Chapter 381: October

[Chapter 381: October]

Eric and Chris spent several hours discussing a detailed plan to acquire Disney stock from the secondary market. After Chris neatly tucked away his handwritten notes, he recalled something else as Eric prepared to leave and called out to him, "Eric, there's one more thing I almost forgot to mention."

Once Eric sat back down, Chris continued, "In August, the Cisco board passed a resolution to dismiss the founders, the Graves, from all of their positions at Cisco. They have now left the company."

As Chris spoke, he got up to fetch a folder from the file cabinet and handed it to Eric. Eric opened it to find a resolution document from the Cisco board meeting in mid-August. After reading it, he lifted his head and asked, "What exactly happened?"

"The Graves felt that the current management of Cisco was too profit-driven, which contradicted their original vision for creating the company. They had caused quite a stir several times because of this. When I attended the mid-year Cisco meeting in June, I witnessed it myself; the couple pointed fingers at CEO Morgan Leach and yelled at him, causing the meeting to be delayed by three hours. In August, the fed-up management team threatened to resign collectively if the board didn't take action, leading to the proposal to terminate the Graves' roles at Cisco."

Chris relayed the situation with a hint of disdain, saying, "The truth is, their issues have little to do with the company's operations strategy. They are just upset about losing control over Cisco."

"I understand that. Unless it threatens our interests, let's try to stay out of Cisco's management," Eric replied.

Chris nodded, "I get it, but I want to mention the next piece of news. After the Graves left Cisco, they indicated they would be selling off some of their stock. I thought you might be interested, and we coincidentally have enough funds."

Eric recalled Cisco's shareholder distribution, an excited look coming across his face. After going public, the Graves held 27.6% of Cisco shares, making them the company's largest shareholders, while Sequoia Capital held 23.5%, putting them in second place. Firefly Investment Company owned 23% and ranked third, with the remaining nearly 30% of shares spread among institutional investors and the management team.

Though Cisco was a public company, the market had not been optimistic about Cisco's prospects at the time of its IPO, so most shares sold had been purchased by investment firms with very few entering the secondary market. Investors already holding shares, due to Cisco's strong performance post-IPO, were not willing to sell easily. This meant that the Graves' decision to sell was likely the only opportunity for a significant buy-in of Cisco stock.

If they could acquire the Graves' shares, it would practically give Firefly Investment near absolute control of Cisco. This was something Eric had longed for.

"How much are they asking?" Eric directly asked, focusing on the critical detail in his voice.

Chris understood Eric's intent. As the manager of Firefly Investment, he was even more aware of Cisco's situation. He shook his head with a smile. "Eric, you might be disappointed. The Graves don't intend to sell off all their shares; they're only willing to part with two-thirds of their stock -- about 18%. They're asking for $250 million, which is 30% above market value. So, most interested investors are currently negotiating with the Graves. I estimate the final deal won't exceed $200 million."

"Contact the Graves as soon as possible. We need to secure those shares. We have enough funds, so even if it's a bit pricey, that's fine," Eric pondered aloud. He then added, "Tell them if they are willing to sell all their shares, we would purchase it at the 30% premium they offered."

"I'll pass that along, but it's unlikely. If it weren't for their need for funds to start a new venture, they probably wouldn't sell even that 18%," Chris cautioned.

"It's worth a shot; there's no harm in trying," Eric affirmed.

...

During Eric's recent days in New York, the price of crude oil reached an unprecedented high of $41 a barrel. Around the same time, Western countries and major Middle Eastern oil-exporting nations began implementing various effective measures to stabilize oil prices. Saudi Arabia first announced it would boost domestic oil production to full capacity to meet market demand, while North America and European countries initiated their own oil reserves to stabilize prices. Additionally, a coalition led by the U.S. military fully deployed in the Gulf, with over 600,000 troops, exerting significant pressure on Iraq with their military presence. Amidst all this, crude oil prices began to slowly decline.

Eric had no idea that his trip to New York would coincide with the peak of oil prices followed by this downturn. So, upon returning to Los Angeles, various attempts to probe him about the returns from the oil crisis flooded in. Without exception, these inquiries aimed to discover how they had fared off the turmoil.

