Chapter 1006: Exit condition

Eric ignored the people on the screen with different expressions and looked a little careless. "So, Steve, you won. I officially announced that from today on, Firefly Investment will not intervene in any internal affairs of AOL. You can take care of this company according to your own ideas."
In the conference room in New York, everyone heard a sigh of relief.
However, listening to the cold tone of Eric in the speaker, Steve Case was equally loose in his heart, but then there was a fear.
No one knows better than his CEO. The importance of the Firefly system to AOL is definitely not just the identity of the largest shareholder.
Over the years, in addition to financial support, the Firefly system has spared no effort in the US Internet's resource and media resources.
AOL's portal not only has the same benefits as Yahoo!, but also Avatar's email, instant messaging and browser software technologies. In terms of more than 2,000 patents granted in various aspects, the cooperation between the two parties in specific projects such as built-in search engines and online payment platforms is even more complicated.
For most of the cooperation, AOL has far more resources than it pays. On the surface, AOL is a big bargain, but it also unwittingly deepens AOL's dependence on the firefly system.
It is not difficult to imagine that after parting ways, once the firefly system cuts off the various cooperations established before the two sides, AOL is far behind Yahoo's Internet media business, and may even fall into a collapse.
What's more, this situation is definitely not the most serious situation. The Firefly System is the largest shareholder of AOL in the end. This is the source of deep-rooted pressure on the scene.
There was a series of possibilities in his heart, and Steve Case’s fears turned into fear. He couldn’t help but say:
Eric, I think I need to explain.

"I just said, I said, listen," said Eric, without hesitation, interrupting the other party's words without mercy, waiting for Steve Case to be embarrassedly closed. Going up, Eric continued: "Secondly, I promised here that within two years, the cooperation between several companies of the Firefly System and AOL will not change. And, in order to eliminate it for a few days. The impact of the recent incident, Chris Hansen, Ian Gnell and Robert Eiger will announce their resignation as directors of AOL's board of directors at tomorrow's press conference. So, Stie Husband, you won again, and I really won’t take control of AOL in ways that might harm the company’s interests."
During the initial capital injection process, Eric promised not to intervene in AOL management for three years. The three-year period expired in 1995, and in line with the listing, AOL reorganized the board of directors.
The Firefly System received three positions from 11 online board seats at AOL.
Chris received a board seat as a shareholder representative. Yahoo CEO Ian Gernier and ABC Group CEO Robert Eiger each received two other director seats as independent directors.
Eric originally hoped that Kasenberg would enter the AOL board of directors, but Kasenberg was based in Los Angeles. On the eve of the US online listing, he moved his headquarters from Virginia to New York, so he left a single board seat for the Firefly Group. Robert Eiger.
The role of the directors of the board of directors of large companies is to provide constructive advice for the development of the company, but in fact, they are basically the spokespersons of the major shareholders or management. Even if it is a sole director, it is absolutely impossible to really maintain independence.
Usually, the publicly held board of directors of a listed company is actually the core of a company's power, they have the power to appoint and remove the company's management. Therefore, every board seat is full of the game of the forces of the parties. In which party the board seats are controlled, it represents which party actually controls the control of the company.
Hearing that Eric will give up the three board seats of the Firefly System on the AOL Board of Directors, it is difficult for everyone to calm down in the conference room in New York. This news is more surprising and inciting at the venue than everyone who is present, than to hear Eric promise not to change the status of cooperation with AOL in two years.
Although even if the firefly investment gives up its seat on the AOL board of directors, it is impossible for anyone to really ignore the influence of this first major shareholder.
However, the abandonment of these seats means that the firefly investment has given up the power to exert influence directly on the US online decision-making level, and the interest of the major shareholder of the firefly investment will therefore be difficult to obtain sufficient protection.
As long as you are willing, other shareholders and management of AOL can easily unite and adopt M&A, additional issuance, and introduction of other investors to gradually dilute the shareholding of the largest shareholder of Firefly Investment and gradually marginalize the investment of fireflies. It may even take some rubbing measures to directly damage the interests of firefly investment.
But now, the firefly investment is really going to do this.
Then, no one would think that Eric Williams made this crazy decision because of his own stupidity. There is only one possibility. Fireflies intend to withdraw from AOL, and for a short period of time. Exit quickly.
