477 M&A plan

According to the data provided to us by the Hunbei Municipal Economic Commission, as of the end of March 1994, the total assets of Hunbei Forging were 230.12 million yuan, the total liabilities were 102.52 million yuan, and the net assets were 127.6 million yuan. About half of the fixed assets belong to old equipment and old buildings, and if we want to make mergers and acquisitions, these old equipment and old buildings need to be renovated, and the residual value of the equipment is almost negligible. If the technical depreciation of this part of the old equipment is deducted, the net value of the muddy forging press is about 50 million. ”

This is in the small conference room of the Hunhe Hotel, He Fei, director of the strategic investment department of Hanhua Heavy Industry, introduced the basic situation of Hun Forging to Lin Zhenhua and others, and what they are discussing now is the merger and acquisition plan of Hun Forging. The Strategic Investment Department is a newly established department, and He Fei was appointed as the first head of the department after acquiring Nihon Heavy Industries.

"Does the liabilities include liabilities to the employees of the enterprise?" Lin Zhenhua asked.

He Fei said: "Including, just the arrears of wages, benefits and medical expenses that need to be reimbursed, there are more than 10 million yuan, which are borne by the Hunbei Municipal Economic Commission." ”

Ge Ying, assistant of the company's finance department, said: "In fact, some arrears can be completely canceled, such as heating fees, heatstroke prevention and cooling fees, etc., which are not expenses that enterprises must pay. The money has been in arrears for seven or eight years, and I don't think the workers would have any problem if we didn't bear it. ”

He Fei said: "There are indeed two schools of opinion on this issue. Like Xiaoge considered, it is recommended to cancel it directly. On the other hand, it is better to promise a repayment, which is not a high amount, and if we make up for it, it will help to increase the workers' sense of identity with us. ”

"I agree with Assistant Ge's opinion, there are some money that can be made up but not made, don't make it up yet." Huang Gang interjected that he had been assigned by He Haifeng to stay and work with Lin Zhenhua, with the aim of learning from the experience in the M&A process and promoting it to other investors in the future. Lin Zhenhua took a fancy to Huang Gang's careful thinking, so he was willing to take him to discuss the problem together.

"Tell me your reasons, Huang Gang." Lin Zhenhua said.

Huang Gang said: "My opinion is that the workers of the forging press have long formed a kind of thinking inertia and are accustomed to the big pot of rice. We want to merge and acquire a new salary and welfare system. In this case, if we admit too much about the old system, we may give the workers a psychological implication that we should continue to use the old system of distribution. As a result, we will encounter even greater obstacles if we want to implement the new system in the factory. ”

"However, if you don't pay back the money, the obstacle will be even greater." He Fei retorted.

Huang Gang said: "I'm not saying that all the arrears will not be repaid. For example, arrears of wages, medical expenses, etc., this is the money that belongs to workers by the state, and of course we have to pay it. However, such as heating expenses and heatstroke prevention expenses, which belong to the part of the benefits stipulated by the enterprise itself, there is no need for us to reissue them. In fact, after so many years of losses, the benefits outside the statutory should have been cancelled a long time ago, which is in line with the principle of linking treatment and efficiency. ”

"What Xiao Huang said also has a certain amount of truth, this problem, let's ask Mr. Lin to make a decision." He Fei said to Lin Zhenhua.

Lin Zhenhua thought for a while and said: "That's it, let's put this issue down first, we don't promise to make up those additional benefits, only promise to make up for wages and medical expenses." Even if this money is not made up all at once, but a part of it is made up first, telling the workers that the rest will be made up after the business conditions of the enterprise improves, in short, we cannot leave the impression that we don't care about money. ”

"I see." He Fei nodded, wrote down Lin Zhenhua's opinions in his notebook, and then continued: "According to the opinions discussed with the Hunbei City Economic Committee, Hunbei City agreed that we will invest 30 million to obtain the equity of Hunbei Forging 51, and the remaining 49 equity will be distributed to all employees of Hunbei Forging as compensation for the length of service of employees. After the completion of the merger, the wages of all retired workers will be borne by the Hunbei Social Security Bureau, and the 30 million yuan we paid will also be transferred to the Social Security Bureau as a pension fund. ”

