Chapter 286 Covering the sky with one hand
[1.2014. The resolution of shareholders voting in November 11 to add three board seats controlled by the founding shareholder (Banana Entertainment) is invalid. The three board seats are revoked, and Mr. Wang’s current position as chairman is also without basis. His position as chairman should be removed immediately.]

[2. During the election period for the new chairman, no shareholder shall attempt to change the current size or composition of the board of directors, and Mr. Wang shall not attempt to fill the controversial director seat he held before resigning as chairman. ]

[3. To avoid disputes, during the election period for the new chairman, the Panda TV board of directors shall not take any action that requires the approval of the board of directors but has not been approved by half of the board of directors (excluding Mr. Wang's vote).]

[4. Mr. Wang shall immediately resign from the position of CEO and shall not attempt to hinder the normal and continuous management of the operations and affairs of Panda TV by the current board of directors of the company.]

Words themselves have no power, but the meaning they carry is heavier than Mount Tai. Mr. Qu, the boss of Wanda Finance, put down the paper documents, wiped his glasses politely, and squinted his eyes to look at the cover of the email with the postal date stamp.

The China Post timestamp is a legally valid certificate, a very formal deadline notice, or it can be simply summed up in three words - see you in court.

"It's all fake, the essence is just money."

He lightly tore through the window paper and helped the two mentally broken young men and women rebuild their fighting spirit.

Jin Xiu stared blankly at the texture of the wooden desk. She realized that she was just a drop in the ocean, but she didn't think she was so useless that she didn't even have basic common sense.

The four demands are to first dismantle the three board seats that were added after the introduction of Qihoo 360's investment and to take away Mr. Wang's position as chairman of the board who signed a joint action agreement with Banana Entertainment. They are intended to directly destroy the control currently held by Mr. Wang.

From the perspective of the board charter and board design, we can prevent the major shareholder Banana Entertainment from regaining control by adjusting the board structure.

Secondly, they took control of the daily operations and management of Panda TV through the paralyzed board of directors, and finally removed Mr. Wang from his position as CEO.

What kind of waves can a CEO who loses control of the board of directors make? It is precisely the CEO position that has caused the crisis of control of the board of directors.

The sequence is clear and the links are tightly linked. How could there be any flaws?
"In fact, there is no such thing as a strategic decision in the terms and agreements of the venture capital industry. They are all objective and there is no subjective tendency to favor one side."

President Qu broke the silence again and said calmly: "Let's do some math first. Assuming that all their demands are met, how many seats will there be on the board of directors?"

"According to their request, the three existing management seats will be revoked, and there will be four seats left on the board of directors, including Grapefruit, Qihoo 4, and two seats from Banana Entertainment. If we exclude Mr. Wang's voting rights as chairman of the board, there will actually be three seats." Jin Xiu felt a little regretful.

When Panda TV was first established, Mr. Wang thought it was troublesome and only adopted a three-seat board structure. Banana Entertainment, as the founding major shareholder, occupied two seats, and Grapefruit Capital held one seat.

The reason why four additional board seats were created at one time and a joint action agreement was signed after the introduction of Qihoo 360's investment was that the company found that it lacked control and tried to inject capital to expand its scale and strengthen itself while diluting the influence of Xiyou and Qihoo 4.

We should have taken a firm attitude and advised Mr. Wang at the beginning, but unfortunately the management of Panda TV and Banana Entertainment were both in their infancy at that time, and there was really no suitable candidate to occupy a seat on the board of directors.

"So there are 4 seats on the surface, but 3 seats in reality. Does Grapefruit have an advantage over us?"

Mr. Qu paused for a moment and smiled, "Since Xiyou has already made the move, they should have done their best and canceled the additional board seat for Qihoo 360. Why did they go against their intuition and retain only the seat for Qihoo 360 to create a de facto three-seat board framework?"

"Because if Qihoo 360's seat is revoked, there will actually be only two seats left on the board of directors. We will have one vote against one vote, so at most it will be a tie and no one will gain an advantage."

He slowly concluded: "So I said that all the terms and conditions of the agreement are objective. Keeping Qihoo 360 is the best option they can do."

"But Xie Jingxing and Zhou Hongyi have conflicts, and Old Zhou is more inclined towards us!"

The bearded and slightly haggard Prince suddenly regained his spirits and raised his head as if he had an idea.

President Qu was slightly stunned for a moment, but agreed with a smile: "We can analyze it this way. As long as Lao Zhou stands on our side, we can still control the power of the board of directors."

Jin Xiu pursed her lips, and the words turned around and then she swallowed them back into her stomach. She was dismissed on the battlefield after the defeat, and whatever she said now would be harsh and unpopular. There was no need to cause trouble for herself.

“If the board of directors is not the problem, then their request is very empty. It only asks for the CEO position with a sunset clause, right?” Mr. Qu asked in a guiding manner.

Prince Wang pondered for a moment and said, "Funds, the next round of financing, the company is running out of money."

"Yes, the essence is money. They will use their veto power to delay the next round of financing until Panda TV can no longer bear it and you resign as CEO." At this point, Mr. Qu finally felt a little troubled.

Panda TV has been burning money intensively since its inception, losing 4-5 million yuan in half a year. The 360 million yuan financing from Qihoo 1 was of no use.

The company will have to rely on revenue cash flow, bank loans and other means of turnover, and will have to continue financing at the latest until next summer.

That is to say, before this, Banana Entertainment had half a year to fight the CEO lawsuit with Grapefruit. After half a year, every day of delay would cause Panda TV's operating condition to deteriorate by one day.

