Pinch your fingers and count

It's been a year and a half since I returned from North America, and it's really gratifying that the original M&A plan has finally come to fruition!

Fortunately, Fischer was able to persuade the US shareholders to agree to bring in Australian funds to save the company from bankruptcy.

Relying on Li Fushou alone, it is difficult to complete difficult cross-border mergers and acquisitions.

Detroit Cargil Steam Machinery Co., Ltd. is a large and medium-sized enterprise with more than 1,100 employees, mainly producing steam machinery products for the European and American markets, from small steam engines for knitting and wool spinning enterprises to steam engine products for mining, and is a powerful enterprise.

Don't talk about technology, all of them are imported by European technological powers such as Britain, France and Germany to import mature production technology, and their own scientific research and development capabilities are very limited.

In recent years, European countries have been very lax in guarding against civilian patented technologies, wild boars with large loopholes can get into them, and the awareness of civil patents is not strong.

In terms of patent awareness, the Edison Electric Light Company, which was just established in the United States in 1878, is the predecessor of General Motors in the United States, which has applied for hundreds of patents since its establishment.

In the noisy and dark night of the town of Valle and Brisbane, the electric light products originated from the Edison Electric Light Company, which will not be repeated here.

Li Fushou took a closer look

The transoceanic letter from the United States, with a full set of transaction documents, and has been reviewed by the U.S. attorneys of Normandy Import and Export Company, the documents and process of the transaction are reasonable and legal, and there is no problem in this regard.

Founded in 1859 as a small workshop for repairing steam machinery, the Cargil Steam Machinery Company eventually became a powerful steam machinery manufacturer with millions of dollars a year at its peak.

Due to the strong players in Detroit's machinery industry, fierce competition, and serious product homogenization, Cargil went downhill after an initial period of glory.

After the sudden death of Cargil Sr. due to illness, the Cargil Steam Machinery Company was caught in a family property lawsuit and gradually declined.

In recent years, it has fallen into serious losses, with losses of US$2.76 million in 1876, US$45.54 million in 1877 and US$37.61 million in 1878, respectively.

From a financial point of view;

Cargil Steam Machinery Company is really terrible, with a debt ratio of 217, a foreign debt of $3.4 million, and the company's employees have been reduced from more than 1,100 at its peak to more than 430, and its production capacity has shrunk significantly.

As a result, the company's stock price has shrunk sharply, from a peak of $31 per share, with a total value of more than $1,700, to a current net value of 65 cents per share, with only hundreds of thousands of dollars remaining.

Since the Kargil family controls nearly 70% of the shares, the acquisition of the company, the children of the Kargil family are unable to get around.

Fortunately, the elder Fischer persuaded them that the Australian Red River Valley was willing to take over the 683 shares of the Cargil family for $5.66 million, and assume the corresponding debts according to the proportion of shares, completing this rare cross-border acquisition.

This price is very sincere, and it has a premium of nearly 80% compared to the current stock price of chicken feathers, which is the key to completing the transaction.

Privately

The Normandy Company has collected the shares of Cargil Steam Machinery Company 723 through various channels, and the two together reach 7553, with an absolute controlling stake.

Coupled with the 85 shares held by Fischer Import and Export Company, the third largest shareholder, Red River Valley and Fischer Company firmly controlled Kargil Steam Machinery Company.

The elder Fischer revealed in the letter;

In the warehouse of Kargil Company, a large number of small and medium-sized steam machinery is piled up, the number of which is as high as thousands of sets, and due to backward technology, it is seriously unsalable, and this part alone is worth millions of dollars.

Better a finger off than always aching.

After Phil Company takes over, it plans to sell these technologically backward products at half price and quickly return the funds for production.

The downside of this was obvious, as there would be a bigger hole in the company's books, and the losses in 1878 could be in the millions of dollars.

All things considered

It's worth it, and Cargil Steam Machinery has the potential to make a comeback.

The company has a full set of steam machinery production equipment, perfect small and medium-sized steam machinery production capacity, experienced workers, huge area of plant and wharf facilities and other fixed assets, the potential is considerable.

Enterprises on the verge of bankruptcy are like this, if there is no suitable successor, the high-value production equipment is all scrap iron, worthless, and can only go back to the furnace into molten iron.

The problems of the Cargil Company were the lack of suitable managers, the lack of capital injection, the serious aging of product technology, weak market competitiveness, poor sales channels, and the failure of the 1878 U.S. Navy ship power tender, with no revenue.

If there is a suitable receiver, inject a sum of money to update the equipment, and introduce the latest steam machinery technology in Europe today, it can revitalize the huge precipitated assets and rejuvenate this enterprise that has embarked on the road to the twilight.

Red River Valley and Fischer joined forces to take over Cargil Steam Machinery, which was definitely a beautiful home run.

The Red River Valley itself is home to iron ore mines, coking coal plants and coal mines that are in dire need of expansion, as well as a large number of factories and heavy industrial enterprises, making it a huge customer with a high demand for steam machinery products.

It itself is not sensitive to old-fashioned steam machinery products with high energy consumption, and it burns coal anyway, and its own coal mines are more sensitive to price.

It would be beneficial for both parties to get a large number of steam engines at half price.

Li Fushou thought carefully about it and signed his name on the legal documents for mergers and acquisitions, thus completing the last step.

The M&A will be paid by the Normandy company, and in addition to the $5.66 million that must be paid upfront to take over the 683 shares of the Cargill family, the corresponding transaction taxes will also be paid.