"Oh, in the end, it's 30 million." Lin Zhenhua subconsciously responded, but he didn't expect He Fei to answer. Regarding the method of mergers and acquisitions, he has already negotiated with Hunbei City, but the specific amount has not yet been finalized. He Fei and his work team settled accounts and bargained with the Hunbei Municipal Economic Commission, and finally determined such a quota. ..., one of the highlights of this merger plan is to allocate state-owned equity to workers as compensation for their length of service. This is the idea put forward by Huang Gang, and once it was put forward, it was fully recognized by He Haifeng, Lin Zhenhua, and relevant officials of Hunbei City.

The restructuring means that the original 3,500 employees of state-owned enterprises have collectively changed their identities and become employees of joint-stock companies. Even if the enterprise has serious losses and cannot pay wages, everyone is not worried, because the enterprise is the state, and the enterprise owes everyone money, that is, the state owes money, which cannot be relied on. This is not the case with joint-stock companies, if the losses are serious and the company goes bankrupt, then the workers' jobs will be smashed, which is a serious matter.

It is precisely because of this that when many state-owned enterprises go bankrupt or restructure, they have to pay a sum of compensation to their employees, which is called "buying out the length of service." In fact, it is to spend money to redeem the initial lifelong commitment to the workers and push them into society. According to the interpretation of legal experts, buying out the length of service is equivalent to unilateral termination of the labor contract, which is a violation of the labor law. However, at that time, the labor law itself had not yet been promulgated, let alone strictly enforced, so the practice of buying out seniority was very common in the reform of state-owned enterprises at that time.

Hunbei City sold Hunbei City to Hanhua Heavy Industry, which is equivalent to pushing 3,500 state-owned enterprise workers out of the arms of the state, and the necessary compensation must be given. However, on closer examination, the background of the buyout of seniority is the compensation given by the state after the bankruptcy of the enterprise, the unemployment of employees. Since Hanhua Heavy Industry has taken over Hun Forging Press, and the workers are not unemployed, what is the basis for this compensation?

In this case, Huanggang proposed such a plan to replace compensation with equity, and the specific method is to distribute this part of the equity owned by the state to the employees according to their working years, wage levels, job positions, and other conditions, as the price of buying out the length of service. In the future, if employees continue to work in Hunforging, they can enjoy dividends with these shares. If the employee leaves, these shares can be redeemed by the enterprise at the agreed price, or the employee can resell them in the market according to the market price of the enterprise's shares. The agreed redemption price is comparable to the cost paid by other enterprises to employees to buy out their seniority, so the employees did not suffer losses in the process.

"Now let's talk about our earnings." After Lin Zhenhua understood the cost, he felt at ease, and at a price of 30 million, it was quite cost-effective to buy such a company. The workers in the factory and the technology accumulated over the years are treasures that money can't buy.

"The most valuable asset is 1,500 acres of land in the city. These lands were occupied by Yijing as early as the Republic of China, and the state did not pay for them, and the original value could not be found in the asset accounts of enterprises. During the negotiations, Hunbei City agreed to calculate the price of 20,000 yuan per mu, and the total price was 30 million yuan. However, according to our estimates, the land value of this location should be about 100,000 yuan per mu, and the value of this 1,500 acres of land should exceed 150 million yuan. He Fei said with a smile. As a minister of the Strategic Investment Department, he feels a sense of accomplishment to be able to take such a big advantage in the negotiations.

At that time, the real estate industry in the northern cities was still in its infancy, and there were only a dozen commercial properties in the entire Hunbei City, and the price of commercial housing was less than 400 yuan per square meter. Neither the government nor the developer recognized the value of the land, and the land in the factory area had not been spent on the money, so the municipal FU could not imagine how much the land could be worth.

However, in the south, at this time, the real estate boom appeared, and the real estate in Hainan and Guangxi Beihai was speculated to sky-high prices, and countless speculators became rich overnight, attracting countless funds to flow to these areas.

