Chapter 545: Chapter 546: This is Just Crazy


    ?


    [Chapter 546: This is Just Crazy]


    "Since you''ve made up your mind, I have to think a bit more long-term," Chris chuckled.


    He continued, "As for the acquisition, the information we''ve gathered is quiteprehensive. Even though Nokia''s new 1011 phone has been selling welltely, thepany''s issues haven''t really been resolved. With our financial advantages, acquiring Nokia shouldn''t be a major problem. What''s left to discuss is which acquisition method to choose. Eric, if we go for aplete buyout, the premium will be very high, which would also obstruct your original n to acquire a televisionwork. Among the big fourworks in North America, Fox is growing the fastest and certainly isn''t for sale. The market value of any of the other threeworks exceeds $10 billion. If we chose a stock-for-stock merger, you could even loseplete control of Firefly."


    Eric had been considering these issues as well. A windfall like the Gulf War wouldn''te around a second time. While the tech boom in IT stocks was still a few years off, acquiring a televisionwork was something that needed to happen sooner rather thanter.


    He vaguely remembered some data. In his original timeline, the order of mergers between North America''s majorworks and filmpanies was ABC, NBC, and CBS. Disney wrapped up its acquisition of ABC in 1996 for approximately $19 billion but just three yearster, in 1999, Vi acquired CBS for $37 billion. The scale of the twoworks wasn''t too far apart, but this disparity arosergely due to the rapid economic growth in the United States during the 1990s, which caused stock prices to surge.


    "Chris, do you think that with Firefly''s current performance, it would be feasible topletely finance the acquisition of awork through issuing corporate bonds?" Eric asked.


    Chris thought for a moment. Eric hadn''t hidden many of his ns. If they followed the n Eric had discussed with him, Firefly could raise about $5 billion in cash during the acquisition negotiations. However, if they wanted to swallow any of the big threeworks, they would ideally need around $15 billion.


    Subtracting $5 billion from $15 billion...


    With that thought, Chris suddenly widened his eyes and looked at Eric in disbelief. "Issuing $10 billion in corporate bonds? Eric, you really are mad."


    Not to mention a $10 billion debt financing, up until 1993, there were very few instances globally where acquisition funding exceeded that amount. To issue $10 billion in corporate debt to acquire apany could only be described as insanity.


    Eric shrugged off Chris''s shocked expression. "Chris, think about it from another perspective. We all know what MGM''s current situation is like. Their assets are around $1-1.5 billion, but their liabilities are as high as $1.7 billion, with a debt ratio exceeding 100%. However, if weplete the acquisition of awork, Firefly''s asset size would undoubtedly reach $30 billion, with existing liabilities only around 40%."


    "But Eric, a billion-dor liability and a ten-billion-dor liability aren''t just simple numerical issues," Chris countered.


    Eric certainly understood that. Investors usually purchasedpany bonds because they presented lower riskpared to the fluctuations associated with stocks. Thus, therger the amount involved, the more cautious investors would be. Even a giant like General Motors hadn''t yet encountered a $10 billion corporate debt.


    Still, Eric brimmed with confidence. He recalled how, in his original timeline, Disney sessfullypleted debt financing on the level of $10 billion during the acquisition of ABC. Moreover, Firefly was in a stronger operational position than Disney had been in that parallel universe: "Chris, maybe for otherpanies, issuing $10 billion in corporate bonds is indeed too daunting for Wall Street investors, but Firefly is different. Last year, Firefly''s profit approached $1 billion. This year alone, the profits from summer blockbusters like Jurassic Park, A Bug''s Life, and Deep Impact could total $500 million -- that''s just part of the film''s overall operation. This kind of profitability is enough to alleviate most investors'' concerns."


    Just as Chris was about to respond, the car suddenly came to a halt. Eric looked out the window, realizing that they had stopped in the hotel''s underground parking lot.


