipped behind. That made major conglomerates even less willing to touch it.
From the government’s perspective, it was nothing but a headache.
They’d poured in money, the situation kept getting worse, and because nobody wanted to buy it, they had to keep throwing more cash at the problem.
A few months earlier, a mid-sized builder, Yuban Construction, had stepped forward as a potential buyer, but the deal fell apart when undisclosed additional debts turned up during due diligence.
If Hanjeong Mulsan took that kind of unwanted burden off the government’s hands in the name of preserving jobs, it would be like having a rotten tooth pulled.
The Korea Development Bank got to offload a failing company and recover cash, while Hanjeong Mulsan got to defend control.
If they merged the two companies and said they were normalizing operations while preserving employment, there would be no obvious reason to object.
Kim Sung-gwun looked at me with fresh surprise.
“How on earth did you figure this out?”
“If my headquarters hadn’t told me, I wouldn’t have known either.”
That had usually been a convenient excuse, but this time it was the truth.
David Lockhart really had not been called a genius investor for nothing. I was glad I’d gotten him on my side ahead of time.
If I’d stood still, I would’ve been blindsided before I even knew what hit me.
“It’s good that we caught it early, but... that still leaves the question of how to stop it.”
And who was I?
I’d already come with a solution.
“How about this?”
Kim Sung-gwun’s face brightened.
“Do you have a good method in mind?”
“We move first.”
“What do you mean?”
I laid out the answer with confidence.
“Before they even bring up the acquisition, we go after Daejun Construction first.”
It took a while for him to react.
“...Pardon?”
I arrived at a bar underground in Yeoksam-dong.
The parking lot was arranged so you wouldn’t run into anyone else before you even got inside. After I got out of the car and stepped in, a woman in her mid-forties was waiting for me.
She had a composed, elegant air about her.
“Are you Han Miru?”
“Yes.”
“Your companion arrived earlier and is waiting. I’ll show you the way.”
I followed her down the hall. The place felt refined and quiet.
When she opened the door and I stepped inside, a lavish interior spread out before me.
There was liquor and food already laid out on a wide rectangular table, and at the far end of it sat Heo Min-woong.
This was our second meeting since we’d met in the United States.
The moment he saw me, he shot a hand into the air.
“Hey, brother! Good to see you. Feels great to meet again after so long.”
He looked genuinely happy to see me.
“Been a while.”
When I sat a little distance away, he scooted over toward me with exaggerated vigor.
Then Heo Min-woong said to the woman who had brought me in, “Remember his face well, all right? He’s a friend I consider practically my own little brother. If he ever comes here alone, treat him properly. Oh, and put the bill under my name.”
She covered her mouth and laughed. “My, Vice President, if you speak that highly of him, he must be someone truly remarkable.”
Heo Min-woong nodded emphatically.
“He is. He’s not ordinary at all.”
“Then I’d better make a good impression from today on. Please call me anytime if you need anything while the two of you talk.”
She closed the door and left, and we were alone.
I stared at him, dumbfounded. “Anyone watching would think we were genuinely close.”
“What’s with you? Keep talking like that and I’ll be hurt, brother.”
He could be hurt if he wanted.
I glanced around the room and said, “Isn’t this the kind of place where they bring women out?”
“Want me to call one?”
“I’ll leave first, then you can call as many as you want after that.”
“Man, what a buzzkill. Is this your first time at a place like this?”
“This time, yes.”
I had come along once or twice in my first life while entertaining big-spending clients, but I’d mostly just stood around serving drinks and running errands before heading home.
Just looking at the interior told me this place was on a completely different level from the bars I’d been to back then.
Money really did buy access to better places.
“Oh! Congrats on the promotion.”
He had been a team leader, and for the work he’d done last time, he’d been promoted to vice president. In terms of rank, he was now my equal.
“Are you teasing me? A promotion isn’t necessarily all good.”
The higher you climbed, the more responsibility came with it.
Hwaan Group had reorganized the business units across its affiliates and pushed all of its hydrogen energy operations into Hwaan Energy.
Heo Min-woong was effectively the one in charge.
If the business went wrong, he would bear all the blame.
