“As you can see from the bankruptcy of Hanjin Shipping, the global shipping industry is currently in a slump. And the poor shipping industry also means a downturn for the shipbuilding industry.
Daehoo Shipbuilding has been managed by presidents parachuted in from political circles. Even positions like outside directors and standing advisors were all filled with politicians.
Because of this, the management changed every time the government changed. During the Park Si-hyeong era, politicians from the Liberty National Party, and now politicians from the New Politics Party.
Looking at this, you can see that whether they are conservative or progressive, they are all the same when it comes to taking care of their own people.
Even emergency management would be insufficient, but they are running the company to suit the tastes of the regime, so there’s no way the company can run properly.
“The bond maturity date is coming up soon, and the repayment amount is barely enough.”
“What about rollover?”
Rollover means extending the maturity date.
“We already did it once. Anyway, assets are greater than liabilities, so it’s not like we can’t repay, but from the creditors’ perspective, they’d probably want even more interest.”
I nodded.
“It seems they are pushing for a sale again because they are wary of public opinion about injecting more public funds.”
If the industry conditions were good, even conglomerate groups would show interest. But taking it over now would be a white elephant.
In this situation, talk of merging with Seosung Heavy Industries, led by the New Politics Party, has emerged. Calling it a merger is nice, but it’s practically forcing it upon them.
“What’s Daehoo Shipbuilding’s market cap now?”
“Just under 2 trillion won.”
The Korea Development Bank’s stake in it is 58 percent.
“The stake sale will naturally be a block deal. If they’re forcing it on them, wouldn’t they offer a discount?”
In a block deal, which is a large-volume trade, the price is determined by the power struggle between the buyer and seller. If the buyer is eager, they might add a premium to the market price, and if the seller is eager, they might discount the price.
About 1 trillion won should be enough for the acquisition.
“It’s not like it ends just by buying it. Container ships and LNG ships have synergies with existing businesses, but offshore plants don’t.”
Korea was once the world’s number one in shipbuilding. However, Chinese shipbuilders, having built up their technology, swept up global orders with low-price bids, putting Korean companies in great difficulty.
In response, domestic shipbuilders turned their attention to high-value-added industries. One of them is offshore plants. Offshore plants are structures installed on the sea to extract resources from the seabed.
Daehoo Shipbuilding and other domestic shipbuilders ambitiously challenged this market, which was dominated by advanced shipbuilding companies.
However, this ultimately resulted in enormous losses.
Lack of production experience and reliance on foreign countries for core design were problems, but the biggest cause was low-price bidding.
As a result, opinions were divided: one side wanting to continue pushing forward since they had accumulated know-how, and the other wanting to withdraw to avoid even greater losses.
Then, as low oil prices continued, orders themselves decreased, and the offshore plant sector became a white elephant.
If industry conditions don’t improve, they might end up incurring additional losses by acquiring it.
Taekgyu said, “Then shouldn’t they just not acquire it?”
Chairman Im Jin-yong shook his head.
“We can’t because we have to be mindful of political circles, and it’s not a bad asset either.”
Is it what they call “adult circumstances”?
No matter which regime takes power, chaebols… especially the Seosung Group… have received various favors. As such, they can’t ignore the intentions of political circles.
And unless they are thinking of abandoning the heavy industries altogether, expanding their size in this opportunity wouldn’t be bad either.
“Are you perhaps interested in the shipbuilding sector?”
It seems this is what he came to ask me about.
I was about to say I wasn’t particularly interested, but at that moment, something flashed before my eyes.
– Hurricane Red Kay slams North Sea oil fields –
***
As soon as Chairman Im Jin-yong left, Taekgyu asked, “What did you see this time?”
I told him what I had just seen.
Taekgyu was startled and asked, “The North Sea? Isn’t that next to England?”
“Yeah.”
The North Sea is a sea located above continental Europe, to the right of England.
It became famous because oil fields were discovered there in the 1960s. The extracted crude oil is high-quality light crude oil with low sulfur content, and it is none other than Brent crude, one of the world’s top three crude oils.
The North Sea oil fields brought enormous wealth to the surrounding countries.
Thanks to this, countries like the UK, Norway, and the Netherlands rose to the ranks of oil-producing countries. However, this wasn’t necessarily all good.
After that, the Netherlands experienced economic hardship to the extent that it was called the “Dutch disease.” And this is the same for other resource-rich countries.
This is called the “resource curse,” and there are several reasons for it.
First, resource extraction has a low employment creation effect. In the end, only a small number of companies and a small number of talented people live off resource extraction and sales, and the rest of the people are unemployed.
