Republic of China: Ace Pilot

Chapter 212 211 Acquisition of Hudson Lines, Experiences of the NYSE Red Vests

"Anything else?" Indiana couldn't think of anything else needed to be added to such a perfect plan.

He was certain that the success rate of this matter was very high.

"My casino company will also go public through this listed company." Fang Wen did not explain the details of the asset restructuring plan; this matter had to be done last, and now was not the time to talk about it.

Indiana didn't think too much about it. "Oh, what do you want me to do?"

"We don't need it for now, but we'll probably need your help in the process, so we need to have a way to contact each other."

“This is my office phone number.” Indiana wrote his office phone number on a note in the guest room.

Fang Wen's subordinate tore off the note with the phone number written on it, put it away, and saw Indiana out, ending the conversation.

After Indiana left, Fang Wen awaited the arrival of new visitors.

There was a knock on the door at 6 p.m.

Fang Wen got up and opened the door.

It was Zhao Jiu and Al Capone, who flew in from the west coast of the United States.

"General Manager, we're here!" Zhao Jiu said excitedly. Fang Wen's arrival filled him with confidence, and he had a lot to say.

“Fang, it’s a pleasure to see you again.” Alcapon extended his hand.

After shaking hands with Al Capone, Fang Wen stepped aside to let the two into the house.

Inside the house, he asked directly.

"I'm going to use the funds from Taishan Casino Company to acquire Hudson Shipping Company. In addition, there will be 10 overseas corporate accounts for a joint acquisition. To ensure that this acquisition goes unnoticed, we also need the participation of many individual investors. Al Capone, have you got it all sorted out?"

“Alright, we’re all New Yorkers,” Al Capone replied.

Zhao Jiu placed the two suitcases on the table and opened them; they were filled with large sums of US dollars.

“This money is the surplus of Taishan Casino Company’s operating profit for a year, which has been deposited in the bank. Now I have withdrawn it all, a total of 200 million US dollars.”

$200 million is no small sum, and even with a 40% devaluation, it still has astonishing purchasing power.

This money will serve as crucial seed funding for this acquisition plan.

Fang Wen then instructed Al Capone to deposit $5 into the individual investment accounts and await unified acquisition instructions.

He then instructed Zhao Jiu to follow him for the rest of the time.

After a night, Fang Wen got up, washed up, and then dialed a number.

"I came here this morning."

After finishing the phone call, he went outside and called Zhao Jiu to leave the hotel.

As the two Chinese walked the streets of a foreign country, Zhao Jiu had a lot to say.

"General Manager, things are much simpler here than in the underworld of Shanghai."

"Really? Tell me about it." Fang Wen bought two hot dogs from a roadside vendor and gave one to Zhao Jiu.

While eating a hot dog, Zhao Jiu said, "Everyone here is basically religious, yet extremely self-centered. Affection is all superficial; only interests are the core. Compared to Shanghai, there's less intrigue and backstabbing, making things much easier, but there are also more contradictions and trade-offs."

Zhao Jiu spoke eloquently about his experience as a "good guy" in Las Vegas, emphasizing impartiality and non-partisanship.

This action, ironically, earned him the approval of various factions. Later on, he would even mediate disputes that were not related to the Taishan Casino.

"Really? You've come up with this trick in just one year!" Fang Wen exclaimed in surprise.

Zhao Jiu finished the last bit of hot dog and replied with a smile, "General Manager, have you forgotten? You told me back then that we came from out of town, without roots or foundations, and if we wanted stability and longevity, we had to be fair and just. I did exactly what you said, but who knew that they would still buy into it? Now I've established a reputation in Las Vegas."

Fang Wen was surprised to find that Zhao Jiu had such an opportunity, and he sighed inwardly at the twists of fate.

The two hailed a taxi on the side of the road and headed to Beresford Apartments on Seventh Avenue.

(Beresford Apartments in 1932, from an alternative perspective.)
Fang Wen and Zhao Jiu took the elevator to the 18th floor of the Beresford Apartments.

This was once the luxurious apartment where Graham lived during his heyday, but he had to move out after his investments failed during the Great Depression.

He's moved back now.

But it wasn't rented separately; it was rented together with Fisher-Price.

The two investment studios each occupy half of the space.

At that moment, the door to the luxury apartment was open, and three investment experts greeted Fang Wen, the big spender, at the entrance.

Upon entering the room, the first thing they did was to give a performance report.

Both investment experts with different philosophies made substantial profits during the year.

They bought shares of companies such as Coca-Cola, Colgate, Gillette, Procter & Gamble, General Motors, Sears, John Deere, Reynolds American Tobacco, IBM, and General Electric at low prices.

These stocks all experienced significant price drops during the Great Depression, with some falling by more than 90%.

Because of the successful bottom-fishing and the sudden sharp depreciation of the US dollar, the market value of the stock market also soared, causing the returns of both accounts to skyrocket.