Lin Zhenhua said: "The account can't be calculated like this, we are buying a factory, not engaging in real estate." These 1,500 acres of land are our factory after all, and no matter how valuable they are on the books, we can't sell them, so the money is just a theoretical gain. ”

He Fei glanced at Huang Gang and motioned for him to speak. Huang Gang said: "Mr. Lin, Minister He and I have carefully inspected the factory area, and feel that there are 200 acres of land in its southwest corner that can be completely vacated for real estate development, even if it is to build ordinary residences, we can earn more than 50 million yuan by selling them at the current market price, which is enough to compensate for our investment." Lin Zhenhua pretended to be serious and asked: "Huanggang, did He Fei tell you that I am resolutely opposed to the company's involvement in the real estate industry." ”

Huang Gang nodded and said, "Minister He told me, I don't think there is a need to be too paranoid in everything. Being obsessed with real estate and utilizing real estate are two different concepts. At the appropriate time, doing some real estate development projects and recovering funds is also a means of business operation. As long as Mr. Lin doesn't focus on real estate, it doesn't matter. ”

"Hehe, you Huanggang, dare to say that I am paranoid! Are you leaderless? Lin Zhenhua scolded with a smile.

Huang Gang also smiled: "Mr. Lin, this is the style you advocate yourself, everyone is equal and speaks freely." You seem to be so outspoken when you talk to my mentor, right? ”

Lin Zhenhua said to everyone: "I knew that Huanggang was taking revenge on me for Director He." ”

He Fei smiled and said: "Mr. Lin, I agree with Xiao Huang's opinion, we can't concentrate on real estate, and we can't be tempted by the high profits of real estate, but the houses under our noses, it's not a big problem to build a few buildings, right?" It's just to facilitate the return of funds. ”

"No, you can't do it now." Lin Zhenhua said solemnly.

"Why?" Huang Gang and He Fei asked together, in their impression, Lin Zhenhua was not a very paranoid person.

Lin Zhenhua said: "Do you think, how much is the housing price in Hunbei now?" More than 300 square meters, still a good location. After 20 years, no, as long as it takes 15 years, I dare to guarantee that the hun forging will cost more than 10,000 yuan per square meter. If we build a house and sell it now, won't we regret dying at that time? ”

Huang Gang was stunned and said, "Uh...... Mr. Lin, why do I think you are more greedy than me. ”

Everyone laughed, Lin Zhenhua turned to the sealing situation from the machine tool company, and asked him: "Lao Feng, do you have any ideas for studying the product line of hun forging these days?" To develop new products, how much investment is needed, how much income is expected, and whether our business is cost-effective or not, ultimately depends on this part. ”

Feng is also a returnee, is a machine tool company recruited a few years ago CNC machine tool experts, this time is specifically responsible for the evaluation of the forging press from a technical point of view. Hearing Lin Zhenhua call his name, he lifted his glasses and said: "I have studied Yijing, the product line of forging is seriously aging, most of the products are the technology transferred by the Soviet Union in the 50s, the so-called new products, but on the basis of the old model has been improved a little, CNC technology is completely blank, such a product is definitely uncompetitive in the market." ”

"We all know that, what do you think?" Lin Zhenhua asked.

Feng said embarrassedly: "Mr. Lin, you also know that I was originally engaged in CNC machining centers, and I don't know much about forging machinery." These days, I raided some information and felt that if I wanted to replace imported CNC forging equipment, there should still be some market, but the profit margin was very low. The price of pressure machinery manufactured by some coastal township enterprises is very low, and the profit margin of Yijing is very small.

I asked Mr. Hu of the headquarters to help me calculate, if according to the current product series, we invest about 30 million yuan in equipment transformation and technology development, and occupy about 20 domestic markets in the future, that is, we can achieve breakeven. ”

Mr. Hu is the head of the planning and operation department of the group headquarters, and he is more expert in this kind of calculation. This time, he didn't come to Hunbei, but with the help of the information faxed to him by the seal, he was able to roughly make a more reliable calculation of the profits and losses of several plans.

"What's the use of light breakeven?" Lin Zhenhua said depressedly, "For such a large enterprise, the daily operating expenses are a large number. If we just go for break-even, the end result can be a net loss. After all, we are here to invest, not to do charity, and we must not do anything that does not make money. ”

"If that's the case, we need to think about developing new products, but I don't have a good idea yet." Feng said apologetically.

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