When the economy is bad, the currency value should fall, and exports should increase, but in these countries, the dollars coming in from selling resources are constant, so the currency value skyrockets regardless of economic fluctuations.
Naturally, manufacturing competitiveness is bound to weaken. That’s why countries with vast resources are actually experiencing significant stagnation in manufacturing.
Anyway, it’s fortunate if the economy runs even in this way, but an economic structure that relies only on specific resources will collapse entirely if prices plummet or resources are depleted.
Nauru and Venezuela are prime examples. It’s not to that extent, but Russia, Brunei, Saudi Arabia, etc., are also suffering from falling oil prices.
“Of course, not all resource-rich countries fall into this curse, and there are rare cases of countries that have escaped the curse.”
The United States produces enormous amounts of shale oil and shale gas, and there are many other resources, but these account for a negligible portion of the overall US economy. And because they can consume all the resources they produce domestically, there is no reason to be caught in the resource curse.
In the first place, when it comes to the economic scale of the United States, general theories are simply surpassed.
And the UK, the Netherlands, and Norway, which have North Sea oil fields, were able to overcome it thanks to efforts such as creating sovereign wealth funds with the money from selling oil and gas, and fostering high-value-added industries.
These countries are characterized by having democratic decision-making systems that can rationally distribute the profits from resources. Therefore, they can grow by using resources as a stepping stone.
Countries that don’t often suffer from extreme conflicts, or in severe cases, civil wars over resource ownership break out.
In a way, perhaps the reason why the Korean manufacturing industry has grown so much is because it didn’t have any special resources.
Taekgyu and I searched for related videos.
In the moment of being caught in a hurricane, houses and garages, without exception, were shattered and soared into the sky. The places swept away in that manner became complete ruins.
Taekgyu’s jaw dropped.
“The scale of typhoons in the Land of the Free is different.”
Typhoon, hurricane, cyclone.
The names differ depending on the region of occurrence, but they are all the same tropical cyclones.
Every year around this time, the United States suffers from the threat of hurricanes. Looking at the scenes of hurricanes or tornadoes sweeping through the United States is truly beyond imagination.
The most representative hurricane is Katrina, which hit New Orleans in 2005. This hurricane that struck the southern United States flooded the entire city, resulting in nearly 2,000 deaths and over 50,000 displaced people.
“Has there ever been a super-large hurricane of this magnitude landing in Europe before?”
Hurricanes usually hit the southern United States. However, it is not uncommon for them to move towards Europe depending on the wind direction.
“Professor Mohan’s book also had content like this.”
The Big One is the largest earthquake of the 21st century, and even including the 20th century. This naturally had a huge impact on the environment and ecosystem.
Professor Mohan argued that we need to closely examine changes in seabed topography and geothermal heat because we don’t know what kind of results this will lead to.
He may have been a heretic in academia before, but now that he has become an authority, his opinions were immediately accepted, and budgets and personnel were allocated.
Just as a butterfly’s wings flapping in Brazil can become a tornado hitting the United States, considering various situations, there’s no reason why a hurricane can’t hit the North Sea oil fields.
Leaving aside these grounds, the most important thing is that a premonition appeared.
“When is that hurricane coming?”
“I need to find out now.”
The names of typhoons or hurricanes are assigned sequentially from a pre-determined list. So, if you know the name, you can roughly predict when it will come.
“What happens if a hurricane hits the North Sea oil fields?”
“First of all, oil prices will rise, right?”
A few years ago, when a hurricane swept through the Gulf of Mexico coast, crude oil and natural gas production in the area decreased by more than 30 percent, and oil prices soared.
If the North Sea oil field facilities are destroyed by this hurricane, high oil prices will continue for quite a long time.
Then offshore plants might come into the spotlight again, right?
Our investment scale is large, so it can’t handle most markets, but the oil market is a different story.
It’s another good opportunity to make money.
“Should we try to get some shares for free this time?”
***
I contacted Chairman Im Jin-yong.
“OTK Company will also invest funds in the acquisition of Daehoo Shipbuilding.”
He was delighted at my words.
[“Really?”]
“We’ll acquire half of the Korea Development Bank’s stake, and hand over management rights to the Seosung Group.”
After negotiations, the sale price of Daehoo Shipbuilding was set at a 20 percent discount from the closing price.
As pre-agreed, OTK Company acquired half of the Korea Development Bank’s stake, and this stake was converted into Seosung Heavy Industries shares as Daehoo Shipbuilding and Seosung Heavy Industries merged.
