This announcement is neither an offer to sell nor a solicitation of an offer to buy or exchange the securities referred to below. The Exchange Offer is made only by the Prospectus, copies of which may be obtained in any jurisdiction only from authorized dealers, including the undersigned.
NOTICE OF EXCHANGE OFFER
TO
HOLDERS OF NORTHEAST CONSOLIDATED INDUSTRIES, INC.
COMMON STOCK
BY
HEGGINS AIRCRAFT CORP., INC.
Heggins Aircraft Corp., Inc., is offering by the Prospectus to exchange unlimited shares of Common Stock of Northeast Consolidated Industries, Inc., for Convertible 5½% Debentures of Heggins Aircraft Corp., Inc., in the ratio described below. The Exchange Offer will expire at 5:00 P.M. Eastern Daylight Time on September 30, 1970, unless extended by Heggins Aircraft or withdrawn as aforesaid.
There was a good deal more, and Hastings, peering over Quint’s thick shoulder, read all of it, right down to the italicized signature of Hackman and Greene, Registered Brokers.
Bill Burgess said, “We got that proof from the Times. The same ad’s set to run Monday in The Wall Street Journal and every big metropolitan daily in the country.”
“The fat,” Quint said obliviously, “is in the fire. Not only that, but the damnable thing about it is, he can do it. Legally. Unless we find a means to stop him.”
Bill Burgess said, “What I still don’t understand is how he managed to beef up Heggins so fast. Two weeks ago it was a dying company floundering on the verge of collapse. Now the price has shot up six points, and you hear nothing but glowing reports—and don’t tell me all of them were planted by Villiers’ people.”
“Part of them,” Hastings said. “The rest of it must have been done by cooking the books. A lot of things. I’ll lay a few examples on you to give you the drift. First, the company deals in a low-down-payment product—airplanes. Say a plane costs fifty thousand and the customer buys it with five thousand down. Ordinarily you report only the five thousand as income. But when Villiers took over, suppose his accountants cooked the books by inflating earnings with the whole thing in the income column—they report the full scale price as income, not just the down payment. Shady, but legal. They can juggle the inventory accounts to make the assets look greater. They can bring in their own team of auditors, who’ve been coached to show how depreciation has been taken inaccurately, and fiddle with earned-surplus figures and net working capital and other vagaries. They can report the company’s subsidiaries at book value instead of original cost. They can choose between accelerated depreciation and straight-line depreciation. They can take research costs immediately instead of amortizing them over a five-year period. They can announce they’re going to grant stock options, which aren’t charged to income, in lieu of cash bonuses. They can credit capital gains to income. They can, and did, declare a cash dividend last week to increase stockholder confidence. Villiers has created a bull market in Heggins stock overnight by operations like that and by putting out sales literature that convinces the readers it’s a good company to invest in. All kinds of happy talk about talented scientists and engineers, capable financial leadership, and a new management that’s balanced in depth so that the loss of a key exec won’t wreck the company. A spirit of innovation. An aggressive intent to exploit existing markets and create new ones. A good record of sales expansion five years ago, and never mind the years in between. Hell, our boy’s been a one-man inflation for Heggins stock. And it’s easy enough to see what he’s doing now. It’s relatively cheap for one company to take over another company by issuing interest-bearing Chinese money like these Heggins debentures in Villiers’ ad. And I’m not even sure the NCI board of directors will put up a fight.”
Quint said sharply, “Why the devil shouldn’t they?”
It was Burgess who answered him. “Because according to our information, at least two of them have got themselves into a trap that Villiers ingeniously set for them. And if two of them fell into the trap, it’s possible one or two others are in it too that we don’t know about. If it makes up a majority of the board, then the rest of the board members can’t act—they’ve got to sit on their hands while Villiers moves right in.”
Quint said, “Explain yourselves. What sort of trap?”
