“But what about the other forty ships in the vicinity?” Peder asked eagerly. “The ones I know for a fact belong to George, Nicos, Andreas and Peter?” Shipping was the only business in the world in which billion dollar companies were still ubiquitously referred to by the first name of their owner.
“Ja, but those guys agreed to charter most of them to me for thirty days when we were out playing golf together on the Algarve a few weeks ago,” Coco said. “And the ships I don’t control will just come along for the ride; everyone is invited to Coco’s tanker party.”
“But if what you’re saying is true, Coco,” Peder said slowly, “then you are the first shipowner to have ever cornered the VLCC market.”
“Ja, but this is a little dramatic.”
“Dramatic?” Peder said, stunned. “Coco, you control the lifeline between the money addicted Middle East and the power addicted people in America and China! You are living the dream!”
The seventy-five-year-old shipbroker pumped his fist and spun around on the heel of his suede loafer like a breakdancing boy. Not only did he appreciate the artistry of Coco’s handiwork, he was also thrilled that the 1.25% commission he levied against the transportation costs was about to increase in lock-step with the short-squeeze in charter rates.
“Dreams don’t last forever,” Coco said as he thought briefly about his failed relationship with Alexandra Meriwether – the prize he wanted most of all and only one he hadn’t had been able to keep.
“And neither do tanker parties,” Peder said, “but they sure are fun while they last! And I guarantee this will be a surprise party for Mr. DuBois.”
“You know surprise parties are my favorite,” Coco sang. “I’ve been waiting almost ten years to get even with that no-good wrangler and now I’ve finally got my chance.”
“So what should I tell him?” Peder asked.
“Please inform Mr. DuBois that I require $100,000 per day for the Viking Aphrodite and that he has one hour to reply firm,” Coco laughed.
“One hour?” Peder said. “I don’t know if I can even reach him in one hour. It is Friday, you know.”
“People can always be reached if they want to be,” Coco said. “Oh, and tell him the price will go up when he comes back from his rodeo on Monday. That will get his attention.”
“But Coco,” Peder said, “I believe Rocky DuBois has at least ten cargos to load in the next two weeks,” Peder said. “Are you actually proposing to charge him $100,000 per ship, per day?”
“Oh no,” Coco said sweetly. “I would never do such a thing to a fine gentleman like Mr. DuBois.”
“Thank God,” Peder exhaled. During his decades of shipbroking he had learned that while a strong market was good for almost everyone, an overheated market usually ended up hurting more people than it helped.
“I am only proposing to charge him $100,000 per day for the first ship,” Coco howled. “The next one will be higher.”
“Higher?” Peder swallowed hard.
“Strap on your lifeline, Mr. Hansen, because we are taking the VLCC market up to $250,000 per day!” Coco announced. The tanker party wouldn’t yield enough cash to satisfy the $500 million he owed the Greek, but it was a good and symbolically powerful start.
“Aye, aye, Captain!” Peder said.
“There’s just one more thing,” Coco said. “Be sure to tell old Rocky that I’m currently in Aegean Sea on the $150 million yacht he bought for me the last time I had a tanker party in 2006,” Coco laughed.
“Will do,” Peder smiled. “What will Mr. DuBois buy you this time: a couple more Van Goghs?”
“No,” Coco said with a smile as he admired the evil eye pincer gripped between his fingers. “This time Mr. DuBois will buy me eternal salvation.”
Chapter 4
John Fredriksen
John Fredriksen (1944- ) is widely considered to be the greatest shipping tycoon of all time. Born in Oslo, the welder’s son dropped out of high school to work in a shipbroking company before starting his own business at age twenty-seven. With a gift for assessing risk, a belief in empowering people, a drive to build value for shareholders and a strong work ethic, Fredriksen has amassed a fortune of around $15 billion, making him Norway’s richest citizen. Fredriksen and business partner Tor Olav Trøim have been a creative force in shipping and ship finance – dramatically transforming the way maritime companies utilize the capital markets.