OTK Company became the second-largest shareholder of Seosung Heavy Industries, and Seosung Heavy Industries took over management rights.
Once the contract was signed, the Korea Development Bank announced that it had successfully recovered 970 billion won in public funds.
As the days went by, the heatwave grew more and more intense.
This wasn’t just happening in Korea; deaths were increasing in Europe, and mass deaths of fish were also occurring frequently. In California, wildfires had been burning for fifteen days and were threatening residential areas.
Senior Sang-yeop said, “As instructed, I’ve appropriately allocated bets on crude oil futures and spot, and related stocks.”
“Good job.”
“But are oil prices really going to rise?”
“Or else, we’ll just end up with a few hundred million dollars in losses.”
“Well, we made a lot of money selling cryptocurrency anyway, so it’s okay even if we lose a little.”
Of course, even though we say this, neither Senior Sang-yeop nor I have any intention of losing money.
“Wait and see. According to Professor Mohan, there’s a high possibility of abnormal weather events due to the heatwave and changes in terrain and geothermal heat caused by the Big One.”
***
Hurricane Red Kay formed in the eastern North Atlantic and moved towards Northern Europe.
Meteorologists all predicted that the hurricane would dissipate as it moved across the North Atlantic.
But what do you know?
Red Kay actually grew even larger by swallowing other low-pressure systems around it. Its moving speed also increased rapidly, and the wind speed reached 300 kilometers per hour.
Realizing the seriousness of the situation, the UK Met Office hastily issued the highest warning. Ship and aircraft departures were prohibited, and some schools went on holiday.
Fortunately or unfortunately, the hurricane moved past Ireland and the British mainland, and the feared casualties did not occur.
However…
[North Sea Oil Field Plants Severely Damaged by Hurricane Aftermath!]
[North Sea Oil Spill. Concerns about Damage to Neighboring Countries!]
[UK Oil and Gas Authority Closes Some Oil Fields]
[Norwegian Government Begins Reviewing Damage Situation……]
Oil prices, which had been fluctuating due to concerns about production disruptions caused by the hurricane, reacted immediately as soon as the news broke.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) crude oil rose 22 percent from the previous day to $92.61 per barrel, and Brent crude oil futures prices on the London ICE Futures Exchange soared to $112.67 per barrel.
Due to the damage to North Sea oil field facilities and the surge in oil prices, offshore oil drilling began to revive again. Inquiries for offshore plants and LNG ships poured in.
Chairman Im Jin-yong immediately flew to the UK to grasp the exact situation.
The money earned by betting appropriately on crude oil and related stocks exceeded several times the share acquisition amount.
Meteorologists belatedly claimed that the extreme heatwave sweeping across the Northern Hemisphere due to global warming was an anomaly, hitting the nail on the head after the fact.
Due to soaring oil prices, airline and shipping stocks fell, and shipbuilding and heavy industry stocks, expected to benefit, rose across the board.
As a result, some civic groups criticized the cheap sale of Daehoo Shipbuilding, causing losses to the nation, and special favors for Seosung Group and OTK Company, but the bus had already left.
If they knew so well, they should have criticized it before it was sold.
***
The hardest-hit country was, as expected, the UK.
With the Brexit negotiations already facing difficulties, the North Sea oil fields were severely damaged and oil spilled, and the UK financial market fluctuated greatly once again.
With forecasts that recovery would take more than half a year, shares of Royal Dutch Shell, Europe’s largest oil company, fell sharply.
While most financial companies and investors were losing money, OTK Company once again swept away money, causing outrage among the British people.
“How many times is this guy going to rip off Britain?”
Strictly speaking, Kang Jin-hoo didn’t cause the hurricane, and the amount directly invested in the UK wasn’t much, but considering what happened during Brexit, their feelings couldn’t be good.
A mansion in Buckinghamshire, near London.
A beautiful blonde woman received the documents. They contained the fund flows of OTK Company in the international financial markets.
She examined them, her eyes gleaming.
Once or twice could be coincidence, but when the same thing happens repeatedly, it cannot be explained by the word coincidence.
She recalled a man she had briefly spoken to in New York. On the surface, he was just an ordinary young Asian man, but…
Grace Rothschild muttered as if to herself, “Does someone really exist in this world who is chosen by fate?”
[Notice: Some of you might not know this but don’t worry we’ll be announcing it soon official that Moonlight Novels will be closing soon. I’ll be moving all my novels to another group for those who want to keep up with the update of the current novel “An investor who see the future” click on the image below and follow me for further updates.]
