Generally speaking, the plan given by John Mark is equivalent to a stock underwriting contract. From this point of view, John Mark is quite bold.
There are usually two ways for an investment bank to underwrite client stocks, one is underwriting and the other is consignment.
Under the underwriting mode, the underwriter needs to ensure that all the stocks entrusted by the client are sold. If there is any remaining stock, the underwriter needs to pay for the remaining part. Therefore, the underwriter needs to bear a lot of risk. In contrast, consignment sales do not need to guarantee the sales share of stocks, and only sell as much as possible. Similarly, in this sales model, the commission ratio that underwriters can get is usually only half of that in the underwriting model.
Of course, these two methods are usually new shares issued by underwriting companies, but this time, John Mark intends to underwrite all AOL shares already in Eric's hands, and the value of this stock is even more unprecedented.
In the plan, John Mark proposed that Morgan Stanley use its own stock sales network to be responsible for underwriting all AOL stocks in the hands of Firefly Investment. Firefly Investment needs to pay Morgan Stanley 5% of sales as a commission. At the same time, in order to cooperate with Morgan Stanley's sales, Firefly Investment also needs to give a relative discount and a fixed price that is not affected by the fluctuation of the public stock price in the market, which is similar to the issue price of a company's IPO.
From 1992, when Firefly Investment Corporation acquired 30% of AOL’s equity for the first time with US$60 million, until the beginning of the year when it aggressively absorbed AOL stock in order to strengthen its control, the total amount of capital used by the Firefly system was 1.57 billion. million US dollars, a large part of which was spent on absorption during the period from the end of last year to the beginning of this year.
However, according to Eric's plan, only the 3.1% of the shares held by the Clover Fund will be sold off one after another next year when AOL's stock price is high, which is enough to recover all the capital that the Firefly system has paid over the years. Firefly Investment Company's 32.6% AOL stock, no matter how much it sells, can be regarded as a net profit for Eric.
According to yesterday's closing price, 32.6% of AOL shares publicly held by Firefly Investors are worth a total of 14.2 billion US dollars.
What does $14.2 billion mean
On the Forbes list of the world's richest people at the beginning of the year, the Mars family, which controls the famous Mars food company, ranked tenth on the list, with a family wealth of only 13.5 billion US dollars. If you don't consider factors such as capital gains tax that need to be paid for the time being, just this 14.2 billion US dollars in cash is enough for one person to squeeze into the top of the world's richest list.
If it can be successfully cashed out at the current stock price, even if it cannot be compared with corporate giants such as General Electric and Wal-Mart, Eric will definitely become the individual with the largest cash reserves in the world, and the amount far exceeds all other rich people in the world.
No one is more aware of the bubble in AOL stock than Eric. His original plan was to use the period before the dot-com bubble burst to sell as much of AOL stock as possible and cash in $10-20 billion Funds come out.
Once the Internet bubble bursts, even if the remaining stocks in the hands still maintain a very high face value for a short period of time, in fact, no investors will buy them easily at that time.
Therefore, if it can be cashed out in a short period of time, it will be safe, even if AOL's current market value is far lower than the highest point in Eric's memory, he will not resist the plan given by John Mark for a while.
However, after carefully reading the plan given by John Mark, Eric looked up and asked, "John, it involves capital operations of more than 10 billion US dollars. How sure are you that you can successfully complete this plan?"
"According to the information I have collected recently, international hot money has begun to withdraw from Southeast Asia on a large scale, and some hedge funds have also begun to turn their targets to the Russian ruble, and may even launch an attack on the ruble this month. Once launched, I think the ruble will absolutely I can't even last a month." John Mark didn't answer Eric's question directly, but said with a touch of confidence in his tone: "So, Eric, I now very much agree with the point you said last time, Nazhi The 2000 point is just the beginning. In response to this plan, Morgan Stanley will release a series of analysis reports on the continued rise of the Nasdaq index to stimulate investor confidence. In this regard, I hope that Firefly Group will It can also provide certain media resources to cooperate.”
