Chapter 1010: Disadvantages of equity pledge

"Haha, needless to say, of course I'll do it!'

'Now that I see the Song family and the Shi Yahuai family fighting to the death, many people have already been itching to get involved, including me. Now that I know you will intervene, what am I hesitating about!'

Bao Yugang laughed aloud.

'I definitely have to be counted in. I may not be able to make a big difference in tackling difficulties, but I am still capable of boosting your morale in a battle you are winning.' Huo Yingdong said with a joke and a humble tone, but the meaning was clear.

'Yu, in your usual style, you should have made a plan, right?' After laughing, Bao Yugang asked.

Xia Yu nodded and said, 'I have formulated a preliminary plan, let me tell you now.'

Bao Yugang and Huo Yingdong immediately focused their attention on Xia Yu.

'After I acquired Swire Pacific Airlines, there were still more than 200 large and small companies under the Swire Group, except that the vast majority of them were unlisted companies.'

'Among them, I have promised the Song family that I will help them acquire Swire Properties and Swire & Maclaine. The Song family's holdings in other companies that are related to these two groups will be used as the cost of the acquisition. If there are any of these that you need, just let me know.'

'...'

'However, because the stock market crash is imminent, it is too uneconomical to acquire the companies of the Swire consortium at this high or even higher stock price, so the actual acquisition will be carried out later to take advantage of the low prices. In the early stages, my plan is to drive up the price.'

'Whether it is the stock of a listed company or the equity of an unlisted company, we will compete with the Shih Yahuai family on all fronts, forcing them to spend a lot of money to acquire and increase their holdings. The more they pay, the greater the damage they will suffer when the stock market crash hits, and the more they will have to vomit!'

'At that point, unless Norman Shiyawei wants to bury the entire family, he will have to disgorge most of his assets. We will just seize the opportunity to buy low, pick up whatever is valuable, and throw away whatever is not. The funds can also be used to acquire other companies in the market...'

After listening quietly to Xia Yu's account, Bao Yugang and Huo Yingdong both understood, and Bao Yugang even applauded.

'Yu, no one else knows that a stock market crash is coming, and your plan can definitely collapse the Swire Group in one fell swoop! What a good plan!'

'If it's done properly, it won't be a problem to double the assets!'

'It seems that now we have to raise funds as much as possible!' Huo Yingdong added.

In fact, Xia Yu's plan was indeed very simple, but since no one else could guess that there would be a stock market crash, as long as Xia Yu and the others kept quiet, the Sze Ya Huai family would definitely jump into the pit in order to preserve their assets.

At present, the debt ratio of the Hong Kong Taikoo Group is close to 10 billion Hong Kong dollars, and if the entire British Taikoo Group is included, the debt is even as high as more than 15 billion Hong Kong dollars.

This is just the debt at the group level.

If the Swire family wants to deepen its control over the entire conglomerate, then it has to go down two parallel paths: on the one hand, it has to get the various holding groups to increase their shareholdings, and on the other hand, it has to get the family fund to increase its shareholding.

Unless the group has a large amount of liquid funds, it must use the group's assets and equity to take out a mortgage.

And to increase the shareholding of the Swire family fund, it needs to use the Swire family's money, or use the equity and assets held by the family fund to take out a mortgage.

In any case, assets and equity must be pledged, regardless of whether the lender is a bank or another family or institution.

However, once the company's stock price drops significantly, and the pledged stock price falls below the market value warning line set by the bank when the loan was signed, the pledger must add additional collateral or margin, otherwise, if the agreed time is exceeded, the bank has the right to sell the equity to cover its losses.

This is the same principle as when a stock investor entrusts a securities company to speculate in stocks, and the securities company can forcefully close out the position when the investor suffers losses.

Therefore, as long as the Swire Group and the Shi Yahuai family borrow more and more money, when a stock market crash comes, unless they can come up with the money or assets of equivalent value to replenish the pledge, even if they don't want to sell, it will be out of their hands.

'Bao Yu, Huo Yingdong, once we start a fight with the Swire consortium, it will be easy for the Hang Seng Index to break through 2,000 points. But once the stock market crash hits, I am 90% sure it will fall below 1,000 points.'