    Chris packed away the documents into his briefcase and said, "Eric, I''ll keep an eye on this matter. Once I return to New York, I''ll carve out some time for a feasibility assessment. Jorma Oll might head back to Find this afternoon, so we have only one lunch meeting with him -- we should focus our energy on Nokia for now."


    Eric nodded and got out of the car. After arranging for Chris and the others, it was nearly noon. Eric and Chris, representing Firefly, hosted Jorma Oll at a nearby restaurant.


    ...n/?/vel/b//jn dot c//om


    As agreed upon, Firefly would issue a purchase offer to Nokia within three days. Until the acquisition waspleted, their positions would be temporarily at odds with Jorma Oll. Thus, there wasn''t much substantial discussion during this lunch. Eric made small talk about his interest in Nokia, while Oll passionately talked about digital mobile phones and the future of the global mobilemunicationswork (GSM). By the end of lunch, both enjoyed themselves.


    Oll returned to Find that afternoon to have preliminary discussions with Nokia''s major banking shareholders. Eric and Chris leased a conference room at the hotel to begin deliberating their acquisition strategy.


    Although Nokia had divested or sold off its unprofitable paper, rubber, and television sectors in recent years, as a once-diversified Finnish giant, Nokia still held other businesses, such as energy, pharmaceuticals, and cabling, which had remained profitable,prising about a third of thepany''s total assets.


    Even though mobilemunicationpanies in some European countries had begun operating GSMworks and had boosted sales of Nokia''s first GSM phone, the 1011, GSMworks hadn''t yet be fully ubiquitous. Coupled with significant initial R&D investments, while GSM phones had great potential, Nokia''s mobile division was still operating at a loss, with funds being supplemented by other profitable sectors. No one could foresee the explosive growth potential of GSM phones in theing years, and without visible profits, Nokia''s shareholders wouldn''t tolerate the ongoing situation. This also exined Jorma Oll''s urgent need for external investment.


    Anyone knew that energy and pharmaceuticals were lucrative industries, but Eric wasn''t interested in them at all. From a scale standpoint, Nokia''s segments were insignificant next to the giants in those fields.


    After detailed discussions, Eric ultimately decided that their priority should be acquiring Nokia''s mobilemunications division. This division included not only mobile phone operations but alsomunication devices primarily manufacturing base station equipment for GSMworks, where Nokia had technological advantages over other manufacturers as one of the early adopters of the GSMwork.


    ...


    The next afternoon, as Eric and Chris exited the conference room, Chris, holding a stack of documents, said, "For the R&D of GSM phones, Nokia has been in the red for the past few years, meaning they''ve invested all profits from their profitable divisions into the development of GSM phones. Now that the results are out, I think if Nokia''s shareholders had any foresight, they wouldn''t consider selling the mobilemunications division to us." "Who knows? Perhaps Nokia''s shareholders are eager to cash out," Eric replied. "But in any case, we at least need to acquire absolute control over Nokia."


    That was the baseline for the acquisition that their team had discussed over the past two days. Chris nodded in agreement, saying, "Then I''ll formally present the acquisition offer to Nokia tomorrow morning. Also, regarding the offshore investment fund name we just discussed,


    you can name it."


    Due to different tax rates in various countries, significant funds involved in cross-border acquisitions always raised tax issues. Themon solution was to inject funds into an offshorepany, then conduct investment operations through thatpany, which also could serve to hide assets. Even though it was only 1993, due to the many conveniences of offshore investments, the scale of capital in global offshore centers had already exceeded one


    trillion dors.


    Eric remembered the voices of two little guys chattering over the phone to New York


    yesterday and quickly said, "Let''s call it the Hawaii Fund."


    Chrisughed and nodded, "You must like daughters, huh?"


    "Yeah, haven''t you heard the saying? Sons are a father''s enemies from a past life, while daughters are his lovers."


    "It does sound familiar, and I think it''s rather scientific. For quite a while, my rtionship


    with my dad wasn''t very good, but Emily has always had a great rapport with her father. Perhaps you didn''t know, but I''ve had several arguments with Emily''s dad, and almost every time, she sided with him." Chris smirked and added, "I''ll have someone register that name."


