Top of the big era

They were supposed to sleep at night, but it was still daytime in the United States, and Zhou Buqi was very energetic. This made Han Yan and Chen Yan suffer, and various tricks came alternately.

In the middle of the night, Zhou Buqi let them go, put on his pajamas and left the bedroom. I found Sun Wanran and Ning Lu watching a movie in the living room, and they didn't feel sleepy at all.

"Has the specific news from MGM been passed on?"

"Well, here we are! It's in the study room!"

Sun Wanran and Ning Lu stood up together and followed him to the study.

This is Teacher Han’s large flat floor. The area is not as big as the Zhou family’s villa, so you have to run upstairs and downstairs. Just after turning a corner, Sun Wanran said softly: "It's true. Warner offers US$1.5 billion to acquire MGM, including US$3.7 billion in debt."

Zhou Buqi twitched the corner of his mouth, "The price is too low! It's strange that others can sell it!"

Sit down and look at the material.

Ning Lu has sorted out some documents and translated them into Chinese. Zhou Buqi can also read English materials, but it is still easier to read them in Chinese, with ten lines at a glance.

It turns out that this is related to last year’s subprime mortgage crisis!

Last year, the subprime mortgage crisis broke out and had a serious impact on the banking industry. Many large banks went bankrupt due to rupture of capital chains and runs, or were packaged and sold.

In order to withdraw funds and survive the crisis, many banks have to sell financial assets at low prices to survive!

For example, last year Zhou Buqi and Xu Baihui launched a wave of "platter investment" business in Hollywood. In fact, they bought their movie platter shares at low prices from major financial institutions.

Banks and financial institutions got the cash, and Jieyu Media got shares, including classic film series such as "Avatar," "Fast and Furious," and "The Twilight Saga."

So did MGM's creditors.

Last year, two hedge funds bought all of MGM's debt at 50 to 60 cents on the dollar, spending a total of $1.7 billion. The reason for making this investment was because they concluded that MGM could no longer pay its debts and would go bankrupt.

Once MGM goes bankrupt and reorganizes, it must use a debt-for-equity swap model to convince creditors.

At that time, MGM's existing shareholders will be deprived of all their shares, and creditors will own 100% of MGM. In other words, they only need to spend US$1.7 billion to own this established Hollywood giant that the Sony consortium spent a full US$4.8 billion to acquire four years ago.

This level of bargain hunting is much better than Zhou Buqi.

Zhou Buqi plays with foresight, and he really relies on his keen insight into the capital world to complete the bargain hunting. Zhou Buqi called an investment consultant named Ericla who was responsible for capital operations and told him about it.

He feels like he has a good chance!

The two hedge funds were betting that shareholders would give up on MGM and would no longer inject capital or assume debt for MGM, causing MGM to go bankrupt.

If someone takes action at this time to help MGM survive the bankruptcy crisis, then the hedge funds' plans will be in vain. The $3.7 billion in debt may be difficult to resell, and they will only be able to collect about $250 million in interest from MGM each year.

This way of making money by slowly collecting interest is obviously not what hedge funds like.

At that time, Zhou Buqi will have the opportunity to package up the debt in their hands at a price far less than 3.7 billion US dollars. Taking over MGM's debt is equivalent to owning MGM.

Sure enough, Ericla confirmed this idea. Next, it depends on whether MGM's shareholders are willing to continue to contribute money to help MGM tide over the difficulties.

If they are willing to pay, there is nothing anyone can do about it. They are the actual controlling party of MGM.

But with the current economic situation, it’s impossible for them to pay.

MGM was already insolvent.

This is a bottomless pit.

Ericla continued: "Now, MGM has received a total of two acquisition bids, one from Time Warner, they invested US$1.5 billion. One is from Lionsgate, they invested US$1.8 billion."

Zhou Buqi asked: "Why is the price so low?"

Ericla smiled and said: "Actually, it depends on the coordination between equity parties and creditors. For example, Time Warner invested US$1.5 billion. The specific operation process is to acquire all shares from MGM shareholders at a price of 0 yuan. Buy it, and then buy the debt from creditors for US$1.5 billion. If it really goes to bankruptcy and liquidation, an additional US$200-300 million may be wasted on asset restructuring, which will cause huge waste. ."

Zhou Buqi said with a smile: "They spent 1.7 billion US dollars to buy the debt, and they are waiting to make a fortune. Time Warner wants to buy it for 1.5 billion US dollars? Bargaining other people's bargains? You really know how to think!"

Really amused.

This is already the second time.

Last time it was EMI.

The creditor of EMI Records is Citibank. There has been news before that Time Warner will invest in buying Citigroup's debt, and then wait for EMI to go bankrupt, thereby achieving control of EMI Records and completing an ultra-low-price acquisition.

If done, this will become a very classic case of capital operation.

But here comes the question, why should Warner?

Is it too much to think about using capital operations to suck blood from Citigroup and hedge funds?

In comparison, Lionsgate’s offer is quite realistic.

$1.8 billion.

Others bought the debt for US$1.7 billion last year, and Lionsgate took over it for US$1.8 billion, leaving a profit margin of US$100 million...

