Ian St James Compendium - Volume 1

by Ian St. James

  Business continued to flourish well into the seventies - at least for Apex Holdings. Others were less fortunate. First the London property market collapsed, then the energy crisis tore great gaps in the country's economy, carrying off gamblers like the victims of a flu epidemic. But others took their place. Iranians, Saudis, Libyans - the Arab invasion of London gathered the momentum of a caravan descending upon an oasis. And at the very centre of the watering hole lay the casinos. Arabs lost fortunes. The money passing across the green baize tables around the West End made London the gambling capital of the world. By comparison, gamblers in Vegas were playing for matchsticks in a school yard. And at the very centre of the casinos lay Apex Holdings. It was the classic case of being in the right business in the right place at the right time. Winner Harris had it made. I was what I always wanted to be someone important in London.

  But the take-over attempt in ’75 caught me napping. True, we were making huge profits but Apex stock had never been the most sought after in the City. So when somebody started to buy our shares in a big way it caught me off guard. Of course the shares of all public companies are bought and sold - that's what the Stock Exchange is for - but generally the value of a share remains fairly stable. The market assesses its worth and unless something dramatic happens its value alters very little. It reflects interest rates and anticipates profits, but exceptional circumstances are needed for the value of a share to alter by much. So when our shares opened at a pound seventy-five on the morning of the second of May, the price was more or less the same as it had been for months past. But six hours later the price had risen to two pounds twenty! Somebody big was buying - and buying in large enough blocks to send the price through the ceiling.

  I spent the whole of the following morning telephoning our brokers, while Edgar Hardman called up half of the City. But all to no avail. The shares were being bought by nominees, and try though we did, we failed to discover the identity of the bidder.

  The following day was even worse. Another bout of heavy buying took the price through the two pound fifty barrier. We estimated that enough of our shareholders had swapped their shares for cash for ten per cent of our company to be in the hands of someone not known to us.

  The next day was a Saturday, so mercifully the market was closed. I had stayed in town overnight and was drinking a solitary cup of coffee for breakfast when the telephone rang. "My name is Corrao," he said after I confirmed I was speaking, "I would very much like to meet you. Rather urgently if possible."

  "In connection with what?" I asked brusquely, still worrying about the report in the Financial Times open in front of me.

  "A proposition of interest to you."

  I was like a bear with a sore head already, and his approach made me snarl. "No thanks, I'm loaded with life assurance and-"

  "It concerns Apex Holdings, Mr Harris," he interrupted just quickly enough to stop me hanging up. "And the events of the past forty-eight hours."

  That cleared my brain faster than the scalding hot coffee. "Who are you?"

  "I told you. My name is Corrao. Pietro Corrao."

  "Representing?"

  He laughed softly. "An interested party."

  Stalemate. His name meant nothing to me and if he wanted to play games there seemed nothing I could do about it. His attitude irritated me, but I knew I had to meet him. I had to find out who was buying our shares. But I tried to sound unconcerned in an effort to diminish his importance. "I suppose that might be possible - a meeting I mean. Say towards the end of next week. Perhaps if you called me on Tuesday or Wednesday-"

  He laughed again. "Better make it sooner than that. After all, a few more days trading on the Stock Exchange could change the circumstances of our meeting dramatically."

  It was an open threat. They would continue to buy until they obtained control. I said, "That could cost a lot of money."

  "Money is like sex, Mr Harris. It's all you think about if you're not getting enough. I never think about either."

  I sighed. I knew when I was beaten. "When had you in mind for a meeting?"

  "Why not now? Join me for breakfast. I'm at the Hilton. The Kennedy Suite."

  We met half an hour later. He was a trim little man, dressed in black mohair and a pyjama striped shirt. Dark hair was pasted across the crown of his head as neatly as a bathing cap, and he sported a thin Ronald Coleman moustache. Smoked glasses hid his eyes and his way of jerking his head added something birdlike to his manner. Birdlike - as in vulture.