'As for when the stock market crash will end, it is hard to say right now, but I will definitely remind you when the time comes.'

Xia Yu continued.

'Okay, we will follow your orders then.'

'That's right.'

Bao Yugang and Huo Yingdong answered in succession.

...

Early the next morning, Bao Yugang and Huo Yingdong held back-to-back meetings with their subsidiaries, scaling back the company's upper-level strategies and enhancing their ability to withstand risks.

At the same time, they urged their respective companies to accelerate the collection of payments and increase their capital holdings.

In addition to their companies, they also worked hard to find ways to increase their liquidity.

Early that morning, Xia Yu boarded a plane to Star City.

After about three and a half hours, Xia Yu arrived at Changi Airport, which had just been opened half a month earlier, and then checked into his own hotel, the Mandarin Oriental, Singapore.

In the afternoon, Xia Yu took the opportunity to inspect his company in Singapore, and then rested until just after 5:00 p.m. After making a few preparations, he took a car to the Qiu family's home.

This time, Xia Yu's goal was none other than Deacon Chiu himself, after coming to Singapore in person!

More specifically, it was the 7.8% stake in Swire Pacific Limited held by the Qiu family!

After the team from Jiuding Securities had repeatedly visited the Qiu family without success, and the Qiu family had received them so cordially, without explicitly agreeing or refusing, Xia Yu guessed that Qiu Deba must have been waiting for him to come in person.

As for Qiu Deba's intentions, Xia Yu couldn't guess, but the answer might be revealed tonight.

The agreed time was 6:30 pm, and Xia Yu's car arrived at the Qiu family's at 6:24 pm, which was within 5 to 10 minutes early, which was very appropriate.

Facing the arrival of Xia Yu, the number one powerful boss in Hong Kong, the Qiu family gave a very grand welcome ceremony.

When Xia Yu's car passed through the large iron gate of the courtyard and arrived at the front door of the inner villa, he saw Qiu Deba, who was over 60 years old with grey hair at the temples, leading a group of his descendants standing at the door. He immediately ordered the car to stop, told Li Wuming to take the carefully prepared gift, got out of the car, and walked towards Qiu Deba in three steps.

'Mr. Qiu, you are embarrassing the younger generation. I am truly flustered by your family's welcome!'

Xia Yu pretended to be grateful and flustered, shook Qiu Deba's hand, and hurriedly said.

This was the first time he had met Qiu Deba, and Qiu Deba had given him such a big gift right away. Although it showed the Qiu family's enthusiasm and attention, Xia Yu could not accept it as a matter of course.

Otherwise, even though Deacon Chiu's face would remain beaming, there was no guarantee that he wouldn't think that Xia Yu was being ungrateful.

Furthermore, it was said that when someone receives a gift, they must be expecting something in return. This time, it was obvious that Xia Yu had come to the door to ask for something, but now the Chiu family had put on such a big show.

It was said that people don't mind being treated with courtesy, but Xia Yu felt that the Chiu family's gift was too big, and there was nothing he could do about it.

And having received such a big gift, if the Qiu family has a favour to ask, Xia Yu will have to think carefully about it.

And the favour that Xia Yu asks for cannot cause the Qiu family to lose out.

'Haha, Mr Xia is being too modest. Who doesn't know that you are the God of Wealth and a legendary figure among the Chinese? I have admired you for a long time, but I have never been able to meet you.'

'This time, Mr Xia being able to come to my Qiu family is indeed the biggest piece of good news for my Qiu family in all these years. If not, it would seem that my Qiu family is not hospitable enough.'

Qiu Deba laughed heartily.

Xia Yu shook his head and said with a wry smile, 'Mr Qiu, you are flattering me too much. You are the recognised outstanding banker and the God of Wealth in everyone's mind. I was not even born when you were dominating the business world!'

'This time, I have come to learn from you, an old master.'

Deeb Qiu hurriedly waved his hands and said, 'Eh, I don't dare to learn from you. I would be more than happy to say that we are discussing things together. We must have a good chat tonight.'

'Mr. Xia, please come inside!'

'You go first!'