“It’s your call,” Joe said. “I haven’t even mentioned this to Preston or Casey. It’s just that in the event that you may feel that you have largely finished your work at Atomic, you may want to consider a new challenge. Wilson needs an overall operations manager with experience, understanding and horsepower. You know that.”
“You asked me to analyze the stores from an operational point of view. I did that. I’m sure you got your time at bat today, and your plan, as usual, was dynamite, but we don’t know what the bank is going to do, do we? There may not be any business to be operations manager of.”
“Between us, I believe the bank is going to think hard about all the information they’ve been asked to digest. Wilson has some problems, but so do they. They’ve got a lot of explaining to do with their regulators. They need help, too. They don’t want to lend more money, but their other choices are not viable. Bankruptcy would be a mess. Lawyers would have a field day. Foreclosure only leaves the bank with more problems, and in the end, the bank won’t get what it wants and needs most – to be repaid. Our plan is their best hope for that.”
“I agree with all that, Joe, and these are good guys, although a little screwed up. But what has it got to do with me?”
“Alex, you’ve been a hell of a field major for a lot of years. Have you ever thought of being a colonel? Or even a general? This is an opportunity – assuming Preston agrees, which he will – for you to be group vice president in charge of all operations. If you listen to your own report, you believe these dealerships have the capacity to be highly profitable. Isn’t it time for you to be providing hands-on leadership, with a piece of the holding company in the bargain?”
“How big a piece?” Alex asked, pouring himself some more wine.
“Fifteen percent?” Joe replied. “No buy-in.”
“Hmm, that’s interesting,” Alex said. “But again, we don’t know that the bank will allow these businesses to continue.”
“The bank is going to meet all day tomorrow and thrash this around internally and with their lawyers. We know what the lawyers are going to argue, but I believe, while the bank will scale down the loans I’ve asked for, they will, in the end, buy the program if they know there will be a major management change. They need to know that there will be experience at the wheel, somebody who will communicate with them, work with them. That’s you.”
“Well, now that you’ve got my future planned, how much will I be paid?”
“Ask Alex Herman,” Joe replied. “He makes those kinds of management decisions. He knows what’s best for the company, and he understands bonus structures. Alex, have a chat with Preston; I want to talk with Casey for a minute.”
Alex got up, moved around the large round table, and went over to Casey. “I don’t mean to interrupt you guys, but the Captain would like to have a few words with you, Casey. Can we switch seats?”
“Sure.” Casey sat down with Joe, carrying a large plate of German chocolate cake with ice cream on the side.
“Hi, Joe,” Casey said. “You did a masterful job today. Unbelievable. I learned a lot, too.”
“Thanks. It’s a process, and we’re moving along. I need to talk with you about part of that process.”
“Go ahead.”
“Casey, assuming that the bank lets the business run, what do you think is the most important thing needed to make it work?”
“More dinners like this,” Casey said, as he attacked his dessert.
“Right. We can talk about this in the morning.”
“Let’s get it over with tonight. You want me fired, right, Joe? I’ll do whatever you ask.”
“No, I don’t want you fired. I just want you to answer my question. What do these stores need most right now under these circumstances?”
“To begin with, we obviously need sufficient capital. In terms of management, each store needs a strong general manager – a hands-on type the bank will respect. And each department needs to be an independent profit center. Overall we need better controls. All of which I should have addressed.”
“If the bank gives you the chance, do you feel you’re in a position to provide that now?” Joe asked.
“Probably not, although honestly, I do think I have a lot to add. Also, I never heard Preston talk like he did today in my whole life.”
“What do you think is in the best interest of the company?”
“I think we need a guy like Alex to take charge and run the place. That’s what I think.”
“How would you feel about working with him? Retaining your position as CFO and having Alex be a VP/COO in charge of overall operations.”
“I’d love it, Joe. I’d love it. We could really get things organized and, as Preston said, we could learn from our mistakes. Preston’s been talking to me all night about that. I’m telling you, he’s really into it. The real question is, will we get the chance?”
“One more thing, Casey,” Joe said. “I think it’s time you had a piece of this company. You’ve worked long and hard and you’ve been totally loyal to Preston and the business. How would you feel about 15 percent, no buy-in?”
Casey looked up at Joe, dead serious for a change. “It would really mean a lot to me. It would mean a lot to be able to say that I’m an owner. It would also mean a lot to my wife. I guess it would be an answer to a prayer if all this could work out. I hope we’re not dreaming.”
The waiter brought the check, which Preston picked up. Joe stood, raised his wine glass, and said, “Gentlemen, we’ve had a good dinner and a good night. Let’s go back to the Sheraton and get some sleep. We’ve still got work to do tomorrow.”
“Aye, aye, Cap,” Alex said, as they clinked their glasses.
On the way to the parking lot, Preston made a point of walking with Joe. “I hope I didn’t mess things up in there this afternoon,” he muttered.
“Quite the contrary,” Joe replied. “You spoke from your heart. Nothing like the truth. As my Aunt Lettie used to say, it will set you free. I’m proud of you, Preston.”
“You don’t know how much that means to me, and how grateful I am to you. I don’t know how this is going to come out, but I’ll never forget all you’ve done for me.”
