by Arthur Rawl
“First of all Mary you’re a lot more than just a former employee, you’re family. My stepfather wouldn’t have done the things he did for you if he didn’t consider you part of his extended family and now you are most certainly part of mine. You would be right in saying you are all the family I have now that both of them are gone. Now you and I have to look after each other. I’m sure it’s what he had in mind.”
“That’s very kind of you Sir … Carlton, very kind indeed. For someone like me who never married getting older can be difficult. Knowing I have you to count on is a great comfort, much greater than you can understand at your age. Now tell me what I can do for you.”
“First above everything else, take good care of yourself. As I said I’ll be home soon and I promise that you’ll be one of the first I visit. On the business side you may be able to help me with some questions that have come up here in Brazil. A man I met claims he worked with my stepfather in the early nineteen fifties. This man, Hans Dieter von Lieghter, an Austrian, said he and Dad helped coordinate the rebuilding of certain industrial plants in Austria after the war. He also said they did some private business later on. Do you think there would be anything in Dad’s old files that would tell me whether von Lieghter is being truthful?”
“I don’t have to go to the files. I remember a big happy man by that name who used to strut around the office as ramrod straight as a field marshal. He worked with your stepfather on projects involving English and American aid funds that were to be used for rebuilding the Austrian economy. They were part of the many millions of dollars to be used for putting Europe back to work after the war and your stepfather was appointed by the Ministry of Defense to be sure the money found its way into the right hands. Yes, and I remember later on they worked together on some private development projects. I’m quite sure your stepfather and he made a great deal of money from those later projects.”
“That’s outstanding Mary. Thank you, I could have spent months trying to find out what you remembered in a fraction of a second.”
“Remember Carleton, for most of your stepfather’s business life I was involved one way or another in almost everything he did so it is natural for me to remember who he did business with. Is there anything else I can help you with?”
“Well yes, but it’s about my father. Mother kept a small old fashioned steamer trunk where she said she stored her memories. When five or six mother read some of my father’s letters from Vietnam to me that she kept in the trunk. I have no idea what happened to it. The last time I saw it was at the Cadogan Square house when stepfather bought the leasehold and everything was removed from Holland Park.”
“You do know the year before he died he bought the freehold from the Duke of Westminster’s Trust. The laws changed and because he had seventy-five years left on the leasehold he could buy the property at a fair appraised value.”
“No I didn’t know. At his age why did he buy it? It must have cost him a fortune.”
“It was a great deal of money but he wanted it for himself and for you. He had waited more than ten years until one of the leaseholds on the east side of the Square became available. He believed the law would change and if he didn’t buy just then there wouldn’t be another opportunity. Now, your mother’s trunk … I have an inventory of the contents of Cadogan Square and the contents here at Greenbrook. I’ll have look and see where it is. What were you looking for in the trunk?”
“In Mother’s trunk there is a box I think it’s about double the size of a shoebox. Mother put all of the things she had from father’s military service in it. I’m looking for any documents or letters regarding how he earned the Victoria Cross. Someone recently told me it involved saving a number of lives including that of a Brazilian officer who was an observer. What I really want, if there was a Brazilian officer involved, what the officer’s name and rank were.”
“It might take me several days and I might have to go up to London.”
“It’s not an emergency Mary. By the end of next week or even the week after would due quite nicely. You have my personal email address, don’t you?”
“Yes I do. While I have you, the accountants just gave me last year’s accounts for the Greenbrook Trust. Should I send off a copy to you?”
“No, you and I will review them together when I’m back in England. Thank you Mary, you’ve been a great help. Goodbye.”
“It was so good to hear your voice Carleton. I hope to see you soon. Goodbye.”
I sat looking at the phone. It was like I had been talking to another galaxy … Brazil in many not too subtle ways had consumed me cutting me off from my past. New York was no more than a distant voice over the telephone as was London. I had to get myself … us out of here so I could think clearly again, regain control instead of being controlled and led about like a child.
“Robin, please come here.”
“Yes,” slouching in the doorway. A miracle, you talk to England for five minutes and ‘please’ comes back into your vocabulary.”
“It must be a bad habit. Our new client isn’t as focused on revenue streams and their risks as Laser was. I think we can safely skip a lot of the final rate structure reviews and the reviews of any large user special agreements that were still open when our old client ended the relationship. So for the meeting this afternoon, once we’re past the introductions and the formalities. I want to start developing a closing schedule. Would you pull an activities list for a privately held company closing and we’ll try to put in as many dates as you are able to. If we don’t start focusing everyone on a closing date and what’s needed to get there the deal could start drifting ending up right in the middle of the presidential election politics. To get things moving, we’ll start with getting agreement on how much is needed for the good faith deposit that will accompany the offer.”
“Good place to start. I can produce a first price based on the model tomorrow if you want me to. I’ve got lots of examples of offer letters I can give your new girlfriend so she can tune one up according to Brazilian law.”
