/

Chapter 79




The Genius Grandson of the Loan King - Chapter 79 (79/840)
< The Hyunbo Group's Bankruptcy. >
#79
The Hyunbo Group's Bankruptcy.
“Did you rest well?”
“Yes, Grandfather.”
Grandfather warmly welcomed me back from Busan.
“Chairman Jang came by, didn’t he?”
“Yes. He asked for a loan, just as you predicted.”
“He must have been in a hurry. Last time, he acted as if he’d never see us again.”
I smiled slightly.
Grandfather shook his head.
“With their cash flow cut off, they’re like a sinking ship. The other conglomerates are probably discussing how to benefit from Hyunbo’s collapse. They’re like hyenas. Tsk.”
“Hyunbo is just the beginning. Il Sung and Daehyun won’t be safe either.”
“Huh. If what you say is true, it means the country’s economy will completely collapse... I can’t believe it, but I can’t deny it either.”
“It’s a side effect of rapid growth. This was bound to happen at some point.”
“Yes, it was.”
The president, who had received widespread support for his reforms, including the crackdown on the Hanahoe, faced a series of accidents and disasters that led to massive casualties, earning the country the nickname of the “Republic of Accidents.”
He tried to boost his approval ratings by aggressively promoting South Korea’s OECD membership in 1996 and the achievement of a per capita GDP of $10,000. However, behind the scenes, there was a $39 billion current account deficit, a 211% ratio of short-term foreign debt to foreign exchange reserves, and a 317% average debt ratio in the manufacturing sector—unimaginable time bombs ready to explode.
Whatever the case, it’s just a matter of time before they do.
“Grandfather, this is just the beginning.”
History flowed as I knew it would.
* * *
On January 6, Chairman Jang of the Hyunbo Group issued 450 billion won in convertible bonds to try to put out the immediate fire. However, due to the stock market crash and other adverse events the next day, it failed.
On January 9, the group was on the brink of bankruptcy, unable to cover a 1.2 trillion won bill. However, it managed to overcome the crisis with emergency support from banks.
He tried to raise funds by putting up real estate, but it was impossible to sell over 3 trillion won worth of properties all at once.
Another attempt to issue 350 billion won in convertible bonds also failed, as no one was willing to buy them.
He even tried to contact Pyeongchang-dong but was rejected.
Hyunbo pretended to enter an emergency state by replacing executives and continued to request help from banks and the government.
On the 17th, a 500 billion won bill was covered with the help of banks, but the crisis was far from over.
On January 20, Chairman Jang again requested 3 trillion won in support, but the creditors refused.
“Chairman, step down from your management position. We’ll do whatever it takes to save the company.”
“We’ve already helped you twice. We can’t support you any further. Just step down.”
The creditors’ demand was simple: the Jang family must relinquish management control.
With the presidential election this year, the ruling party and the government could be embroiled in a favoritism scandal. If the Jang family stepped down, they planned to provide emergency support to stabilize the company.
However, Chairman Jang used subcontractors and partners as hostages, believing the government would not let Hyunbo go bankrupt.
He knew that the creditors had lent him over several trillion won.
“Just 3 trillion won in support, and we can get the company back on track. We’ve already put up real estate and are working on issuing convertible bonds. Please help us one more time, and I’ll do something in return.”
However, the negotiations ultimately broke down, and no agreement was reached.
“Stupid bastards. If Hyunbo goes down, the country will go down with it. Hey! Let’s head to Pyeongchang-dong quickly.”
He lashed out at the driver, who had been sitting quietly, and headed to Pyeongchang-dong, determined to persuade Chairman Cheon to lend him money.
Despite the situation, Chairman Jang was not worried about the bankruptcy.
‘How do I persuade Chairman Cheon?’
* * *
“Will you meet him?”
“Yes, I’ll handle it.”
“Alright, I understand.”
Grandfather handed the meeting with Chairman Jang over to me.
A little later.
When I heard that Chairman Jang had arrived, I came out of the study.
“It’s been a while, Chairman Jang.”
“Oh, you’re here too? Is the Chairman inside?”
“He’s not feeling well. You can talk to me. I have full authority.”
“Huh...”
Chairman Jang frowned, his pride hurt.
He still didn’t understand the situation.
I smiled calmly.
“Let’s go to the reception room.”
I led him to the reception room instead of the study.
We sat facing each other without the presence of Manager Ha.
“What would you like to drink?”
“...Manager Ha isn’t here either?”
“I told you I have full authority. If you don’t want to talk, you can leave now.”
My firm tone made Chairman Jang’s expression even worse. However, he didn’t get up, as he still had something to gain.
“If you’re not going to get up, let’s get to the point. We have no intention of buying your convertible bonds. Hyunbo’s stocks are already worthless.”
“What? Are you trying to be funny?”
“I understand that negotiations with the creditors have already broken down. Do you have the money to cover the 50 billion won bill due on the 23rd?”
The 14th largest conglomerate, the Hyunbo Group, would ultimately declare bankruptcy when it failed to cover the 50 billion won bill due to Hyunbo Steel, leading to the signing of a stock surrender agreement.
However, the 50 billion won was just the beginning. Hyunbo Steel owed over 5 trillion won.
“The banks will cover it. That’s not the urgent issue.”
“Alright, what else can you offer? Not convertible bonds.”
“Do you want something? Speak up.”
The only valuable asset left in Hyunbo was real estate.
The prime lands across the country owned by Hyunbo Construction.