“Thanks. I don’t know how it will come out, either, but I believe the bank is going to struggle with loaning more money and letting the businesses go forward – compounding their risk – unless it has an anchor of stability in terms of management.”
“A guy like Alex, for example?”
“Exactly. And when you talk to him, which I hope you will do tonight, I suggest you ask him what role he would like to play. You’d be damn lucky to get him, and it would be a big risk for him. I’d let him set his own salary, make him VP, general manager of operations, and COO, and give him 15 percent equity in Wilson Holdings with the other 15 percent going to Casey.”
“Fifteen percent to Alex and 15 to Casey? That’s 30 percent! I’ve never given any ownership up.”
“Look at the donut, not the hole. Seventy percent of something is a lot better than 100 percent of nothing. Anything over 66 2⁄3 percent gives you two-thirds majority and all kinds of corporate control. On the other hand, Casey and Alex will work their hearts out and feel that they’re really a part – as owners – of turning this company around and growing it. It will be the best investment you’ve ever made. Besides, not having a guy like Alex running these companies is going to be a deal-breaker with the bank.”
“You’re right, you’re absolutely right. I’ll talk with Casey and then with Alex first thing in the morning.”
“Good,” Joe said. “But do it the other way around. Let Alex know how much you want him and how much you need him and that he will have a direct line to you, as will Casey. Casey will understand that. You’re lucky to have such a loyal friend.”
Chapter 26
While Preston, Alex, Casey, and Joe
were having breakfast at the Sheraton coffee shop, Lou Barenzo, the bank’s CFO, was already meeting in his office with Paul Olsen. Lou, focused on the numbers, Paul, on operations, were locked in argument.
“We’ve got a meeting this afternoon, and you and I have got to be together before we go in there.”
“You don’t get it, Lou. The reason you have the SOT is because of operational issues. If the bank lets these dealerships go forward without turning the faucet off now, we’ll have more SOT because there’s no controls in place. If we put our own people in place in the stores, then we’ll know precisely what we’ve got.”
“Hart wants us to transfer the SOT in Charlottetown to the capital loan and then increase it by five hundred thousand, secured by consolidated first and second mortgages. If you believe the MAI appraised value, we’ve got a ratio of 90 percent on the mortgages. Are you willing to loan the money and accept that risk?”
Paul looked at his notes. “I understood Hart to say that Houston is sitting on a lease with an option to purchase at a fixed price that can be sold for more. So the sandwich is 6.4 million in gross proceeds, just from the equity in the real estate.” Paul walked to the board and spelled out what the store could be sold for, the payoff of the cap loan, and ultimately how the bank is paid back. After several hours, they managed to find common ground, agreeing that the bank would be in an improved position.
“Don’t forget,” Lou said, “If Houston’s sold, it sure as hell doesn’t need four hundred thousand dollars working capital. We should have that money applied toward our debt. And we’re entitled to 10 percent of the equity of that store when it’s sold.” So much for common ground.
“I want to forget that, Lou,” Paul said. “I’m going to clearly recommend this afternoon that BNA waive any interest it has in the equity kickers. I don’t know who drafted those documents, but it’s a hornets’ nest. This is a good opportunity to get out of it clean.”
“We don’t have to give up the four hundred thousand!”
“The store needs working capital until it’s sold. Let’s leave fifty thousand in for working capital and take 350 thousand and apply it to debt.”
And so it went for the rest of the morning.
The afternoon meeting was convened by Bobby Bower at two-fifteen in the large conference room. The first item Bobby brought up concerned Manhattan Mercedes. “I’d like some straight answers on what really happened with the sub-lease, Sally.”
Sally explained the pressure she was under from the real estate department to make Wilson extend the sub-lease, and that, while it made her uncomfortable, she got Wilson to go along.
“Well, there’s nothing wrong with that!” Floyd Ritter said.
“There’s a lot wrong with that,” Tom jumped in, his face red. “But it happened. Let’s hope we don’t have to defend ourselves over that someday. Let’s turn to Hart’s plan. Lou, where are you and Paul?”
“We’re essentially in agreement. We can’t approve the plan in its present form. We don’t agree with the proposed numbers. We feel it would be an error in judgment to allow these businesses to continue with incompetent management, confirmed by Wilson’s own expert, Alex Herman,” Barenzo said, turning to Paul.
“If we did do the plan,” Paul interjected, “and Wilson sold Houston, I for one do not think we should take 10 percent of either the real estate or the store.”
“That’s totally naïve,” Floyd Ritter said, having had a part in drawing up those documents. “In any event, I think it can be fairly said at this point,” he said, standing up, “that the bank does not have an affirmative vote from either of you gentlemen, you cannot buy into this plan. Tom, I move we reject the plan, and give White & Polk the green light to proceed with foreclosure and TROs immediately.”
“Sit down, Floyd,” Tom said. “I appreciate your input, as always. Let’s go a little slower. What do you think, Bobby?”