From Eric's words, it is not difficult for everyone to speculate that the time limit for Firefly's investment to sell stocks to withdraw from AOL is about two years.
For AOL, a listed company with a market capitalization of $40 billion, the first-largest shareholder holding more than 30% of the shares will take all of the stocks in their hands for two years, which is absolutely short-lived and short-lived.
At least, it is expected that if the firefly investment continues to sell large amounts of stock to the open market for the next two years, even if the market is optimistic about the company, AOL's share price will definitely not have any improvement.
With this in mind, a group of AOL shareholders and executives who have just been excited about how to win the three board seats after the firefly investment exit, have become extremely fascinating.
"So, the above is my guarantee. Next, you are going to do it," Eric looked down at the documents in his hand, then looked up and noticed the faces of the people on the screen. "I want to come to you and definitely guess some." The current situation is that Firefly Investment holds 32.6% of AOL's shares, totaling 53.79 million shares. Since 1992, in order to express support for AOL, even if the company went public three years ago, the fireflies have never reduced their holdings. After any AOL stock, it has been continuously increasing its holdings. But now, since everyone can't agree on the company's development direction, Firefly will not stick to its identity as the largest shareholder."
In fact, the Firefly system holds a total of 58.9 million AOL shares, accounting for 35.7% of AOL's total share capital of 165 million.
However, another 3.1% of the stock is in the hands of the Firefly Group's Shamrock Fund.
With a shareholding of less than 5%, according to the Federal Securities Exchange Act, Firefly does not need to report to the Federal Securities and Exchange Commission (SEC), nor does it need to inform other online shareholders and management of AOL if it is not necessary.
Although there is no shortage of people on the scene who know that the firefly system still holds a large part of AOL's stock, since Eric ignores this part of the shareholding, everyone will not take the initiative.
However, even so, imagine that there may be a stock that occupies one-third of the total share capital of AOL, and everyone is still a little scared.
Historically, the stock market disaster that caused the entire Great Depression in the United States in 1929 was caused by the frenzied reduction of major shareholders. After the stock market crash of the year, the SEC imposed strict restrictions on the reduction of major shareholders of listed companies in North America in order to maintain market stability and protect the interests of small and medium-sized investors.
If AOL’s largest shareholder, such as Firefly Investment, wants to reduce its holdings through the secondary market, it must first submit a shareholding report to the SEC, and disclose information such as share reduction and reasons for reduction to the market. Secondly, the firefly investment must also disclose the operating conditions and financial data of AOL in the recent period to prove that the major shareholder did not receive the inside information in advance to reduce the holdings.
However, these restrictions are ultimately only to prevent major shareholders from deliberately infringing on the interests of other shareholders and investors.
However, stocks are private property after all. As long as the major shareholder's reduction is formal and legal, even if it may cause the company's stock price to plummet or even collapse, others have no power to block.
All AOL stocks held by Firefly Investment are common stocks that can be traded freely. At the same time, AOL was listed three years ago, and the stocks held by Firefly Investment have already passed the six-month lock-up period. Selling.
Imagine the various situations that may be faced. Someone in the conference room quickly took the initiative to say: "Eric, you want to sell all the stocks on your hands for a short time. This is not realistic. Have you considered this consequence?"
Eric listened to the sound coming from the sound, looked at the monitor, and spoke of a bald middle-aged man. Eric vaguely remembered seeing each other during the listing of AOL three years ago. Is the president of First Boston Investment Bank.
Eric did not ask the other person's name, but said: "I certainly thought about it. Everything I said today is well thought out."
The thoughts were interrupted. Eric once again looked down at the documents in front of him and continued to say: "My decision now is that the firefly investment will be the first to reduce the holding of 16.5 million shares. This part of the stock, I want you to follow. As for How many of your parties intend to undertake, this is your business, I will give you a month, after a month, if you do not get a positive response, Firefly will choose to sell to the open market."
16.5 million shares, which is exactly 10% of the total share capital of AOL.
According to current AOL stock prices, the value of these stocks is around $4 billion.
For the major investment banks and funds holding AOL stocks, $4 billion, they will definitely not be able to get it in the short term. However, if they are shared, they are still a small business, but they can still afford it.
