Chairman Jang Young-joo set aside his pride. Believing that Chairman Kim Tae-jung was the only one who could save Hyundai Group now, he approached with complete humility.
"Without the help of Tae-woo Group, Hyundai Group cannot survive. Please acquire Hyundai Semiconductor."
"I wish that were possible, of course, but the moment Tae-woo Group acquires Hyundai Semiconductor, Tae-woo Group itself could collapse. I can't let Tae-woo Group perish trying to save Hyundai Group. The debt of Hyundai Semiconductor is a staggering 16 trillion won. How can we possibly take it over?"
The debt of Hyundai Semiconductor was at its worst. Thanks to emergency injections from the government and banks, it was hanging by a thread. Chairman Jang had only recently come to fully understand the situation.
"If you just decide, I will personally try to persuade the creditors and the government. If we can reduce the debt as much as possible, wouldn't Tae-woo Group be able to manage it?"
"If the condition is to repay 25% of the debt, I will try to acquire Hyundai Semiconductor. But I doubt the creditors will accept such terms."
Twenty-five percent of the debt. This was not a decision by Chairman Kim alone. The vice-chairman, Tae-woo Securities, and the planning office all gathered and held long meetings to set this acquisition condition for Hyundai Semiconductor.
"That is a difficult condition to accept. No bank would accept it."
President Lee Soo-hyun of Korea Exchange Bank opposed the proposal. Korea Exchange Bank was the largest creditor and major shareholder of Hyundai Semiconductor. That was why Lee attended the FKI meeting as the creditors' representative and voiced the interests of the other banks.
"I will directly request help from the government. Let's find a way for both Hyundai Group and the banks to survive."
"Even with government assistance, reducing the debt by 75% is nearly impossible."
"Even so, we can't just kill Hyundai Semiconductor. If it collapses like this, the banks will suffer as well."
Even getting 25% of the amount was an opportunity. With government assistance and support from Hyundai Group, they could roughly recover about half the amount.
But what if Hyundai Semiconductor truly collapsed? Being a semiconductor company losing over 2 trillion won annually, even foreign companies were reluctant to buy it. On the other hand, if the creditors managed Hyundai Semiconductor, they would have to bear the full 2 trillion won losses.
"This is not a decision I can make alone. I will convene a creditors' meeting to discuss it."
"I will step in to secure as much government help as possible. Also, Hyundai Group will try to raise funds as much as possible."
"If a good decision is reached, I will positively consider acquiring Hyundai Semiconductor."
Chairman Jang Young-joo, struggling with his weak body, grabbed Chairman Kim Tae-jung's hand. Kim gently stroked the frail hand several times, trying to reassure Chairman Jang.
***
It was past 10 p.m. when Grandpa finally returned home. He seemed drained, his steps heavy from the grueling FKI meeting.
"The meeting went on for quite a while. Did it go in the direction you wanted?"
"I don't know. Chairman Jang personally came to the meeting to persuade the creditors, but I'm not sure if we can get a 75% debt write-off."
The basics of negotiation were always about driving the price down. That way, they could play hard to get from a favorable position and buy at a decent price.
"If the creditors agree to write off a little over 70% of the debt, then you should proceed with the acquisition."
"Do you think the banks can tolerate that much of a write-off?"
"They have no choice. The creditors will try every possible method to sell Hyundai Semiconductor, but who would acquire a company that is deep in the red? They'll have to settle for recovering even just 30%."
Banks were never a push-over. They would try every method to minimize losses. But no other options would come up, and the creditors would have to reach out to us first.
"Hmm, that will take quite some time."
"Drag out the time, and it's a fight on our terms. The deficits will keep piling up."
"But is it really okay for us to acquire Hyundai Semiconductor? It loses over 2 trillion won yearly."
"That level of loss is manageable. Besides, it won't keep losing forever; we only have to endure for a few years. We have already researched ways to revive Hyundai Semiconductor."
"Hearing that is reassuring."
Though the semiconductor industry had fallen into the abyss due to the IT bubble burst, eventually, profits would return if they just endured. And I even had a plan to shorten that endurance period.
"What about Hyundai Construction?"
"It will probably go to Chairman Jang Kyung-jun of Hyundai Motor Group. Chairman Go of CL initially opposed it, but Chairman Jang Young-joo stepped in and gained his understanding, so the acquisition process should proceed without major problems."
Chairman Jang Young-joo's appearance was something even I hadn't expected. The emergence of a variable is never welcomed, but this time, it was a great help.
"Chairman Jang personally untied the tangled knot."
"What kind of hardship is that in my later years? Tsk, tsk, tsk. That's why you have to pile up money in the group. You never know when you might end up in such a mess."
Grandpa had changed a lot over the years. Before the financial crisis, he used to say debt was a form of capability and focused only on business expansion. But now he acted more cautiously than I did.