Hearing the good news from both sides, Fang Wen nodded.

“I will invest an additional 50 each time. Now let’s discuss the Hudson Shipping Company.”

The fact that this matter was handled by two studios simultaneously, and that they communicated via telegram multiple times, is enough to demonstrate the importance Fang Wen attached to it.

Therefore, the two of them took this matter very seriously.

Graham recounted their progress.

"We conducted a comprehensive review of Hudson Lines, a company that was a leader in the ocean freight industry 10 years ago and successfully listed on the NYSE. However, in recent years, due to a series of internal and external shocks, especially the decision-making errors before the Gold Purchase Act was introduced, the company has fallen into serious financial difficulties. At that time, the management of Blue Ocean Lines misjudged the situation and held a large amount of US dollar assets in the hope of profiting from exchange rate fluctuations, anticipating significant market volatility. However, the government then introduced the Gold Purchase Act, which strictly restricted the holding and trading of gold and foreign exchange, while US dollar assets depreciated sharply, resulting in huge exchange losses for the company."

Fisher added, "This loss directly impacted Hudson Lines' balance sheet, leaving it heavily indebted and unable to repay its debts. Its stock price subsequently plummeted to 1 cent. Currently, the company faces the risk of delisting, investor confidence has been severely damaged, and its business operations have been significantly affected."

Fang Wen nodded, but did not reveal the true purpose of the acquisition. Instead, he offered a more far-reaching perspective.

"The ocean freight industry is a sector with a long-term positive outlook. With the recovery and growth of global trade, market demand will continue to expand. I am optimistic about the productivity of the United States, which will inevitably need a large number of ocean-going freighters to transport American products in the future. Hudson Lines has a certain brand influence and market share in the industry. Once it can solve its financial problems and regain market trust, its recovery potential is huge. Considering that the company's current stock price is extremely low, we believe this is an excellent opportunity to enter the market at a low cost."

Graham asked, "What about the debt problem?"

The biggest problem in the whole affair is the debt, totaling $700 million, which is enough to crush the shipping company. That's why no one, including the major shareholders, is optimistic about it. They would rather sell their shares for 1 cent and give up than leave this quagmire.

Fang Wen has a plan, but he can only reveal it after he has taken control of the company.

Therefore, he skipped that issue and jumped directly to the acquisition.

Graham explained the situation regarding the acquisition.

"The exchange issued new regulations this year, stipulating that when a company plans to acquire more than 5% of the shares of another publicly traded company, it must submit relevant materials to the U.S. Securities and Exchange Commission and fulfill its information disclosure obligations. This regulation aims to ensure that market participants can be informed of significant changes in shareholding in a timely manner, thereby making rational investment decisions."

"We need to submit materials? Can the two of you do it?" Fang Wen asked.

“No problem,” Graham replied.

He went on to say:
"The acquiring party needs to disclose in detail to the acquired company and its shareholders key information such as its acquisition intentions, sources of funds, and acquisition plans. At the same time, if it is an acquisition of shares from a major shareholder in the private market, it needs to make a public announcement to inform all public shareholders."

All of this was within Fang Wen's expectations. He explained his plan: "I own an American company called Taishan Casino Company. We will use it to make the acquisition. You two will be in charge of the operation and prepare to acquire all the shares of Hudson's major shareholder. At the same time, 10 subsidiaries under Taishan Airlines Global Headquarters will also launch a coordinated tender offer. After the acquisition is completed, Taishan Casino Company will become Hudson's controlling shareholder."

Graham and Fisher readily accepted the acquisition. They then held negotiations with Hudson Shipping, headquartered in New York.

The once-glorious Hudson Shipping Company was insolvent, its operating building had been sold, and its employees had been laid off in large numbers. Graham and Fisher moved their acquisition negotiations to the major shareholder's own property.

This shows how badly this company is doing; they can't even cover it up.

In order to get rid of this burden, Hudson Line's major shareholders were willing to sell 38% of the company's shares for $1.

The only requirement is to properly handle all debts and keep the remaining two cargo ships operational.

Such a simple request and a price of $1 for the sale of equity allowed the negotiations to conclude smoothly.

Subsequently, Taishan Casino Company filed a detailed acquisition report with the U.S. Securities and Exchange Commission (SEC).

This is mentioned in the report.

Purpose of the acquisition: To continue development in the marine industry while expanding into other sectors.

The acquiring entities, namely Taishan Casino Company and its parent company Taishan Aviation International's 10 global subsidiaries, are acting in concert.

Source of funds: Self-owned.

Acquisition Plan: The company plans to acquire 67% of the shares of Hudson Corporation.

After the acquisition report was submitted, it was quickly approved without any issues and subsequently announced on the NYSE.

Tuesday, April 1934, 7.

An acquisition announcement was posted on the pre-market announcement board of the NYSE.