By then, there will be strong external competitors and internal cash flow will be exhausted. Even if the legal lawsuit does not come to a conclusion, it will be difficult for Mr. Wang to drag it on, unless he wants Panda TV to die and both sides will perish together.

So, will Qihoo 360 still stand by him? "But on the other hand, if they can delay, we can delay too. As long as they don't start the next round of financing, the super voting rights of the AB equity structure will not take effect."

Mr. Qu put on his glasses again and raised his spirits: "Before we start the next round of financing, even if you resign as CEO, we can still control the board of directors and take control of the company."

"If I resign from the CEO position, the next six months will be very important." Prince Wang emphasized thoughtfully.

What he meant was that if I couldn't handle Xie Jingxing within the next six months after I resigned from the CEO position, wouldn't I be so disappointed when the next round of financing triggered the AB equity structure?

Xiyou's logic is to first remove him from the CEO position to indirectly get rid of his super voting rights and then initiate financing to trigger the AB equity structure. His logic is to stay in the CEO position, first raise funds to trigger the AB equity to activate the super voting rights, and then try to use the super voting rights to keep the CEO position.

Although both are delaying time, their purposes are completely different. Strategically, their delaying time is to assume that they will not allow Xiyou to obtain super voting rights if they lose super voting rights. Tactically, starting financing as soon as possible is to assume that they have super voting rights.

This is like having strong firepower and saving ammunition on the battlefield. It is a bit difficult and there is no fallback.

“I heard that there is a cool-down period for the sunset clause, right?” Mr. Qu did not give a direct answer.

Jin Xiu said cautiously: "After the sunset clause is triggered, according to some supplementary clauses, we can extend the expiration date of our super voting rights. The law is in our favor."

"So even if the next round of financing triggers the super voting rights of AB shares, we still have a certain amount of space and time to continue to find solutions." Mr. Qu was vague. He had no intention or need to make any military orders with Xiao Wang. Coming to clean up the mess was already enough to give face to Lao Wang.

I really don’t know how he could have ended up in such a passive mess. In comparison, Xie Jingxing deserves to be recognized as the most reliable successor.

The young man's combination of punches was clever and fierce, but too fierce.

They are all well-known figures in the business world. You can't tell who will be around when you look up or down, but you can tell who will be around when you look up. It's easy to lose friends if you don't leave any room for them.

"The situation is very clear now. If we lose our CEO position, we will lose our super voting rights. This is a dead end for futures. But there is a difference between early and late futures delivery. If they want to sue, they can sue. We can at least delay it for half a year."

Mr. Qu thought about it and gave a countermeasure: "In the next six months, we need to do three things well. First, we need to withdraw part of the Panda TV shares held by Banana Entertainment and set up another holding company to pledge the shares to obtain a pledge loan from Qihoo 360."

"The pledged loan does not involve Xiyou Capital's veto power over financing. We have the upper hand in regular board votes. We can obtain cash flow to maximize the daily operation of Panda TV and completely bind Qihoo 360. In the future, if Panda TV is in trouble, they will be the first choice to take over."

"Registering this holding company in Hunan gives us an advantage in terms of legal and technical control."

Jin Xiu unconsciously concentrated and listened with her ears erect, observing carefully with her eyes Mr. Qu who was displaying his sinister tactics with a polite manner. Banana Entertainment could delay for a longer time, and its ally Qihoo 360's stance became more resolute.

Finally, even if they fail in the final struggle, they still have the option of using this holding company to be reborn, or simply walk away.

"The second thing is to negotiate with them while we are suing Xiyou. It's not impossible for us to give up the CEO position and super voting rights, but the core purpose is for the good development of Panda TV. If they can make certain concessions, we can still make money in harmony."

Mr. Qu is very magnanimous: "For example, regarding board seats, management positions, and future financing conditions, we can all show our sincerity and discuss them together. No one can kill anyone with one stick. At the very least, we are the largest shareholder. Even if he actually controls Panda TV, can he kick us out?"

"Third, we should actively seek new financing parties. Every time they reject financing, justice and morality will lean towards us. To put it bluntly, no matter how strong Xie Jingxing is, he still has to be responsible to the vast number of LPs of Grapefruit Capital. A good project with an annual return rate of ten times has been delayed in its development speed because of his personal reasons. There are still people who are qualified to say that it is against the will of the world."

He pushed his glasses up slowly and said, "If he could easily take over the venture capital circle, why would he bother with us? If he wants to slap us to death, his hands will be stained with blood."

"..."

Jin Xiu was stunned and speechless. How could he say the most cowardly words in the most nonchalant tone without showing any weakness?

The corner of Prince Wang's mouth twitched. He was inwardly applauding the first countermeasure. The third countermeasure was what he had wanted to do for a long time. At worst, he could make a big deal out of it. Even if it was of no practical use, he could still throw a basin of dirty water on Xie Jingxing.

But he couldn't accept the second solution, which was to bow down and make peace with Grapefruit Capital.

If this was the result, why would he have the audacity to call his mother for help?

"What will happen if we prepare for the worst and both we and Xiyou suffer losses in the end?" Prince Wang asked after taking a deep breath.

President Qu was stunned again. He pondered for a long while before he said with a forced smile, "They used their liquidation priority rights and withdrew their shares with ten times the investment income, losing the expected investment return rate of dozens of times in the future."

"What a scoundrel! Once you get hold of these assets, you can't get rid of them!" Prince Wang stood up angrily.

Jin Xiu was so embarrassed that she didn't know where to put herself. Mr. Qu smiled from the bottom of his heart and said, "Why don't you just resign as CEO now?"

(End of this chapter)