Chapter 34 Don’t Be Afraid, Keep Going (3)

After hearing these powerful words, Antonio and Leo stopped talking. They now understood Contini's mentality: he would rather spend 100 million US dollars on oil guards and support Algerian tribal armed forces than to The French bowed their heads and gave up $50 million. This is not the rational behavior of a truly mature entrepreneur, but it is the pillar for a politician to gain a foothold in the political arena.

You can lose money and lose money, but you can't lose the battle! Should French politicians risk losing public support and give it a try?

The investment of 3.5 billion lire and the loss of 800 million lire were taken as a heavy bet!

"Okay, I understand what you mean." Leo sighed, "If this is the case, the credit budget can be adjusted - with this 1.1 billion lire as a basis, our loans can be reduced by 1 billion (100 million is (to cope with the expenses of the Dante), and then the net assets can be increased by 1.1 billion at the end of the year - so the total assets are 19 billion, the net assets are 5.1 billion, and the debt ratio is a little more than 73%. Although it is considered on the high side, it is basically within the controllable range. …”

Leo quickly handed the adjusted debt and credit structure to Contini for review: It is estimated that the United Group will have new loans of 7 billion in 1926, of which 2 billion lire will be the issuance of 100 million US dollars of 5-year corporate bonds through Wall Street. The interest rate is 5%; another 3 billion lire is used for debt financing from the U.S. banking system, with an annual interest rate of 4.8-4.9%, and a term of 3 years. The other 2 billion lire is issued domestic corporate bonds, with a lira standard and a coupon rate of 6%.

In this way, in the overall debt structure of the United Group, the Italian banking system issued approximately 5.5 billion lire in credit, the US banking system issued approximately 3.4 billion lire, domestic bonds 3 billion lire, and foreign bonds 2 billion lire, making up a total of 13.9 billion lire Due to the uneven investment progress, the overall debt structure will show an upward trend from low to high. The only good news is that high-interest loans borrowed in previous years will gradually be replaced by bonds with relatively low interest rates - United Group The annual debt interest and preferred stock dividend payments are almost 800 million, and every 0.1 percentage point reduction in comprehensive credit costs can involve tens of millions of liras in expenses.

"Next year, the available funds will be approximately 10.3 billion, of which 1.6 billion will be allocated for the military. Construction projects are expected to be 5.6-7 billion - 6.3 billion will be taken at a discount, 800 million for interest expenses, and 200 million for CEO mobility expenses..."

Contini waved his hand: "Project expenditures are calculated based on the maximum, and there may be additional ones. The military will also have a separate flexible budget of 200 million lire, and the president's mobility fee will not be touched."

"In this way, the capital plate will use up 9.8 billion, and there is still room for 500 million... there is very little room for maneuver." Leo sighed, "Unless we find new sources of funds or save expenses, even if we can survive next year, we will not be able to survive the year after There will definitely be contraction.”

"You don't have to be so pessimistic about next year." Contini turned around and said, "Uncle Antonio, after the British (Iranian) company took a stake, are the negotiations on Shell still continuing?"

"It's still going on, but Shell seems to be waiting for the struggle between us and the French government. They want to buy it at a lower price. I offered 55 million US dollars and 10 points of shares, but they were only willing to offer 45 million."

"Since there is a lack of sincerity, let's suspend the negotiations and tell them after I announce the oil pipeline plan. The price has been raised to 65 million, which is too much to buy!" Contini smiled. "You should be more conservative. The credit will be renewed next year." Add 2 billion lire, but don’t raise money domestically, issue bonds in the United States, and expand the amount from US$100 million to 200 million!”

"This... I'm afraid the collateral is not enough."

"It's not enough, you forgot two things when you were doing your budget plate estimates, one is the increase in my shares in the stock market and the other is the Libyan oil fields."

"Libyan oil fields?" Leo was startled, "You mean?"

"Do you really believe that Libya only has this little oil? If so, then you have been fooled." Contini laughed. "I can tell you that the reserves buried in the Libyan oil fields will be more than those in Algeria! The reason why I I chose to report lower at the beginning because I was worried that too much reserves would trigger coveting from the British. Now that the army's two divisions are in place, and the oil guard will be released after the spring, we can mention it higher, for example, double the size. Increase the recoverable reserves from 500 million barrels to 1 billion barrels, so it is logical to issue bonds.”

"But this will create oversupply in the market, which in turn will suppress the valuation of Algerian oil."

"Then we need to take some other measures." Contini thought for a moment, "Allocate part of the additional 2 billion lire to build oil reserve bases: Genoa, Venice, Milan, Parma, Bologna, Naples, Livorna, etc. 7 New underground storage bases in each region are required to have a reserve capacity of no less than 10 million barrels; if possible, we will purchase some land in Austria and Germany to build new storage bases, and strive to build 7-8 warehouses.”

"Why is Germany building a warehouse?"