The official economic analysis reports of several major investment banks on Wall Street have a very powerful influence, and in many cases may even affect the economic data trends of some countries.
In the previous subprime mortgage crisis, major investment banks on Wall Street repeatedly advocated the safety and return rate of high-risk housing mortgage loans through public release of a series of economic data, which made a large number of investors who bought related bonds lose their money. Even European financial giants such as Deutsche Bank are among the misled investors, which shows the strong influence of Wall Street investment banks.
As the Nasdaq index broke through 2,000 points, many investors who were aware of the technology stock bubble began to become more and more cautious. However, if a Wall Street investment banking giant such as Morgan Stanley makes a clear endorsement for the trend of the Nasdaq index, a large number of investors will be affected.
When John Mark said these words, he had already made clear his confidence in this plan and the intensity of his spending.
Eric thought for a while, and asked another question that he was more concerned about, and said, "So, how long do you need?"
John Mark has obviously considered the details in this regard, and replied decisively: "In three months, Morgan Stanley needs one month to release relevant economic predictions to create public opinion. If the Russian economic crisis breaks out as scheduled during this period, we will It will be more sure. One month later, Morgan Stanley can sell AOL stock to our affiliated investment institutions."
"In this case," Eric leaned back on the sofa chair, looked at John Mark, and said, "What do you think, how should I deal with the plan I talked about in the video conference?"
At the video conference in New Zealand at the end of June, Eric strongly demanded that other shareholders of AOL buy 10% of AOL shares held by Firefly Investment within one month, otherwise Firefly Investment would choose to sell it to the open market.
At this time, nearly half a month had passed since the time limit given by Eric, so he naturally couldn't just let it go.
John Mark suddenly realized that he was still negligent. From yesterday afternoon to now, he almost naturally felt that after he came up with this very guaranteed plan, Eric would definitely not stick to the original plan.
After Eric finished speaking, he paused for a moment, and before John Mark could speak again, he said, "John, let me tell you what I think."
John Mark couldn't think of a speech for a while, and nodded subconsciously when he heard Eric's words.
"Actually, everyone knows that other shareholders of AOL, including Morgan Stanley, are not too resistant to buying the 10% of the stock. You are just worried that Firefly Investment will put the rest of the stock on you."
When Eric said this, he paused for a while, and continued: "However, your plan has solved the problems everyone is facing. In this case, I can make some concessions, and the 10% of the stock is still Undertaken by AOL shareholders, the price is calculated based on the US$4 billion I initially gave. Next, Firefly Investment will give Morgan Stanley 15% of the AOL stock underwriting rights at a price of US$6 billion. At the same time, Firefly Investment will publicly guarantee , within one year, no longer reduce the remaining stocks in hand.”
A look of surprise appeared on John Mark's face. He didn't expect Eric to make such a drastic change to the plan he came up with in such a short period of time.
However, after careful consideration, John Mark also has to admit that Eric's modification plan is undoubtedly the most beneficial for Firefly's investment.
Sell a total of 25% of the stock for $10 billion. According to the current market value of AOL, Eric gave up about 900 million US dollars in benefits. But in fact, this price is comparable to Eric's quotation in the video conference at the end of June.
At the same time, the transaction is divided into two parts, 10% of which will be undertaken by other AOL shareholders according to Eric's original plan, and Firefly Investment will no longer need to pay Morgan Stanley a 5% commission.
The other 15% of the stock is underwritten by Morgan Stanley. Compared with the original underwriting plan, this will undoubtedly greatly increase the success rate of sales and reduce risks. At the same time, Firefly Investment can also recover funds in the shortest time.
Morgan Stanley definitely doesn't need three months if it only underwrites 15%.
After selling 25% of the stock, Firefly Investment still holds 7.6% of the stock.
The shareholding ratio has been reduced to less than 10%. Although it is still a major shareholder, Firefly Investment can no longer have much influence on AOL. Coupled with Eric's promise not to reduce its holdings in the last year, AOL's stock price will completely get rid of The shadow brought by the possible reduction of holdings at the time of firefly investment has returned to the overall trend of rapid rise of the entire market.
