Power Down

by Ben Coes

“Good, thanks. Nice to see you.”

  “And this is our general counsel, Tara Wheatley.”

  “How do you do, Mr. Anson,” she said.

  “Call me Nick.”

  “This is Philip Bois,” said Romano, “from Morgan Stanley.”

  “Nice to meet you, Philip,” Anson said. “I take it you’ve met some of the folks I brought with me?”

  “That’s right,” said Marks. “Met Marty,” he said, nodding at Martin Ballard, Anson’s CFO, “and Ralph.” He nodded at Ralph Fagen, Anson Energy’s outside counsel from Debevoise & Plimpton. “And of course, we all know Pat. Shall we get started?”

  “Sure,” said Anson.

  “You’re a pioneer in this industry,” said Marks, speaking directly to Anson, but with a smile on his face, soft-spoken and dignified. “When I was trading oil futures in Chicago, back when I got out of the Navy, I remember reading about you and your brother down in Midland. I was always jealous as hell. I wish I had the guts to do what you did, to go out and start something from scratch, build it up into a great company.”

  “Well, you’re kind,” said Anson. “But I’ll be perfectly honest. It was a royal pain in the ass.”

  Marks and the rest of the people in the room erupted in laughter.

  “The reason I think back on those days is because it seems to me ironic that we’re meeting now to discuss a potential merger,” continued Marks.

  “How so?” asked Anson.

  “Because what I want to propose to you is something very similar to that original gutsy idea you had. I want to propose something just as new, just as entrepreneurial as that original vision you had for Anson Energy. For too long, Americans have been content to get their energy from foreign companies. For too long, the financial terms of our lives have been dictated by a bunch of men in the Middle East who despise us and everything this great country of ours stands for.”

  Anson nodded.

  “I’m talking about a new paradigm here. I’m talking about an American energy company. A company whose very existence is testament to the American spirit. Whose profits stay within our borders. Whose products don’t come from the Middle East or any foreign government that is hostile to the U.S. Whose men and women are American men and women or at the very least allies of the United States. This will be an energy company like no one’s ever seen before—”

  “The biggest energy company in the United States,” Romano interrupted, “second biggest in the world.”

  “I don’t care about size,” said Marks, glancing at Romano. “I’m talking about something much more important. This will be a company that could help free this country of its addiction to Middle East oil. It’s an addiction that not only costs American consumers their hard-earned money, but also lives, the lives of our sons and daughters.”

  Marks paused and smiled at Anson across the table.

  “But I can’t do that without you, Nick.”

  The room looked at Anson, who sat in silence.

  Marks stood up and unfurled a large, laminated document. It was a map.

  “The red ones are KKB facilities,” he said, pointing to the hundreds of red dots that had been affixed to the map, representing KKB hydroelectric, nuclear, and coal facilities, natural gas wells, pipelines. “The blue ones are Anson Energy facilities,” he continued. “Imagine the combination of these two companies. With Savage Island Project and its almost endless supply of low-cost electricity, our thirteen nuclear facilities, the western natural gas pipelines, and our multinational distribution network, combined with Capitana Territory and Anson Energy’s extensive and growing capacity to produce oil. The thought is just mind-boggling.”

  Anson looked down at the map. “It would certainly be interesting.”

  “As president,” added Marks, “you’ll be an integral part of leadership for as long as you have the desire.”

  “President?” said Anson, glancing at Pat Perry, who appeared equally surprised. “What happens to you?”

  “CEO,” said Marks. “We do it together, as partners.”

  Anson paused and leaned back in his chair.

  “If you don’t mind, please brief us on the numbers,” said Perry.

  “The details of the financial package are contained in this draft proxy,” said Romano, “twelve copies of which will be dropped off at Goldman by the end of this meeting. But the highlights are relatively straightforward. This is a sixty-five point seven billion–dollar deal. KKB acquires all assets of Anson Energy in a ten-to-six-to-one bond-stock-cash transaction. The bonds total twenty-five billion dollars, high yield; Morgan and Goldman corun the placement. Stock is a straight swap out that takes out Anson Energy’s shareholders at a forty percent premium to yesterday’s closing price. Cash is for you guys at closing, about three and a half billion dollars. One billion two of that retires your Anson Energy stake. Another one billion is for your brother. The other points can be used for whatever you want, though presumably you’ll spread them around to a few of your top managers.”

