Chapter 615 Debt-for-Equity Swap
Although Barron’s relationship with the Hearst sisters is extraordinary, when it comes to business matters...he will definitely not say that he will give up the acquisition of Huache Group because of this. .
After all, take the world-famous fashion magazine "ELLE" owned by Huaxie Group as an example. It has 43 editions around the world (branches in various countries or regions, such as "ELLE China Edition"). It is hailed as the crown jewel of Huaxie Group.
In addition, "Psychologies" magazine also has 12 editions.
Barron itself owns the fashion luxury goods group Gucci-Hermès Group. If it also owns an influential fashion magazine, it will be very beneficial for brand promotion and marketing.
Therefore, SEM Group will also actively participate in competition.
Speaking of Gucci-Hermes Group, due to the impact of the subprime mortgage crisis, the revenue of its brands has also declined.
However, under the guidance of Barron, they have already begun to focus on developing Asia, especially the Chinese market - the revenue growth of Gucci-Hermès brands in China has been growing in all luxury goods. At the forefront of the brand.
Therefore, the growth in China has made up for a considerable part of the declining revenue in the European and American markets. On the whole, the performance of Gucci-Hermès Group this year is still satisfactory.
And the Gucci-Hermès Group itself is not a listed company - they have completed the privatization of Hermès, so they do not have to worry about the impact of the global economic downturn on the group's stock price.
For example, LVMH and Li Feng Group, which are also luxury goods groups, have seen their stock prices fall by more than 25-35% compared to last year's highs!
Private companies and listed companies still have their own advantages and disadvantages. Listed companies need to be responsible to investors, and the performance of their stock prices will also put considerable pressure on management, which has led to some of their efforts to boost their stock prices. measures may not be beneficial to the company's long-term development.
This is actually somewhat similar to the electoral system in the West - those professional managers have term limits. From the perspective of their private interests, they naturally let the companies they manage during their term of office " Prosperity" and get more bonuses and equity incentives.
As for the long-term interests of the company? A term of several years, why should we consider things that last ten or twenty years?
How many people can tolerate a decline in business during their tenure for the sake of long-term interests, and may even be fired because of it... and then let their successors enjoy the long-term dividends?
Of course, the reason why most multinational companies are listed companies is because at that scale, this is still the safest non-family management method of operation after weighing the balance.
You can't avoid all risk possibilities, you can only choose the ones that are safer in comparison - this itself is the risk aversion of a company after it reaches a certain scale.
Small companies and start-ups can take risks, but big companies need stability.
……
In mid-September, the Federal Reserve Board of the United States and the European Commission successively approved the acquisition of Merrill Lynch Group by Standard Chartered Bank.
This also means that the merger between the two parties will officially enter the substantive stage. Davis, the former president of Standard Chartered Bank, will serve as president of Standard Chartered-Merrill Lynch Group, and his deputy Paul Spint will be promoted to CEO of Standard Chartered Bank - he will manage the merger of Northen Rock Bank, Merrill Lynch Industrial Bank and India Bank. Branches of Demac Bank and Standard Chartered Bank after depository operations.
In addition, Thain, the former chairman and CEO of Merrill Lynch Group who just took over this year, will serve as chairman of the Securities and Wealth Management Department of Standard Chartered-Merrill Lynch Group after his predecessor resigned.
It is also worth mentioning that because the stock price of Standard Chartered Bank fell during this period - from 25 US dollars per share to less than 20 US dollars, the total purchase price of Merrill Lynch Group also correspondingly has fallen a lot.
After all, a large part of this acquisition of Merrill Lynch was carried out through stock exchange.
The majority of the US$25 billion in cash was directly injected into Merrill Lynch to repay part of its debt and alleviate their lack of liquidity.
However, what is interesting is that after Standard Chartered Bank’s acquisition of Merrill Lynch Group was approved by relevant regulatory agencies in the United States and the European Union, Standard Chartered Bank’s share price fell by nearly 5% that day...
Mainly There are also many voices in the market who believe that Merrill Lynch's "holes" need to be filled by Standard Chartered Bank. In addition, Northrock Bank, which they previously acquired, is also in a mess.
Under the current market conditions, I am afraid it will drag down the performance of Standard Chartered Bank.
Then when Standard Chartered-Merrill Lynch announced that they would also pay £1.5 billion in bond interest to the Cavendish Trust before the end of September, their share prices fell by more than 3% again...
Because last year, when Standard Chartered Bank acquired Northen Rock Bank, according to the agreement, it needed to return a loan of 250 pounds and interest to the British government...
At that time, the Cavendish Trust Fund passed The purchase of 25 billion pounds of convertible bonds from Standard Chartered Bank helped Standard Chartered Bank repay the loan.
But the 25 billion pound convertible bond has a stipulated annual interest rate of 6%, which means that Standard Chartered Bank needs to pay US$1.5 billion in interest to the Cavendish Trust Fund every year. It has been a full year since the bond was issued, and Standard Chartered Bank needs to make the payment before the end of September.
Under the current market environment, although Standard Chartered Bank has not been greatly affected by the subprime mortgage crisis, because the stock market, especially bank equity, is in decline, their stock prices have been declining before. It has fallen by more than 20% from last year's high - which is already a relatively small decline among bank stocks.
Now that we need to bear such heavy financing interest, it is no wonder that the share price of Standard Chartered-Merrill Lynch Group will fall again.
Under such circumstances, when the Cavendish Trust proposed to sell their 25 billion pounds of convertible bonds and 1.5 billion pounds of interest at a price of 9.72 pounds (equivalent to 17.5 US dollars) per share, a total of 26.5 billion pounds When the pound was converted into ordinary shares of Standard Chartered Merrill Lynch, the approval of the board of directors of Standard Chartered Merrill Lynch was immediately obtained.
In addition, the US$25 billion convertible bonds purchased by BFT Fund from Standard Chartered Bank when it acquired Merrill Lynch will also be converted into ordinary shares of Standard Chartered Merrill Lynch Group at this price.
Such a proposal, although the converted share price ($17.5) is slightly lower than the share price of Standard Chartered-Merrill Lynch at this time, at least these "debts" will be converted into shares of Standard Chartered-Merrill Lynch. After buying stocks, you can avoid the high interest that needs to be paid every year - to be honest, the interest on these convertible bonds is 6% per year, which is not high, but the scale of debt they bear is high, so the amount that needs to be paid is corresponding It's very expensive.
(End of this chapter)