“The total value of the real estate you’ve put up is 310 billion won, right?”
“Yes, will you buy it?”
“It’s hard to pay the full price.”
Chairman Jang’s face twisted.
“Listen, young man.”
“2 trillion won. We’ll sign the contract and pay by February 1st. If you’re not interested, there’s no deal.”
The banks had already dumped all their Hyunbo-related stocks, and the stock prices were plummeting.
Even though the stock briefly rebounded due to the completion of the Dangjin Steel Plant, the banks couldn’t absorb the volume.
“...Can you offer more?”
“No one will lend money to Hyunbo, buy its bonds, or purchase its land. The Federation of Korean Industries? They’re probably negotiating how to divide the spoils after Hyunbo’s collapse. You know that, don’t you?”
Chairman Jang bit his lip, unable to refute my argument.
He had likely already asked other large corporations for help, but they wouldn’t assist him. At best, they would offer to take over his subsidiaries at absurdly low prices. He was already frustrated.
“...”
His long sigh sounded like a surrender to me.
After the bankruptcy, there would be fierce competition to buy the land. Hyunbo had nothing else to offer.
In the end, Chairman Jang raised his hands in surrender.
“Alright, I’ll sign the contract. But you must pay by February 1st.”
“I understand. You know the credit of Pyeongchang-dong, right?”
I smiled calmly.
If the bankruptcy occurs after the contract is signed, the money will go to the creditors.
Chairman Jang won’t get a single penny.
I had Manager Ma bring in the pre-prepared contract.
“...You prepared this in advance?”
“It was your last chance.”
He examined the contract for a while.
“There should be no issues. The contract has been reviewed by Yoon & Jang. We just need to fill in the amount and sign.”
Chairman Jang signed the contract, and I did the same. We each kept a copy.
“Thank you for the good deal.”
“Please make the payment quickly.”
“I understand. I’ll prepare it as quickly as possible and make the payment by February 1st.”
The subject of the contract was Hyunbo Co., Ltd., not Chairman Jang. The contract was carefully reviewed by expert lawyers to ensure there would be no issues even if the bankruptcy occurs and Chairman Jang is arrested.
“Thank you for the good deal, Chairman Jang. Let’s meet again with a smile.”
“I understand. After putting out the immediate fire, let’s meet again.”
As he left, Chairman Jang’s back showed no signs of defeat.
‘I’m looking forward to three days from now.’
“Master, the Chairman is waiting.”
“Yes, let’s go.”
I entered the study where Grandfather was waiting, as Manager Ha had said.
“You look good. What did you decide?”
“I decided to buy the real estate. The market value is around 3 trillion won, but I signed the contract for 2 trillion won. If Hyunbo declares bankruptcy between the 23rd and 25th, I plan to negotiate with the creditors to take over the assets.”
I explained in detail to Grandfather what I had discussed with Chairman Jang.
Grandfather smiled throughout the explanation.
“Good job. Land never disappoints.”
“That’s all there is to take.”
Grandfather nodded and continued.
“Once Hyunbo goes bankrupt, the aftermath is unimaginable. The banks will suffer significant losses.”
“The bankruptcies will continue one after another.”
“It’s a big deal.”
As Grandfather said, it was a big deal, but no one thought it was.
On January 23rd, Hyunbo Steel failed to cover the 50 billion won bill. Chairman Jang signed the stock surrender agreement, and the company declared bankruptcy.
This was the price for not meeting the creditors’ demands.
The government, fearing a favoritism scandal during the presidential election, could no longer provide support.
This was the first bankruptcy of a corporate group since the forced dissolution of the International Group, which had fallen out of favor with the government.
On the 25th, the entire Hyunbo Group, including Hyunbo Co., Ltd., declared bankruptcy.
The day before Hyunbo’s bankruptcy, I visited Chairman Song of Daehyun.
“Don’t be greedy about Hyunbo, Chairman.”
“What?”
“Are you eyeing Hyunbo Steel?”
“...You, you can see right through me.”
“The moment you take it, Daehyun will be in danger. It’s like a frog with poison.”
Seeing Chairman Song’s contemplative expression, I delivered the final blow.
“I’ve already signed contracts to buy all the land owned by Hyunbo Steel and Hyunbo Construction. There’s nothing left for you to take.”
“What? Is that true?”
“Yes.”
“You, if I buy it, what will you do? It’s something you can get for free.”
The heads of large corporations had a simple plan.
Once Hyunbo goes bankrupt, they would negotiate with the government to take over the company, write off the debt, and sell off the valuable assets.
Of course, they would take out loans from banks to cover the acquisition costs.
Such absurd scenarios were common in South Korea in 1997.
“There will be many competitors. Since I signed the contract with the company, not Chairman Jang, I can delay the payment until February 1st. The bankruptcy can’t be prevented. I know you have a soft spot for the Dangjin Steel Plant, but Hyunbo will be in danger.”
“...Who knows about this?”
“Besides Pyeongchang-dong, I’ve only told you.”
“Don’t tell anyone else.”
“There’s no one to tell.”
Chairman Song’s expression showed a hint of mischief.
He was probably pretending to compete with Chairman Seo of Il Sung, planning to pass it off to Il Sung at a high price.
My prediction was spot on.
* * *
The Federation of Korean Industries held an emergency meeting to discuss the Hyunbo Group’s bankruptcy.
All the heads of the top 20 conglomerates were present.
The only issue was who would take what.
No one was worried about Hyunbo’s bankruptcy.
The smaller assets would be taken by other companies, while the