“And if I were to put mine on the open market, what do you think they might fetch?”
“If you placed that quantity of shares on the market in one tranche, it would be assumed you were dumping them, in which case you’d be lucky to get twenty million. In a successful sale there has to be a willing buyer and a reluctant seller. At the moment this deal seems to have two desperate sellers.”
“What alternatives am I left with?” asked Armstrong as they walked toward the limousine.
* * *
“He’s left us with virtually no alternative,” E.B. replied. “I’m going to have to find a third party who’s willing to buy your shares in the Star, and preferably before Armstrong’s forced to dump his.”
“Why go down that route?” asked Townsend.
“Because I have a feeling that Mr. Armstrong is in even worse trouble than you.”
“What makes you say that?”
“My eyes never left him, and once the speeches were over the first thing he did was to head straight for this table.”
“What does that prove?”
“That he had only one purpose in mind,” replied E.B. “To sell you his shares in the Star.”
A thin smile appeared on Townsend’s face. “So why don’t we buy them?” he said. “If I could get my hands on his holding, I might…”
“Mr. Townsend, don’t even think about it.”
39.
Financial Times
1 November 1991
NEWSPAPER GROUPS’ SHARES IN FREE FALL
By the time Townsend boarded the plane for Honolulu, Elizabeth Beresford was already halfway across the Atlantic. During the past three weeks he had been put through the toughest examination of his life—and, like all examinations, it would be some time before the results were known.
E.B. had questioned, probed and investigated every aspect of every deal he had ever been involved in. She now knew more about him than his mother, wife, children and the IRS put together. In fact Townsend wondered if there was anything she didn’t know—other than what he had been up to in the school pavilion with the headmaster’s daughter. And if he’d paid for that, she would doubtless have insisted on being told the precise details of the transaction.
When he arrived back at the apartment each night, exhausted, he would go over the latest position with Kate. “I’m certain of only one thing,” he often repeated. “My chances of survival now rest entirely in the hands of that woman.”
They had completed stage one: E.B. accepted that the company was technically solvent. She then turned her attention to stage two: the disposal of assets. When she told Townsend that Mrs. Summers wanted to buy back her shares in the New York Star, he reluctantly agreed. But at least E.B. allowed him to retain his controlling interest in the Melbourne Courier and the Adelaide Gazette. He was however made to sell off the Perth Sunday Monitor and the Continent in exchange for keeping the Sydney Chronicle. He also had to sacrifice his minority interest in his Australian television channel and all the non-contributing subsidiary companies in Multi Media, so that he could go on publishing TV News.
By the end of the third week she had completed the striptease, and left him all but naked. And all because of one phone call. He began to wonder how long those words would haunt him:
“Would it be too much to ask the figure you have in mind, Mr. Townsend?”
“Yes, Ambassador. Three billion dollars.”
E.B. didn’t have to remind him that there was still the contingency plan to be considered before she could move on to stage three.
However many times they wrote and rewrote the press release, its conclusion was always the same: Global Corp was filing for Chapter Eleven, and would be going into voluntary liquidation. Townsend had rarely spent a more distasteful couple of hours in his life. He could already see the stark headline in the Citizen: “Townsend Bankrupt.”
Once they had agreed on the wording of the press release, E.B. was ready to move on to the next stage. She asked Townsend which banks he felt would be most sympathetic to his cause. He immediately identified six, and then added a further five whose long-term relationship with the company had always been amicable. But as for the rest, he warned her, he had never dealt with any of them before he set about raising the three billion for the Multi Media deal. And one of them had already demanded their money back, “come what may.”
“Then we’ll have to leave that one till last,” said E.B.
She began by approaching the senior loan officer of the bank with the largest credit line, and told him in detail of the rigors she had put Townsend through. He was impressed and agreed to support her plan—but only if every other bank involved also accepted the rescue package. The next five took a little longer to fall into line, but once she had secured their co-operation, E.B. began to pick off the others one by one, always able to point out that to date every institution she had talked to had agreed to go along with her proposals. In London she had appointments with Barclays, Midland Montagu and Rothschilds. She intended to continue her journey to Paris, where she would see Crédit Lyonnais, and then flights were booked for Frankfurt, Bonn and Zurich, as she tried to weld each link in the chain.
She had promised Townsend that if she was successful in London she would phone and let him know immediately. But if she failed at any stage, her next flight would be to Honolulu, where she would brief the assembled Global delegates not on the company’s long-term future, but on why, when they returned to their own countries, they would be looking for new jobs.
