Chapter 117: Relief Pitcher
Lee Chang-jin asked.
“You’re suggesting that I acquire a beer company?”
“Yeonki Trading is a company built with a loan of 2.8 billion won from a state-run bank. Therefore, the government’s intention is to save the factory even if it means enduring some difficulties rather than letting it go bankrupt.”
Lee Chang-jin, who was listening to the bureaucrats’ explanation, responded in a slightly hesitant tone.
“First of all, I consider it an honor to be given such an opportunity. However, there are many large and medium-sized companies bigger than ours, so I’m curious why our company was chosen as the acquisition target.”
Director Lee Jae-guk of the Ministry of Commerce continued.
“After practical consultations between government departments and creditor banks, we selected companies capable of acquisition. The first condition was that it should not be a large corporation, the second that it should not be in the same industry, and the third that it should have the ability to revive and financial capacity.”
“We’re not the only company that meets those conditions, are we?”
“Haha, it’s like this. We first asked large companies like IB or Korea Beer, but both companies were reluctant to acquire, and no other acquirers appeared. So, the creditors proposed entrusting the fate to a capable young manager. Especially, considering the dedication you showed in the restoration process of the previous Iri Station accident, the government judged that you are the right person to be the relief pitcher for revitalizing the Masan area, where the beer company is located.”
“Thank you for the words, but it’s difficult to say anything as the liquor industry is different from our main business.”
“Haven’t you always taken on new businesses? If you can just revive it, the liquor business is the fastest in cash turnover. Just holding cash will help secure liquidity.”
Seeing how actively the government and the lending bank were encouraging the acquisition, it was clear that the situation was not favorable.
Nine times out of ten, other companies might have thought it more beneficial to acquire the remaining facilities after bankruptcy than to take over a heavily indebted company.
Lee Chang-jin also wasn’t very keen, but rather than refusing the proposal outright, he decided to hedge his response.
“Hmm… This is a sudden proposal for us, so we would appreciate it if you could give us enough time to make a decision.”
“Of course. Executive Vice President Oh Tae-sik here will provide you with all the materials Daese requires. We’ll understand it as giving you a chance to conduct due diligence on the premise of acquisition.”
“That’s a given. Thank you.”
Lee Chang-jin held daily strategy meetings regarding the acquisition conditions. Marathon meetings continued with executives and staff from Daese Industries, as well as senior officials from its affiliates, Daese Trading, Daese Construction, and Daese Textiles.
Since it was about acquiring an insolvent company, the review was thorough and based on practical benefits.
Based on the data provided by the main creditor bank, the due diligence team from Daese and Jin Seon-ah’s team from Daeheung Trading cross-verified the information.
“Have you confirmed the assets and management status of Yeonki Trading?”
“The headquarters factory of Yeonki Trading is in Sangnok District, Gyeonggi Province. The land area is 12,000 pyeong, the factory is 3,300 pyeong, and there are about 150 employees in total, with 100 in production and 50 in management and logistics. All the equipment is German-made, and they also have facilities to produce polyester-based products. Although there’s no dormitory, most employees are local residents, so commuting isn’t an issue.”
“3.5 billion won including machinery and land… The asset value isn’t much. How about the beer factory?”
“The beer factory is quite decent as it was newly built recently. The facilities alone can produce 4.1 million cases annually. However, the financial status is worse than expected.”
“How much debt are we talking about?”
“Just confirmed debts are 5 billion won. Besides the Industrial Bank of Korea, there are Jeonbuk Bank, Han Young Bank, Sehan Bank, and others. Loans from nearly seven banks total over 2 billion won. This means most of the listed stocks are held as collateral. They even forged deferred payment export contracts to obtain unsecured loans exceeding 3 billion won. We need to confirm the exact amount, but the real debt is around 10 billion won, putting it in a state of complete capital erosion.”
“A debt of 10 billion won. That’s quite significant. Can’t we negotiate with the government for debt relief?”
“It doesn’t seem that simple. Even with debt relief, the company has been shut down for over six months. The recovery and marketing costs, along with competition from existing beer companies, make it unlikely that reviving the company will be easy.”
The due diligence results leaned towards a negative decision. However, the final decision rested with the owner, Lee Chang-jin.
With the crucial decision of whether or not to acquire, he had to provide an answer within a few days.
‘Let’s take one last look before deciding.’
Still undecided, Lee Chang-jin decided to visit the beer factory in Masan and take a look himself. He felt uneasy about making such a decision without a direct visit.
As he entered the industrial complex by taxi, a song called ‘Masan Port’ played.
Unconsciously closing his eyes to the poignant tune, the familiar lyrics stirred something deep within him.
With an inexplicable frustration, Lee Chang-jin let out a deep sigh.
Unknowingly, he relaxed his body and leaned back.
“Wow, that sigh could sink the ground. Why are you so troubled?”
“It’s nothing.”
The elderly taxi driver with white hair muttered while looking at the rearview mirror. When Lee Chang-jin straightened his posture and replied with a smile, the driver, assuming Lee was just a company worker, muttered again.
“Even if the company is crap right now, you have to endure it to make a living. If you endure, better days will come.”
Though Lee Chang-jin’s mind was too preoccupied to converse, he asked again to avoid further assumptions.
“How long have you lived here, sir?”
