Chapter 190 Negotiation of 30 Billion
"Sorry, I need to consult Mr. Ma directly."

The negotiations were interrupted again. Ji Gang picked up his mobile phone, walked out of the meeting room and went into the next room.

He did not call Teacher Ma. He walked back and forth with his arms folded, thinking for a moment, then opened the screen of his mobile phone and typed a few lines in the memo.

Buyback clauses, gambling clauses, shareholders’ meeting voting rights, board seats, and financial audit rights.

Lin Lin sorted out all the core conditions in his mind one by one, and edited a text message to send out: [We need to compromise. 】

【OK! 】

Tsai Chongxin replied immediately. In fact, he was in Hong Kong Island at the moment and could come to Zhuhai at any time.

Xie Jingxing is determined to obtain the lead investment rights and has the corresponding ability. Meizu agrees with this, so he does not need to come forward.

Use alternative plans in cooperative negotiations and strive to maximize benefits while following the investment as much as possible.

Ji Gang cracked his knuckles until they made a creaking sound. He felt that the big boss' attitude towards this project was very ambiguous.

President Cai not only asked for the right to lead the investment, but also ordered that the investment should be adjusted according to the situation and compromised if necessary.

What is necessary?

Xie Jingxing, a young demon, set him up with a sneak attack to deal with Huang Zhang, or he may have a natural talent for mobile phone product design.

"This is probably necessary. If there is no compromise and the talks fail, Alibaba is not irreplaceable, but there is no other mobile phone brand in the market that is complementary to Alibaba and can be invested in."

Ji Gang instinctively added confidence to the decision he had made in his heart. He calmed his emotions again and again, mustered up his strength, pushed open the door and returned to the meeting room.

Xie Jingxing and Huang Zhang are discussing how to transplant professional-grade audio equipment onto mobile phones; Shen Xin and two Meizu executives, Bai Yongxiang and Li Nan, are discussing the details of the subsequent financial due diligence process.

Several other lawyers and financing consultants were reviewing the documents at hand in a tense atmosphere. Even though they had reviewed them many times and even dreamed about them in recent days, it would be unprofessional not to do something at this moment.

"Mr. Xie has indeed put us in a difficult position. After careful consideration, we at Alibaba are willing to make concessions."

Ji Gang changed the subject and said half-jokingly: "But cooperation requires everyone's joint efforts to achieve it. The subsequent negotiations may be difficult. Please be mentally prepared in advance."

"Thank you Mr. Ma for your understanding."

Xie Jingxing was calm. Teacher Ma was willing to invest in him because he was making friends with him. Naturally, he would not urinate on Brother Ma.

But how much benefit Ji Gang can gain from the negotiations depends entirely on his ability. After all, brothers should settle accounts clearly.

Huang Zhang breathed a sigh of relief. Xie Jingxing had money and understood products but no resources, while Ali had money and resources but no products. It was the most ideal cooperation plan for them to reach an agreement and form a triangular relationship to check and balance each other.

Moreover, with Taihe Capital as the lead investor, Meizu does not need to consider the issue of taking sides.

It is expected that certain concessions will be made for this purpose. This week, the company has formulated several sets of "joint investment plans" internally, and we have a general idea of ​​what to do.

"Mr. Bai, please take everyone to have lunch and discuss the details of the plan in the afternoon." He suggested in a relaxed tone.

Xie Jingxing's eyelids twitched, and his first reaction was that he wanted to run away.

Huang Zhang has a slightly low EQ but is very focused. He is not a difficult person to understand, and a short week is enough to get a good feel for him.

Sure enough, after lunch, when the three negotiation teams were sorting out their documents, Meizu Senior Vice President Li Nan made a special trip to Taihe's conference room to say hello.

Yituanheqi said that Mr. Huang had something urgent to do, and he and Mr. Bai would be responsible for the afternoon negotiations.