“The offer letter examples are a good idea. Before we show the other side a first price we have to bring von Lieghter up to speed about how the pricing model works, what we think is a workable price range and the negotiating strategy we think makes sense in the privatization environment. We should have time to work with him after today’s meeting breaks up.”
“I’ll start sketching out two meeting agendas, one for the general meeting and a second for the later client meeting. I’ll give them to you in a half an hour so you can fiddle with them at your leisure. After tomorrow the ball should be in play.”
Chapter 27
“Good morning everyone let me start by introducing Herr Hans Dieter von Lieghter. Herr von Lieghter is our client and leads an Austrian investor group who have come together to make an offer to purchase one hundred percent of BrasTel to be paid in US Dollars at closing. Their purpose in making this investment is long term capital appreciation with reasonable dividend performance within an economy whose future appears to present long term growth opportunity.
My client’s group is composed of passive investors none of whom have material holdings in the telecom sector anywhere in the world. Their desire is to have existing management remain in place and they intend to only be active at the parent company Board of Directors level. I think it appropriate that we go around the table and introduce ourselves after which Herr von Lieghter would like to say a few words about his group. Then he would like to answer any initial questions you may have about his group, himself and the plans they have for BrasTel once the transaction has closed.
With the introductions done I took over again, “We have prepared copies of a confidential dossier Herr von Lieghter furnished to us as part of our own due diligence regarding his group, its members and its source of financing. These copies are for you to take with you today. Robin, please be kind enough to pass around the copies. Herr von Lieghter …”
Standing, von Lieghter�
�s deep rich voice reflected off the hard wood paneling filling the room with the warmth of his presence, “Good morning, I am delighted to have the opportunity to be here with you in Brazil today. My colleagues and I have been greatly impressed by Finance Minister Fraga’s direct and effective way of dealing with past structural weaknesses in Brazil’s economy. We have also been impressed by the way Brazil’s business leaders have focused on strengthening their markets, their companies and the skills of their employees in recent years. Today Brazil is clearly on the threshold of great things even though from time to time in the future it may encounter a bump or two in the road forward.
As we have seen in many places, this expected future growth has and will continue to create demand for newer, more technologically powerful communications within Brazil and with the rest of the world. This growth is part of the basis for our interest in BrasTel. Together with this we are attracted by BrasTel’s leadership position and market share. We believe BrasTel leads its industry here in Brazil today and will widen its lead day by day for the foreseeable future. For us BrasTel represents a conservative investment. It is one we believe will add value to our holdings for generations to come. Are there questions I may address?”
Watching the faces around the table it was clear von Lieghter’s brief but frank comments and his easy style touched many of the listeners’ concerns. Momentary smiles, affirmative head movements and easing posture told me this wouldn’t be a hard deal to close once the price was agreed. Too many times deals cratered because of non-monetary considerations. Managers who had spent more time and energy protecting and growing their companies than their children often had great difficulty building confidence and trust in corporate suitors much the same as they would have when an unknown someone asked for the hand of their daughters.
von Lieghter stood at the head of the table for more than an hour answering questions with sincerity, candor and good natured ease spiced here and there with a bit of humor. The three BrasTel executives and their lawyer appeared well satisfied. When we broke for coffee they gathered around von Lieghter speaking proudly about Brazil and offering advice on how he should spend his free time to both enjoy and learn more about their unique country. Clearly he was an early success and our task was to keep the momentum of his positive start going so we could bring the deal to a rapid conclusion.
Alana, Robin and I stayed a bit apart from the group as von Lieghter continued to work his audience for another half hour. The time was marked by periods of laughter and sincere man to man talk just the way Brazilians liked. When I stepped forward to suggest we return to work it took another ten minutes for the group to break up and return to the conference table.
“Gentlemen and ladies of course, let me lay out what I think would represent achievable next steps. When this meeting concludes our team will spend the rest of today and this evening reviewing recent updates to our valuation model and what assumptions have been revised. Once done we will move to the final determination of an offer that I hope will be delivered to you in writing by mid-morning tomorrow.
To do this we will first have to agree the composition of the earnest money that will accompany the offer and the broad terms under which the buyer will be entitled to a refund. The amount to accompany the offer could be an agreed number or it could be a percent of the purchase price. The money could be paid by check accompanying the offer drawn on an Austrian Bank or done by wire transfer from Austria received by the Brazilian Central Bank within 24 hours of the offer letter being issued. Naturally we cannot control how long it takes the Central Bank to forward the funds. Are there any suggestions to open the conversation?”
I looked around the room, face to face, there was nothing forthcoming. “Then, considering I have had experience in the privatization sector and have formed views on what might work, let me open the discussion. In the majority of deals a fixed amount seems to be the favored approach. An amount tied to a purchase price that is subject to a possible series of negotiated price changes that would require constant funding adjustments and therefore is more likely to result in accidental defaults than a fixed amount.”