“Me? I’m originally from Wando, but I’ve been living here for almost 40 years now. I’ve grown old here. But why ask?”
“They say it’s not easy to stay in your hometown.”
“True. But you have to make a living somehow. So, where are you from?”
“From Seoul. Actually, this place is my hometown.”
“You must have lived in Seoul for a long time. You look quite sophisticated. Where are you headed?”
“Turn left over there. Please circle around the factory fence.”
“Got it.”
The taxi driver adjusted his posture and responded. Although the due diligence team decided against the acquisition, and internal and external opinions were negative, Lee Chang-jin couldn’t shake off his lingering attachment.
As they neared the factory, the song about Masan Port ended.
Surprisingly, the beer factory, which was supposed to be shut down, had faint lights shining inside.
“Isn’t it supposed to be halted? Are there still people inside?”
“Those guys are persistent. That’s the factory manager and some staff. Even though the beer factory has been down for six months, they keep inspecting the machinery.”
Lee Chang-jin got out of the taxi and carefully looked inside the factory.
Through the main gate, he saw people indeed inspecting the machinery.
Curious, he looked around, and someone stepped out from inside, sensing his presence.
The person, a man in his mid-40s with a protruding beer belly, approached.
“You there, young man, what are you doing?”
“Excuse me, but I noticed the lights were on while passing by. May I take a look inside?”
“Oh, really? Sure, come on in. We don’t have an owner anyway. Since you’re here, have a look around.”
The man in work clothes let Lee Chang-jin in without much suspicion. Lee Chang-jin followed him inside, inspecting the equipment.
The first place the man guided him to was where they brewed malt and wort, the main ingredients of beer, and the fermentation tanks where yeast was added to the wort for fermentation. He saw a few workers in white uniforms frequently checking something under microscopes amid the bubbling sounds.
“What are they doing?”
Lee Chang-jin asked, showing interest, and the man replied.
“Oh, they’re adjusting the alcohol content. Yeast consumes the sugar in the wort, producing alcohol and carbon dioxide. If the yeast consumes too much or too little sugar, the taste changes. So, we check it daily.”
“Even though the company is shut down, the staff checks it daily?”
“We can’t make beer without yeast. We have to do our job thinking about the future. That way, we can justify ourselves when someone acquires the factory.”
“You’re very responsible. Are you an executive here?”
“Yes, I’m embarrassed to say I’m the factory manager. Although the factory’s operation is temporarily halted due to unfortunate circumstances, we can’t just sit idle.”
The factory manager still didn’t seem to know who Lee Chang-jin was.
Following the manager’s guidance, Lee Chang-jin toured the company, paying close attention to his explanations.
“Korean lagers are made using the high-gravity brewing method. We raise the alcohol content of the wort to 7-8 degrees before fermentation, then dilute it with carbonated water to 4-5 degrees before bottling or canning.”
“Why choose this method?”
“It’s cheaper compared to the original method. Korean consumers prefer the light and refreshing feel. Although the alcohol content rises during storage, the high alcohol content during storage allows for fewer fermentation and maturation tanks.”
As they walked inside the factory, he saw the pressing and filling machines rotating to fill beer into glass bottles.
While touring, Lee Chang-jin also learned about the factory manager’s background. The manager, Yoon Jin-sam, had been a brewer for 14 years.
Although he hadn’t majored in brewing, his passion for beer took him to Germany to learn brewing, which impressed Lee Chang-jin.
Indeed, he was a genuine brewer who had dedicated his life to beer.
“Given your dedication, I hope the factory finds a new owner soon.”
“Thank you for the kind words. Take care.”
The night breeze was cold but refreshing. Touring the factory brought a change in Lee Chang-jin’s perspective.
Before coming down here, his thoughts were leaning towards rejection. With so many tasks at hand, the sudden suggestion to acquire a beer factory seemed implausible.
But seeing the people devoted to their work without expecting anything in return made him think this opportunity might be a sign from above.
A few days later, during a follow-up visit to the factory, Lee Chang-jin conveyed his conditional willingness to acquire to the government officials and creditors.
“I will acquire it. But there are conditions.”
The officials, delighted by the acquisition, asked.
“What conditions?”
“A three-year grace period with a ten-year installment repayment. More than half of the principal and interest on the loans must be written off. If these conditions are met, we will seriously consider it.”
“Mr. Lee, those conditions are too stringent.”
“Acquiring an insolvent company where recovery is impossible with the principal and interest intact, our conditions are not excessive but minimal. According to the due diligence, even our staff are largely opposed. Without bold debt relief, bankruptcy is inevitable. Moreover, if the company is revived and Hanse Beer normalizes, the soaring stock prices will ensure the recovery of the entire loan amount.”
Despite the repeated persuasion by the creditor bank executives and government officials, Lee Chang-jin maintained his negotiation terms.
Time was entirely on Lee Chang-jin’s side.
Failing to prevent stock forgery connected to bank trust issues, if suspicions increased or employment issues arose, officials from relevant departments, creditor bank executives, and loan-related personnel might face collective resignations. Their livelihoods were on the line.
Especially since major bank presidents were heavily involved, the banks undoubtedly wanted to minimize the issue.
After a tug-of-war, Lee Chang-jin succeeded in getting his terms accepted.
After the detailed coordination, a signing ceremony was held at Baekje Hotel in Seoul.
- To be continued in Chapter 118 -
