Story of a Big Player from Gangnam - Chapter 624
Chapter 624: Plan to Increase Dyeon Korea’s Capital – Part 1
The following day, Gun-Ho went to Dyeon Korea to work.
He usually spent his morning time at GH Mobile first and went to Dyeon Korea in the afternoon, but that day, he wanted to talk to Dyeon Korea’s Vice President Adam Castler as soon as possible.
When he arrived at his office in GH Mobile, Gun-Ho called for Director Kim.
“Did you deliver the message to Mr. Adam Castler, that I told you yesterday?”
“Yes, I did, sir. He made a call to the head office right away after I told him what you asked me to tell him. It seemed that he talked to Vice President Brandon Burke on the phone.”
“Really?”
“I don’t know why, but he asked me to bring the purchase request this morning, and he signed it. I’m not sure what changed his mind.”
“I see.”
Gun-Ho thought, ‘They must have realized that it was a necessary step to facilitate Dyeon Korea’s plan to go public.’
While Gun-Ho was talking with Director Kim, Mr. Adam Castler entered Gun-Ho’s office being accompanied by the interpreter— Mr. Myeong-Joon Chae.
“There was misunderstanding in the head office of Lymondell Dyeon.”
“What kind of misunderstanding are you referring to?”
“When they were told about our new research center, they thought that we were trying to develop a technology to produce the same raw materials that we get from Lymondell Dyeon.”
“That’s very difficult to achieve. The raw materials that we are provided by them are raw materials derived from petroleum. We don’t have a proper facility or technology, or even funds to actualize it. What we are trying to achieve by having a new research center is that we want to enhance our current technology and skills of compounding. All we did so far is to change the name of our previous compound room to the ‘research center.’ That’s about it.”
“Right. That’s what I told the head office’s Vice President Brandon Burke.”
“One of the major reasons that we wanted to have a research center is to appeal better to our potential client companies. They usually visit their soon-to-be-suppliers’ factories to see if they have adequate facilities to manufacture what they plan to order. One of the things that they care about is whether the soon-to-be-suppliers have a research center or not.”
“I actually saw their checklist about it.”
“Also, having a research center within our company will greatly help us to be certified as a start-up company with technology, and also to eventually register with KOSDAQ.”
“I emphasized those points when I made a report to Vice President Brandon Burke.”
“Next year will be our second year since Dyeon Korea was established this year. Once we are recognized as a start-up company with technology, we can register with KOSDAQ without waiting for another one or two years.”
“Do you think they will recognize our company as a start-up with technology based on our compounding skills only?”
“We will convince them by stating that our compounding technology is our own know-how, that no other company has it. We tell them that Lymondell Dyeon in Seattle supplies us with their processed raw materials, and we process them again for the second time using our own unique technology and sell them. That’s why we are exporting our products to other countries such as China and India, because they don’t have the technology to process the raw materials the way that we do.”
“Our unique compounding technology… Haha. That is a very interesting idea.”
“That’s just what we say publicly.”
“Speaking of which, I just received a call from Vice President Brandon Burke this morning. He asked me to find out tacitly what you— Mr. President Goo— would think about increasing Dyeon Korea’s capital stock.”
“Is he suggesting to distribute the cash in our reserve as dividends and take them back to increase capital stock?”
“Exactly.”
“When we established this joint venture company, I invested this land which we are standing on right now, while Dyeon invested the necessary machines as their investment in-kind. At that time, this factory was a newly constructed building, and we didn’t count it as part of my investment. My investment in-kind was considered worth 4.5 billion won, and that was the value of the land which didn’t include this building.”
“That’s why they want to increase capital stock by counting this building this time.”
“Putting this building? And Dyeon wants to use the funds that they would receive as a dividend?”
“Yes, that’s their intention.”
“It’s not a bad idea at all. You have to take into account the fact that this is a newly constructed building. You know how much it cost me to complete it, right?”
“I actually asked Director Yoon about the construction cost of this building the other day, but he said he didn’t know and suggested that I ask you about it, sir.”
“It cost me around 3 billion won to build it.”
“That’s more than I expected.”
Gun-Ho and Mr. Adam Castler took a moment and sipped their water. Director Kim and Interpreter Myeon-Joon Chae, who were sitting next to them, seemed to feel thirsty as well. They drank their water.
Gun-Ho continued, “When we signed the joint venture contract, the paid-in capital was 10 million dollars, and the authorized capital was 20 million dollars. Let’s assume that the paid-in capital was fulfilled with the land and the machines.”
The interpreter, who had to interpret what Gun-Ho just said, seemed to not know what the ‘paid-in capital’ and ‘authorized capital’ meant. He looked at Director Kim’s face and asked in a low voice, “Mr. Director Kim, what is ‘paid-in capital?'”
Director Kim said to Interpreter Chae, also in a low voice, “I will explain the meaning of it later. For now, just know that it is called ‘paid-in capital’ and ‘authorized capital” in English.”
“Oh, okay, sir.”
Interpreter Chae continued his interpretation.
Mr. Adam Castler responded after hearing the interpretation, “At the time when we formed this joint venture, Dyeon fulfilled its investment portion of 5 billion won by providing the machines and raw materials, while you— Mr. President Goo— brought in the land that was worth 4.5 billion won and 500 million won in cash. So, the amount of intended paid-in capital of 10 billion won was met.”
“Now, Dyeon is suggesting putting an additional 10 million dollars— let’s just assume that 10 million dollars is equal to 10 billion Korean won. So, Dyeon would have to come up with 5 billion won, and I need to bring in 2 billion won in cash in addition to this building which is worth 3 billion won.”
“That… that sounds about right.”
“That will make Dyeon Korea’s capital 20 billion won, and we would reach our authorized capital.”
“That’s correct.”
“Dyeon Korea’s stock price is 10,000 won per share, and the number of shares totals 1 million. After we increase the capital stock, our number of shares will be 2 million.”
“That… is right.”
“According to the joint venture contract, a shareholder can sell its share in its sole discretion after the company goes public. You are aware of this, right?”
“I’m not sure about it, but if that’s what is stipulated in the contract, then it is.”
Gun-Ho crossed his legs and continued, “Mr. Vice President Castler, when you talk to Vice President Brandon Burke next time, please tell him this. We currently have about 10 billion won in our reserve, and it will grow to 12 billion won by the end of this year. We will use 10 billion won to increase the capital provided by both parties, and we will distribute the remaining 2 billion won as dividends.”
“Okay. I will let him know.”
The three men then left the office after giving a respectful bow to Gun-Ho.
Gun-Ho was sitting in his office by himself having a cup of jujube tea that Secretary Seon-Hye Yee had previously brought to him. While having his tea, Gun-Ho thought about Lymondell Dyeon’s Vice President Brandon Burke who was in charge of their international business development department.
‘That crafty bald man… Once he realized that having a research center will greatly help Dyeon Korea to register with KOSDAQ, he quickly made his suggestion to increase the capital stock. Dyeon Korea will become a company with its capital of 20 billion won. Once it successfully goes public, its total market value would become at least 200 billion won given that the company’s sales are rapidly on the rise. They are just picking up cash without doing much like a free rider. They invested a few old and shabby machines in this company, and they now expect to make several hundreds of billions won.’
