Chapter 591 Hotel Group
"We received notifications from 3 of the 8 oil companies that they will deliver the crude oil to the port within the specified time. The other 5 companies have proposed further negotiations with us..."
In early April, Duane Hurst, CEO of BFT Fund, gave Barron’s the latest news.
It should be noted that the prices of international crude oil mentioned earlier are usually based on the price of London North Sea Brent light crude oil - this crude oil is regarded as one of the highest quality crude oils.
The quality of crude oil produced by oil companies that have signed agreements with BFT funds, including Russia, Southeast Asia and Africa, is often lower than North Sea Brent crude oil.
For example, the price of Russian Urals crude oil is even more than ten dollars per barrel lower than the price of North Sea Brent crude oil...
At the same time, the BFT Fund signed a crude oil spot purchase contract of US$90 per barrel with them. This US$90 is the CIF price, which means that it includes the freight and insurance of the crude oil. This was also the reference when signing the agreement. CIF crude oil price based on the Baltic Composite Index.
So far, according to the purchase contract made at that time, part of the crude oil spot obtained by the BFT Fund has been sent to three ports.
The oil produced by oil companies in Russia will be transported to Indian ports and refined at the refinery jointly operated by United Energy Group and Reliance Group; the oil produced in Southeast Asia will be shipped to Guangxi Province in China and processed at United Energy Group. It is refined at the refining base that cooperates with PetroChina; as for the oil produced in Africa, it is directly transported to the refining base in Colo...
Of course, at this time, the production capacity of these refining and chemical bases was not enough to digest the crude oil spot. Therefore, the BFT Fund also sold the excess crude oil to some partners of United Energy Group, including Reliance Group, PetroChina, and Sinopec...
With the refining capacity of two barrels of oil at this time, the excess inventory can be fully absorbed.
As we all know, China has many oil fields and is also an oil-producing country.
But in fact, the cost of China's local oil extraction is higher than that of purchased crude oil. This is just because of the need to maintain the country's oil extraction capabilities and maintain a certain level of energy self-sufficiency, and there are a large number of relevant upstream and downstream personnel and enterprises. Relying on this industry, many refining bases with two barrels of oil still need to purchase internally.
Moreover, two barrels of oil also have considerable crude oil storage capacity. In contrast, the oil of the BFT fund is naturally welcomed by them.
Those five oil companies already hope to reduce some "default costs" through negotiations. As for the three oil companies that are still insisting, they will gradually start to choose to default as crude oil prices continue to rise.
Of course, as the subprime mortgage crisis becomes more and more powerful, BFT funds also need to start withdrawing funds and prepare to "buy the bottom". Even so, they still hope to get as much profit from these oil companies as possible.
…
"I heard that you are giving those oil companies a lot of headaches, Your Highness the Duke."
Prince Walid came to London again. When he met Barron, he said this after hugging him.
Obviously, he was referring to the large purchase orders between the BFT Fund and those oil companies...
Although Prince Walid's industry does not involve oil, Saudi Arabia itself is a major oil-producing country. They have always been very concerned about news about the crude oil market. Therefore, Prince Walid was able to learn about this matter, and Barron did not know at all. Accident.
"This is not what I want, dear Walid..."
Barron shrugged and said innocently:
"No one could have expected that the price of crude oil would continue to rise. If the price of oil fell instead of what it is now, then the situation would be completely different."
Prince Walid also agreed with what Barron said:
"That can only mean that you are too lucky, Your Highness the Duke, or that your vision is very accurate. I believe it is the latter."
"Thank you for the compliment, maybe I should admit that..."
This time Prince Walid came, of course, not just to congratulate Barron...
Next, he talked to Barron about the Four Seasons Hotel Group - as early as last year, Barron had taken the initiative to bring it up, hoping to buy the remaining shares of the Four Seasons Hotel held by Prince Walid.
In the first phase of the Global Industrial Investment Fund, they completed the privatization of the Four Seasons Hotel Group together with Prince Walid's Kingdom Investment Company. Currently, GII Fund and Kingdom Investment each hold 47.5% of the shares of the Four Seasons Hotel Group. 5% of the shares of the Four Seasons Hotel Group are held by the family of Isadore Sharp, the founder of the Four Seasons Hotel Group - they have also been responsible for the operation of the Four Seasons Hotel.
Last year, Barron proposed to acquire the 47.5% stake in the Four Seasons Hotel Group held by Prince Walid for US$1.66 billion.
Based on this price, the Devonshire Family Trust's valuation of the Four Seasons Hotel Group this time will reach about US$3.5 billion. Compared with the US$2.86 billion valuation of the Four Seasons Hotel Group when it was privatized, its price has increased. Over 22%, it is considered a very reasonable price.
However, Prince Walid had no idea of selling his shares in the Four Seasons Hotel Group at that time, so the matter has been delayed.
However, this time when he came to London, it seemed that Prince Walid had the idea of selling his shares in the Four Seasons Hotel. According to Barron's guess, he should have seen the impact of the US subprime mortgage crisis on the banking industry and thought that now was an opportunity to continue to invest in it.
Before this, Prince Walid held a considerable amount of Citigroup shares and was its largest private shareholder.
But in November last year, after Citigroup accepted the capital injection from the Abu Dhabi Investment Authority, the Abu Dhabi Investment Authority held less than 5% of Citigroup's shares, surpassing Prince Walid and becoming Citigroup's largest private shareholder.
At that time, Prince Walid did not have the idea of investing more in Citigroup, but one of the reasons was that he was already the largest private shareholder of Citigroup. If there was a choice, Citigroup would rather obtain funds from other aspects to prevent Prince Walid from holding too high a proportion of their shares.
On the other hand, Prince Walid's industries were also affected by the subprime mortgage crisis, and it was difficult for the ceremony to raise too much funds to participate in it.
It is probably this matter that made Prince Walid think of selling the shares of Four Seasons Hotel Group to obtain funds to increase investment in the American banking industry.
In this case, it can be said that the man is in love with the woman.
Barron is still willing to give the previous conditions. Under the influence of the subprime mortgage crisis on the global economy, stock markets around the world have fallen to varying degrees, so Prince Walid readily agreed.
In this way, the Devonshire Family Trust will acquire 47.5% of the shares of the Four Seasons Hotel Group at a cost of US$1.66 billion; GII-1 of the Global Industrial Investment Fund holds another 47.5% of the shares of the Four Seasons Hotel.
Next, they will promote the merger of the Four Seasons Hotel Group with the Cavendish Hotel Group owned by the Devonshire Family Trust to form a hotel group with a larger scale.