  He pointed to the covered dishes on a side table. "Bacon and eggs - kedgeree - what will you have, Mr Harris?"

  "Just coffee. I'm pushed for time as it is."

  He smiled and poured the coffee, while giving me a lot of old guff about the benefits of a good breakfast. But finally he got to the point. "People I represent are interested in acquiring control of Apex Holdings, Mr Harris. I am authorised to make a very generous offer for your shares."

  "Are you going to tell me who is behind all this?"

  He jerked his head. "I'm afraid not. That would exceed my brief."

  "You can't hide behind nominees for ever."

  His head barely moved this time, but his shoulders hunched into a shrug. "That is not my decision. I am merely a messenger."

  "The Stock Exchange have issued a recommendation on takeovers," I said carefully. "Anyone holding more than ten per cent should declare their interest - and their intention."

  He smiled. "You just said it all, Mr Harris - a recommendation."

  "Likely to become compulsory."

  "Perhaps," he sounded doubtful. "But I'm sure we'll have finished our business together long before that."

  I gave up. "So what are they offering?"

  "Two forty-five. It's a very good offer."

  It was. Two forty-five was less than the inflated price on the Exchange but that was just for mopping up smaller interests. The price was inevitably lower for a big block of shares. And lower still if you got locked in.

  Corrao let me digest that information before adding: "The same offer is open to your fellow directors, Mr Harris.".

  "Naturally," I said. I thought about the others. Between us we controlled a third of the voting shares - Hardman, Charlie Weston, Lew Douglas, Darlington and myself. When we put the merger together and floated the public issue we had signed an agreement saying that none of us could dispose of any shares without the consent of the others. Approval had been generously given for me to sell some shares when I was ploughing cash into Ashley Grange, but apart from those not a share had been sold since we started. I wondered how the others would feel now? Hardman and Darlington would be with me. We would reject almost any offer because of the growth potential, but I was not so sure about Douglas. And Charlie Weston might be tempted. But the agreement still had a year to run - so we could block them if we wanted. I reached a decision and decided to bluff: "I’m sorry but my shares are not for sale. Neither are those of my co-directors."

  He drummed the fingers of his right hand on the table: "I said it was a very good offer, Mr Harris."

  "I didn't say it wasn't. But I don't want to sell."

  His head jerked: "My people spent a lot of money on Apex stock last week. They won't like being stuck with a minority holding." The change in his voice was unmistakable. His tone had been conversational before - now it was hard and threatening.

  "Then tell them to sell."

  "On a falling market? They'd take a loss. A very big loss. They won't like that either, Mr Harris."

  "Tough tit," I said cheerfully.

  He was obviously watching me because his face was turned towards me, but his eyes were hidden behind the dark glasses, so it was like looking at a blind man. He paused, then said, "We haven't time to bargain. I'll go to two fifty-five but not a penny more. I suggest you accept our offer and tell your colleagues to do the same."

  I would have laughed outright but for the way he said it. His arrogance was astonishing. As it was his blatant threat made me see red
and I snapped, "You can suggest whatever you damn well like. The answer remains the same."

  "You have until Monday to change your mind," he growled, "I suggest you consult your colleagues before giving me your final answer."

  "I'll do that, but don't hold your breath - you've had our final answer."

  He literally trembled with temper. Never have I seen a man fly into a rage so quickly. "You're making a big mistake," he snapped. "This thing of ours is too strong for you. We shall take Apex, Mr Harris - one way or another!"

  I had listened to all the threats I could take for one morning, so I left - and I never saw Corrao again. Nor did I find out who he was working for, though I spent a deal of time thinking about it. I felt sure nobody in the City would hire him. I suppose if I suspected anyone it was the Arabs. After all, they were buying into property and businesses in London generally, so buying Apex would at least be one way to safeguard their gambling losses. It made a certain kind of sense, but it was all so much supposition. I never collected a scrap of evidence which connected them with Corrao in any way.