E.B. left for London that evening, armed with a case full of files, a book of plane tickets and a list of telephone numbers that would allow her access to Townsend at any time of the day or night. Over the next four days she planned to visit all the banks and financial institutions which would, between them, decide Global’s fate. Townsend knew that if she failed to convince just one of them, she wouldn’t hesitate to return to New York and send his files down to the thirteenth floor. The only concession she agreed was to give him an hour’s notice before she issued the press release.
“At least if you’re in Honolulu you won’t be doorstepped by the world’s press,” she had said just before she left for Europe.
Townsend had given her a wry smile. “If you issue that press release it won’t matter where I am,” he said. “They’ll find me.”
* * *
Townsend’s Gulfstream landed in Honolulu just as the sun was setting. He was picked up at the airport and driven straight to the hotel. When he checked in, he was handed a message which read simply, “All three banks in London have agreed to the package. On my way to Paris. E.B.”
He unpacked, took a shower and joined his main board directors for dinner. They had flown in from all over the world for what he had originally intended to be an exchange of ideas on the development of the company over the next ten years. Now it looked as if they might be talking about how to dismantle it in the next ten days.
Everyone around the table did their utmost to appear cheerful, although most of them had been summoned to the presence of E.B. at some time during the past few weeks. And all of them, after they had been released, immediately shelved any ideas they might have had for expansion. The most optimistic word that ever passed E.B.’s lips during those cross-examinations had been “consolidation.” She had asked the company secretary and the group’s chief financial officer to prepare a contingency plan which would involve suspending the company’s shares and filing for voluntary liquidation. They were finding it particularly difficult to look as if they were enjoying themselves.
After dinner Townsend went straight to bed, and spent another sleepless night that couldn’t be blamed on jetlag. He heard the message being pushed under his door at around three in the morning. He leaped out of bed and tore it open nervously. “The French have agreed—reluctantly. On my way to Frankfurt. E.B.”
At seven, Bruce Kelly joined him in his suite for breakfast. Bruce had recently returned to London to become managing direc
tor of Global TV, and he began by explaining to Townsend that his biggest problem was getting the skeptical British to buy the hundred thousand satellite dishes that were presently being stored in a warehouse in Watford. His latest idea was to give them away free to every reader of the Globe. Townsend just nodded between sips of tea. Neither of them mentioned the one subject that was on both their minds.
After breakfast they went down to the coffee room together, and Townsend moved among the tables, chatting to his chief executives from around the world. By the time he had circled the room, he came to the conclusion that they were either very good actors or they had no idea how precarious the situation really was. He hoped the latter.
The opening lecture that morning was given by Henry Kissinger, on the international significance of the Pacific Rim. Townsend sat in the front row, wishing that his father could have been present to hear the words of the former secretary of state as he talked of opportunities no one would have thought possible a decade before, and in which he believed Global would be a major player. Townsend’s mind drifted back to his mother, now aged over ninety, and her words when he had first returned to Australia forty years earlier: “I have always had an abhorrence of debt in any form.” He could even remember the tone of her voice.
During the day, Townsend dropped into as many of the seminars as he could manage, leaving each one with the words “commitment,” “vision,” and “expansion” ringing in his ears. Before he climbed into bed that night, he was handed the latest missive from E.B.: “Frankfurt and Bonn have agreed, but extracted tough terms. On my way to Zurich. Will phone as soon as I know their decision.” He had another sleepless night as he lay waiting for the phone to ring.
Townsend had originally suggested that, following Zurich, E.B. should fly straight to Honolulu so that she could brief him personally. But she didn’t think that was a good idea. “After all,” she reminded him, “I’m hardly going to boost morale by chatting to the delegates about my job description.”
“Perhaps they’d think you’re my mistress,” said Townsend.
She didn’t laugh.
After lunch on the third day, it was Sir James Goldsmith’s turn to address the conference. But as soon as the lights were lowered, Townsend began checking his watch, anxiously wondering when E.B. might call.
Sir James walked onto the platform to enthusiastic applause from the delegates. He placed his speech on the lectern, looked out into an audience he could no longer see and began with the words: “It is a great pleasure for me to be addressing a group of people who work for one of the most successful companies in the world.” Townsend became engrossed by Sir James’s views on the future of the EC, and why he had decided to stand for the European Parliament. “As an elected member I will have the opportunity to…”
“Excuse me, sir.” Townsend looked up to see the hotel manager hovering beside him. “There’s a call from Zurich for you. She says it’s urgent.” Townsend nodded and quickly followed him out of the darkened room and into the corridor.
“Would you like to take it in my office?”
“No,” Townsend said. “Put it through to my room.”
“Of course, sir,” said the manager, as Townsend headed for the nearest lift.
