Viking Raid
Page 8
“And a good evening to you, Coco,” Alistair Gooding oozed in a slow and syrupy British accent. With his head tipped back and his eyes locked on the towering tanker king the banker resembled a baby bird waiting to be fed – an image that was not altogether inaccurate. “How are you these days?”
“How am I?” Coco laughed. “Haven’t you been reading the Financial Times, Allie? I’ve already squeezed tanker rates up to $125,000 per day and most of my ships are still on the starting line. The only guy who’s printing more money than me these days is Benjamin Bernanke.”
“Yes,” Alistair laughed, “and my bank very much appreciates your efforts.”
“Excuse me?” Coco said slowly.
“Well, as you know, Coco, you have a substantial breach in the minimum value clause of your loan agreement,” Alistair said. “And since you do not have a personal guarantee on the loan, Allied Bank of England has decided to retain all freight income in Viking Tankers’ operating account until further notice; this is permitted according to the terms of the loan agreement.”
“You what!” Coco said with his mouth agape.
“Relax, Coco, it’s still your money,” the banker said. “We are just going to hold it for you until loan is back in compliance.”
“How much will that require?” the shipowner asked.
“Based on recent vessel appraisals,” Alistair replied, “we estimate that $200 million should do the trick.”
“Ugh!” Coco cried. “But I need that money.”
If what Alistair was saying was true, Coco wouldn’t get a single penny out of his tanker party – and neither would the Greek. He had pulled off the greatest coup in the history of the oil tanker market and he still didn’t have a dime to show for it. This was the problem with having an over-leveraged and over-aged fleet; you couldn’t even make money in great market because the bank took it all. Coco might as well of had the name “Allied Bank of England” on his business card because that’s exactly who he was working for.
“We appreciate the fact that you need some money to run the ships,” Alistair said. “That’s why we are more than happy to pay the ships’ operating expenses directly. We must be careful; it appears that the crude oil tanker market is heading into some very heavy weather.”
“Heavy weather!” Coco cried. “Why do you think that?”
“Because the U.S. is importing less and less light, sweet crude oil now as a result of fracking; everybody knows that what’s happening in the tanker market today is nothing but a blip.”
“Blips are how you get rich in this game,” Coco said. “Besides, Allie, this is shipping; just when everyone thinks something is going to happen, the opposite usually does.”
“Thanks, Coco,” Alistair laughed. “The rigor of your analysis will give great comfort to my colleagues on the credit committee.”
“May I ask you something, Allie?”
“Sure.”
“How did you get so darned pessimistic?” Coco asked.
“Simple,” Alistair replied, “by financing optimists like you.”
“Okay, Fairchild,” Coco said with expectant eyes after turning toward a truly terrified looking Robert Fairchild, “why am I here? I am counting on you more than you can imagine.”
Robert Fairchild had been expecting to enjoy at least a few minutes of conversation, canapés and cocktails in the cozy corner booth before delving into the brutal commercial matter at hand, but Coco was clearly ready to get down to business.
“Coco, do you remember when we were on the brink of bankruptcy last year and you said you wanted to make some changes to our strategy?”
“Wait, wait…don’t tell me!” the Norwegian blurted out as he began rubbing his hands together so fast and forcefully that they might catch fire. “I think I know why we’re here!”
“You do?” Robert asked and shot a glance at Alistair, wondering if the banker had spilled the beans about the ten time charters to ARC.
“You finally found the $500 million on Wall Street that I need!” Coco shouted.
“Excuse me?” Robert gasped.
“You know how much I adored those bonds,” Coco said and closed his eyes.
The mercurial Norwegian spoke wistfully of the junk bonds as though recalling a spectacular bottle of wine or a particularly adventuresome lover – which, in fact, he was. It was during the process of selling that $300 million tranche of unsecured junk bonds to U.S. institutional investors that Coco happened upon the dazzling and energetic investment banker Alexandra Meriwether – and the pleasure of chilled Montrachet.
Although Coco had been attracted to Alexandra the moment he first saw her pitching him via videoconference he had fallen hopelessly in love with her when she somehow managed to use the bondholders’ escrowed funds to help Coco buy back his bonds at a substantial discount just weeks before the Suez Canal closed and the tanker market spiked. From that moment on, Coco had wanted Alex to be his star – a guiding light to steer by throughout the whipsaw ride that was his life. Instead, she’d been nothing but a comet that flashed brightly but briefly and disappeared as quickly as she came; Coco hadn’t felt quite right ever since.
“I…I… but…I…um,” Robert stammered.
“As you know, the free American money is so helpful to my business model,” Coco whispered after leaning across the table, as if his words were a trade secret. The Norwegian was now so close that Robert was enveloped in a mysterious mélange of mastic chewing gum, Marlboros, cedar shavings and Snus. “Did you know that renting capital is the single largest daily expense of running a supertanker? That is why the free money is so important.”
“But the junk bonds came with a coupon of 20%,” Robert pleaded. “That was hardly free money, Coco.”
