Chapter 825 – Strategy and conditions
“Manager Li, you are saying that you will let foreign investors invest in Jianlibao and then restructure it to a shareholding? Are you sure you can do it?” Feng Yu also hope this would happen, but it should not be easy.
Li Jingwei put up 3 fingers and said. “First, I am the General Manager of Jianlibao. Although the company belongs to the country, I still have some say in the company. At least I can make most of the employees and management team to stay on my side. Secondly, this will be a political credit and the local government leaders will be very interested. It is almost time for the leadership transition and the leaders need some results to get their promotion. Sanshui is a place where no foreign investors will be interested in. Lastly, Lehaha has to get involved in this plan as Jianlibao wants to buy Lehaha’s tea beverage formula. Don’t worry. We will be producing carbonated tea beverages. It will be different from Lehaha’s products.”
“Tell me the details.” Feng Yu was excited. Li Jingwei had got everything planned.
“First, I will tell the leaders Jianlibao must cooperate with Lehaha because the US market loves tea beverages. If Jianlibao can introduce a tea beverage product in the US, the company will get enormous profits. But the leaders might not agree, and Jianlibao and Lehaha might have to exchange some shares. But the number of shares cannot be a lot.
Feng Yu frowned. Lehaha and Jianlibao exchanging shares? He got to discuss with Zhong Qingxian about this, as Zhong Qingxian might not agree. But if Feng Yu told Zhong Qingxian that Lehaha can use Jianlibao’s distribution channels to sell its products to the US, Zhong Qingxian might agree. Although Feng Yu does not interfere with Lehaha’s management, he still Lehaha’s biggest shareholder and Zhong Qingxian should listen to him. If Zhong Qingxian still does not agree, Feng Yu will use his own Lehaha shares for this deal.
“The first step of the plan is exchanging shares, Lehaha selling tea beverage formula to Jianlibao and Jianlibao will help Lehaha enter the overseas markets?”
“That’s right. The second step will need at least 3 foreign companies to invest in a joint venture with Jianlibao. This joint venture will be Chinese Beverages Enterprise, and Jianlibao will use some of its shares to invest in this venture for 51% of the company shares.”
Feng Yu almost burst out laughing. Chinese Beverages Enterprise sounds majestic, and those government officials will be interested. Furthermore, this venture will attract foreign funds and will give them political credits.
“After that, it will be straightforward. Those foreign companies will merge and bought over by you. Lehaha will sell its Jianlibao’s shares to you, and you will have the controlling stake of Jianlibao. With the controlling stake, we can move Jianlibao out of Sanshui to Guangzhou and will have the final say in the company.”
Li Jingwei paused and took a big puff of his cigar. He blew out a cloud of smoke and continued. “In this plan, only I can persuade the leaders to agree. If I don’t agree, I will lead all the employees on strike and stop the company’s operation. That’s why I want to sign a confidential agreement with you. You must promise that after getting the controlling stake of Jianlibao, you will sell a portion of the company’s shares to my team, and it must not be less than 10%!”
Li Jingwei is telling Feng Yu that without me, this plan will not succeed. Even if you can persuade the government leaders, I can also stop it. I will help you gain control of Jianlibao, but you must let me run the company and also sell a portion of the shares to me.
But 10% of the company’s shares is a lot. Li Jingwei is greedy, and Feng Yu knew his team cannot afford it. Even if Li Jingwei got a loan from Li Ning and the banks, he would not raise enough. Is he going to borrow from Venture Capital?
“Manager Li, after I get the controlling state, you will buy 10% of the company’s shares. I will not talk about where you are getting your money. This 10% of shares should not be coming from me alone. Are you able to convince the local government to sell you their portion of shares?”
If all 10% of the shares are from Feng Yu, Li Jingwei and the local government will have the controlling stake of Jianlibao when they combined their shares. Since Feng Yu will have the controlling stake, why should he give it up? After all, Feng Yu and Li Jingwei do not know each other well. In Feng Yu’s previous life, Li Jingwei went to jail because he misused the state-owned enterprise’s funds. Feng Yu had to take precautions against someone like him.
“Manager Feng, you can rest assured that I will make sure the local government sells off a portion of their shares. I will even let all of Jianlibao’s staff get some shares!” Li Jingwei said with a ferocious look in his eyes.
Give all the employees shares? Li Jingwei should be going to gather all the company’s staff to go against the local government. But that’s his problem as long as my shares will not be lessened.
Also, Li Jingwei is old and will be hospitalized in the future. Feng Yu believes that Li Jingwei will handover his authority after he fell sick, as he will not let the company, he built from scratch to be gone.
Furthermore, Jianlibao’s asset value is not high. Only its brand is worth something and if Li Jingwei can let the local government overlook the brand value, Feng Yu will recover his investment. Keeping a factory in Sanshui and donate a bit of money to the local government will be enough as repayment.
Feng Yu still have a trick up his sleeve to ensure Li Jingwei will listen to him.
“Manager Li, Jianlibao’s fixed assets are currently worth more than 300 million RMB? Even if all the profits are handed over to the local government, after the joint venture, Jianlibao’s assets will increase by several folds. You and your team might need to pay at least 60 million RMB for the 10% shares. I am curious where are you going to get the money?” Feng Yu smiled and asked.
Li Jingwei’s face changed. “Don’t worry. I am confident I can get a loan. If I really can’t get the loan, I hope you will agree to let us pay back in installments. I will not touch Jianlibao’s money!”
Li Jingwei wants to persuade the government to increase the salaries of the management and then get a loan for the remaining amount. This should be enough to purchase the 10% shares. If all else fails, he will pay back in installments.
“Installments are also using Jianlibao’s funds to buy Jianlibao’s shares?” Feng Yu asked. In his previous life, many of the state-owned enterprises got privatized using this method. It might be legal, but this method is still questionable.
“Manager Feng, you do not agree to my terms?” Li Jingwei was slightly mad. He had made it clear that he will help Feng Yu gain control of Jianlibao and will give up the controlling stake of the company he built. Yet, Feng Yu was still not satisfied?!
“No, no, no… Manager Li, you misunderstood me. Actually, I feel that you should be rewarded with some shares, and I am willing to lend you the money to purchase the shares. The interest will not be higher than the banks, and you all are also not able to get such a big loan from the banks.” Feng Yu said.
Li Jingwei was stunned. What Feng Yu said was totally different from what he expected. Feng Yu’s offer sounds more attractive than his proposal.
“Manager Feng, what are the conditions?”
Feng Yu smiled. Dealing with smart people is so easy.
“Manager Li, you are not young. If your children are good at management, they can enter the board of directors or by the General Managers in the future. But if they are not good, then you must give up the position of director and General Manager after you retire. I hope you will understand. Zhong Qianxian and I also have this agreement.” Feng Yu smiled.
Feng Yu’s condition is not harsh at all. He is only worried that Li Jingwei will have too much influence on the company and will create problems after he retires. It’s better to make things clear to prevent Li Jingwei from refusing to give up his authority in the future.
Li Jingwei thought for a while and nodded. “Alright. I agree!”