Traders from various brokerage firms watched the announcements from the bulletin board.

"Taishan Casino Company has reached an acquisition agreement with the major shareholder of Hudson Shipping Company to acquire 38% of its shares for $1, and will also acquire the remaining 23% of the shares together with its concert parties in order to achieve absolute control."

Most traders were not optimistic about Hudson Line, but that didn't stop them from sharing this potentially profitable trade with their clients.

Thanks to their word, all of New York knew that Hudson Lines' stock price would fluctuate wildly today.

Fang Wen, as the actual controller of Taishan Casino Company, along with Graham and Fisher, donned red vests and entered the New York Stock Exchange.

They sat in the brokerage seats, with a huge trading platform in front of them.

Fisher was talking to people from the brokerage firm, while Graham was explaining the situation inside the New York Stock Exchange to Fang Wen.

“People here can be identified by their clothing and badges. Those in yellow vests are exchange staff; they go into the trading floor to receive and process various trading requests from traders. Those in red vests are employees of brokerage firms and financial companies; we are wearing their uniforms now.”

Fang Wen looked around and saw that the people inside were very relaxed, chatting and laughing while holding coffee and greeting each other.

But as the opening of trading approached, everyone gradually became serious.

As the opening bell rang, everyone took their positions and began a new day of trading.

Fang Wen's gaze then turned to one of the trading tables. On that enclosed circular trading table was a price quote board, on which Hudson Shipping Company's stock would be quoted.

The price list shows Hudson Shipping's selling price as the lowest bid of 1 cent, but the buying price is not listed.

A man in a red vest ran over, and after some discussion, the man in the yellow vest modified the bid price on the price board.

Hudson Shipping Company stock, with a total outstanding share capital of 10 shares and a current price of 1 cent, surged to 2 cents as soon as the market opened.

Fisher spoke up: "It wasn't us who made the offer. Other investors are snapping up shares through brokerage firms. Should we make a move?"

Fang Wen looked to the other side, where Al Capone was also wearing a yellow vest and sitting in the seats of another brokerage firm.

From Al Capone's body language, Fang Wen knew that he was the first to make an offer.

Fang Wen did not make any moves during the subsequent trading session.

He wanted Al Capone to buy some first, since even with a 67% controlling stake, he could make a profit no matter how much he bought.

The atmosphere inside the exchange became somewhat strange.

The red-vested individuals are keeping an eye on Taishan Casino Company, represented by Fang Wen. They won't get involved unless the main entity makes a move.

Therefore, the stock price rose from 1 cent to 4 cents, supported only by Al Capone and a few scattered offers.

Al Capone then stopped and left the field.

Without his involvement, the number of people bidding to buy Hudson Commercial Shipping stock suddenly decreased.

Some of those who bought stocks that day and made a profit quickly sold them to secure their gains.

The stock price plummeted from 4 cents to 2 cents.

At this moment, Fang Wencai spoke up: "Buy it, today's price cap is 1 cents."

Graham and Fisher, having received the instructions, began the operation.

As the offers continued to rise, brokers called investors, and more people began selling their shares.

Throughout the day's trading, the stock price rose from 1 cent to 10 cents, representing a 5% acquisition stake.

Including the 11% stake acquired by Al Capone beforehand, and the 38% held by Tarzan Casino, there are currently 46% of the shares on the market.

These shares were trapped during the decline and could only be sold when the stock price rose.

The following day, the stock price rose to 30 cents, and another 10% of shareholders sold their shares.

On the third day, the stock price rose to 50 cents, and 10% of shareholders sold off their shares.

The remaining 21% are still unwilling, hoping that the stock price will continue to rise.

However, at this point, the upward trend in stock prices came to a standstill.

After carefully calculating the shares acquired by Taishan Casino Company over the past three days, everyone discovered that its shareholding had reached 63%, only 4% away from the 67% stated in the acquisition announcement.

Immediately, some shareholders who realized the seriousness of the problem sold off their shares, and the stock price fell from 50 cents to 45 cents. However, because no one was willing to buy, it fell another 5 cents to 40 cents.

At this point, Taishan Casino Company stepped in and bought a 4% stake.

As the acquisition of Taishan Casino Company was completed, the stock price immediately plummeted.

No one in this market believed that Hudson Line could turn things around in a short time, so they preferred to withdraw as soon as possible.

The acquisition by Taishan Casino Company and 10 foreign parties acting in concert has been completed.

They hold a total of 67% of the shares.

With the addition of the 15% stake acquired through Al Capone, they effectively control 83% of the total shares.

No more shares could be purchased, so Fang Wen prepared to implement his next plan.

The crew of both cargo ships were replaced with Chinese sailors, and silver transportation began.

The overall listing of Taishan Casino Company should also be achieved as soon as possible.

There's also the issue of resolving Hudson Lines' debt.

(End of this chapter)