“I have no problem with expensive capital as long as I can buy it back at a discount,” Coco explained.
“I’m sorry to be the one to break the news to you, Coco, but there is no such thing as free money in this world,” Robert said and he felt as though he was sharing the bad news about the Easter Bunny. “And that’s not why I asked you to come to London.”
Robert closed his eyes and waited for the type of unrestrained temper tantrum for which the Norwegian was internationally famous. He waited and waited, but the rage never came. When Robert slowly opened his eyes a minute later he was startled to find Coco’s smiling mug hauntingly close to his own. The Norwegian’s psychotic smile reminded him of Jack Nicholson in The Shining.
“So you’re not upset?” Robert asked as he slowly backed away from Coco.
“Of course not,” Coco beamed as he leaned toward Robert.
“And you’re not disappointed?” Robert asked and leaned back a little further.
“Why would I be disappointed? In fact, I feel happy again because now I definitely know why we are here!” The giant unfolded his tall frame and rose from the stool. “And this is the one thing, the only thing, that’s even better than the free money!”
“Really?” Robert looked at Alistair.
“Oh yes! The only other good excuse for you to drag me to London, and for my lender to effectively steal $200 million from me, is because you are having a surprise birthday party in my honor,” Coco announced and looked around the room.
“What?” Robert gasped. “Did you say surprise party?”
“Yes! And that must be why all the fancy people are staring at me,” Coco said. “Allie knows I love them more than anything! My parents used to have a surprise party for me every year in Norway! Is Alexandra here to celebrate my big day?” Coco asked manically as he scanned the room with a flash of excitement in his blue eyes. “If Alexandra comes to my birthday party I’ll be the happiest boy in the whole world!”
Robert cleared his throat and prepared to offer the sobering news.
“Coco, we already had your birthday party three months ago, aboard the Christian Radich,” Robert said, referring to the beautiful full-rigged training vessel built in 19
37 whose homeport is downtown Oslo. The vessel was a stirring reminder of Norway’s seafaring history and a popular party venue for nostalgic shipping professionals.
“We did?”
“Yes, don’t you remember jumping off the bow of the ship into the Oslo fjord with the woman’s volleyball team from the University of Nebraska?” Alistair asked.
A smile suddenly stretched across Coco’s face. “They were awesome!” the Norwegian declared as the warmth of the memory rushed over him. “This reminds me, Fairchild; don’t you have a big birthday coming up soon?”
“It’s not for a few months,” Robert sighed, “and I certainly don’t have time to worry about it now. In fact, that’s the least of my problems at this point.”
While Coco Jacobsen couldn’t seem to get enough of celebrating his birthday, Robert Fairchild always dreaded the attention and self-analysis that came along with his…especially now that he was inching ever-closer to the dangerously self-destructive decade of the 40s.
Coco laughed and turned to his banker. “Hey Allie, you ever notice how Americans don’t think they have time for anything?”
“They’ve always been a bit confused about what’s important,” the banker said. “They’ve gone from drinking three martinis for lunch to feeling guilty about enjoying a single glass of wine with lunch.”
“So maybe we should cook up a little surprise party for Fairchild’s fortieth,” Coco said. “What do you think?”
“No one does surprise parties better than you,” Alistair conceded with a chummy wink and a knocking of the Norwegian’s considerable knuckles. “The one you had for our Venezuelan friend on the island of Corsica was best in class!”
“Thanks, Allie, but I think I can do even better, especially if we think up a good theme,” Coco said.
“You’ll come up with something,” the banker said. “You always do.”
“But now I am confused, Fairchild,” Coco said as he resumed his line of questioning. “If you still haven’t found me the free $500 million, and I am not here for my birthday party, then why on earth did you drag me all the way to this freezing cold city?” Coco demanded with patience nearly exhausted. “What is this great news?”
“You’re about to find out,” Robert said.
Chapter 10
America’s Richest Shipowner
George B. Kaiser, whose $10 billion net worth ranks him #40 on the Forbes 400, is currently America’s wealthiest shipowner. In addition to his principal ownership of the Kaiser-Francis Oil Company and The Bank of Oklahoma, and his varied activities in the oil and gas business, Mr. Kaiser owns Excelerate LNG which is active in the transportation of Liquid Natural Gas. He is based in (landlocked) Tulsa, Oklahoma.
“The chief executive officer of a blue chip oil and gas company in Houston, Texas called me two days ago and offered to charter some ships from Viking Tankers,” Robert said.
“How did he get to you?” Coco grumbled suspiciously as his eyes narrowed on Fairchild.
“I’m not exactly sure,” Robert said. “He probably just found me on the internet.” He was trying to remain confident as he prepared to lay out his confession-disguised-as-a-business-proposition, but Coco’s reaction to his opening sentence made for a discouraging start.
“I hate the internet,” Coco snarled. “That machine has been worse for the shipping business than Somali pirates and new Chinese shipyards…combined!”
