Chapter 922: Gift (2) – Part 1
Chapter 922: Gift (2) – Part 1
In the Romance of the Three Kingdoms, the state of Shu Han’s Zhuge Liang and Wu’s Zhou Yu presented their war strategy by writing it down on their palms, and showed it to each other. They were fighting against Cao Cao’s army at that time. When they each showed his palm to the other, they figured that both of them had written the same word, "Fire." They both thought of the same strategy for the Battle of Red Cliffs. As they were surprised by knowing that the other person was thinking about the exact same tactics, Zhou Yu determined that he would have to kill Zhuge Liang later because Zhuge Liang seemed to be so smart that he might be a threat to him in the future.
Just like Zhuge Liang and Zhou Yu in the Romance of the Three Kingdoms, Gun-Ho and President Song opened their palms and showed it to each other. They both wrote the same word, "Building." They looked at each other’s faces with a surprised look. President Song said, "I am so impressed, sir."
Gun-Ho laughed and said, "Mr. President Song, you are an amazing businessman. You are indeed one of the best strategists in this industry."
"Am I qualified to be your Zhang Liang, sir?"
"You are more than qualified, Mr. President Song."
At that moment, Secretary Hee-Jeong Park brought two cups of green tea to the office. While having his tea, President Song said, "GH Mobile currently has a debt of 35 billion won. Since we used the proceeds that we made from the Dyeon Korea acquisition in distributing dividends, we will be able to use our operating income to pay some of the debt this time. We will use 5 billion won to reduce our debt, so GH Mobile’s debt would be 30 billion won."
"Hmm."
"GH Mobile made a sales revenue of 187.4 billion won with net earnings of 13.3 billion won last year, and it will continue to generate that much or even more. A debt of 30 billion won for a company like this is nothing. GH Mobile’s current credit rating is A0; it was A-. Our major bank told me that they are willing to lend us as much funds as we need."
"Hmm."
President Song continued, "Let GH Mobile acquire GH Building in Sinsa Town, sir. We will buy the building assuming its debt."
Gun-Ho replied, "But, its debt is so high. It’s almost 150 billion won."
"Its monthly loan interest is being covered by its rental income from the building. Even if we decide to take an additional loan of 100 billion won, GH Mobile will be able to handle it. With the loan of 100 billion won at a loan interest rate of 6%, the loan interest is only 6 billion won per year. It will be 500 million won per month."
"GH Mobile’s net earnings after tax last year was 13.3 billion won. How much were its net earnings before tax?"
"It was 17.1 billion won. GH Mobile can set aside 6 billion won out of this 17.1 billion won to pay the loan interest. A bank surely would know that GH Mobile is more than able to
The word, "Building" that both Gun-Ho and President Song had written on their palms earlier meant GH Building in Sinsa Town. Gun-Ho wanted to sell that building to GH Mobile, and GH Mobile’s President Song explicitly expressed his willingness to take over that building knowing that Gun-Ho would want it.
Gun-Ho had acquired GH Building in Sinsa Town for 205 billion won. In preparing this 205 billion won at that time, Gun-Ho paid 40 billion won out of his pocket, took out a loan of 150 billion won from a bank, and he finally added 15 billion won that came from security deposits of the tenants in the building. If Gun-Ho sells GH Building to GH Mobile now assuming that GH Mobile would buy it with its current loan attached to it, Gun-Ho would get his 40 billion won back. In addition, since Gun-Ho was the major shareholder of GH Mobile anyway, even after GH Mobile acquired GH Building, Gun-Ho would be able to continue to use the building as he had done.
GH Mobile didn’t have a whole lot of money in the reserve after it had distributed a substantial amount of money to its shareholders recently. However, GH Mobile didn’t have a lot of debt on its own given its high and stable sales revenue. Therefore, President Song determined that the company was more than able to bear an additional debt. When President Song mentioned that GH Mobile could take out an additional loan of 100 billion won even after it acquired GH Building, he implied that GH Mobile wouldn’t have any problems giving 40 billion won to Gun-Ho, and also that it could even afford to give out more than 40 billion won.
After taking a sip of his tea, President Song said, "When you bought GH Building, you probably received an appraisal. It has been two years since then, and I’m sure that the value of that building has increased. So, I recommend that you get a new appraisal reflecting that building’s current value. When you do that, try to get the value as high as possible. GH Mobile will acquire the building for that high price as the new appraisal would indicate."
Gun-Ho smiled. That was exactly what Gun-Ho wanted, and President Song explicitly stated that for him. Gun-Ho appreciated it.
"Sure. I will have it appraised."
Gun-Ho took out GH Mobile’s bank book which he was holding until now. That was for the newly opened bank account where GH Mobile had received the sales proceeds of its ownership interest in Dyeon Korea.
"This is the bank account where we received the acquisition proceeds of Dyeon Korea. Its initial balance was 272 billion won, and after we distributed 200 billion won to the shareholders as dividends, it was reduced to 72 billion won. I want you to keep this account and use the funds to pay transfer tax and corporate tax later. I will give you its OTP device as well."
President Song took the bank book with two hands showing his respect to Gun-Ho. He then called for Accounting Director Min-Hwa Kim.
When Accounting Director Min-Hwa Kim entered the office, President Song handed the bank book and the OTP device to her, and he said, "This is one of our bank accounts’ book that Mr. Chairman just handed to us. We received the sales proceeds of Dyeon Korea through this account. We then used 200 billion won to distribute dividends. The account is currently holding 72 billion won."
"Yes, sir."
"I want you to keep this bank book in the office, and use the funds in the account when we have to pay for the transfer tax and corporate tax. If the amount of the taxes is too high to pay at once, you can make a request to the government for an installment payment plan."
"Understood, sir."
Accounting Director Min-Hwa Kim, who picked up the bank book, gave a 90-degree bow to both Gun-Ho and President Goo, and then she walked out of the office.
After Accounting Director Kim left the office, Gun-Ho stood up from his seat getting ready to leave as well. That office was no longer Gun-Ho’s, but it was being used by President Song, and Gun-Ho had no reason to prolong his stay there unnecessarily.
"I’d better get going now. I will be heading back to Seoul after briefly stopping by GH Machines."
"I believe that GH Machines is very busy right now with the new product order from S Group, with their Ring Cable. They would make 500 million won in the first month, but it will gradually increase until it reaches 10 billion won."
"I’m sure that Jong-Suk Park is excited about the new product order."
"And, this is…," mumbled President Song as he was determining the contents of the envelope that Gun-Ho had given to him earlier.
Gun-Ho said, "That is the compensation that I prepared for you for the next three years since you won’t receive your dividends for a while. I want you to accept it. I received a huge gift from you today anyway."
"Well, sir, if you insist. Thank you."
President Song slipped the envelope with 300 million won in it into the inner pocket of his jacket. He then gave a deep bow to Gun-Ho.
This year, President Song made an extra 600 million won in total– 300 million won was his dividend, and another 300 million won was from Gun-Ho contemplating the possible upcoming years without a dividend. President Song looked excited with an additional income of 600 million won.