Hastings said, “Villiers bought himself a speculator’s dream when he took over Heggins. God knows where he got the money. Some of it was an exchange for Melbard Chemical stock, but just the same, he had to raise an incredible amount of capital to pull it off. What he did, in the old-fashioned phrase, he cornered the market in Heggins. There weren’t a hell of a lot of outstanding shares drifting around the market anyway. Villiers planted word, just before he bought the company, that Heggins was overvalued and bound for collapse. He planted it in the right places. Amos Singman and Daniel Silverstein and maybe two or three other NCI board members, among others. They expected a dive in price, and so they sold Heggins short, in big bundles.”
“Now, of course, the price is up, and they’ve got to cover their short sales, and they suddenly find out Villiers has bought up all the shares. Put simply, the short sellers owe Villiers half a million shares, and to pay him they’ve got to buy the shares from him and then give them back to him—and he’s got every legal right to name the price. So he’s got them in a bind, and the only way they can squirm out of it is to sit it out while he moves into NCI.”
Quint said, “It can’t be legal. He’s a control stockholder and he didn’t advise us of his movements in Heggins stock. We can nail him for fraud and failure to divulge inside information.”
“Nuts,” Burgess said sourly. “Do you think he’s done all this in his own name? You can be damn sure Villiers personally doesn’t own more than five percent of Heggins’ outstanding stock. It all belongs to Swiss trusts, and you know damn well how far you’d get trying to prove they belong to him. Even if we could hit him with that technicality, the worst he’d suffer would be a slap on the wrist and a meaningless fine.”
Quint made a face. “You can take a man out of the gutter, but Villiers has never washed off the smell, has he?”
Burgess showed his unhappy consternation by letting his hand dangle limply from his wrist and shaking it back and forth as if wearily drying his fingertips. “We can’t lay a finger on him unless we can prove fraud or extortionate coercion, and you can bet your ass none of the jokers involved are going to admit a thing—unless we can crack Steve Wyatt open.”
Quint put his big head down, thinking. Bill Burgess said, “Don’t forget, we’ve only been moving on this thing for a matter of hours and days. Villiers has had years to plan it out. He’s not an impulsive man—he wouldn’t have this ad in the papers if he hadn’t thought it through. He doesn’t blurt things out, and he doesn’t make easy mistakes.” He shook his head apologetically and uttered a dispirited little laugh.
Hastings shot to his feet. It made Quint’s head skew back with dignified astonishment. Hastings strode back and forth impatiently, hair falling over his eye; he said, “It’s not a question of finding some technical loophole to collar him with. There’s got to be a way to nail the bastard to the wall, pin him like a butterfly so he’ll never get loose.”
Quint murmured, “Do I detect a note of personal animosity? He’s been seen with your wife, I understand.”
“My ex-wife, damn it. And what does it matter whether it’s personal? The man’s guilty of a criminal assault, half of Wall Street will know it by Monday morning, nobody can touch him legally, and we sit here trying to decide if we’ve got enough evidence to hang a parking ticket on him! For God’s sake, there is no such thing as a little rape—we’ve got to stop him cold.”
Quint cocked his head to one side. “You’re really quite an emotional being underneath it all, aren’t you?”
Hastings made an exasperated sound.
The fat man said, “How would you handle it, then? Strap on a revolver and shoot it out with him in Wall Street at high noon?”
He was in no frame of mind for Quint’s brand of drollery; he formed his big hands into loose fists. “Just turn me loose on him, Gordon. Ill bring him down.”
“Large talk,” Quint observed, not visibly stirred. “Are you deliberately implying I’m the only thing standing between you and Villiers’ downfall?”
The skin on Hastings’ face tightened. “That’s exactly what I’m saying.”
Bill Burgess said uncomfortably, “Cool it down, hey?”
But Hastings wasn’t through. He put his hands on Quint’s desk. “You gave me a speech about why you always go by the book. But this time we’re not in the kind of game that’s played according to Hoyle. It’s a dirty back-alley crap game and if you want to win it you don’t carry your book of Hoyle along, you carry a knife and a set of brass knuckles instead—otherwise you’re a dead loser.”
Quint’s eyes glinted. “I’ll only ask it again, Russ. What do you want? How would you handle it? I’ll listen—sit down and talk.”