    Eric replied with an affirmative grunt. The conference room was located at the lowest level of the hotel. They walked to the end of the hallway. The other team members had gone directly to the restaurant for dinner, while Eric needed to head upstairs to change. Chris also had some things to check in his room. While waiting for the elevator, Chris curiously asked, "Whichpany is your date with tonight?"


    Besides Nokia, Eric also had to manage discussions rted to European film partnerships in


    line with the GATT negotiations.


    "It''s the big stakeholder at MGM -- Lyon Credit Bank. This summer, the two movies MGM


    released tanked, and after failing to sell MGM in an auctionst year, they''re eager to get rid of this hot potato. However, they hope MGM''s performance can recover a bit first to make finding a buyer easier."


    As the elevator door opened, Chris and Eric stepped aside to let the passengers exit before they entered. Chris pressed the button and continued their previous conversation, "Haven''t you thought about buying MGM?"


    "Of course! I''ve been very tempted by MGM''s massive film library. If we could secure MGM''s library, it would allow us to fully leverage Firefly''s strengths in multi-channel operations, which would also greatly benefit the future development of thework. After all, awork still needs a lot of quality content. However, aside from the library, there''s nothing else that truly interests me about MGM."


    During Ted Turner''s transfer in 1986, he left MGM with only the film library from before 1948, which is why Turner Broadcasting, under Time Warner, began showing MGM''s ssic films in recent years. But MGM still owned over 4,000 film copyrights and even more television series rights, making it the secondrgest library after Time Warner. Yet, due to consecutive years of losses, this once-glorious film giant struggled to leverage its massive library advantages, caught in a vicious cycle of continual borrowing and losses.


    Chris said, "Isn''t there still the 007 rights?"


    "Given MGM''s current debt situation, with a 5% annual interest rate, they would need to pay


    $80 million in annual interest. MGM averages a new Bond film every two years, but the profits from that barely cover interest payments on their corporate debt. That''s why MGM has been losing money in recent years and umting more debt," Eric casually remarked about MGM''s situation. Suddenly inspired, he kicked the elevator wall lightly with his toe, excitement bubbling up as he eximed, "I just thought of a brilliant idea!"


    Chris looked at him in confusion. "Hmm?"


    "Compared to a giant like Lyon Credit Bank, all these European moviepanies are like


    small fry. If Lyon Credit could broker a deal using MGM as a shell, Firefly could extricate itself from these negotiations without derailing its established operational strategies." Chris, who had already understood the implications of Firefly needing to negotiate to


    facilitate the GATT discussions, quickly grasped Eric''s intent. Firefly had already confirmed many production ns for next year and the year after. To support the GATT negotiations, it needed to allocate some resources to share with European film entities, meaning they would have to adjust their established development ns. However, if Firefly could coborate indirectly with European filmpanies through MGM, they wouldn''t need to make drastic


    adjustments.


    Yet Chris wasn''t too optimistic about Eric''s idea. "You just said MGM''s annual profits might not even cover their bond interest. I can''t imagine those European filmpanies are oblivious to that. Do you really think they would agree?"


    "Then let''s invite all parties to sit down and negotiate. Given MGM''s current state, I believe


    as long as someone can guide thispany out of its predicament, its creditors would be willing to temporarily forgo some benefits. Otherwise, if thepany goes bankrupt, MGM''s assets wouldn''t even cover its current liabilities. The biggest problem MGM faces now is ack of sufficient funds tounch more film projects. The creditors have needs, the European filmpanies have cash, and Firefly can provide high-quality film projects. Put all that together, and we could nearly revitalize this floundering filmpany. Don''t you think they


    might be tempted?"


    Chris nodded but cautioned, "Didn''t you just say you were very keen on MGM''s library? If MGM really does revive as you said, the costs of acquiring thepany down the line will


    only rise."


    *****


    https://.patreon/Sayonara816.