Marine Money
“Mr. DuBois, you have a telephone call on line one, sir,” Brittany Davenport said, her soothing New Orleans patois drifting like smoke from the triangular speakerphone on the corner of his massive black desk.
Although the CEO of American Refining Corporation had clearly heard his twenty-five-year-old personal assistant summon him, Rocky DuBois didn’t acknowledge her right away; he preferred to prolong the pleasure of terrorizing Coco Jacobsen and the silver-tongued tanker broker who fronted him.
To kill time, Rocky sucked a breath into his twice-broken nose, pushed his inhumanly rough hands into the pockets of his gray flannel trousers and began to move slowly across his corner office; he was as far from his natural environment as a lion in a cage.
It was a beautiful autumn Friday and while many high-ranking oilmen were looking forward to hitting the links at River Oaks, Rocky was looking forward to a enjoying a different sport: trading ships. Although some oil companies considered the vessel charter market to be nothing but a necessary evil, a two-bit Turkish bazaar in which their transportation department had to procure vessels from time to time, a self-made wildcatter like Rocky DuBois felt at home there; he took the same hardscrabble pleasure in trading vessels as he did in exploring for stranded pockets of oil and gas – especially when those vessels belonged to Coco Jacobsen – the man who had ruined his Thanksgiving dinner and embarrassed him in front of his family ten years earlier.
Rocky slowly paced his acre of office. When he finally arrived at the wall of floor-to-ceiling windows that insulated him from Houston’s stifling heat and humidity, he paused to study the view – not of the endless industrial prairie his company was finally helping to electrify with domestically produced power, but of himself. Rocky felt like he was staring at a complete stranger.
He studied his perfectly coiffed chestnut-brown hair, the red power tie and clerically-crisp white spread-collar as if they belonged to someone else. He scowled at the perfect fit of his J. Press suit and the mirror shine of his Jermyn Street wingtips. Rocky would have been more comfortable in the dirty blue jeans and steel-toed boots he’d be wearing for decades, but his investor relations team asked him to wear his CNBC costume because he’d been on Mad Money earlier that day explaining the potential of hydraulic fracturing and watching his stock price gush to yet another all-time high.
“Are y’all taking a nap in there?” Brittany finally asked her non-responsive boss. “I can always take a message if you’re feeling sleepy,” she added.
“No, I’m not taking a nap,” The eighty-year-old man said as he moved toward the speakerphone. “I just wasn’t ready to talk.”
“Well are you ready to talk now?” she asked.
“That all depends who I am talking to,” he said. “Not if it’s that Matt Damon calling again to interview me for that anti-fracking movie of his,” Rocky said, shamelessly showing off for his attractive aide-de-camp.
“It’s not Matt Damon,” she said.
“And not if it’s one of those boobs inside the beltway accusing me of poisoning the aquifers,” he said. “There’s nothing worse than being an oilman during a Democratic administration; I give them the miracle of energy independence and cleaner burning fuel and they give me nothing but grief.”
“I don’t think it’s…”
“Did you know that Congress hauled me in over that Deepwater Horizon fiasco, even though ARC doesn’t even drill offshore!” he continued his rant. “I tell you, Britt, if this stress keeps up much longer I’m going to head up to B
ig Sky once and for all,” he grumbled.
“Oh, no,” the young woman gasped into the telephone. “There’s no need for a vigorous man like you to talk about death,” she said. “Not just yet.”
“I’m not talking about death!” the old man replied into his telephone. “I’m talking about cashing in my chips, giving a bunch of money to charity and moving out to my new ranch in Montana.”
Deep down, Rocky knew it was time to get out while he still could. He had spent his life preaching about the possibilities of fracking, making and losing half-a-dozen fortunes along the way, and now America finally believed him. But Rocky knew that the fracking party would invariably come to an end, at least for a little while, and he didn’t want to be holding five-million shares of ARC when it did. After all, with all this hype about alternative energy and global warming, the next time a cyclical bull market came around for a fossil fuels man like him he might be dead. Rocky knew that a business owner rarely got two chances to sell out; he had bought the rumor, now it was time to sell the news.
