sovbooks Chapter 267 Financing Negotiations
Chapter 267 Financing Negotiations
At 8:10, the administrative team was ready for the second round of inspections—the nameplate positions were slightly adjusted, the mineral water bottles were uniformly made with the trademarks facing outwards, the sticky notes were replaced with a thicker version, and the projector was replaced with the latest financial model demonstration.
Carly is testing the video conferencing system—Durand from France is unable to attend in person due to unforeseen circumstances and will participate via video. The video on the screen is slightly delayed, but the audio is clear.
"Mr. Ling, can you hear me?" Durand's voice came from the speaker.
"Very clear." Ling Yun nodded to the camera. "Thank you for adjusting the time."
"Hopefully, an agreement can be reached today," Durand said. "Paris is taking this investment very seriously."
At 8:25, the sound of the elevator doors opening could be heard.
The Goldman Sachs people have arrived.
Richardson walked at the front, still in his dark blue suit, but today he wore a red tie. Behind him were three people: Chen Wenhao and two assistants. Their footsteps echoed down the corridor.
"Mr. Ling." Richardson shook hands firmly, "I look forward to today's results."
"Me too," Ling Yun said.
The Goldman Sachs team took their seats in their designated areas. Richardson naturally chose a seat with his back to the door—a symbol of being in control. Chen Wenhao sat to his right and opened his laptop.
At 8:40, Morgan Stanley's men arrived.
Winston, dressed in a light gray suit, appeared somewhat more approachable than his Goldman Sachs team. His team consisted of only two people—a senior vice president and a legal counsel. They had chosen window seats, directly opposite the Goldman Sachs representatives.
"Mr. Winston." Ling Yun shook hands.
"I hope we're all satisfied today." Winston smiled, but there was no smile in his eyes.
At 9:00 AM sharp, the people from Abu Dhabi arrived on time.
Khalid walked ahead, dressed in a traditional white robe but with a well-tailored suit jacket over it. Sheikh and Dr. Leila followed behind. Their arrival subtly shifted the atmosphere in the meeting room—the involvement of Middle Eastern capital meant that these negotiations were no longer just a Wall Street game.
"Lingyun!" Khalid embraced her warmly. "Today is a good day, isn't it?"
"I hope so," Ling Yun said.
The Abu Dhabi team sat at the other end of the long table, next to the French on the video conference screen.
At 9:10, everyone was in place.
There were twelve people in the conference room: Ling Yun, Carly, Fiona; four from Goldman Sachs; two from Morgan; three from Abu Dhabi; and the French side participating via video. The air was filled with the aroma of coffee and the soft rustling of paper.
"Everyone, thank you for gathering amidst your busy schedules." Ling Yun stood up and walked to the whiteboard. "Today is the final negotiation for Xingyu's current round of financing. The goal is clear—to finalize all terms and sign the Term Sheet."
He paused for a moment and looked around the room.
"To ensure efficient progress, I suggest we discuss the issues in order. First, equity allocation and valuation. The parties have largely reached an agreement on this: a pre-investment valuation of $8.5 million, $1.7 million in financing, and the sale of 20% equity. The specific allocation is: Morgan Stanley 7%, Goldman Sachs 5%, French National Investment Bank 4%, and Abu Dhabi Investment Authority 4%. Any objections?"
No one spoke, only the sound of keyboards being tapped.
"Then it's approved." Ling Yun wrote the first checkmark on the whiteboard. "Second, board seats."
The atmosphere in the meeting room became tense.
"The current design has seven seats," Ling Yun continued, "two for the founders, two for the management team, and three for the investors. How will the three investor seats be allocated?"
Richardson was the first to speak: "Goldman Sachs, as the lead investor, needs a separate seat."
"Morgan Stanley also needs an independent seat," Winston immediately followed up.
On the video screen, Durand said, "France and Abu Dhabi share a seat, but we want a clear rotation mechanism—France in the first year, Abu Dhabi in the second year, and then they alternate."
"Abu Dhabi agrees to the proposal," Sheikh said slowly. "But we need to add a clause—if the two parties sharing a seat disagree on major issues, that seat will abstain from voting at that meeting."
"Okay," Durand said.
"So the allocation of the three investor seats is set: one for Goldman Sachs, one for Morgan Stanley, and one shared by France and Abu Dhabi." Ling Yun looked at everyone. "Any questions?"
"How are the voting rights for shared seats calculated?" Richardson asked. "If France and Abu Dhabi disagree, whose vote prevails?"
"That's why abstention clauses are needed," Fiona explained. "When two parties sharing a seat disagree, that seat abstains on the relevant issue to avoid a deadlock."
"This could result in investors having only two votes on certain issues," Winston said.
"That's exactly what the design was intended for," Ling Yun said, "to ensure that no single investor can control the board of directors."
A brief silence followed. Richardson's fingers tapped lightly on the table.
"Goldman Sachs accepts," he finally said.
"Morgan accepts," Winston nodded.
"Then it's approved." Ling Yun wrote down the second checkmark. "Third, liquidation priority."
This is going to be tough. The temperature in the conference room seemed to have dropped a few degrees.
"There are currently three options," Carly switched the projector screen. "Goldman Sachs is asking for 2x participation, Morgan Stanley is asking for 1.5x non-participation, and France and Abu Dhabi are accepting 1x non-participation. We need to reach an agreement."
Richardson leaned forward: "As the lead investor, Goldman Sachs assumed the greatest risk and coordination work. A 2x participating liquidation preference is a reasonable request and in line with market practice."
"A 1.5x non-participatory liquidation option is also market practice," Winston said calmly. "And it's fairer to the founding team and other shareholders. Participatory liquidation rights would significantly reduce what founders receive upon exit, impacting their motivation."
"Risks need to be rewarded," Richardson said.
"But the returns need to be reasonable," Durand's voice came through the speaker. "The French National Investment Bank is a strategic investment, and we hope the company can develop in the long term, rather than excessively exploiting the founders and causing talent loss."
"Abu Dhabi agrees," Sheikh said. "We value long-term cooperation, not short-term exit gains."
The two strategic investors were on the same side. Richardson's expression remained unchanged, but Ling Yun noticed that his jaw muscles tightened for a moment.
"Then I propose a compromise," Ling Yun said. "1.5 times non-participation. Goldman Sachs, as the lead investor, can receive an additional transaction fee of 0.5% of the investment amount as risk compensation."
Richardson quickly calculated: Goldman Sachs invested $8500 million (5%), so 0.5% would be $42.5. While not a large sum, it represented approval.
"Goldman Sachs needs explicit authorization from the board of directors to pay this transaction fee from the company's cash, without deducting it from the investment amount," Richardson said.
"Okay." Ling Yun looked at the others. "Does anyone have any objections to this plan?"
Winston considered for a few seconds. "Morgan agrees with 1.5 times the non-participatory level."
France agrees.
"Abu Dhabi agrees."
"Then it passes." Ling Yun wrote the third checkmark.