Finally, keep 7.6% of the stock. Once the market value of AOL continues to rise, Firefly Investment can still gain certain benefits from the rise in stock prices in the future.
It's just that, in this way, Morgan Stanley's income will be much lower.
According to the original underwriting plan, although the risk is a bit high, once successful, according to the 5% commission rate, Morgan Stanley will get 600 to 700 million US dollars in commission income. Danley's annual profit is about 25%.
But now, for the $6 billion underwriting plan, Morgan Stanley can only get $300 million in commissions, more than double the original plan.
For a while, John Mark suddenly had a feeling of making wedding clothes for others.
If Eric could see through John Mark's mind, he would definitely admire him for being able to analyze all his intentions in such a short period of time.
Selling 25% of the stock at one time, in fact, the share of AOL stock held by Firefly Investment and Clover Fund still reached 10.7%. However, on the bright side, the shareholding ratio of Firefly Investment has dropped to 7.6%. Such a shareholding ratio is enough to let the market put down its worries about Firefly Investment.
As for the 25% of AOL stock, the price is only 10 billion US dollars, which is far lower than the value at the highest point of AOL's market value in memory. But Eric believes that even the opposite John Mark, if he can see the future, he will probably make the same choice.
Only if the invisible "rein" of Firefly Investment is completely removed from AOL, AOL's stock price will be able to follow the overall trend of the Nasdaq market in the next year or so, and go wild like a wild horse. Otherwise, AOL will only be shrouded in the shadow of Firefly Investment's reduction of holdings, and Eric will not give up the reduction of AOL stocks, otherwise, this wealth will only be wiped out with the collapse of the Nasdaq index in the future .
In my memory, at this time next year, the Nasdaq index will also break through the 3,000-point mark. At that time, seeing the continuous explosion of technology stocks, not only Wall Street, but investors all over the world will completely fall into the madness of completely losing their minds.
By then, Firefly Investment and Clover Fund will gradually reduce their holdings of the remaining AOL stocks, not only will they not cause too much negative reaction, but they will even be looted by investors.
Seeing that John Mark was silent for a while, Eric had no choice but to take the initiative to speak again: "John, I believe that the 5% commission rate you just gave must still have room for bargaining. However, as long as Morgan Stanley cooperates with me just now I can guarantee now that the 15% of the stocks entrusted by Firefly Investment to Morgan Stanley will be calculated according to the commission ratio of 5%, what do you think?"
John Mark hesitated for a moment, but there was still a faint wry smile on his face as calm as possible. At the same time, he admired Eric's keen business vision. He came directly to Los Angeles to meet Eric instead of contacting Eric's agent in New York, Chris Hansen. Persimmons' thoughts. At this moment, I understood that my little calculation was completely wrong.
Moreover, what if he doesn't agree now.
There are no restrictions such as patent rights on the business plan. If he disagrees, Eric can find Goldman Sachs, Lehman Brothers and other companies to cooperate at this time. Once this happens, Morgan Stanley's competitors will probably wake up from their dreams. The major investment banks on Wall Street have always wanted to snatch away Firefly, a super client.
Without further hesitation, John Mark quickly reached out to Eric and said, "Then, I wish us a happy cooperation."
Eric reached out and shook hands with the other party, and nodded with a smile: "It's a pleasant cooperation."
Eric will devote himself to the filming of "Gravity" on Monday, and the detailed cooperation details will naturally be handed over to Chris in New York.
After discussing this matter, the two chatted about Firefly Group's 2 billion US dollar bond issuance. The sale of this bond has started since last week.
Although Firefly Investment is expected to make a lot of money, Eric did not terminate the bond issuance plan of Firefly Group. Not only because this plan has already been promoted, and it is impossible to withdraw it temporarily, but also, appropriate debt can also play a role in tax reduction and exemption for Firefly Group.
At noon, he retained John Mark for lunch at Pointe Manor, and saw him off in the afternoon, and Eric took Aniston to Hearst Castle in San Simeon, California for the weekend.