Story of a Big Player from Gangnam

Chapter 890: Big Deal (1) – Part 1

It was December, but it still felt warm with all the natural lights coming through the windows in the office. There was a big announcement from the opponent party of Gongmyeong Party. They brought in a tycoon-level figure to their political party. That person took a tour all over the country giving a lecture to people while implying that he might run for next President.

It seemed that Gongmyeong Party’s Leader Jin-Woo Lee had to do something, not to lose the public support for him, to that new face in the opposing party. However, Jin-Woo Lee’s political party was quiet for now.

The very same day, Gun-Ho was offered with another shocking suggestion. It was again from A Group’s CEO Park at the planning and coordination department.

When Gun-Ho recognized the phone number from his ringing phone, he quickly answered it.

“Mr. President Goo? It’s A Group’s CEO Park. It’s almost the end of the year. As we are wrapping up the year, would you like to have a cup of tea with me?”

CEO Park was one of those people who often surprised Gun-Ho with an unexpected offer. Gun-Ho was curious about what he would bring to Gun-Ho this time.

“Where can I meet you? I can go to the Namsan Public Library where we met last time.”

“Well, let’s meet at Grand Hyatt Seoul Hotel across the street from the Namsan Public Library.”

“Okay, I can meet you at Gallery Café there then.”

“Instead of Gallery Café... I will reserve a hotel room for us. I will text you with the room number.”

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“Sounds good.”

After a while, Gun-Ho received a text message from CEO Park. He sent him a room number as he said he would. The appointment with him was set at 11 am that day. Gun-Ho should get ready to leave now if he wanted to arrive there on time. Gun-Ho asked Secretary Yeon-Soo Oh to ask Chan-Ho Eom to stand by at the building entrance with his car.

Gun-Ho went to the Grand Hyatt Seoul Hotel in Namsan, and he went straight up to the room that CEO Park asked him to come to. When he arrived at the room, its door was already open as if it was waiting for Gun-Ho, and all lights were on inside the room. Gun-Ho still knocked on the door before entering.

“Please come in.”

When Gun-Ho entered the room, CEO Park was sitting on the sofa by himself having a cup of tea.

“You came early, sir.”

“I just arrived as well. Well, please have some tea. It seems like we have red tea and black tea in this room, prepared for guests.”

As CEO Park offered tea, he pressed the button on an electric kettle to boil the water. The two men were sitting on the sofa waiting for the water to be boiled. They both didn’t say a word, letting silence fill the air. Gun-Ho thought that the room seemed to be a perfect place to have a private conversation without worrying about being interrupted by anybody. There were only two of them in the room.

“This room has a very nice view.”

One side of the hotel room’s walls was a large window wall. Gun-Ho could see Han River from the room. He thought that the view would be even more beautiful at night.

“You are right. This room has a great view.”

CEO Park poured hot water into Gun-Ho’s cup and said, “Dyeon Korea’s stock price fluctuated greatly after Mr. Hyeong-Woo Lee had joined the company, didn’t it?”

“Well, because of it, the company sold its stock at the highest price as an effort to calm the price down.”

“That’s right. I read the public announcement about it. The company’s major shareholders sold their stock 1 million each, right?”

“Right. After that, the stock price seems to be stabilized. It is now around 20,000 won per share.”

“What is the total number of shares issued so far?”

“It’s 26 million, sir.”

“That means that Dyeon Korea’s current market capitalization is about 520 billion won, right?”

“That’s about right. Dyeon Korea is a financially stable company with good business. It has no debt, and its sales are continuously increasing every year by 30%. If it was not classified as a theme stock, its stock price would still have increased that much after, say, 3 years.”

“The company is relatively a newly established firm. Given the fact, it’s amazing that Dyeon Korea is worth that much already. Congratulations.”

“In fact, drawing unnecessary public attention to the company as it became a theme stock was not what I wanted. We had decided to sell the major shareholders’ stock in order to diminish the loss that the little investors would have borne. That was one of the main reasons why we sold our shares.”

“I believe that Dyeon Korea is now loaded with good funds after selling the major shareholders’ stock.”

“We have now accumulated an additional 40 billion won. We haven’t touched any other major shareholders’ stock, but only GH Mobile and Lymodell Dyeon sold their stocks in an equal number.”

“I believe that a substantial amount of funds must have brought in when it initially offered its stock to the public as it became a public company, as well.”

Gun-Ho felt a bit offended by the statement made by CEO Park. It certainly didn’t give him a pleasant feeling to listen to a third person talking about his company’s funds in the reserve. CEO Park seemed to notice how Gun-Ho felt.

He said, “Haha. I’m just saying.”

“Well, that’s fine. It’s not like I’m trying to hide something here. We had made 15.6 billion won during the initial public offering, and we made an additional 40 billion won this time. So, we now have 55.6 billion won in cash. If I give you an accurate picture of the funds, the amount that we made by selling the major shareholders’ stock can be sent to each company— GH Mobile and Lymodell Deyon. However, the amount made from the initial public offering has to stay in Dyeon Korea.”

“That means that 20 billion won out of 40 billion won can be retrieved by GH Mobile as collecting its investment.”

“That’s right.”

Silence filled the air for a moment before Gun-Ho spoke again.

“I’ve thought about it. When there were problems with little investors, I reviewed the possibility of revoking our stock registration, because that could make profit-sharing more complicated.”

“Just like Denso Korea Automotive Corporation that did a joint venture with a Japanese company, huh?”

“Denso is generating a substantial amount of revenues, but it’s a private company. It hadn’t registered its stock with KOSDAQ. Was Denso Automotive ever a public company before?”

“Well, I’m not so sure about it. I don’t remember clearly.”

An awkward silence filled the air again.

‘I wonder what CEO Park has in mind. What does he want to tell me about? He didn’t set up this meeting with me by going to all that trouble reserving a hotel room, just to find out how much funds that Dyeon Korea currently has.’

After taking a sip of his tea, CEO Park said, “I remember what you told me before, Mr. President Goo. You said that Dyeon Korea’s shares are transferable according to the joint venture contract. You also said that if someone offers you to buy Dyeon Korea at a high enough price, you are willing to sell it.”

“Isn’t it obvious?”

“Are you still willing to sell your portion of the company ownership interest? Say, someone made an offer to buy your 32.7% ownership interest in Dyeon Korea with a very desirable price for you, would you sell your portion?”

“Wh, what? Oh, selling my ownership interest in Dyeon Korea?”

“Yes. The current market capitalization of Dyeon Korea is 520 billion won. 32.7% of 520 billion won is 170 billion won. That’s a substantial amount of money.”

“Well, I can sell my portion of the ownership, but the price doesn’t seem to be right.”

“How come? Dyeon Korea’s market capitalization has increased that high because its stock became a theme stock.”

“Think about it. The company has no debt at all, and it’s generating net earnings after tax of more than 10 billion won every year steadily. Since the company is constantly growing with its sales revenue, it will highly possibly generate even 100 billion won after 5 or 10 years from now. In addition, it is loaded with a significant amount of cash right now. It can expand the business too.”