The day after the end of the year Board of Directors meeting, Zhao Chen called Chen Xi, Zhang Qingxue and Chen Qiming to his office.
Not a formal meeting, no projector, no agenda,
Only the Zisha Pot left by Su Wantang on the coffee table and three new teacups--
The new administrative assistant finally figured out his tea drinking habit, the water temperature was just right, and the Tea Soup had the right mellowness.
Outside the window Jiangbeizui the winter sun is shining in from Two Rivers Confluence, and the mist on the river is beginning to disperse.
The light fell on the coffee table, illuminating the Henglong Group asset structure comparison chart just printed out slightly.
Chen Qiming was the last one to come in.
He held a laptop under his arm and coffee in his hand.
As soon as I walked in, I put my computer on the edge of the coffee table and turned it on. On the screen was a financing repayment schedule that had been prepared.
"Zhao Zong, you asked me to prepare the remaining balance of pledge financing Principal and Interest in advance. I checked it again in the middle of the night yesterday.
All numbers are consistent with the bank statement, and the error does not exceed two decimal places."
Zhao Chen nodded and went directly to the topic without any pleasantries.
"I called you here today for three things.
These three things are related to Henglong's overall financial security next year. If they are not completed,
The 'release of hidden assets' and 'increase in net assets' mentioned by Board of Directors at the end of the year are just figures on the books, and they will disappear as soon as the wind blows."
He raised his first finger.
"The first thing is to clear the leverage.
The stock price of Henglong has risen from 40 to over 100, and the amount of Risk Exposure pledged for financing has shrunk significantly.
I repaid part of it in advance, how much is left now?"
Chen Qiming turns the laptop screen to Zhao Chen,
The time, amount and remaining principal balance of each repayment are clearly listed on the financing repayment schedule.
"As of today, the total remaining principal of the four pledge financings is about 800 million Hong Kong Dollar.
According to the current exchange rate, it is equivalent to about 700 million people RMB.
Among them, Morgan Stanley has the fastest repayment progress, and the remaining principal is less than 100 million Hong Kong Dollar.
The other three--Citigroup, Credit Suisse and the other Private Bank--
The remaining principal is between 200 million and 300 million Hong Kong Dollar respectively, with no penalty interest and no default clause.
All are in normal performance status."
"700 million."
Zhao Chen repeated the number.
He recalled the scene when New York was hunted by the Short-Selling Alliance,
The old guys in the Explorers Club calculated accurately that every US Dollar cash he had was consumed by the pinch of Nvidia and Tesla.
He calculated correctly that the four investment banks would issue Margin Call Notice at 225 US Dollar, and he calculated correctly that he would not be able to provide any more collateral.
The only thing they didn't calculate accurately was that he raised ammunition on the day 178 US Dollar.
The last funds were used to pull the stock price back, making Short Sellers's stampede closing become their own nightmare.
Now, there is only a pledge financing balance of 700 million left on the books.
The net assets of Henglong have exceeded 20 billion, and the debt ratio is less than 13%.
"700 million, all cleared. Not in batches, just one time.
Before the end of this year, all pledged financing will be repaid in advance. No leverage tail will be left."
Chen Qiming's fingers paused on the keyboard for a moment.
He has been in finance for so many years and knows the weight of the words "all cleared".
Early repayment means that Henglong Holdings shareholders will completely withdraw from the pledge financing market.
From now on, no assets are pledged, no financing leverage is available, and no securities firm can issue Margin Call Notice.
He nodded and typed a new line of words at the bottom of the financing repayment schedule--
"Planned repayment date: before the end of this month. Planned repayment amount: all remaining principal."
After typing, he closed the computer, thought for a while, and added:
"Controlling Shareholder leverage returns to zero. From now on, whether in Hong Kong Stock Exchange or SEC,
Henglong There is no longer any tail left by any pledge that requires additional explanation to the supervisor."
"The second item." Zhao Chen raised his second finger,
"Liquidity Safety pad.
The Henglong Capital account must reserve at least 1.5 billion RMB Cash Reserves,
Do not invest in any Secondary Market transactions, do not participate in any new share subscriptions, and do not make any structural deposits--
We only do demand deposits or short-term Treasury Bonds reverse repurchases, which can be called at any time."
Chen Xi raised his head and glanced at Zhao Chen.
1.5 billion Cash Reserves. Based on the current capital cost of Henglong, the annual opportunity cost is tens of millions.
But she raised no objection - she knew all too well what the money was used for.
Next year Henglong's asset territory will continue to expand. After the lock-up period of Bubble Mary expires, a decision will be made on whether to reduce its holdings.
Green Energy Technology's Mass-Production Line requires continued investment, and Yunnan Agriculture may face a pre-market transfer window for Existing Shares once it passes.
What's more important is that once an extreme situation similar to that in early 2019 occurs again where Short-Selling Alliance simultaneously sniped Tesla and Nvidia,
This 1.5 billion is Henglong's first firewall.
There is no need to pledge any stocks, break any promises, or sign any alliances.
She only asked one sentence:
"All the 1.5 billion should be placed at the Henglong Capital level, or should some of it be split into the group?"
Zhao Chen's answer is very clear - at the Henglong Capital level, it is completely isolated from the group's daily operating funds.
This money has only one purpose: to deal with extreme risks.
Zhao Chen Put up the third finger.
"The third item, the credit limit mentioned by Aunt Zhang before, has been officially implemented.
Green Energy Technology 32% equity, plus Bubble Mary 31.2% equity--
How much standby credit can be leveraged by the combination of these two unlisted and listed equities?"
Zhang Qingxue extracted a draft financing framework agreement that is being advanced from Briefcase,
Open the core terms that have been initially negotiated with the two banks.
"Bubble Mary has been listed, and its shares can be directly included as pledges in the standard credit framework.
The pledge financing space discounted by the current market value is approximately between 100 and 150 million Hong Kong Dollar.
Although Green Energy Technology has not yet been listed, the real data of Series C's pre-investment valuation of 5 billion US Dollar has been disclosed to the bank's due diligence team.
Their initial internal assessment is,
The credit limit of this part of Unlisted Equity is in the range of 300 to 450 million US Dollar, which is equivalent to approximately 200 to 280 million people RMB.
Taken together, Henglong can get a comprehensive standby credit line from the bank for about 30 to 4 billion people RMB."
She paused and emphasized,
"Standby credit means that you don't need to use it normally and you don't need to pay interest.
There is no need to transfer any assets as security, it can just be called directly when needed.
This is the last line of defense for the system, not a conventional financing tool."
"You don't need Major Shareholder to guarantee the credit, right?" Chen Qiming asked.
"No need."
Zhang Qingxue's answer is very simple,
"All the credit lines negotiated with the bank this time and the pledges all come from the investment portfolio equity under the name of Henglong Capital.
It does not involve any Henglong Group shares held by Zhao Zong individuals.
This is a completely different credit structure from before.
The two Partner Banks I chose this time are both large commercial banks with state-owned assets background.
They pay more attention to the quality of the underlying assets and the stability of cash flow.
Green Energy Technology entering Tesla Megapack Supply Chain itself is a global credit endorsement.
Bubble Mary and Trading Volume after Hong Kong Stocks is listed can support the liquidity of the pledge at any time.
The preliminary framework can release this amount of credit,
If we wait for Green Energy Technology to officially launch its IPO, there will be room for further improvement in the credit scale."
Zhao Chen After listening, put the tea cup back on the coffee table.
"Institutional defense is not a slogan, it is a firewall of real gold Silver.
The last time we were attacked by Short Selling, we were almost beaten. That was because we did not have these systems.
That situation will never happen again in the future."