  “What about Alden? He’s the smart one.”

  “He can continue working E and P,” said Marks, “or he can retire. It’s up to him. You tell him I said that.”

  “I will. My guess is he’d like to keep working.”

  “We’ve created a generous incentive bonus plan for Anson management, based on some very achievable EBIT targets. As for salary, office, et cetera, just write your own ticket on that stuff.”

  Marks stopped talking. He leaned back and smiled at Anson.

  “I’m not quite sure what to say,” said Anson.

  “Say you’ll join us,” said Marks. “How about it?”

  Anson sat back in his chair. The entire meeting had taken less than fifteen minutes. He looked to his right, at Pat Perry, who appeared to be in a mild state of shock. Anson thought of his brother, Alden. He pictured him that day some twenty-odd years ago when they’d hit it, when Saranox 66 struck a triangulated vertical reservoir of light, sweet Permian Basin crude oil, spilling a geyser of thick Texas oil out into the morning sky like a volcano, and how they’d danced beneath it like two children in a summer rainstorm.

  Anson looked at Marks and realized for the first time that he hadn’t said more than ten words the entire meeting. He’d crumbled like a piece of his wife’s coffee cake. All his protestations, in front of the mirror, to Pat, they were all meaningless now. His face, his eyes, his body language—it all gave him away. He’d been taken over, not just the company, but him. He couldn’t say no, not to this. This was too fucking good.

  He stood up. He extended his hand across the table, toward Marks.

  “Let’s do it,” Anson said.

  8

  FOSTER-BADENHAUSEN COMMUNICATIONS

  EAST SIXTY-FIRST STREET

  NEW YORK CITY

  As was inevitable in transactions of this nature, where a variety of bankers, lawyers, company executives, public relations consultants, and others become knowledgeable of a pending deal, rumors got out about the KKB–Anson Energy merger. A day after Ted Marks and Nick Anson shook hands, rumors of the deal swirled across Wall Street, sending shares of both companies soaring. By noon the next day, shares of KKB were trading 11 percent higher than the day before, while Anson leaped to a 20 percent premium over the previous day’s close.

  Janice Gross, director of the Division of Corporate Finance at the Securities and Exchange Commission, phoned Tara Wheatley, KKB’s general counsel, to express the agency’s deep concerns about the amount of trading activity taking place in the stock of the two companies. Wheatley assured her that an announcement was imminent.

  That afternoon, Marks and Anson spent time getting ready for the whirlwind of press interviews that would take place the next morning. Managing the announcement and the attendant press surrounding the process was KKB’s public relations firm, Foster-Badenhausen.

  Its dapper, polished founder, J. P. Badenhausen, was a former White House speechwriter and campaign consultant who at some point real
ized it was far more lucrative to manage the public images of corporate executives than of politicians. Badenhausen wore expensive suits made by a tailor in London and was driven to work in a Mercedes limousine from his mansion in Greenwich to the firm’s stucco town house just off Fifth Avenue and Sixty-first Street, around the corner from the Pierre Hotel.

  When Anson and Marks arrived, the staff of Foster-Badenhausen was gathered in the lobby. They greeted the two executives with applause, cheers, and glasses of champagne. After a round of toasts, Marks and Anson followed Badenhausen to his office to prepare for the next day’s announcement.

  “It’s an ugly business,” Badenhausen said as he led them to the seating area. “You’re part sausage maker, part used-car salesman. It will feel uncomfortable. Repeating the same crap over and over will drive you crazy. But it’s the only option. Reporters are sneaky bastards. Repetition is the only way to ensure, or at least help influence, the story you want to see written.” Badenhausen sat on one of the couches and drained the remaining champagne in his glass. “If the only thing that comes out of your mouth is the positioning statement, they won’t be able to report anything else.”

  “And what is the ‘positioning statement’?” asked Marks.