Robert stoically pushed forward with his pitch like a soldier heading into a battle that he was sure to lose. “The CEO of this American oil and gas producer offered to time charter ten of our VLCCs for five years!” Robert announced, failing to mention that he had legally committed Viking Tankers into performing the fifty years of high-seas haulage.
Although Robert knew the Norwegian was euphoric about the state of the short-term spot market, Robert was praying the financial security of having fifty years’ worth of time charters would hold some analgesic appeal for a man who’d recently returned from a financial near-death experience.
“So?” Coco said.
“So isn’t that great?” Robert asked.
Robert lifted his hand and offered a high-five – but Coco failed to even acknowledge the rudimentary attempt at human bonding. The Norwegian just closed his eyes, shook his leonine head back and forth and yawned.
“Great for whom?” Coco asked.
Although Coco’s signature question always sounded like a simple one, Robert and Alistair struggled to come up with an equally simple answer. The two money-men knew the time charter deal was great for Alistair and Allied Bank of England, because it would increase the odds that Viking Tankers would repay its loan. They knew it was great for Robert, whose employment and income would instantly become so secure that he might even be able to get a mortgage on the Vineyard house. They also knew it was great for ARC, because the oil company would get a fleet of ships at a discount to the current spot market. But the question of whether or not the deal was great for Coco was a much more complex one. The answer depended entirely on what actually motivated Coco Jacobsen – and neither Alistair nor Robert had a clue about that.
“It’s great because we can lock in excellent returns that are guaranteed,” Robert finally said.
“Why would a major oil company guarantee great returns to a little shipowner like me?” Coco asked.
“Because shipping is not their core business,” Robert said.
“Nei,” Coco shook his head back and forth as he worked hard to restrain his impatience with the naïve Robert Fairchild.
“Oh, I know why they want to do it!” the American called out. “Because they don’t have time to mess around in the charter market every time they need a ship. They want monogamy.”
“Any other brilliant theories?” Coco asked.
“Yes, they want the time charters because the financial returns generated by actually owning ships simply can’t successfully compete for capital with their shale gas exploration and production projects,” Robert said but his statement sounded more like a question.
“Are you finished now?” Coco asked.
“It sure sounds like it,” Alistair said under his breath.
“Fairchild, the only reason Rocky DuBois and people like him would offer to take my ships on long-term charter is because they can’t afford to take my ships on short-term charter,” Coco explained. “And fixing a short-term problem with a long-term problem is generally not a good idea.”
“Do you know Rocky DuBois?” Robert exclaimed when he heard Coco first mention the oilman’s nickname before he had even mentioned it. “What a small world!”
“I know Rocky DuBois,” Coco snarled, “and I hate Rocky DuBois. He is an evil squid.”
“He seems like a very good guy to me,” Robert said.
“You think Rocky DuBois is a good guy?” Coco choked as the memory of his altercation with the Texan surfaced like bile in his mouth.
“He sounded nice,” Robert said.
“Takers always sound nice when they’re taking, Fairchild,” Coco said. “Listen to me gentlemen and listen carefully: long-term chartering-out our ships to that man in this market would be the dumbest thing in the world we could do.”
“What happened between you and Mr. DuBois anyway?” Alistair asked.
“Ten years ago I agreed to put the Viking Telemachus on a long-term time charter to Rocky DuBois. Three weeks later that Kraken cowboy ordered my captain to halt two miles off Lagos and declared force majeure.”
“What was the Act of God that gave him a legal excuse for getting out of the charter?” Robert asked.
“He claimed there was an ‘armed revolution,’” Coco chortled.
“Well was there?” Robert asked.
“The ship got hit with one lousy bullet,” Coco scoffed.
“But Coco,” Robert said calmly, “did you ever consider that having an oil tanker hit by a bullet might actually be Rocky’s idea of force majeure?”
“Not really,” Robert said.
“He said, ‘Go cry to the arbitrator in London three years from now, Coco Puff.’”
“Did he really call you ‘Coco Puff’?” Alistair asked.
“Ja, but we were all a bit heavier in the 80s,” Coco said.
“So what did you do next?” Robert asked.
“It’s like I’ve always tried to teach you, Fairchild; there are some problems that you can’t solve by searching on Google or sending an email,” Coco said. “I flew down to Lagos, hired a helicopter to take me out to Telemachus, brought the ship into port and handed out greenbacks until the terminal workers agreed to load Rocky’s lousy cargo.”
“All’s well that ends well,” Robert said.
“That’s not the end,” Coco said without taking his piercing blue eyes off Fairchild. “Once Telemachus was on her way across the Atlantic I flew to Houston to find Rocky and collect the money he owed me.”
“Oh boy,” Robert said as he took note of another important feature of the shipping industry; everyone had a history with everyone, whether they admitted it or not.
“I tracked down Mr. DuBois in a private dining room in a place called the Petroleum Club located on the top floor of the Exxon Mobil building,” Coco said. “I burst into the dining room just as old Rocky was asking God Almighty to bless the Thanksgiving dinner he was about to share with his beautiful family.”