He went back to his chair and cuffed the hair back out of his eyes; he glanced at Burgess and said, “Villiers can make his scheme work only as long as NCI doesn’t fight him. He knows he’s got the directors on the run. He must know Judd won’t fight him. With a relatively small cash investment he’s trying to take over a giant corporation worth billions. It can work only if people are willing to give him their NCI shares. If he had to pay for those shares, he’d be stopped—he hasn’t got the money, nobody’s got that kind of money. All right—I say we go to the directors, and we make it hotter for them than he’s making it. We fight him with his own weapons. We force them to switch sides and fight him. Faced with a proxy fight right down to the wire, he’ll go under; he hasn’t got the kind of financial backing it would take to fight it through. Even if he did try to go all the way with it, at least it would give us more time to dig into this thing and develop evidence against him. There have got to be chinks in his armor, and the longer we force him to fight, the more likely he is to make the kind of mistakes that can hang him.”
“I suppose you know exactly how to force the NCI board to turn against him?”
“If there’s one thing I learned with Jim Speed,” Hastings said softly, “it’s how to put pressure on people.”
“I don’t like it.”
“I didn’t think you would.”
“Go on,” Quint said, “both of you. Get out of here and leave me in peace.”
“You’re not buying it, then?”
“I didn’t say that, did I?” Quint did not smile; he glowered. “Every decision I make in this office is subject to review by higher authority, Russ. I can’t authorize you to use threats or extortion. On the other hand, you’re under no obligation to explain to me the nature of every stitch you sew into the fabric of your case. If you get results, that’s all anyone will notice. If you fail, it’s your neck, not mine. Clear?”
“Clear,” Hastings said. Feeling vital and alive, full of juices, he bolted out of the chair and strode to the door. “Come on, Bill.”
Burgess trailed him into his own office. Miss Sprague was out to lunch; there were three or four phone messages on his desk. He glanced through them and put them aside. “Damn it,” he said, “I feel good. For the first time in months.”
“Something you can sink your teeth into,” Burgess said. “I’ve been watching you flounder around like a headless chicken. Waiting for you to snap out of it. Ever since you got divorced, you’ve been acting as if you didn’t know who you were or what you wanted.”
Hastings gave him a look of surprise. “You see a lot, don’t you? You’re right, you know. Until a short time ago I was wandering around as if I’d lost myself somewhere in all the confusion. It’s like a nightmare—you keep trying to see yourself in terms of other people, like looking in a distorted mirror. I fell in love with a woman I didn’t even know. Whipped up all kinds of enthusiasm for a job Elliot Judd offered me when I knew all the time it wasn’t for me, it had nothing to do with me.”
“Forget it, Russ. You’ve turned the leaf over—I’ve seen the change in you. You could have ignored this NCI trouble, it was nothing but a vague hunch—but you sank both hands in it right up to the elbows.”
“Sure I did. Because right down inside I’m a gut-fighter, Bill. It took a long time to discover it, and I feel like a fool. But something clicked on this job. I’m a predator just like Mason Villiers. I like a good fight. I need to be where it’s at. Right down at bedrock, I’ve got the temperament of a good old-fashioned cop. Set me down in a precinct station house and I’ll bet I’d blend right into the woodwork.”
Burgess grinned at him. In a different voice, Hastings said, “I’m going to enjoy matching wits with Mason Villiers. And I think I’m going to beat him. It can’t be done Quint’s way, but it can be done.”
“I hope you’re right.”
“I’ve got to have you with me right down to the wire, Bill, and it may get sticky. We’re going to tromp on some important toes.”
“Which Quint won’t know about?”
“Which Quint won’t know about.”
“Then I guess my boss better not know about it either,” Burgess said, and spread his grin even wider. “Where do we start?”