Xie Jingxing was speechless, and sent a WeChat message to Huang Zhang to ask him where he was. This guy replied three messages in a row, saying that he was very tired recently. The several pots of camellia at home were blooming and needed watering.

"Mr. Huang, are you aware of the contents of the financing agreement?" Xie Jingxing emphasized.

Li Nan is a fat man wearing short-sleeved shirt and big shorts. He looks quite unruly and pushes up his black-framed glasses: "Boss Huang is prepared."

"That's good." Xie Jingxing did not comment.

According to the original historical trajectory, Alibaba’s investment in Meizu failed and was eventually taken over by Zhuhai State-owned Assets.

There are many problems, but they can be summarized in one point - the combination of Alibaba + Meizu is not good.

If he gets involved, he must take the lead in changing the original process. Even if there is still a possibility of failure, it is better than dying as planned.

Dominance means control. In this regard, Taihe and Alibaba share the same position, so they did not communicate the details of the financing plan with Huang Zhang in advance.

I hope Carpenter Huang has really thought it through and doesn't go back on his word and do something weird in the middle of the conversation.

At two o'clock in the afternoon, the negotiations officially began in the same conference room as in the morning.

The Taihe and Alibaba teams sat side by side on one side, while Bai Yongxiang and Li Nan sat opposite them with their advisory team.

"First of all, there is the option pool. We hope to set it up before financing occurs." Ji Gang took the lead in throwing out some ideas.

Bai Yongxiang simply replied: "Mr. Huang personally transferred 20% of his equity as an option pool, which will be established after the financing."

"There's no problem on our side." Ji Gang thought for a moment and said with his head tilted.

Xie Jingxing nodded in agreement. Investors often hope to set up an option pool before financing to avoid equity dilution.

After completing the financing, if there is a need to expand the option pool ratio, all shareholders will negotiate and bear their respective shares.

Based on the framework of Meizu's valuation of RMB 210 billion and financing of RMB 30 billion to increase 15% of the equity, Huang Zhang assumed the entire share and personally transferred 20% of the shares to establish an option pool.

Whether it is established before or after financing, it doesn’t matter how many shares Taihe and Alibaba hold.

After the financing, the option pool was able to avoid one round of dilution. Huang Zhang gave his employees an additional 3% of equity, which was a generous move.

Obviously, Meizu's current decline has had some impact on his views, and as an investor he is happy to see such changes.

"Second, we need to enrich the repurchase terms and diversify the exit methods." Ji Gang continued to state the conditions.

Li Nan and Bai Yongxiang looked at each other and took the initiative to take over the conversation: "The current domestic securities market situation has changed a lot. For example, the risk of listing difficulties caused by policy factors in the past few years, we have to include it in the repurchase clause."

"We have enough patience to accompany Meizu's growth, and judging from Meizu's current operating status, it is still too early for it to be profitable and go public, so we prefer to set phased goals." Ji Gang began to speak in a nonsensical manner.

The repurchase terms are basically bound by the gambling agreement. The listing repurchase that Li Nan mentioned is the kind signed by Xiaoma Pentium and China Construction Bank International.

The two parties agreed to go public within the specified period and repurchase the investor's shares in the event of a breach of contract. The period is generally 5 years. The longer the period, the higher the cost for the investor.

Alibaba is a strategic investment and does not give high priority to listing expectations, not to mention that Ji Gang cannot see Meizu's profit prospects.

He hopes to sign a "technical bet" on performance, such as achieving an average annual shipment of over 60 million in three years, or an annual revenue of % of that of competitor Xiaomi.

Both of these repurchase betting methods are essentially oriented towards exiting with investment profits, and there is no question of whether one is good or bad.

But when it comes to Meizu, Huang Zhang and the consulting financing consultants and management all agree that the former has more freedom. They only need to consider the profitability of the listing, and it is best to extend the listing time limit of the bet. The latter is easily bound by the additional terms of the bet agreement and forced to make products that they are unwilling to make.