“The caller’s name is Peder Hansen, sir,” Brittany said.
“I’ll take him,” Rocky sighed as he snatched the telephone from its cradle and pressed the blinking button. “So I assume we’re on subjects,” he said into the black handset; he deliberately used the shipping parlance to remind the Norwegian tanker broker that he was a bareknuckle businessman and not some pampered American executive there to be hustled in the spot market like a tourist in a taxicab.
“I’m afraid not,” the Norwegian said softly as he began his twenty-minute walk home through the Oslo twilight. When Peder noticed that people had begun to arrive at BAR for dinner, he’d decided that his lunch should probably be over.
“Come again?” Rocky asked with his mouth agape as he untied his uncomfortable shoes and pulled on his faded yellow “Cat Diesel” baseball hat.
“Coco countered,” Peder said as he walked into the magnificent Frogner Park and added softly, “sort of.”
The lovely one-hundred-acre park located in the dead center of Oslo was home to the sprawling bronze and granite sculptures created by his countryman Gustav Vigeland. While Frogner Park was the most popular tourist destination in Norway, even natives like Peder couldn’t get enough of the place. He had learned to ride a bike with his parents in the park when he was a little boy, met his future wife on the lawn during a Frisbee game in university and now took his grandson for a walk along the pathways every Sunday; the place was a part of his soul.
“What do you mean he sort of countered?” Rocky was still stunned. He had been expecting to put the Viking Aphrodite on subjects over the weekend with “no money down” and then fail the deal or lower the charter rate if he was able to find a cheaper ship on Monday.
“I mean that…”
“That Norwegian has $10,000 of operating costs per day and $20,000 of financial costs per day and I am offering him $40,000 per day; he should be thanking me not countering me.”
“Coco has a different view,” Peder said.
“How different?” Rocky grumbled. He picked up a pair of binoculars from his bookshelf so he could read the name on a fully laden freighter making way up the Houston Ship Channel – M/V Tanna Schulich.
“About $60,000 a day different,” Peder replied. He sat down on a park bench and prepared for the crabby old man’s rage.
“Are you saying he wants $100,000 per day?” The Texan laughed. Rocky had expected a counter offer from Coco on the order of $10,000 per day higher, which they would finally agree to split down the middle after dancing a tango of eight counter offers made in increments of $1,000 each. “Is this some sort of joke?”
“I’m afraid not,” Peder said as he resumed his walk past the sculpture-adorned fountain located on the Monolith Plateau of the park.
“Then let’s just forget that crazy, long-haired Viking and find us another ship,” Rocky said. “Actually, this is just as well. I never want to give too much of my business to any one shipowner,” Rocky said. “You know I like them better when they’re all hat and no cattle.”
“There are no other available ships,” Peder said.
“Well now I know you’re kidding around,” Rocky chuckled. “There are always desperate ships loitering around the Arabian Gulf like stray dogs in search of a meal.”
“Not this time,” Peder said.
“Why not?”
“Because Coco has managed to get control of more than half the fleet of supertankers within ten days steaming of the loading ports,” Peder said.
“So let’s charter one from the other half,” Rocky said. “I’m not picky about boats.”
“I’m afraid the market doesn’t work that way,” Peder said. “Coco has told all the shipowners what he’s done and now no one will fix below $100,000 per day. Coco said he’s hosting a big tanker party and he’s invited all the shipowners to come along as his guests.”
“Did you say tanker party?”
“Yes,” Peder said. “That’s what he’s calling it.”
“What am I supposed to do now?” Rocky asked, suddenly feeling vulnerable. “I can’t put thirty million barrels of oil on an airplane – and I’m pretty sure I can’t send it by email!”
“If you recall, sir, I advised you to put a ship on subjects last Friday but you were out elk hunting,” Peder reminded him. For better or worse, rarely did anyone remember a broker’s market call.