“You’ve got nothing to worry about. Hydrogen energy is going to do well. In a few years, it’ll be one of the group’s core businesses.”
“Really?”
He was just that reassured by a casual remark from me. Since when had he started trusting me this much?
Heo Min-woong poured me a drink.
“Come on, let’s have a drink first.”
We clinked glasses.
“Come to think of it, you’ve been pretty quiet lately. You’re hardly in the news.”
“What would I be in the news for?”
“Assault and drunk driving?”
He gave an awkward laugh.
“Come on, that was ages ago. You’re talking about the days when I couldn’t tell shit from shinola.”
“So you were basically wearing diapers until a few months ago?”
At that, he waved a hand.
“Don’t be like that. I’ve been reflecting lately, all right? I’ve even been thinking I should set aside a day and go around apologizing to people.”
That caught me off guard a little.
“That’s not really your usual character, is it?”
“What kind of character am I supposed to have?”
I answered immediately.
“Hwaan Group’s spoiled bastard?”
“...Could you at least think before you speak?”
After a few drinks, he said, “It’s basically all because of you.”
“Because of me?”
“I mean, I’ve been living pretty recklessly, right?”
“‘Pretty’?”
“For me, that’s on the mild side. You just haven’t met anyone who was a real bastard.”
“I have.”
“Who?”
“Ju Hyeon-jin.”
Heo Min-woong looked mildly surprised.
“Seriously? I’m not exactly proud to say this, but that guy’s personality is total garbage. The rumor’s spread all over the business world too—he’s known as a complete piece of shit.”
“Not sure that’s the best thing to say out loud about yourself either.”
Heo Min-woong hurried to defend himself.
“No, I mean, I just got drunk and caused trouble. Hey, did you see what he did to his driver this time? Still, I’m good to the people around me. I try to take care of even the little things. And these days I’m being even more careful.”
“Why the sudden change? Did something happen?”
“Well, not exactly... but when I met you at that hotel before.”
“What about then?”
“Honestly, I wanted to beat the crap out of you and throw you out.”
That wasn’t news to me, so I wasn’t particularly shocked.
“Why didn’t you?”
“Well...”
“Because you came through Chairman Yoo Jae-ho?”
“Something like that. Anyway, if I hadn’t listened to you back then, I’d probably be ruined by now, wouldn’t I?”
“You would have been.”
“Up until now I’d lived treating everyone except myself like a joke. But then I started thinking maybe there might be another bastard like you somewhere out there, and that made me realize I’d better start living more carefully.”
“...”
That was a little surprising.
A person’s nature didn’t usually change so easily. But no matter what kind of nature you had, you could control it.
The reason chaebol family members ran around causing all sorts of scandals was that they never felt any need to rein themselves in.
That had been Heo Min-woong’s way of life until now.
So unless he was just running one or two affiliates, no one had ever looked at him and thought, He’s chairman material.
He’d caused too many problems for that.
But today, he looked different.
“Why are you looking at me like that?”
“You’ve grown up.”
“Is that a compliment or sarcasm?”
“A compliment.”
“Ha! Unbelievable. You’re complimenting me over something like this?”
Even while he said that, his expression looked ridiculously pleased.
“But are you really planning to swallow Hanjeong Group?”
I shook my head.
“No way. How could I possibly swallow a group that big?”
“Then what?”
“I only plan to take Hanjeong Mulsan itself. Clean and simple.”
He looked at me as if I’d just said something absurd.
“Isn’t that the same thing anyway? Hanjeong Mulsan is the holding company for Hanjeong Group. If you take the holding company, you take the whole group.”
“That’s true.”
“Not just our group, either. Everyone else is watching this with an uneasy look.”
“Why’s that?”
“If one of the top ten groups might lose control of itself, how could anyone feel comfortable? Management control is the most sensitive issue any conglomerate has. To put it bluntly, if a hedge fund decides to attack in earnest, how many groups can actually hold out?”
“I see.”
Birds of a feather, then?
Still, in this country, even if you were ready to grab each other by the collar on a normal day, the moment a management-control issue came up, every K-chaebol suddenly became a brotherhood of mutual aid.