Many gambling matches in the entertainment industry are like this, with people in their seventies and eighties taking on bad roles without caring about their appearance and selling their feelings.

Li Nan and Ji Gang were in a stalemate with each other arguing with each other, and Shen Xin, who was sitting next to them, would occasionally add fuel to the fire.

Xie Jingxing was bored and his thoughts were scattered. He thought that the cool photos sent by Concubine Pei, who was filming in Yunnan, had color difference recently. He would spend some money to get her a few Golden Globe Awards as a reward.

"Let's do this. Taihe will sign a performance repurchase agreement with Alibaba, and Taihe will also sign a listing betting plan with Meizu." He was determined to make more money.

Shen Xin blinked her confused eyes and winked wildly. Ji Gang was puzzled. Li Nan and Bai Yongxiang hurriedly communicated with the consulting team in a low voice.

Xie Jingxing continued to speak: "The supplementary terms of the repurchase plan between Taihe and Meizu. If the repurchase plan between Taihe and Alibaba is triggered, Meizu needs to issue additional shares to Taihe."

It’s a bit confusing, but it’s actually not much different from the Pony Express project.

If Meizu fails to achieve an average annual shipment volume of 10 million units within three years, Taihe will act as the repurchase entity and repurchase the shares held by Alibaba.

At the same time, Meizu needs to issue additional shares to Taihe as compensation. The two parties also have a listing bet agreement as a guarantee for Taihe's subsequent profitable exit.

Li Nan and Bai Yongxiang understood the logic from the consultant's words, and immediately looked at Xie Jingxing with complicated eyes.

Thank you for your kindness!
Alibaba is not optimistic about Meizu, but Taihe is. This really shows that there is true love in the world!
Ji Gang was speechless, he didn't believe that Xie Jingxing was so optimistic about Meizu, but it had nothing to do with him, as long as he could exit and make a profit in the end.

The three parties once again took a step back and compromised, arguing over the details of the gambling agreement on the spot.

Li Nan said that the performance targets set by Alibaba were too demanding, and then said that Taihe was going to issue too many additional shares.

Shen Xin nodded repeatedly in agreement one second, and said in the next second that we took a huge risk.

In the end, the conditions for the repurchase bet plan between Taihe and Alibaba were determined to be an average annual shipment of 1600 million units over five years, and the repurchase price was the principal of Alibaba's investment calculated over a five-year period, with 10% compound interest per year.

In the past two years, most of the bets were calculated based on bank interest rates. In the past two years, the capital institutions have become increasingly powerful, gradually calculating based on compound interest and even setting the interest rates themselves.

Xie Jingxing is playing a balancing game with Alibaba on his left foot and Meizu on his right foot. While he is trying to please both sides, he is also losing a lot of room for negotiation.

Ji Gang knew that he wanted to take a big gamble and refused to give in to the conditions, but he wanted to turn around and ask for more from Meizu.

Shen Xin had no choice but to agree reluctantly, feeling depressed, and then offered Li Nan a price of 12% equity.

Once the bet agreement between Taihe and Alibaba is triggered, Meizu will need to issue a 12% stake to Taihe in a private placement.

Li Nan discussed the matter with Bai Yongxiang for a long time, and even called Huang Zhang during the period. He felt that this plan was more cost-effective than a repurchase by the company or Huang Zhang personally.

It is mainly a 12% equity interest issued to Taihe, and the price per share is calculated based on the agreed valuation.

The logic here is that the strict bet agreement between Taihe and Alibaba has been triggered, which means that Meizu's operating conditions will not be much better than they are now in five years.

They may not be able to come up with huge amounts of money to repurchase the shares held by Alibaba, and may even need to raise funds again. Taihe is willing to repurchase on their behalf and subscribe for an additional 12% at the agreed valuation to help Meizu recover its losses.

Taihe has indeed taken a great risk. It is possible that it will refuse to subscribe at that time, and it will be too late to run away.

"We just need to use a template to extend the term of our listing repurchase agreement to seven years. We are all tired."

