Chapter 67 The Acquisition of British Gas
Prime Minister Thatcher has cleared all obstacles to his own reforms, and the labor union, which is the most troublesome politician, cannot let this woman succumb. However, due to the current sluggish economy in the UK, there are not many foreign capitals willing to invest in the UK. Therefore, the competition that Seryozha faced mainly came from these financiers in the UK. Seryozha has prepared banknotes and is ready to start his own procurement operations in the UK at any time. And the first Peserezha valued was the British National Gas Company.
Judging from the current financial situation of this company, there is basically no investment value. Not only is it heavily in debt, but also because the British government imposes restrictions on natural gas prices, so the company's profits can be roughly estimated from the book. up.
But now, as the actual head of the Ministry of Foreign Trade and Economic Cooperation of the Soviet Union, Sergesha holds the British natural gas supply contract, and he is confident that the company will be profitable based on the existing price. But the people who booked this company were not only Seryozha, but also PLC Group, a local British company, and some large banking institutions behind it. And if Seryozha wants to win this company at a fair price. The key is to acquire the company's maturing debt from its creditors.
There is a huge difference between buying a company's debt and buying a company outright. If Sergey directly pays to buy British Gas, then the company's existing debts will also be borne by Sergey. In fact, the loss outweighs the gain, because if the British Gas Company does not repay the debts it owes, then he will not be able to obtain loans from British financial institutions, so Seryozha can only use his own money to maintain the company stay in business. This is a situation that Seryozha does not want to see. Seryozha hopes that he can get a healthy British Gas Company without huge debts.
The acquisition of debt also has certain risks, because bonds are not equivalent to equity, and because the company belongs to shareholders, not creditors, there is only a liability relationship between shareholders and creditors. And the company can apply for bankruptcy protection. Once a company applies for bankruptcy protection, although all the profits of the company during this period will be used to repay the losses of creditors, the corresponding creditors cannot interfere with the normal operation of the company. It is impossible to appropriate some or all of the company's assets by exercising its own debt proceeds.
After weighing the interests, Seryozha finally took the path of buying bonds. Because it costs less to do so. Due to the successive years of losses of British Gas, the debt owed by banks and the British government has reached an astronomical figure, and the total amount is close to twice the company's assets. Seryozha's main rival PLC Group is willing to assume the debt, but they also put forward new conditions to the creditors, that is, the repayment time of the debt owed by the company must be extended, and the interest must also be reduced to less than 1%. . As a local company in the UK, PLC is naturally the best destination to take over British Gas, but this harsh condition makes it unacceptable for the British government with high deficits and debts for years and the financial institutions dragged down by the sluggish economy of the UK. The British government needs to get rid of this bottomless pit of funds in its hands, and the bank also hopes to use the fastest speed to dispose of this hot potato quickly.
That's when a new Swiss-based consortium, the Columbian Bank, also got involved, expressing its interest in a relationship with British Gas. The plan given by Columbia Bank is to acquire the debts in the hands of the British government and British banking institutions that have no hope of being repaid, and then carry out debt-to-equity swaps. So as to achieve the purpose of acquiring British Gas. As soon as this plan came out, it immediately aroused the interest of many financial institutions. Because Columbia Bank is not a small local British company that wants to swallow elephants like PLC,
The company has operations in major developed countries in the Americas, Europe and Asia. He can use real money to buy British Gas.
However, it is naturally impossible for Colombia to acquire the debt in full. If British Gas has excellent repayment ability, then it is entirely possible that the company's bond price is higher than the sum of its face value and interest. It is a pity that the company's short-term debt credit is C, and its long-term debt credit is C. The credit rating given by this rating means that the company has a poor reputation, unreliable repayment ability, and may default. Thank goodness that this level of debt can be sold at a discount on the open market.
Seryozha's price for these debts was twenty per cent of face value. The price is twice as high as the market price, but correspondingly, Seryozha wants to acquire all the debts of this company and at the same time ask the major shareholders of British Gas Group, the parent company of British Gas, the British Ministry of Finance and other companies to agree to the debt-to-equity swap of Columbia Bank scheme.
As soon as Columbia Bank's plan came out, PLC, which originally thought the overall situation had been settled, couldn't sit still. They began lobbying the British government and banking institutions not to agree to the foreign company's plan to leave British Gas to the British. However, the PLC group is really naive. Although their plan will pay all the debts, the repayment cycle is as long as several decades, and the interest rate of 1% per year can't even be dealt with due to the inflation rate in the UK, and the most important thing is PLC. The acquisition of the group requires the British government and financial institutions to provide them with cheap financing and tax support. Columbia Bank is willing to pay all the money in one lump sum, and does not need the British government and British banks to pay an extra penny to support Columbia Bank's acquisition plan. In comparison, anyone who votes with their feet knows which side to vote for.
British financial institutions first sided with Columbia Bank. They collectively expressed their refusal to provide PLC with loans to acquire British Gas, and the British government was unwilling to spend money to support PLC for the sake of local feelings. Therefore, Columbia Bank’s plan was finally won. pass. British Gas Group agreed to spin off British Gas from the group and sell it to Columbia Bank. British Gas Group will retain its own natural gas exploration, production, transportation, distribution and supply business, and only sell the British natural gas sales, heating, boiler and natural gas power generation business to Columbia Bank. The total assets of British Gas, which owns these businesses, are as high as 20 billion U.S. dollars, but Columbia Bank only paid about 5 billion U.S. dollars to win the company, which won a good start for Seryozha's British plan.
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