Chapter 579: This Time We Suffered a Big Loss

January 12, 2015.

Monday.

Lin Feng finally had some free time.

Yun Luan, Liu Cangyun, and Jiang Xiaofei have been in Japan for over a month and a half.

First, they registered and established a Japanese company named Fengyu Zhu Shi Company.

After the company was established, they proceeded to acquire a Japanese enterprise called Bright Ocean Metal in full.

This company had been established for several decades, and initially its profitability was relatively strong.

But later, as the machinery aged and production capacity declined, they were badly hit by Americans in the futures market.

These past few years they have remained in a state of loss.

Because of consecutive years of losses, the company was delisted a year ago.

Its profitability is poor, and with a huge debt to the bank, it is constantly on the brink of bankruptcy.

The board's shareholders have changed several times; eventually everyone realized that the former profit‑making golden chicken had turned into a gold‑swallowing beast.

The more they invested, the more they lost.

After Yun Luan established the Fengyu Association, they first set their sights on this company.

The two sides hit it off immediately.

Yun Luan acquired all shares of Bright Ocean Metal at a price of two billion US dollars.

After receiving the documents sent by Yun Luan, Lin Feng examined them carefully.

This company acquisition plus debt repayment used nearly three billion US dollars, which is clearly not worth this premium acquisition.

To revive this company, at least another two billion US dollars must be invested.

Moreover, the company's management needs a major overhaul.

Bright Ocean Metal's problems: first, the machinery is outdated, leading to excessively high production costs.

Second, employee wages are too high and management is chaotic.

You should know that in Japanese workplaces, the seniority‑based hierarchy is extremely severe.

Furthermore, because the company is overseas and hires too few locals, it faces resistance from them.

If you mine on their land but don't employ their people, they will certainly have objections.

Lin Feng clearly understands that this is actually a form of colonialism by Japan.

Looking again at Bright Ocean Metal's mineral holdings, they are distributed worldwide, with over thirty sites.

There are gold mines, copper mines, silver mines, nickel mines…

Most of them are precious metals, with expected output not low.

Investing a few billion more dollars and streamlining management would make profitability fully achievable within two years.

Recouping the investment within five years poses no problem.

At this point, the energetic young Japanese hired by the company are already flying around the world, parachuting in to become general managers of local subsidiaries.

Meanwhile, they are purchasing large numbers of new machines, hiring more local workers, and retaining only a small portion of the technically competent Japanese employees.

Because too many Japanese employees have been laid off, some have started protesting.

Lin Feng is not here to do charity; this bunch is just supporting the Japanese elderly.

The Fengyu Zhu Shi Company is merely a stepping stone that Lin Feng has set up in Japan.

It is convenient for carrying out the next step of the plan.

Compared to Han Guo, Japan's zaibatsu are just as formidable; they likewise control Guo Jia's economic lifeline.

Because the zaibatsu exist, it is easier for Americans to manage, just as during WWII when Japan propped up various puppet regimes.

Lin Feng was sitting in the courtyard, pondering.

Suddenly his phone rang.

It was Zhao Xiaoyang calling, telling Lin Feng that he had been detained again.

The reason was that Masheng Liangji had pressured them through the 'Great Death Official'.

They wanted to elevate this simple brawl to another level.

Also blame Zhao Xiaoyang's bad luck.

While out shopping with his two girlfriends, Wang Yu and Yu Yanni, he happened to run into Masheng Liangji exiting the mall.

At the time, he almost made Masheng Liangji vomit blood from anger.

His own son was still lying in the hospital, yet this near‑killer of his son was walking around scot‑free!

"How did Wang Yu and Yu Yanni end up playing together?"

After hearing Zhao Xiaoyang's account, Lin Feng curiously asked.

Wang Yu is not a generous woman.

Zhao Xiaoyang paused, wondering if this was off‑topic.

After a few seconds he replied, "I'm not entirely sure, but I only know that Wang Yu first approached Yu Yanni, and then their relationship became as close as sisters."

"We, we also happily played together…"

Before Zhao Xiaoyang could finish, Lin Feng interrupted, saying, "You don't need to go into detail with me, but I want to remind you that Wang Yu has some tricks—don't let her play you."

"I know, bro."

"Don't worry! Masheng Liangji won't be able to jump around for long."

Masheng Liangji is indeed soon unable to jump around.

Because the company's gold futures are about to suffer massive losses.

In the London gold futures market, daily trading volume reaches two trillion US dollars, making it very hard to manipulate.

But the New York gold futures in Mi Guo are different.

And Asa Ryokichi invested in those New York gold futures.

With Yang Huairi as this insider, Asa Ryokichi's short or long positions, when he entered, the price, etc. were known.

Lin Feng could see it clearly.

Lin Feng dumped a large number of short contracts, and at current prices Asa Ryokichi's losses had already reached one billion dollars.

Moreover, the price of gold futures was still falling.

During the contract period, most of the positions had already been closed.

In the end, only Asa Ryokichi and a small portion of the longs were still struggling to hold on.

There were still three days left until the final delivery date.

Asa Ryokichi finally knew who had placed all those short contracts.

It turned out to be Bright Ocean Metal, which had the qualification for physical delivery!

This company had been quickly acquired earlier, and is now the Fengyu Corporation.

After learning the details of Bright Ocean Metal, Asa Ryokichi laughed.

Factoring in leverage, his contracts amounted to over twelve billion dollars.

He didn't believe that Fengyu Corporation, which had acquired Bright Ocean Metal, could come up with over three hundred tons of gold all at once.

If they couldn't deliver the physical goods on the delivery date, they would have to pay him at least 1.5 billion dollars in penalties.

Conversely, because he was long, his contracts were above market price.

If Fengyu could produce the physical goods for delivery, Asa Ryokichi certainly couldn't come up with that much money.

But whether he was forcibly liquidated or defaulted, he would lose no less than 1.5 billion dollars in penalties.

Of course, this was only Asa Ryokichi's contracts.

If the contracts held by other institutional investors were included, Fengyu Corporation would have to deliver even more physical gold.

Estimated, not less than five hundred tons.

Only five hundred tons!

For Lin Feng, increasing twentyfold would be no problem.

Moreover, using futures to trade gold is far more profitable than selling at market price.

As long as he had enough physical goods on hand, shorting would never cause a loss.

This is also a common practice among many futures-producing enterprises to prevent product prices from plummeting.

For example, precious metals, corn, soybeans, and so on.

When physical prices plummet, the money lost is made back in the futures market.

If prices surge, the rise in physical prices can offset the losses on short positions.

Of course, if the appetite is too large, and the short contracts opened far exceed one's physical inventory,

and if on the delivery date they cannot make up the shortfall, then they can only default and pay the penalties.

When Asa Ryokichi felt he would not lose this time but would instead make a big profit, he suddenly received a phone call.

It was the futures exchange calling.

The other party prepared for a physical transaction, telling Asa Ryokichi to get ready with cash.

Over twelve billion dollars—Asa Ryokichi could not sell that much even if he turned himself into gold.

The futures exchange would not deceive Asa Ryokichi.

This proves that they are indeed able to mobilize that much gold.

Whether it's physical delivery or closing out, they would lose 1.5 billion dollars.

This time they lost big!