During this period of trading in oil futures, Eric's principal of $500 million out of total $700 million had been temporarily borrowed from the seven major film studios, and the studios had ultimately gained nothing except for the loans and a negligible interest payment. Therefore, it was only natural that certain people were desperate to learn how much "they" had profited, feeling that knowing the results would soothe their worries.

Eric, however, had no intention of revealing specific information and stirring their excitement; he was not about to act in such an unkind manner. When pressed, he typically found ways to change the subject quickly. So, some individuals shifted their focus to the movements of Eric's companies, hoping to glean some information from there.

As the days went by, aside from a plan that some of Firefly's employees leaked about the Playa Vista filming base, the only major announcement was that Firefly Investment had acquired 18% of the shares from the Graves at $210 million. Beyond that, Eric appeared to have been quite inactive. Though he had claimed to the community officials that he would invest $1 billion for the Playa Vista filming base, savvy observers recognized that it was impossible to spend that much money on the project, particularly considering it would span several years, and the initial investment would max out around $10 million.

This calm over the situation led many to feel a sense of relief, comforting themselves with the notion that Eric likely hadn't earned too much from the crisis.

...

As October faded away, Hollywood was gearing up for the upcoming New Year's releases. The major film studios had begun promoting their marquee films for the year-end period. Executives from the seven studios were pleasantly surprised to discover that apart from a film produced by Eric titled Point Break, he was not directing any films set for release that year.

Firefly was also set to release only two films at the end of the year, besides Point Break, there was Robert Shea's latest movie, Ghost Detective. This project seemed to imitate the thrilling comedy style of Ghostbusters, and it was a film Eric had never heard of before. Estimated investment was around $40 million, with Firefly covering a quarter of that sum per the prior agreement with Shea.

However, Firefly's previously successful Home Alone series would not see a sequel this year. This was mainly because Stuart's agency, CAA, had demanded a whopping $15 million for his salary, nearly double what was offered last year. Additionally, the Ronkel couple seemed to have "caught on" this time, not interfering and leaving salary negotiations entirely to CAA.

Should they agree to CAA's salary request, combined with increased salaries for the other cast members, producing a sequel would cost at least $25 million just in salaries alone. Total costs for the sequel would likely exceed $50 million, and with the added marketing budget, it would require a box office of $140 million to break even. Given that the previous film had seen a downturn in ticket sales compared to the first, it appeared the sequel would be a risky financial endeavor. Without much thought, Eric decided to put the sequel plan on hold.

On the same day Firefly announced its pause of the Home Alone series, Stuart's agent immediately called to make concessions. However, Eric, busy with futures trading, didn't have time for another round of negotiations with CAA and flatly turned them down. Unlike some studios overly reliant on specific film franchises, Firefly didn't need to accommodate unreasonable demands if certain parties insisted on their highball approach to salaries; they should be prepared to suffer the consequences.

...

Point Break wrapped filming in mid-October and was expected to take a month to complete post-production. During this period, Eric avoided getting close to Kathryn Bigelow, especially with the recent revelation of Cameron and Linda Hamilton's affair being caught by the paparazzi, complete with photos plastered in the newspapers.

The day the news broke, Kathryn rushed to the set of Terminator 2, located in New Mexico. After Cameron confessed the truth, she wasted no time and divorced him, cutting ties cleanly without any lingering disputes. However, considering Cameron was not just one of those young, single directors, the affair had the potential to impact the box office of Terminator 2, prompting the two of them to agree to wait until after the film's release before announcing their divorce.

While this matter was temporarily kept under wraps from the media, many people were aware of it. As an investor in both films, Eric certainly couldn't be oblivious. Kathryn Bigelow, a remarkably fierce woman, had married Cameron only after she was captivated by his talent when she was 35, but did not expect their marriage wouldn't even last three years due to her husband's infidelity. It was an ordeal any woman would find hard to accept.

Although Kathryn maintained her cool, meticulous professionalism during work and seemed unaffected by the crumbling marriage, whenever Eric appeared, her gaze occasionally darkened, shooting him the kind of look that suggested all unfaithful men should be roasted. This feeling sent chills down Eric's spine; he had no intention of taking the fall for Cameron's mess, and therefore decided to temporarily step away from dealing with Point Break.

*****

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