“Well I’ll be dipped in diesel,” Rocky chortled.
The Texan’s complex tone reflected both his anger and his admiration for what Coco Jacobsen had apparently pulled off. The aged oilman had seen dozens of shipowners try to corner the VLCC market over the years but every one of them had been led to slaughter. In many ways, the Norwegian was just like him: a self-made and able adversary.
“Did you tell him I have ten cargoes to move this month?” Rocky finally asked.
“I did,” Peder said.
“And did he offer me a volume discount if I give him all the business?” Rocky asked hopefully.
“Actually,” Peder said, “Coco said the cost for your next shipment is going to be higher than this one and the one after that will be higher still. Coco said he is going to squeeze the market up to $250,000 per day.”
“I do believe Mr. Jacobsen has got me by the short and curlies this time.” Rocky was distraught about being caught short on ships, but invigorated by the prospect of entering another battle against Coco Jacobsen. “Did he say anything else?”
“He did,” Peder said.
“What?”
“Coco said that if you hadn’t taken away his ability to legally enter the United States of America ten years ago, he would fly to Houston in his G-5 right now and urinate in your ten-gallon Stetson,” Peder covered his mobile telephone with his hand so Rocky wouldn’t hear his uncontrolled laughter but it was Rocky who started laughing.
“I really put him in the penalty box with that North Korea stunt,” the oilman chuckled proudly as he recalled one of his career highlights.
“You have no idea,” Peder said, thinking briefly of Coco’s inability to travel to America to try and patch things up with Alexandra.
“That’s a gift that keeps on giving,” Rocky said. “But you know I can’t pay a hundred grand a day for a boat even if I wanted to.”
“It’s still only a few cents a barrel,” Peder said.
“That’s not the point,” Rocky said.
“Then what is the point?”
“The point is that an army of green eyeshade accountants downstairs make me mark my vessel charter book to market, and I sold thirty million barrels of crude on a delivered basis two months ago when charter rates were less than $30,000 per day,” Rocky explained. “That means if I let Coco extort me for $100,000 per day I will lose about…”
Rocky paused as he pecked the figures into the big-button calculator positioned on his desk and then gasped. “I will lose $45 million of earnings!”
“That’s less than a quarter of the value of the cargo,” Peder said.
“Yes, but since ARC’s shares are valued at ten times earnings, Mr. Jacobsen’s short-squeeze is going to take a $450 million bite out of my company’s market capitalization! And since I own 20% of the stock of ARC I am going to lose $10 million! That Viking barbarian is trying to steal $10 million of the money I’ve been planning to give to charity!” he shouted causing a lightning-bolt-shaped vein to bulge from the side of his forehead.
“If it makes you feel better,” Peder offered, “Coco took you for almost $300 million in 2007. That’s when he bought the yacht he’s on in the Aegean right now.”
At that moment, Rocky DuBois had a moment of clarity; it was the time to hang up his spurs once and for all and put ARC up for sale. He had watched too many of his buddies round-trip their fortunes and there’s just nothing sadder than watching an old man blow his wad when he was mentally and physically incapable of earning it back.
As the shipbroker waited for the oilman’s reply, Rocky collapsed into his black leather chair, put his clenched fist to his cleft chin and considered how he could solve his first problem; he needed at least ten ships as soon as possible. Having spent his long career in the oil and gas business there was hardly a fact pattern he hadn’t experienced. He’d lived through Acts of war and Acts of God, coups d’états, dictators, despots, earthquakes, volcanos, typhoons, canal closures, hostage crises and oil shocks. Most recently, he’d watched the world get caught short on ships when a perfect storm of global credit expansion converged with China’s industrial boom of 2003-2008.
Recalling that mixed-up four-year period, during which supertanker rates rose from $15,000 to $150,000 per day and ship values soared from $65 million to $165 million, Rocky realized there was only one solution to his problem; he had to agree to long-term time charters with Viking Tankers at a lower rate instead of taking short-term ones at a higher rate.
Viking Raid Page 4