America was a place where finance was flourishing, and things were very flexible. It was safe to say that as long as your collateral had value, there would be banks willing to lend you money, and plenty of it.
After a month and a half of screenings, by August, Zheng Bai Cheng’s film, "Never Give Up," had grossed nearly $30 million. It was a huge success. North American cinemas weren't as widespread as they would be decades later. When the film first premiered, it was only shown in ten cinemas. It was like a test run for a new product. If audiences liked it, and the reviews were good, the screenings would be expanded.
Warner Bros. didn't cheat Zheng Bai Cheng because he was Chinese. They saw the potential of the film. There was another reason, too. Warner Bros. was about to be acquired, and they wanted to achieve something, to showcase their abilities to the new owners.
Another reason was that Zheng Bai Cheng had given them some advice that they found very insightful. It involved the controversy surrounding the film, which they used to their advantage, sparking nationwide discussion.
The film was being screened from the central or economically developed cities to second-tier, third-tier cities, and finally to remote areas. The copies were also screened multiple times. The copies were expensive.
By the time the film reached rural areas, it could be several months later. Zheng Bai Cheng wouldn't be able to wait that long. He wanted to make the most of this once-in-a-lifetime opportunity in 1967. He needed the money now, a large sum. He brainstormed and finally came up with a plan - a loan secured by the film contract.
Wealthy people used bank loans to make money, but only if the profits exceeded the loan interest. Such an opportunity was now presented to him, so naturally, he would take out a loan. It was only in 1972, after Cheung Kong Holdings went public and Li Ka-shing experienced the benefits of the stock market and using other people's money, that he started using loans, share issues, overseas listings, and other financing channels to raise funds.
Prior to this, his operations were more conservative. He wasn't sure if the situation in Hong Kong would worsen that year. Using his own money to purchase property would give him a chance to bounce back if things went south, but if he took out a loan, he might lose it all to the bank.
Zheng Bai Cheng's speculation might not have been true, but he needed to take out a loan, and a large one.
He decided to act. He called Warner Bros. to inquire about the box office performance. He asked Tom for a favor, "Tom, I need your help. I'm short of money, a lot of money..."
Before he could finish, Tom interrupted him. "Jason, I sympathize with your predicament, but the company has rules. Everything must be done according to the contract. I have no authority to advance your box office share."
"No, Tom. How much has my film made so far? $30 million, right?"
"YES, $30 million. A beautiful number. It's rare to see such a figure in all these years." When Tom mentioned the box office, his lips curved upward on the other side of the phone. If Zheng Bai Cheng could see him, he would know that this guy was probably going to get a promotion.
"I don't want to advance my box office share. I want you to issue a certificate, confirming that the film has indeed grossed $30 million to date. I need it to get a bank loan, OK?"
"OK!" Tom agreed readily. They even placed an advertisement in the newspaper, promoting their film's $30 million box office gross.
…
Amanda knew that Zheng Bai Cheng was a talented person, but she didn't expect him to be so bold. She witnessed the signing of a massive loan right before her eyes.
Zheng Bai Cheng obtained the certificate from Warner Bros., and then, armed with the contract, he went to the Los Angeles branch of New York City Bank to apply for a loan. This bank had a Chinese name: Citibank, one of the earliest American banks to establish a branch in Shanghai.
"Mr. Jason, we've never had a loan like this before. I need to report this to my superiors."
The loan manager saw that Zheng Bai Cheng had prepared thoroughly. He felt that this loan could be approved. First, the applicant owned six bestselling novels, and the collateral was a film that had grossed over $30 million. The contract showed that the young man, this young Chinese man, would receive at least $12 million in box office share. According to the contract, there were no hidden clauses. The potential loophole was the time for the box office share to be paid, such as an agreement that the share would be paid after the film was completely withdrawn from theaters. This was a simple way to manipulate things. You could find a rural cinema, pay them, and have them keep showing the film until the production company went bankrupt.
Looking at the thick contract gave the loan manager a sense of reassurance. It was comprehensive. When Tom first saw this kind of contract that only existed in the future, he was astonished. Otherwise, he wouldn't have shown so much respect for Zheng Bai Cheng.
The more meticulous, detailed, and comprehensive the terms, the more people would be convinced.
A week later, Zheng Bai Cheng received a credit line of $15 million from Citibank. He could withdraw the money at any time within one year. The funds were to be used for purchasing property under the supervision of Citibank's Hong Kong branch.
The high credit limit was partly due to the fact that the film's box office had increased again, and they liked this potential client. They were happy to give him a higher limit.
"I never imagined that you'd become a millionaire, Jason." Amanda's exclamation also reflected Hans's shock. He couldn't believe that his boss was now a multimillionaire, and in dollars no less.
$15 million, converted to Hong Kong dollars at the current exchange rate, would be 77.4 million Hong Kong dollars. If he spent all that money on property now, the value of those properties would double in a year. In two years, it would be four times as much. By 1972, it could be ten times as much?
Even if he invested in the stock market, investing in the Hang Seng Index constituent stocks, and sold them before March 1973, he could still get a 30-fold return, which would be $450 million!?