According to the arrangement;

Cargil Steam Machinery will apply for delisting from the New York Stock Exchange, and Red Valley and Fischer will acquire the investor's shares, and the company will be renamed Red Mountain Machinery Corp. with an 8:2 stake ratio.

Only after the completion of this process, the original Kargil Steam Machinery Company's inventory products can be sold at low prices, most of which will be taken over by the Red River Valley, and a small part will be sold through the channels of Fischer Import and Export Company, and the funds will be quickly returned.

The related party transactions of the delisted enterprises do not involve the transfer of interests, and will not cause disputes and lawsuits among the minority shareholders of the company, which is the main reason why it was difficult for Cargil Steam Machinery Company to take this measure in the first place.

Once the above steps are complete

Red River Valley and Fischer will join forces to inject millions of dollars to purchase advanced steam machinery production technology and equipment from Europe and the United States, update product lines and train workers, and other necessary expenses.

In this big deal, Li Fushou will pay a total of 2 million US dollars, including the funds for the acquisition of equity, take over a large number of outdated steam machinery with high energy consumption and inject up to 800,000 US dollars in cash flow.

Thanks to the lucrative coking coal deal, it is not difficult for Li Fushou to come up with this huge amount of money, but there is a relaxed mentality that the money has finally been spent.

After the Hongshan Coking Coal Plant was put into operation at the end of December 1877, the production capacity continued to expand, from an initial coking coal production line with an annual output of more than 70,000 tons, to the No. 2 and No. 3 production lines put into operation in May 1878, and the production capacity rapidly expanded to 220,000 tons.

As of early October

Production lines No. 4 and No. 5 have been ignited successively, with an annual production capacity of 400,000 tons, and production line No. 6 is still under construction and is expected to be ignited and put into operation by the end of the year.

As a sought-after product in the international market, Australia's high-quality coking coal has been supplied to North America, Fuso, Manchu and India and the Straits Settlements under the British Empire.

This is the only one

brought Li Fushou a huge income of millions of dollars, and was known as the richest rancher in Australia, which really surprised everyone.

In just three years, this young Chinese gold prospector has risen to prominence and developed a dizzying myth of wealth.

There are those who are red-eyed and those who are jealous, but everyone has to admire Li Fushou's outstanding talent and brilliant vision.

The world's first hydroelectric power plant was built, and this was the beginning of an extraordinary life.

Due to the unique topography of the Australian continent, there are few places suitable for the establishment of large hydroelectric power stations, and the Red River Valley is one of them.

Seeing this Chinese rancher making money like a sea of gold and silver, the white man said that it was false, and he was eager to get a piece of this coking coal feast, but after a round of inspection, he was extremely disappointed to find that he was disappointed;

Li Fushou's success is difficult to replicate, and the superior transportation conditions of the Red River Valley are simply irreplaceable.

The Australian continent has countless coal and iron resources, and what is lacking is the large amount of electricity necessary for coking coal plants, and there are two possible ways to solve the problem: thermal power generation and hydropower generation.

The conditions necessary for hydropower generation are demanding, such as a large enough gap for power generation, abundant water resources, and convenient transportation routes to bring large quantities of coking coal overseas.

The Australian continent is the flattest continent in the world, with mountains in the east, plains in the middle, and plateaus in the west.

The highest peak, Mount Kosciuszko, is 2,228 meters above sea level, and the lowest elevation is Lake Ayr in the middle of the continent, which is 16 meters below sea level.

On the mainland by the sea is a narrow beach with gentle slopes, gently sloping westward, gradually becoming plains.

Since the interior is mostly arid and semi-arid, there is no inherent possibility of hydroelectric power, and the only one is the coastal large watershed area.

The mountains are crisscrossed, the water is abundant, and there is enough drop before entering the coastal plain area to meet the innate conditions for hydroelectric power.

Located in the southeastern corner of New South Wales, Australia, it covers an area of about 6,900 square kilometers, with dense forests and raging rivers.

The region has the prerequisites for a reservoir and is also rich in coal, but the biggest problem is transportation.

How is the coking coal produced transported?

There is no navigable Brisbane River, and 10,000-ton ships can dock at the Valley Town Wharf and load their cargo directly to the North American or East Asian markets in exchange for a lot of wealth.

How to transport thousands of tons of coking coal, whether to build railways in mountainous areas, or to transport them out by horse-drawn carts?

There are indeed 10 rivers leading to the bay, but unfortunately because of the complex geological conditions of the mountainous area, none of them are navigable.

Hydropower is not going to work, and the only way to do it is to build thermal power plants, as in Europe and North America, to supply the large amount of electricity that coking coal plants need.

Thermal power plants can be built anywhere, but there is only one drawback, and that is expensive.

The cost of construction is expensive, the large-scale thermal power generation equipment is expensive, the operating cost is expensive, the production cost is expensive, otherwise, the high-quality coking coal exported by Germany would not be sold for $20 a tonne.

And a ton of steel produced in Germany is 234 US dollars a ton.

Therefore, Li Fushou is now the person that all white people in Australia envy and hate, and the coking coal plant is simply faster than printing money.

Envy to envy, envy to envy, all of them are useless.

Tens of thousands of Chinese are gathered in the valley town, and the Red River Valley also has a lot of armed capabilities, and the Chinese militia is so well trained that it is like a hedgehog that makes people unable to attack.

One word; It's become a climate.

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