How ridiculous.

I don’t know whether the people in Hollywood are smart or stupid. They are a little too self-sufficient and want to cut off the capital from Wall Street and steal the bottom line of capital.

For Zhou Buqi, he felt relieved.

It is impossible for MGM and creditors to accept the offers offered by Warner and Lionsgate.

Zhou Buqi asked: "When will our acquisition plan be produced?"

Eric La said: "The team is working hard to conduct further statistics and evaluation on MGM's finances, and strive to report the plan to you within a week."

Zhou Buqi asked again: "What is the current financial situation of MGM? Has it been found out?"

Ericla smiled and said: "Well, I just learned that it is very serious! Very serious! Just this morning, MGM held an emergency meeting of creditors. They have to repay US$250 million in debt interest this year, and they are still short of US$150 million. The funds are used to maintain the film shooting plan, and they can no longer even come up with the US$20 million needed for short-term capital turnover. It is said that they intend to borrow another US$300 million in debt, pushing the debt to US$4 billion, to tide over the current crisis first and retain It will take longer to complete the sale or reorganization of the company."

Zhou Buqi frowned, "We must find a way to stop them!"

Ericla was stunned for a moment, "How to stop it?"

Zhou Buqi was very decisive, "It's already this time, why are we still making movies? All MGM's production plans have been suspended! Then, we paid US$20 million in advance to help them survive the current crisis."

"Advance payment?"

“Compensation Clauses with Regulatory Review.”

"this……"

Ericla was shocked and very surprised.

Acquiring a large company like MGM requires regulatory review. During this process, the acquirer and the acquired party will sign a compensation agreement.

If the deal is not approved by regulatory authorities, the acquisition will fail. The acquirer has to pay a compensation of about 2% of the total transaction amount as compensation to the acquired party.

In other words, if "Purple Star Global" acquires MGM for a total price of US$2 billion, it may have to sign a compensation clause worth US$40 million.

Once the acquisition fails due to lack of regulatory approval, MGM will be compensated with US$40 million.

This is a common practice in capital operations.

But the problem is...

At present, Eric La's team has not fully understood MGM's financial situation and debt situation. It will take nearly a week to sort out all the rules and regulations.

If you don’t even understand the financial situation of the acquired company, how can you proceed with the transaction? The more detailed your due diligence is, the lower the risk. What if MGM is hiding some financial catastrophe? If this was not discovered before the acquisition, it would be a disaster!

Just like when many state-owned enterprises go for overseas acquisitions, after the acquisition is completed, they are horrified to discover various minefields and get tricked again and again. In name, the transaction failed, but in fact it was a loss of state-owned assets.

Ericla was a little worried, "Isn't this...a bit hasty?"

"No matter what, we must buy MGM! There are two ways to go together. Pay the advance payment first, and don't let MGM borrow any more debt. It's too embarrassing. We must also try to complete the due diligence as soon as possible. There are so many people in the advisory team. Hollywood veterans, I believe MGM doesn’t dare to lay a trap on them. Just do it!"

Zhou Buqi had the foresight to know that there was no minefield at MGM.

In its previous life, MGM went bankrupt and reorganized smoothly a year later. Then it filmed "007" and "The Hobbit" and turned around in one fell swoop until it was acquired by Amazon for $8.5 billion ten years later.

Today, MGM is considered by the industry to be worth no more than US$2 billion and has room for growth of four times.

This is still the result of the previous life.

If Zhou Buqi takes charge of MGM, he feels that he can run MGM better!

At least the development of the "Hobbit" series was too stupid and made a lot of money, but most of the profits fell into Warner's pockets. This is not okay!

…

Airport, go to the capital.

Han Yan and Chen Yan were stunned.

Changed plane!

"Let's go." Zhou Buqi pushed them both behind him, a little funny, "It's not the first time to fly on a private plane, are you still nervous?"

Han Yan got on the plane in a daze. She felt that the plane was spacious and spacious, and the layout was like a mansion at home, including a bedroom.

Chen Yan said weakly: "You...you changed planes?"

Zhou Buqi said: "It doesn't count. That plane will fly domestically from now on, and this plane will mainly fly international flights. Use both planes together. Come on, let's go to the bedroom and shake off the plane."

Han Yan didn't understand, "What's the meaning?"

Zhou Buqi said: "Didn't I take you two through the car shock? Wouldn't it be more exciting on the plane?"

"Goodbye," Han Yan bit her lip, not wanting to rely on him, so she leaned over and whispered softly: "Master, don't always think about playing with women. It's time to take a rest and pay attention to your health."

Zhou Buqi said: "I like playing with you two."

Han Yan advised softly: "If you like playing, you should stop playing in moderation. Be obedient and take a rest. Don't be too tired."

Zhou Buqi hesitated for a moment and looked at Chen Yan, "Teacher Chen, what do you think?"

Chen Yan pursed her lips and said: "Aren't we going to England in a few days? It will take more than ten hours to fly, right? Let's talk about it then. It's so close to the capital and we'll be there in a while. It's really fun and I don't have enough time. "

Zhou Buqi thought deeply, "Well, you're right, let's talk about it later."