  We had a board meeting the next day. They were all there Edgar Hardman, Darlington, Lew Douglas and Charlie Weston. It was a Sunday but the emergency demanded that we met before the market reopened. I outlined the details of my meeting with Corrao, and I knew I had a fight on my hands as soon as I finished.

  "It's a bloody good offer." Lew Douglas waved his cigar with excitement. "Take the money and run, eh? Two fifty-five can't be bad." He was already working out his profit on a scratch pad.

  Darlington was inclined to agree. "Certainly justifies the initial investment. It's an excellent return, very good indeed."

  I never mentioned the way I had treated Corrao, nor what I thought of the man. Personal likes and dislikes are irrelevant in business, especially with a matter like that. Too much money was involved. Corrao had said he would phone for an answer on Monday, after I had taken the views of my colleagues, so that was the extent of my report.

  "Wonder who he's acting for?" Darlington speculated.

  "Who gives a damn," Douglas said happily, "as long as he's got the cash."

  "Sam?" Edgar Hardman cocked his head, inviting my opinion. He was a tough old bird, Edgar. Carried himself like a soldier, dead straight back and all the rest of it. Strong square jaw, blue eyes, brusque upper class voice - but never any side to him. He and I had always got on, even before I married his daughter. "Sam," he said, "what do you make of it?"

  So I began my argument - how two fifty-five was a good price now but that Apex would be worth a lot more by the end of the year. This was ‘75 remember - before the scandals and all the rumours. Arabs were still flooding into London like pilgrims to Mecca. Individual gamblers could lose two hundred thousand in an evening. The drop at the Chequers Club was three times that most nights. I could see no end to it. Casinos were like geese laying golden eggs - and only fools sold those.

  After listening for half an hour, Darlington began to shift his ground. "Defer this profit for a bigger one next year? That's what you're saying?"

  "Why sell at all? We're earning good dividends-"

  "Never turn your back on a certain profit," Douglas was adamant. "Cash in the hand, Sam - can't beat it. What you're saying is all very well, but it's only a forecast. Take the money and run I say - it's always the best policy."

  It went on like that for another hour - Darlington wavering, Douglas for accepting, Edgar Hardman prodding for ideas. Perhaps it was inevitable that Lew Douglas and I were on opposite sides. He and I had never got on. He was too flashy for my liking, and a loudmouth to boot. Whatever anyone had, Lew had a bigger one or a better one. I always thought him the odd one out in our board room. Hardman and Darlington were old school money, polished, urbane men of impeccable family backgrounds. Charlie Weston and I were the young thrusters, men who made it on their own account - but Lew Douglas was second generation money. His father had built up the string of hotels which provided Douglas with his fortune, and Lew himself had been over-indulged, over-fed and over-valued ever since he was born. There was a streak of greediness in him which I found offensive. He was about five years older than me, and patronised me at every opportunity.

  Charlie Weston kept quiet for a long time, but when he finally joined in he voiced the question at the back of most people's minds. "What about the agreement?" he asked. He meant the one about us not selling our shares.

  "What about it?" Douglas demanded. "We gave Sam permission to sell some of his. We can do the same again, surely?"

  But Edgar Hardman was unsure about that. "We were all agreed about Sam. Unanimous policy. This might be different."

  Douglas went red in the face. "Are you saying you'll enforce the agreement? If one of us wants to sell?"

  Edgar tried to smooth him over. "Oh, come on Lew - it just needs talking about. We've never had a split vote on anything. I'm sure it won't come to that."

  But it damn near did - despite Edgar's efforts to play the role of conciliatory chairman. I remember him saying to Douglas, "Look at it this way, old boy - when we put this thing together we backed a man as well as a business. And Sam's done damn well for us, proved his judgement every time. Why quit now? We work well together, none of us need quick cash - and Sam says the future is golden -"

  "That's not the point," Douglas snapped.