However, what everyone considers is not the case.
With a reduction of 16.5 million shares, there are still more than 37 million shares left in Firefly's investment. How does Eric Williams plan to take care of this part of the stock, and will they continue to take over the next two years?
The Nasdaq index is now close to 2000. Everyone understands the serious cost of foam.
Do not talk about other, just say AOL.
According to the recent US online market capitalization and earnings estimates, the company's price-earnings ratio has reached 131 times, which was absolutely unimaginable a few years ago.
In the past years, even for companies with very good development prospects, the price-earnings ratio often does not exceed 30 times. For many investors, a company's price-earnings ratio is more than 30 times, the investment risk has become very large, and now, AOL's price-earnings ratio has exceeded 131 times, the risk is self-evident.
Although countless media and investors are advocating investment in technology stocks to invest in the future, the current profitability of these high-tech companies cannot be used to determine the future of the industry. But in fact, everyone knows the scary bubble behind the high stock prices of these companies.
At 30 times the price-earnings ratio, AOL's market capitalization should be only $9 billion, even if it is already overvalued, but now AOL's market value is about 40 billion US dollars, more than four times higher than normal.
In this serious bubble, no one knows how long AOL's current high stock price can last.
Therefore, although the shareholders of the US online headquarters in New York City have earned substantial book income from the continuous rise in AOL's share price in recent years, at this time, let them spend 4 billion US dollars to buy Eric thrown Of the 16.5 million shares, most people are still very resistant.
In the eyes of many people, this money is actually enough to buy half of AOL.
However, if they are not willing to take over, they will face an open sell-off of firefly investment.
They also know that firefly investment will not desperately throw all the stocks at once, but the long-term continuous selling is even more grueling. In the face of long-term uninterrupted influx of the market, AOL’s share price wants It is impossible to think about any improvement.
The crowd was silent for a moment, and Morgan Mark, president of Morgan Stanley, who was familiar with Eric, asked: "Eric, what price do you plan to sell at this price?"
"If you promised it now, $4 billion." Eric looked at the past and said: "If you plan to consider a month, then settle the price after one month."
John Mark immediately shook his head: "Eric, this is too expensive. The actual situation of AOL is very clear to everyone, not to mention such a large stock exchange. If you are willing to give a discount, I can represent it now. Morgan Stanley subscribed for 3 million of them. So, I think 30% off is a price that everyone can afford."
The voice of John Mark fell, and everyone in the conference room nodded.
They also know that to avoid the continued reduction of firefly investment, the AOL stock price has been in a long-term downturn, and it is inevitable that the stocks under the firefly investment will be sold. But if Eric Kenn sells the stock at 70% of the current price, they are still very willing to take over, even if Eric sells more stocks, no problem.
According to the market value of AOL's $180 billion in the peak period of memory, the total value of AOL stocks held by the Firefly system will exceed $60 billion.
However, even if the firefly invests 1% of AOL shares in the circulation market within one day, it may crush the AOL stock price, not to mention that 35.7% of the stocks are sold at the highest point of the stock price. It is a fantasy. .
Eric has never been a greedy person. For the AOL stock in his hands, he will be satisfied if he can cash out one or two billion dollars in the next year or so. After all, the actual value of AOL is not worth even $10 billion in Eric’s view.
If you don't know the potential of AOL's stock price growth in the next two years, Eric is really willing to sell the stock at a lower discount price. Of course, he will certainly not accept the 30% discount.
But at this time, Eric did not intend to make any concessions, but he resolutely shook his head: "If this is the case, then you can consider it for a month, come here today, the rest, you can talk to Chris. ""
Just about to hang up the video, Steve Case, who has been silently sitting across from the conference table, finally said again: "Eric, the remaining stocks outside of the 16.5 million shares, what are you going to do?"
Eric looked at Steve Case and swept the other people in the conference room. He said: "The rest will be discussed next year. It will be half a year later. It is still 16.5 million shares. You choose to pick it up. Still not. I just said that I will not make too aggressive behavior, but you must also pay the price you deserve in order to maintain the current state."
Leaving these words, Eric stopped talking to the crowd and turned off the video call.