"Having too much money piled up can cause problems. That's why we plan to conduct stock buybacks and cancellations."
"I heard the CEO of Tae-woo Securities say that. We need to defend the stock price, so I told him to do it, but I also said there should be a certain level of reserves kept."
"As for me, I want to secure as many shares as possible during this opportunity. That way no outsider can shake Tae-woo Group."
"More importantly, wouldn't it be better to finish the inheritance procedures this time? If you transfer shares when the stock price is down, you can reduce the inheritance tax."
The inheritance tax was a worry. Since 50% had to be paid as tax, they would have to pay at least several trillion won in inheritance tax.
"If it becomes known that Tae-woo Group is acquiring Hyundai Semiconductor, wouldn't the stock prices of all affiliates drop? It would be better to proceed when that happens."
"Ha ha, you brat! No matter what, shouldn't you say 'thank you' even if it's just lip service?"
"I'm always thankful to have been born as your grandson."
"That's the spirit. Then after all the inheritance procedures are completed, we'll start buying back the shares."
I responded with a smile. No matter what I said now, I'd just be the bad grandson aiming for Grandpa's fortune.
As the warm atmosphere continued, Grandpa cleared his throat and quietly started speaking.
"Hmm, there is indeed a way to drastically reduce inheritance tax. By establishing a public foundation or inheriting assets through art purchases, you can cut the inheritance tax by more than half. What do you think about that?"
"I don't want to go to prison hand-in-hand with you, Grandpa. Paying inheritance tax of several trillion won is far better than spending one or two years behind bars. Money can be earned again, but time cannot be reversed."
"Ha ha, did you just call several trillion 'far better'?"
"If you are the grandson of Grandpa, you should be able to handle that level of honesty."
I had seen several business tycoons go to jail over inheritance tax issues. It might not be a big problem now, but someday it would inevitably become one.
"Right, at my age, I can't go to prison either. But I will do my best to find tax-saving methods. Shares can't be helped, but I'll buy real estate with the cash assets and pass them on. Since property prices have dropped a lot now, that should help reduce inheritance tax somewhat."
"Thank you."
Honestly, I wanted to tell him not to try so hard. I had more wealth than Grandpa did. Compared to the funds in the SAVE investment company, Grandpa's fortune wasn't that large. But what else could I do? For Grandpa's dignity's sake, I had to remain respectful.
***
The first day of November.
For the first time in a while, key figures all gathered in Captain Kang's office. Not only Dimon, but also Team Leader Han, in charge of SAVE investment company, and David had come to Korea.
"The situation of Hyundai Semiconductor is getting worse. The creditors are trying to sell it not only to the U.S. but also to Japan and China, but there's little interest. Those who show interest want to buy it at an extremely low price."
"That's an expected outcome. Who would want to acquire a company losing 2 trillion won annually?"
"Through SAVE investment, we've been blowing the wind that Hyundai Semiconductor will collapse if acquired. The rumors originated from us. Team Leader Han spread it via SAVE, and David, with his vast network, rapidly disseminated the rumor."
"You're doing well. Oh! Also, we should drop the stock prices of all Tae-woo Group affiliates."
"SAVE investment could dump Tae-woo Group's stocks all at once to drop the price, but is there a reason to do that?"
"For inheritance tax reasons."
"...Understood. When you signal, we'll drop the stock price."
Team Leader Han's eyes narrowed. His look seemed to say, "The more people you have, the worse it gets." I deliberately looked away and caught David's eyes.
"Boss! You should come to the U.S. sometime."
"For the presidential election?"
The U.S. presidential election was held this week. Since the gap between Democratic and Republican candidates was in the single digits, it was unclear who would become president.
"If Bush is elected president, shouldn't you personally send congratulations, Boss?"
"Of course. Please set up the appointment."
"But what if Bush doesn't become president? Some polling agencies favor the Democrats, others the Republicans. If Bush loses, won't SAVE investment and you suffer damage?"
"We'll deal with that when the time comes."
I wasn't worried at all. I already knew who would become president. Moreover, since I had provided massive funding support, Bush's chances of winning were higher than before the rewind.
"I'll go ahead and schedule the appointment."
"And since I'm going to the U.S. anyway, I need to handle other matters. I'm thinking of acquiring shares of Qualcomm."
"Qualcomm? The company that makes semiconductors for mobile phones? Their stock halved due to the IT bubble burst. The stock price keeps falling in real-time, too."
Qualcomm's stock dropped almost 80% due to the IT bubble. Considering before the rewind, the stock would likely fall further for the next two years. But the moment the iPhone appeared, the stock price was certain to soar, so securing shares now was necessary. Qualcomm's technology was also essential for normalizing Hyundai Semiconductor.