  “That’s for you to decide. I have a few suggestions.”

  “Let’s hear them.”

  Badenhausen nodded to one of his assistants, a young brunette with smoldering eyes who sat silently in an Eames chair by the door. She stood and dimmed the lights. Badenhausen pulled a remote control from on top of the coffee table. He hit a button and a set of blinds descended from the ceiling and covered the windows. A screen descended from the ceiling. Bright white lights illuminated the screen.

  “This is the sixty-second spot we produced to coincide with the announcement,” said Badenhausen. “We had to rush it a little bit, but I think you’ll like how it came out. We’re suggesting a heavy buy for the next three to four weeks. Evening news, Sunday talk shows, maybe some prime time, 60 Minutes, the Super Bowl, American Idol. Opinion-maker kind of stuff with some fun thrown in. If there’s going to be opposition to this deal, we want to destroy it now, preemptively. One hundred million dollars’ worth of advertising now will save five hundred million dollars in legal expenses and aggravation later. That’s the general idea.”

  The ad started with a black screen. “Amazing Grace” played softly on bagpipes in the background. The first image cut in: an American flag flying on a white flagpole in front of a sun-dappled, white clapboard rural schoolhouse. The flag’s red, white, and blue billowed gently in the wind.

  Then, footage from a series of well-known scenes appeared on the screen. The U.S. Olympic hockey team winning the gold medal in 1980 at Lake Placid. Firefighters emerging covered in blood and dust from the burned-out World Trade Center. FDR walking on leg braces across the deck of the USS Quincy on the way to the Yalta summit. A marine walking down a dusty street holding hands with a young Iraqi child.

  Then, former presidents Bill Clinton and George H. W. Bush, standing next to each other against a black backdrop.

  “What does KKB-Anson mean to me?” asks Clinton. “KKB-Anson means gasoline that comes from our allies and not our enemies. KKB-Anson means an American energy company, a company committed to freedom, a company that might, just might, end our reliance on Middle East oil.”

  “What does KKB-Anson mean to America?” asks Bush. “KKB-Anson means hope. Hope for the future. Hope for our children. Hope for peace in our time.”

  Then the camera cuts to a young blond-haired girl of ten or eleven. She walks across a field of blond wheat. She holds the hand of her father, a pleasant-looking young man in a flannel shirt and jeans. In the background, the red barn of an Iowa farm looks hazy in the late-summer light. The young girl’s pigtails dangle behind her ears. Freckles dot her cheeks.

  “My daddy works for KKB-Anson,” the girl says proudly as the camera zooms slowly in on her face. “He’s my hero.”

  Then a final image of the flag flying in front of the schoolhouse. The camera moves off the flag and focuses in on one of the windows. The point of view moves inside the classroom, filled with young boys and girls.

  “KKB-Anson,” they all yell enthusiastically. “America’s energy company!”

  Badenhausen’s assistant flipped the light switch on. Badenhausen hit a button on the remote and the shades lifted back up, revealing the cold December sky. The room was silent.

  After a minute of silence, Anson cleared his throat. “Wow.”

  “That’s why we pay this guy so much money,” said Marks.

  “Actually,” Badenhausen said, “this one’s on me. That’s how much I believe in what you guys are doing.”

  “That’s not necessary.”

  “Your money’s not good here. I mean it. Your check will get ripped up. And by the way, both Presidents Clinton and Bush feel the same way. They each refused an honorarium.”

  “That was generous of them,” said Marks.

  “You’re a hero for what you’re trying to do. This isn’t about profits or personal glory. This is about something bigger.”

  Marks sat back and smiled. He was silent for a few moments. He appeared slightly uncomfortable, even embarrassed.

  “No, you’re right about that. It’s not about profits.”

  “What is it about then?” Badenhausen asked. “You’re going to get that question. The harder we pound the patriotic theme, the more it begs the question of why a company cares about anything other than the profits.”

  Marks sat in silence. “If they ask, I’ll be ready.”

  Badenhausen leaned forward and refilled the empty champagne glasses. He looked to Nick Anson. “So what do you think? America’s energy company. Keeping America free from Middle East oil. Can you repeat that about a hundred times?” he asked with a smile.