Outside the window, the sky was filled with red sunset clouds, and Xie Jingxing said tiredly.

Shen Xin filled his thermos cup with water three times, and said in a hoarse voice: "We need to add a liquidation clause to this listing repurchase agreement."

"Minor revisions to the template content."

Ji Gang remained indifferent to the matter and smiled leisurely at Meizu's financing advisory team with a sarcastic look on his face.

Shen Xin glanced at his boss from the corner of his eye, and had the urge to strangle him to death. Even if you have never failed, you can't take the "exit mechanism" so lightly.

The reason why the repurchase bet agreement is so famous is not just as simple as the two parties agreeing to bet big or small like in gambling.

During the agreement period, shareholders are not allowed to transfer their shares, and if the listing fails and they are unable to repurchase and liquidate assets, they have the right of priority exit. This is how Zhang Lan and South Beauty were killed.

There are also valuation adjustments for subsequent financing rounds and interpretation of the terms of the repurchase agreement that is triggered in advance due to technical malicious default. The devil is in the details.

Many times, capital institutions’ control over a company goes far beyond the superficial distribution of equity/voting rights.

A seemingly reasonable template clause may become a difficult leash for companies with different operating conditions.

Given a choice, Huang Zhang doesn't want to sign any gambling agreement, but Meizu is too arrogant!

In exchange for 15 billion in cash for 30% of the shares, Taihe started to clear the funds of its Singapore office a week ago. The approval process of Alibaba's strategic investment decision-making meeting took a full three days, and all related parties signed.

The lackeys of the Dongchang Factory in charge of compliance and risk control are so anxious to keep a close eye on the progress that they send an email every day.

At that moment, several people were arguing with each other and their faces were red. Every word they said would involve tens of millions or even hundreds of millions of yuan.

The afterglow of sunset outside the window completely dissipated, the night enveloped the entire city, the repurchase bet agreement was finalized, and an invisible shackle quietly trapped "Meizu".

Li Nan was in a good mood. He was young and confident that the shackles were a boost and would help Meizu jump higher and run faster.

Bai Yongxiang couldn't smile as he stroked his increasingly obvious hairline. If Meizu didn't run fast enough to keep up with the shackles, it would be strangled to death.

Everyone went to the hotel for dinner with their own thoughts, and drank beverages instead of alcohol to celebrate the smooth progress of the project.

After having a good meal and a good drink, they returned to the meeting room and continued. Ji Gang raised the second difficulty: "We hope to have the veto power of the shareholders' meeting and the right to audit the finances."

"Let's not talk about the veto power of the shareholders' meeting. Just the financial audit power is part of the company's daily operations. It's impossible for us to buy two pigs from the canteen kitchen and then go to Hangzhou to ask you to review it, right?"

When talking about the present, Bai Yongxiang is used to high-intensity wrangling, and he made a bold statement.

Ji Gang picked up the water cup and took a gulp to moisten his throat. "The details of the financial audit rights can be clearly divided. How the investment funds are used, how much is used for research and development of new products, and how much is used for the company's daily operations. We will not interfere with the company's operations, but it does not mean that we do not have the right of veto if we are informed."

"This item has been clearly stipulated in the malicious breach of contract clause in the repurchase agreement. It is definitely not possible for you to ask for daily review rights now." Li Nan firmly opposed.

"Buyback is an exit mechanism. In addition, we also need protective clauses to safeguard conventional interests."

Ji Gang sneered: "If you think the right to financial audit is troublesome, then give us a veto power at the shareholders' meeting level and write it clearly in the shareholders' meeting's authority charter."

"Mr. Ji, you are being unreasonable." Bai Yongxiang's face became serious.

Ji Gang was stunned. He didn't expect him to react so strongly.

"Shareholders' meeting, financial audit rights, and board of directors, choose one of the three. It's impossible to take all of them." Xie Jingxing said lightly.

(End of this chapter)