“I’d like to ask Lou and Paul a couple of questions. It seems to me that your objection is to the incompetent management going forward and that you don’t trust these folks. Correct?” Lou and Paul both nodded. Bobby continued, “Let’s suppose, for argument’s sake, that there was a strong management in place, and that the management could be trusted. Would you then accept Hart’s plan to get us paid back? I don’t want to be in real estate or the car business.”
After two more hours of debate, Tom returned to his office, had a long talk with Terry Perkins, and placed a call to Joe.
“How you doing, Joe?”
“I’m fine, Tom. How is Wilson doing?”
“Joe, here’s where we are. We like your program and appreciate all the work you have put into it. We can’t approve your program, however, loaning more money with the knowledge that Wilson lacks competent management that can be trusted to run the businesses going forward. We believe to do so would be irresponsible. That’s our biggest problem. You know I wanted this to work, and so does Paul, but it is not within our control to get over this hurdle. I’m sorry.”
“I understand,” Joe said. “You’re a good man, Tom. Let me ask you this. What kind of management would make the difference to you?”
“Well, as one of the guys said today, and don’t quote me on this, your own expert was pretty clear in demonstrating how incompetent the people in Wilson’s stores are. In fact, he even said he would fire a couple of the GMs. Wilson needs a man like that. Somebody Preston Wilson can trust and we can, too. Wilson needs a real powerhouse right now, with the experience and the ability to make all the things happen that are called for in your plan. Hell, you know it, Joe. It all comes down to execution.”
“I agree,” Joe said. “Suppose we could find a man like Alex, with all his horsepower and experience. Does the bank really want to throw away this opportunity to get back on track and avoid all the expense and pitfalls of going forward through the minefield if Wilson had a man like Alex to get the job done?”
“No, we don’t,” Tom replied. “If you could produce a man like Alex immediately, I can bring the others around and we’ll go forward with the deal. There would be a few changes in the numbers, and your operating capital amounts would not be as high, but essentially, your plan would work. Where are you going with this, Joe?”
“It’s not where I’m going, Tom. It’s where Wilson and the bank are going. And it’s a good place. Preston has already cut a deal with Alex Herman, who’s willing to leave Atomic Motors and join Wilson as vice-president, general manager of operations and COO, reporting directly to Preston. He’s also going to have 15 percent of Wilson’s stock, and Casey will have 15 percent as well. Preston is totally committed to turning this business around. He meant every word of what he said to you yesterday. Admittedly, there’s a lot of work to be done, issues to be resolved. But you now have before you not only a plan, which you like and believe can work, but also the strong management to make it work, and the ability to trust that management.”
“Damn, don’t you just keep stirring the pot. I’ll give you a call in the morning.”
“Thanks, Tom. Call me in Braydon, please; my work here is finished, and I’m going home.”
“Come in,” Preston said to Joe as he opened his door. “Sorry,” he added. “I was on my computer catching up on my e-mail. How are things going? Have you heard anything?”
“I spoke with Tom,” Joe replied. “Have you spoken to Alex?”
“I talked with him in the car last night on the way back here. He spoke with me at breakfast and again about an hour ago. He’s with us, Joe, if we have a chance.” Preston smiled broadly. “I’ve spoken with Casey as well. He was delighted. I never realized how much ownership meant to him all these years. He’s still worried, though.”
“Good,” Joe said. “I am very glad to hear that about Alex, especially since I’ve already told Tom. I’m happy about Casey, too. He’s a good guy.”
“He sure is,” Preston
replied. “I think I’ve taken him for granted. Another one of my mistakes. What do you think will happen with the bank?”
“It’s in their hands now,” Joe said. “We’ve done what we can do. Tom will let me know. I’m done, Preston, and it’s time to go home. I’ve already checked out. I’ll try to catch Alex and Casey. If not, tell them I said goodbye and that I’ll be in touch. By the way, how are things going with Marcia?”
“Not well. Not well at all. Remember when you asked me to sign all those authorizations and consents?”
“Of course.”
“Well, I showed her your letter. We had a big fight. She was shocked. She had no idea we were in such bad shape. She got scared, especially when I told her the part about getting her own lawyer if she wanted to. She took that the wrong way. I showed her the criminal lawyer’s letter and she went over the top. I told her we were going to Charlotte to talk to the bank, and that there was a chance that things could work out. She asked me why she should believe anything I said. I pray that she doesn’t leave me. I guess that’s my other big workout.”
“Good luck with that,” Joe said. “I assume you’re going home now.”
“Yup. Thanks again for everything, Joe,” Preston said, opening his arms to give him a big hug. “Send me your bill.”
“You’re welcome. I’ll talk with you later.”
After dropping Casey off at his apartment in Murray Hill, the taxi driver delivered Preston to his Trump Towers condo. Preston waved absently at the doorman and hurried to the elevator. Eager to see Marcia, he was sure she would want to know what was going on. He wished he had shared more with her about his situation, but he’d soon take care of that.
He was happy to be home, back to his familiar surroundings. He put his bag down in the foyer and went into the den looking for Marcia, surprised that she was not at the door. He had called from LaGuardia and left word on her voicemail, telling her that he’d landed. In the past, he would have just come home. Not finding Marcia immediately, he roamed around the eighteen-room apartment, calling for her. Silence.
The Collectibles Page 17