  “I think I can handle that,” said Anson as he reached for his glass and the three men shared a long laugh.

  The next morning, Marks and Anson rang the opening bell at the New York Stock Exchange, the two executives clearly enjoying their time together. Marks even invited Anson and his wife, Annie, to his ski house in Aspen that weekend, an invitation Anson found himself, to his surprise, accepting. The mood on the floor of the stock exchange, and throughout the day, was celebratory.

  After opening up trading on Wall Street, the two men held a press conference off the floor of the stock exchange. Present was a room full of reporters from various news outlets; ABC, CBS, NBC, CNN, Fox, Bloomberg, MSNBC, The Wall Street Journal, Reuters, The Financial Times, The New York Times, and a variety of others.

  The two executives stayed on theme throughout the press conference.

  “Won’t this merger create a company that controls a substantial portion of the energy that is produced and consumed in a large section of the U.S.?” Sara Jamison from NBC pressed Marks halfway through the press conference.

  “I’m glad you asked that,” said Marks. “What this announcement is really about is keeping America free from Middle East oil.”

  “Isn’t it dangerous to give that kind of power to one company?” followed Jamison. “To one man?”

  “Dangerous is relying on oil from suppliers who do not have our best interests at heart,” said Marks. “Dangerous is depending on others for one of the most critical products used in your daily life. Would you buy a bottle of water from someone who doesn’t have your best interest at heart, someone who might in fact be an enemy? A loaf of bread?”

  “Do you anticipate any problems getting support from members of Congress, the SEC, or the Federal Trade Commission?” asked Bill Radford from The Wall Street Journal.

  “When you’re creating a company that helps America become independent of Middle East petroleum, I think that’s something most citizens will rally around,” Anson shot back.

  After half an hour of similarly predictable questions, the reporters started to slow down and prepare for the press conference to end. A young female reporter i
n the back stood up. She had auburn hair, and a yellow cable knit sweater.

  “Hi. Astrid Smith, Baltimore Sun.”

  “Good morning, Astrid,” said Marks. “What’s your question?”

  “You say this is all about creating independence from the Middle East, right? But is that really your concern? Shouldn’t you be concerned with profits? With financial performance? I mean, my grandparents own KKB stock. They rely on you to create the dividend that allows them to live comfortably in their retirement.”

  The room was silent. The question Badenhausen had warned of had come. Everyone looked at Marks. He took a few steps to the right, silently, looking down as he walked, deep in thought. He glanced at Badenhausen, who stood against the wall to the side of the room. Marks’s limp was visible as he walked. After a moment of silence, he looked at the young woman who’d asked him the question.

  “Great question,” Marks said after several moments. “Oh, we’ll make money. I can assure you of that. Your grandparents can continue to sleep at night. But no, it isn’t just about the money. For me, it never was. It never will be. Of course, if I didn’t make money for the shareholders of this company, the board of directors would fire me. But so far they haven’t needed to. We’ve done pretty well. You know, I think sometimes it’s the guys like Nick and me who don’t care so much about the money that end up being pretty good at making it.”

  Marks paused and smiled. He waited a few moments, looking at the crowd of reporters, then back to the young reporter.

  “I fought in Vietnam,” Marks said, looking past the wall of cameras and reporters to the young woman. “I almost died there. An Irishman from Boston named Henry O’Brien saved my life. I vowed if I ever had a son, I wouldn’t let him die in a meaningless war. I had one child. A son. We named him Henry. I used to call him Hank, God bless his soul.”

  Marks paused. He walked back to the center of the stage. He turned back toward the reporters, who remained silent, mesmerized by Marks, waiting to see where he would take this clearly unrehearsed moment.

  “On August 22, 2006, Hank was killed in Iraq, shot in the chest in a meaningless war, all because the rest of us needed gasoline for our cars. I failed to protect my son. America failed to protect its sons and daughters. I swore then, if I ever had the ability, I’d do whatever I could to make it so nobody else had to collect their son’s remains like I did, picking them up at the airport in a wooden box because the rest of us need our gasoline.”