  But it was, very much so. An exception had been made for me, so why not for him? That's what he meant, though he stopped short of saying it. Instead he tried another tack. "What about the other shareholders?" he demanded, "our public responsibility?"

  "Some shareholders are selling now," Edgar pointed out. "It's only us who are restricted."

  Selling some of my shares had compromised my position, which made it awkward to argue as strongly as I would have liked - and I Was just thinking things could go either way when Edgar put forward his. astonishing suggestion. "Look, I'm sorry you feel this way, Lew," he said, "so I'll make you an offer. Not to buy your shares now, but I'll guarantee they'll be worth much more than two fifty-five in a year's time."

  Douglas was caught off guard. We all were, come to that. "Guarantee how?" he asked.

  Edgar shrugged. "Sign a note if you like - guaranteeing you three pounds say - in twelve months' time."

  It was a gigantic vote of confidence in me - but a hell of a way to buy peace in the board room. Perhaps Edgar thought the gesture would be enough - that Douglas would refuse to take him up on it - but he was wrong if he did. Douglas damn near snatched his arm off.

  Then Charlie Weston asked, "Does that offer stand for the rest of us?"

  He spoke quietly but it was like a bomb going off. Edgar underwriting Douglas's corner was one thing - Douglas only owned fifty thousand shares. Charlie Weston owned ten times as many. Charlie was the biggest single shareholder in the business, ever since financing Ashley Grange had forced me to sell some of my holdings. Underwriting Charlie's end could cost Edgar one and a half million pounds!

  Edgar stiffened and tiny spots of colour appeared on his cheeks. "Do I take it that you'd like it to?"

  Charlie grinned, "It's just I can't bear to see Lew get the better of me. He's getting a hell of a good deal - I'd like it too."

  I immediately protested and to his credit Darlington supported me. We said Edgar would be mad even to consider it. It was a ludicrous risk. He was on a hiding to nothing, and it was all so damned unnecessary. But our words fell on deaf ears. Edgar sat bolt upright and stared coldly at Charlie Weston, who grinned back in a taunting kind of way, as if daring the old man to back down. That's what did it I think. The implication was there, innuendo if you like, that Edgar would be breaking his word if he failed to carry Charlie's risk. It was all so much nonsense of course, but Charlie made it sound that way.

  "Very well then," Edgar said frostily. "You've got the same deal as Lew." He turned to Darlington. "How about you?"

  "Don't be a bloody fool, Edgar. You know me better than that. If you and Sam want to reject this offe
r, I'll go along with you - but I'll have nothing to do with this other business. It's lunacy - sheer, damn lunacy."

  Edgar barely acknowledged him. I think he was pleased with Darlington's reaction, but there was nothing in his manner to show it. And there was no doubt Darlington would have been given the same cover had he asked for it.

  I was very unhappy about the whole business. I tried to pursue it there and then, but Edgar declared the meeting closed and left immediately afterwards. And when I phoned the next day he just laughed about it - dismissed it - told me not to worry, forget it and concentrate on running Apex. Of course I never forgot it - but after that so much was happening at Apex that it slipped my mind at times, along with everything else.

  The only thing which gave me any pleasure was in giving Corrao his answer - and after that the take-over battle really started. We did all the usual things - full-page advertisements in the financial press; profit forecasts, anticipated growth, that kind of thing - all advising our shareholders not to sell. And then we announced an increased dividend which pushed the price of our shares still higher. They hovered at around three pounds for a while, at least until trading slowed down.

  I suppose the actual battle only lasted a month. By then most shareholders decided to hang onto their shares and the price stabilised - and some weeks after that Corrao's nominees started to sell. The price slipped back a bit then, and Edgar reckoned Corrao and Co. must have lost the best part of half a million pounds maybe more. Not that we cared. We were jubilant. Like the survivors of a real battle, basking in the joy of victory as life returned to normal. Except we got it wrong. Life never ever returned to normal after that. It was merely the lull before the storm.