“With Ansel Cleland. Villiers got himself a corner on Heggins, and he’s using it to whip Cleland’s board into line. All right. Cleland can get back at him by staging a bear raid on stock in every company Villiers controls. He puts together a syndicate which sells Villiers short and publicizes the fact. They force the market price of those stocks down to levels where Villiers’ creditors will sell him out to protect their loans—I’m taking it for granted Villiers has hocked every share he owns to finance this operation. Maybe he’ll pull in his horns, and maybe he won’t, but at least he’ll have to scramble to raise the cash to pay off his margins, and when a man like Villiers goes after cash in a hurry, he’s likely to do something we can nail him for.”
“Fine. But how do we persuade Cleland to stage a counterraid against him?”
“Any stockholder has a right to file a private suit demanding a full accounting of the board’s activities. All we need to do is find one man who owns one share of NCI and who’s willing to file suit. We explain that to Cleland.”
“I see. It puts the heat on his directors—‘full disclosure.’”
“Exactly right. Cleland’s directors will have to fight Villiers, no matter what it costs them, because if they don’t, our stockholder suit will drag them into court, and they’ll have to admit out loud, under oath, that they knuckled under to Villiers’ extortion. They won’t dare have it brought out in open court. They’ll fight Villiers.”
Burgess said mildly, “It’s all pretty shady, isn’t it? I mean, I don’t know anywhere in the regulations where it says the SEC or my department are empowered to pull this kind of stunt. It’s pretty raw—what if Quint finds out about it?”
“Why don’t we worry about that if and when it happens?”
“Okay. You’re the boss.” Burgess stood up. “Who goes to Cleland? You or me?”
“We both do. When he knows both our departments are cooperating on it, he’ll be impressed.”
“If he only knew,” Burgess said, and chuckled.
Hastings reached for the phone. “I want Villiers hung in a proxy fight where the whole world can see him fall down. If we don’t pin him to the wall with legal evidence, at least we’ll make damn sure he never does business in this town again.”
“You don’t mind fighting a little dirty yourself, do you?”
“I told you,” Hastings said, finding Cleland’s number in the Wheeldex and beginning to dial, “I’m a cop. My job is to stop the bad guys—any way I can.”
29. Diane Hastings
There was a phone call from Mason Villiers at four o’clock. He merely asked if he might drop by Diane’s apartment after dinner to discuss a business matter. “Or perhaps you’d rather meet somewhere?”
She let the silence run on bef
ore she said, “No. Come up to my apartment.”
She had trouble keeping her mind on work for the last hour of the working day; she was alarmed by the way she responded to him with both fear and fascination. She knew she could be an absurdly easy mark for Mason’s seduction, if she wanted it. She did not want it, and that was what troubled her. She was afraid.
At home she ate a silent dinner served by the unobtrusive day maid, who after washing the dishes removed her apron and said good night and left. Diane sat in the living room with a cup of coffee, irritable and impatient, trying to read an art-museum catalog. If only I could stand being alone at night.
When the doorman buzzed to announce her visitor, she paused on her way to the door to inspect herself in the mirror. Her lips were spotted; she had chewed the lipstick from her lower lip in her agitation. She repaired it quickly and opened the hall door when she heard the elevator arrive.
His cool, handsome face glittered; he was in high spirits, not bothering to conceal his satisfaction. He strode past her into the apartment and made the customary appreciative remarks about the decor, which surprised her, coming from him—and then it occurred to her he might have done it for just that reason: he liked to keep everyone off balance.
She made drinks, and they sat facing each other across the coffee table, and Mason Villiers said, “I’ve got good news.”
“Tell me.”
“You’re about to make your fortune,” he said.
She arched her eyebrows. “Indeed?”
“I’m on the verge of pulling off the biggest financial coup this town has seen in twenty years—and you’re going to share in it.”
“I am?”
“You’re the one who made it possible,” he said.
“I didn’t realize Melbard Chemical was all that much of a coup.”
“It’s the key that’s opening the floodgates. By this time next month you’ll be a millionaire in your own right.”
“I’m afraid I don’t quite understand,” she said.
“Let’s just say the price of Melbard stock is going to shoot through the roof—which means Nuart will go right along with it, since Nuart’s merged with Melbard.”
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