Of course, Contini would not tell the whole story about his true purpose, and shied away: "The German Treasury allows German refineries to refine it nearby and sell it back to the country - I found that land prices, transportation prices and even labor prices in Germany are often lower than ours. It should be Profitable. Regarding the oil reserve, it is a big gimmick. Let’s say that in the first phase we plan to store the oil required by Italian industry for 90 days, in the second phase it will be 180 days, in the third phase it will be 1 year, and in the fourth phase it will be 2 years - - After the overall completion, Italy can support it even if it is cut off from oil for two years. Germany’s consumption is higher than ours, so it will only prepare for one year, and the construction period will not start until the fourth phase, that is, after 1933.”

If there is a traveling public, you can tell at a glance that this is clearly a posture preparing for war - which country is prepared to store oil for two years? Too much money to burn? In addition, the construction of the German storage base will not start until 1933. This is deliberately intended to improve the political performance of the head of state. By then, the employment of the new facilities can create tens of thousands to hundreds of thousands! It’s definitely a big favor!

"The second supporting measure is to consider establishing an oil stabilization fund. The United Group will take the lead in organizing domestic and American banking syndicates to coordinate. Based on the Genoa CIF price, we will be open to purchase when the oil price is lower than 1 US dollar, and will be purchased when the oil price is higher than 1.25 US dollars. Sell ​​to prevent the oil price from rising and falling..." Contini smiled, "By the way, we can also go to the spot market to harvest a wave. The announcement of the discovery of the Libyan oil field will definitely suppress the price. Then we can establish a long order, build up the position, and then sell it. Good news! - This time we will do the opposite and go long! At least we will make a profit on the Dante!"

Leo smiled bitterly and shook his head: "You are now very skilled in using the capital market to speculate... To be precise, you have begun to manipulate price formation."

"Try it out, try it out, no matter how hard you try, you won't lose much money..." Contini thought to himself: I'm just testing it for future speculation.

After a busy day of work, the budget table was finally adjusted to total assets of 21 billion lire, net assets of 5.9 billion lire, debt ratio maintained at 70-72%, annual expenses rising to 10.7 billion, and mobile funds remaining of 1.6 billion, which is relatively speaking. It's relatively comfortable.

After the financial accounts are balanced, the economic work conference can be held.

On the first day of the work meeting on January 29, His Excellency the President made an enthusiastic report and expressed extremely optimistically: "...This year we have lost 1.24 billion lire. This is a big number. I don't deny it, but I would also like to mention the achievements:

With this 1.24 billion loss, we completed three urban dedicated lines in Genoa, Milan and Rome, and are currently building an extension line from Milan to Genoa;

We have launched high-speed railway lines in the main industrial belt of northern Italy, road and railway construction lines in North Africa, and launched port dredging and expansion projects in Tripoli and Benghazi;

We have completed the infrastructure construction of United Steel and United Chemical, and will start installing equipment next year and strive to complete trial operation in October;

United Construction has completed the construction of 17 major cities across the country as well as two overseas sea and air bases in Tripoli and Benghazi, opened 7 civil aviation routes and completed the safe transportation of 200 people;

United Real Estate has constructed more than 3.8 million square meters of housing and commercial buildings, including 40,000 housing units and 3 commercial complexes;

We have basically completed the construction of the first phase of new workers' villages in Milan and Rome. More than 15,000 households of United Group employees live happily there, enjoying modern facilities and services such as running water, piped gas, electricity, and telephones. The communities have commercial, There are entertainment, cultural and educational facilities, and thorough security and security. Every employee of the United Group yearns to live in this new workers' village;

We have completed the rectification of the small and medium-sized financial industry across the country, and Union Bank has become the third largest bank in Italy;

We discovered the Libyan oil fields and the Algerian oil fields, and Italy suddenly became a strong competitor in the European oil market from an oil-poor country that everyone laughed at;

We have completed the review of the national defense system, and United Defense has become the third largest defense supply company in the country;

We helped the government resolve its arms burden and played a major role in the Corfu incident;

In other fields such as culture, education, scientific research, and services, we have also achieved remarkable results...

These investments and losses are shocking when viewed in isolation, and doubly encouraging when viewed in terms of actual results. In my eyes, what's the loss? It is clearly a reflection of the rising strength of the United Group and the overall improvement of Italy's national strength! All are high-quality assets! All are projects that benefit the people! All are key foundations for future development! "

applause! Warm applause!

Contini paused and continued: "All these achievements are the result of the hard work of the company's management and the joint efforts of the 300,000 United Group employees. They are a vivid portrayal and annotation of United's speed! It fully demonstrates that the Group is wise and wise. Under the leadership of the leader, guided by the three flags and Fascist strategic thinking, we have sincerely united, forged ahead, and worked tenaciously, and we have written a mark on the road to the comprehensive realization of the great rejuvenation of the Roman Empire. I believe that history will definitely remember us. The contributions we have made, future generations will definitely be proud of our efforts today!

Facing 1926, the core management has decided to increase investment by another 40% based on this year! I have only one thing to tell you: Don’t be afraid, keep going, the dream of chasing victory will never end! "

Everyone stood up and raised their right hands to salute: "Long live victory!"