I am Hollywood

[Chapter 1069: The Green Shoe]

After having lunch with Bill Mechanic, Eric boarded the plane to New York. It was November 18, a Wednesday. To ensure he had enough time to formulate targeted strategies based on the stock's performance on its first day, Yahoo's IPO date was deliberately set for the next day, Friday, the last trading day of the week.

Inside the Boeing 767 cabin, Anne Hathaway, who had grown up in a wealthy middle-class family, was taking her first ride on a private jet. To avoid appearing as a naive country girl, she remained reserved in the lounge after the plane took off.

Over thirty minutes passed as she flipped through a magazine meant for distraction, not really taking in anything. Glancing around, she noticed Eric's female assistant was deeply engrossed in her paperwork, seemingly oblivious to her presence. After a moment of hesitation, Anne stood up and walked toward the front of the cabin.

Eric had just mentioned he was headed to the study. Did they really have a study on this plane? Well, a jet this size could surely have a study, no surprise there.

Feeling a little self-conscious that her thoughts might be observed by the assistant, Anne glanced back before quietly leaving the lounge.

As she passed a meeting room and a restroom, she gently pushed open the third door, finding Eric seated behind a desk. When he looked up at her, she quickly gave a harmless smile and said, "Eric, I, um, just wanted to see if you were here."

Eric gestured for her to come over and grinned, "Do you think I would sneak off the plane without anyone noticing?"

"Of course not," Anne realized she had said something silly and stuck out her tongue in playful defense.

As she approached Eric, who reached out to her, she naturally sat on his lap. Curious, she glanced at the laptop on the desk. Feeling a strong hand wrap around her waist, Anne leaned back slightly. Remembering something from a few days ago, she whispered, "Eric, I went to see Ted with some friends last Saturday. Was that really your script?"

"It was," Eric closed the laptop screen and shifted it aside, asking, "So, what did you think?"

"Very," Anne hesitated, trying not to laugh, "very amusing."

"Oh, that's not something a good girl should be saying," Eric teased as he lifted her waist and placed her on the desk across from him. "I thought you'd tell me you couldn't handle it and ran out after 15 minutes."

Anne kicked off her high heels and placed her nylon-clad feet on Eric's legs, adding a hint of seduction to her gaze. "But it's your movie."

Eric held down her restless calf and noticed she wore a mid-length magenta trench coat today, its hem revealing her long legs. Curious, he tugged at the coat's delicate belt, revealing only a thin blouse and OL-style black pencil skirt underneath. He couldn't help but laugh, "Do you know what the temperature in New York is right now?"

Fearing Eric might have something mischievous in mind, Anne leaned slightly back, bracing herself on the desk surface. Caught off guard by his question, she stammered, "Yeah, but you won't let me freeze, right?"

Eric nodded, his eyes lingering on her tempting appearance as his fingers found the zipper of her skirt, pulling it down. "Well, since you've seen Ted, I want to test your limits."

Anne lifted her body slightly, obediently allowing Eric to peel off her skirt. Nevertheless, her eyes carried a hint of reproach as she half-heartedly said, "You've already tested that."

With a mischievous grin, Eric replied, "Do you think that was the limit? So naive."

...

Three hours later, the Boeing 767 landed at Eric's private airport on Long Island. Night had fallen along the East Coast, and the temperature in New York was similar to London, marking the onset of winter.

That night, Eric had a party to attend. After making a call to East Hampton, he boarded a helicopter bound for Manhattan.

Around 8 PM, the helicopter touched down on the rooftop of Eric's high-rise residence at the entrance of Sixth Avenue in Manhattan. A group of seven descended from the still-black VH-60, with his assistant, Merissa Mayer, leading a few bodyguards downstairs to arrange for their cars, while Eric took Anne back to his place.

Once inside the luxury apartment, Eric activated the air conditioning and looked over at Anne, who had settled on the sofa. He walked over, gently pinching her chin and asked, "Do you want to join me for the party later?"

"Is that okay?" Anne perked up, only to realize her excitement didn't match her earlier state. She grabbed a nearby cushion and hugged it, saying, "But Eric, I don't know anything about this."

"These parties are perfect for someone who knows nothing," Eric laughed. "It's settled then; you'll come with me, and I'll take you back to Millburn tomorrow morning."

This time Anne traveled with Eric primarily to celebrate Thanksgiving and Christmas with her family. Her home was in Millburn, New Jersey. Eric wasn't exactly clear on the specifics, but from Anne's description, it was probably near Jersey City, just across the river from Manhattan, still part of the New York metropolitan area.

Hoping for a little more time with Eric, she said, "Actually, I didn't tell my parents I was coming back these past few days. Can I stay in Manhattan a bit longer?"

Eric shook his head, "I'm too busy these days; I won't have time to hang out with you."

Anne looked at Eric with a pleading gaze for a moment, but seeing him unmoved, she reluctantly gave up her wish.

After a while, Merissa Mayer returned with a few outfits with a cold expression. Watching Anne change into a dress that fit her very well, and seeing Eric leaving with that girl, the assistant felt like a cat whose owner had abandoned her at home and felt resentment. She tossed around the apartment in a mad fit and drank up the most expensive bottle of red wine in Eric's wine cabinet.

...

The term IPO stands for Initial Public Offering, the first supply of stocks to the public market. Many often mistook a company's listing date as its IPO, but in reality, the IPO is a funding process, not confined to a single day. Generally, when a company publicly announces its listing date, it means they have completed the IPO process of gathering funds from institutional investors.