Again looking from face to face I found agreement, “Then we seem agreed that the fixed amount should be used. Forgive me for not mentioning it before, I have asked the buyer’s attorney to prepare a brief meeting memorandum setting out relevant points and then circulate it for editing or agreement. The memo will not be as detailed as minutes would be so it should be comparatively short. Now, for the amount, are there any suggestions?”
After a brief silence von Lieghter spoke up, “I have no experience with acquisitions in Brazil or even South America but I have done a number in Spain and Portugal. To be truthful those deals were not as a large as this one but it became clear there are somewhat establish steps in the fixed amount of good faith money to be paid on deposit in order to be considered a viable player. Let me suggest US Dollars in the amount of twenty-five million should be enough to demonstrate our sincerity in this matter.”
BrasTel’s distinguished grey haired lawyer put up his hand, “Let me caucus with my client please.”
“Would you like us to step out?”
“That will not be necessary Mr. Matthews. We will just be a minute or two.”
He gathered his three clients into a far corner; they exchanged very few words and then returned to the table. “Mr. Matthews, Herr von Lieghter I sure you both will accept that reasonable are at times include cultural considerations. Here in Brasil many of our steps are shaped by our livelier samba beat. I am sure you understand that for us a step in the old world is less interesting than one here in the new. Perhaps you can understand why to us an amount of US Dollars of thirty-five million would seem more appropriate.”
von Lieghter shook with a good-hearted chuckle, “Yes I have heard and felt your samba music in the few days I have been here. I understand how it could affect someone’s views regarding what excites them. I will agree with your suggestion but I will require that you understand if in final due diligence we find shall we say unfortunate omissions or substantially incorrect data you will upon appropriate written demand refund our deposit. Naturally it is up to the lawyers to put the right words together so the song sings with the correct tune.”
“That would seem sensible. As to the question of lawyers, does Senhora Luz represent you?”
“No, she is a friend and advisor and while I value her advice we have agreed I would be better represented by someone else. Considering I am new in Brazil the only other person I could turn to for advice regarding the appointment of counsel is Mr. Matthews. In discussion this morning we agreed that he would waive any possible conflicts and I would act upon his recommendation of Sr. Pedro Rossi. I spoke to Rossi this morning and he agreed to have his firm represent my group’s interests. He apologizes for not being here this morning because of a previous commitment. I am sure I can count on Sra. Luz to provide him with an overview of this morning’s meeting.”
“Thank you, Rossi is a very good choice. He helped shape many of the laws that govern the kind of thing we are hoping to accomplish. I will enjoy the opportunity to work with Sr. Rossi again. With your permission I will contact him and let him know my firm represents BrasTel in this transaction.”
“I’m sure he will be expecting your call. Now if there are no more questions we adjourn and our side works on moving forward in the pricing area. I suggest if we are able to deliver a written offer to BrasTel tomorrow morning we should plan on meeting here twenty-four hours later to see if we can reach agreement in principal and start dealing with concepts that will find their way into the stock purchase agreement including representations and warranties of the seller and of BrasTel’s Board of Directors and management.”
“That seems a reasonable plan. One more thing, there is a message my client, the seller, asked me to deliver to the representative of the buyer, Herr von Lieghter. The message is exclusively from the seller and not from BrasTel’s Board or management even thoug
h they do have the seller’s full confidence in this matter.
The seller views the sale of BrasTel to be in the long-term interest of Brasil’s people. It should promote the rapid development of modern communication capabilities in the interior and the equatorial regions of the country. The Brasilian people should benefit from the competitive aspects of capitalism to save money while enjoying better service levels. The seller’s only concern is delay because the Presidential elections are coming and the opposition could turn a pending worthwhile transaction into a politicized tragedy. This transaction must move rapidly from this point.
There must be no delays. If the seller detects unnecessary bargaining or an unwillingness to pay full price for this valuable asset these discussions will end and a new buyer sought. You have said your interest is long term then base your deliberations on long term issues and not which way the exchange rate will go tomorrow, next week or next year. I hope I have made the seller’s position clear. The political work has been done to obtain necessary statutory approval in two or at most three days after deliberations regarding the Board’s recommendation to shareholder’s is made. For your planning purposes, you should be prepared to fully fund the purchase price in two weeks but no later than three. Is what I have said clear?”
von Lieghter remained sitting and his face turned as hard as stone and his eyes as cold as ice, “Gentlemen, I am prepared to fully fund today. Nothing would make my group happier than to close in two weeks. Please be sure that your client’s management or hired professionals do not slow down our hard work. You will have our offer tomorrow and understanding your client’s message, I will expect your answer in no morethan four or five days later. Thank you for your clarity; I share your client’s feelings.”
He got to his feet and walked around the table with his hand out. “It has been a great pleasure for me to take this important first step with you. I look forward to taking the last step together.”