That night, the party Eric attended with Anne was a thank-you event hosted by Yahoo for its institutional investors who subscribed to the company's stock.

Thanks to the recent hype surrounding Yahoo's tech stocks, the Nasdaq index surged past 2500 points on Monday, moving into the volatile range that Eric considered most precarious. By the end of trading today, the Nasdaq reached 2567 points, a significant increase that heightened the uncertainty around Yahoo's IPO and the Nasdaq index.

In the banquet hall of the Plaza Hotel, Eric had mingled with some important guests of the night. Chris, Ian Grinell, and Morgan Stanley President John Mack gathered around him.

Eric entrusted Anne to Emily and stood with the other men in a corner of the hall, where the other guests tactfully didn't intrude.

While Yahoo's upcoming IPO suggested it had completed its first public capital raising, the aftermath brought about far more serious concerns for both the Firefly Group and its underwriter, Morgan Stanley, alongside other Wall Street firms.

Everyone present held a large amount of tech stock investments. The exact figure wasn't clear, but Eric was certain the major investment banks on Wall Street owned just as much tech stock as the Firefly Group's Clover Fund. Furthermore, these banks had entered the market much later than Clover Fund. To secure profits, they had to ensure that after Yahoo's IPO, Nasdaq wasn't adversely affected by stock price fluctuations.

As the largest pure Internet company undertaking an IPO so far, if Yahoo's stock were to face significant downward pressure or be heavily shorted after the IPO, the domino effect it might trigger would be more severe than for any other tech company.

"Because the number of subscriptions after the roadshow exceeded our expectations, according to the green shoe mechanism, we sold a total of 172.5 million shares this time, including 22.5 million shares as green shoe options, accounting for 15% of the set issuance ratio. Once the IPO leads to a downward trend in the stock price, Morgan Stanley can use $735.75 million to support the market."

In the crowd, John Mack briefly explained some measures taken by Morgan Stanley to Eric once more.

The so-called "green shoe mechanism," formally known as the overallotment option, allows underwriters to sell up to 15% more shares than initially planned during the subscription process.

However, these shares aren't formally delivered but treated as an option transaction for the purchasers. Because they have already paid cash like other equity buyers, institutional investors cannot back out of this option subscription, essentially constituting a form of betting-style venture capital.

Confirmed green shoe options mean that if the company's stock surges after the IPO, underwriters can buy back shares from the issuer at a favorable rate to sell to option buyers. If the stock price declines -- especially if it dips below the offer price -- the underwriters can use the funds gained via option sales to buy back stock from the open market and resell to the institutional investors who bought the options.

The green shoe mechanism allows flexibility for the issuer to raise additional funds during times of public interest in the company's shares while still providing a fruitful investment experience for an added group of institutional investors. However, the most critical benefit is that should the post-IPO stock price disappoint, underwriters can legally support the stock price, preventing it from dropping too drastically and damaging everyone's interests.

After a brief explanation from John, he turned his gaze to Eric, continuing, "But Eric, I still feel $700 million isn't very secure. I hope Firefly can take more actions. Although Firefly Investments recently acquired Sony's film assets, which is just a tiny portion of the funds gained from AOL's equity sale, I believe that if something unexpected happened, Firefly should be capable of reinvesting enough funds to secure Yahoo's stock price."

Eric smiled as he listened to John and nodded, saying, "If necessary, John, Firefly will surely do that."

Truth be told, Eric was more worried about the chain reaction that could arise from Yahoo's stock price weakening after the IPO than the investment banks at Morgan Stanley.

If the major investment banks were to lose money on tech stocks, the losses would actually fall on the investors who delegated their funds to the banks' wealth management. However, a large portion of the tech stocks held by Clover Fund belonged to Eric. If he lost hundreds of millions of dollars, it would undeniably sting, even for someone of Eric's wealth.

Moreover, the crucial aspect remained the 30% forward equity transfer agreement Yahoo made with Microsoft.

Microsoft had established a very stable monopoly in operating systems, and even if the Nasdaq crashed, Microsoft's stock wouldn't plummet drastically. In contrast, Yahoo was still riding a growth wave, with its stock likely to tumbling significantly due to insufficient revenue and profit data. Although several years of operations safeguarded Firefly's absolute control over Yahoo post-IPO, even if they gave Microsoft a 30% stake, Eric really didn't want to sell this stake cheaply right now.

"There's also the media angle that needs your personal attention," even though Eric's somewhat non-committal response didn't satisfy John, he proceeded, "I've noticed negative comments about Yahoo emerging over the past few days, especially an article from The Washington Post published yesterday that was particularly harsh against tech stocks. Eric, I don't quite understand this; if I'm not mistaken, your relationship with Mr. Buffett should be quite good."

Eric found himself puzzled as well. Although The Washington Post was under the Graham family's control, Buffett had been a significant stakeholder and crucial board member of The Washington Post for a long time, wielding substantial influence over the paper. He glanced at Chris, who maintained a closer relationship with Buffett through their personal interactions, as Buffett's Berkshire Hathaway was also one of Firefly Group's significant shareholders.

Chris shook his head, "I've been too busy lately and didn't catch up on that. I'll personally call Warren tomorrow morning."

"I'll see if I can have lunch with Terry Semel tomorrow," Eric added, "and I'll reach out to the other networks. As for the newspapers, Chris, you can handle that. We need to ensure that no odd commentary appears in the media following Yahoo's IPO."

*****

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