In the corridor he passed one of his secretaries, who wondered why the boss was leaving Sir James’s lecture when he was down on the program to give the vote of thanks.
When Townsend let himself into his suite, the phone was already ringing. He walked across the room and picked up the receiver, glad she couldn’t see how nervous he was.
“Keith Townsend,” he said.
“The Bank of Zurich have agreed to the package.”
“Thank God for that.”
“But at a price. They’re demanding three points above base rate, for the entire ten-year period. That will cost Global a further $17.5 million.”
“And what was your response?”
“I accepted their terms. They were shrewd enough to work out that they were among the last to be approached, so I didn’t have many cards to bargain with.”
He took his time before he asked the next question. “What are my chances of survival now?”
“Still no better than fifty-fifty,” she said. “Don’t put any money on it.”
“I don’t have any money,” Townsend said. “You even took away my credit cards, remember?”
E.B. didn’t respond.
“Is there anything I can still do?”
“Just be sure that when you deliver your closing speech this evening, you leave them in no doubt that you’re the chairman of the most successful media company in the world, not that you’re possibly only a few hours away from filing for voluntary liquidation.”
“And when will I know which it is?”
“Sometime tomorrow would be my guess,” said E.B. “I’ll call you the moment my meeting with Austin Pierson is over.” The line went dead.
* * *
Armstrong was met off Concorde by Reg, who drove him through the drifting sleet from Heathrow into London. It always annoyed him that the civil aviation authorities wouldn’t allow him the use of his helicopter over the city during the hours of darkness. Back at Armstrong House, he took the lift straight up to the penthouse, woke his chef and ordered him to prepare a meal. He took a long, hot shower, and thirty minutes later he appeared at the dining room table in a dressing-gown, smoking a cigar.
A large plate of caviar had been laid out for him; he had scooped up the first mouthful with his fingers even before he sat down. After several more handfuls, he lifted his briefcase up onto the table and extracted a single sheet of paper which he placed in front of him. He began to study the agenda for the next day’s board meeting, between mouthfuls of caviar and glass after glass of champagne.
After a few minutes he pushed the agenda to one side, confident that if he could get past item one he had convincing answers to anything else Sir Paul might come up with. He lumbered into the bedroom and propped himself up in bed with a couple of pillows. He switched on the television and began flicking from channel to channel in search of something to distract him. He finally fell asleep watching an old Laurel and Hardy movie.
* * *
Townsend picked up his speech from a side table, left the suite and walked across the corridor to the lift. At the ground floor, he made his way quickly over to the conference center.
Long before he reached the ballroom he could hear the relaxed chattering of the waiting delegates. As he entered the room, a thousand executives fell silent and rose from their places. He walked down the center aisle onto the stage and placed his speech on the lectern, then looked down at his audience, a group of the most talented men and women in the media world, some of whom had served him for over thirty years.
“Ladies and gentlemen, let me begin by saying that Global has never been in better shape to face the challenges of the twenty-first century. We now control forty-one television and radio stations, 137 newspapers and 249 magazines. And of course we have recently added a jewel to our crown: TV News, the biggest-selling magazine in the world. With such a portfolio, Global has become the most powerful communications empire on earth. Our task is to remain the world leaders, and I see before me a team of men and women who are dedicated to keeping Global in the forefront of communications. During the next decade…” Townsend spoke for another forty minutes on the future of the company and the roles they would all be playing in it, finishing with the words: “It has been a record year for Global. When we meet next year, let’s confound our critics by delivering an even better one.”
They all stood and cheered him. But as the applause died down, he couldn’t help remembering that another meeting would be taking place in Cleveland the following morning, at which only one question would be answered, and it certainly wouldn’t be followed by applause.
As the delegates broke up, Townsend strolled round the room, trying to appear relaxed as he said goodbye to some of his chief executives. He only hoped th
at when they returned to their own territories, they wouldn’t be met by journalists from rival newspapers wanting to know why the company had gone into voluntary liquidation. And all because a banker from Ohio had said, “No, Mr. Townsend, I require the fifty million to be repaid by close of business this evening. Otherwise I will be left with no choice but to place the matter in the hands of our legal department.”
As soon as he could get away, Townsend returned to his suite and packed. A chauffeur drove him to the airport, where the Gulfstream was waiting to take off. Would he be traveling economy class tomorrow? He was unaware of how much the conference had taken out of him, and within moments of fastening his seatbelt he fell into a deep sleep.
* * *
Armstrong had planned to rise early and give himself enough time to destroy various papers in his safe, but he was woken by the chimes of Big Ben, foreshadowing the seven o’clock television news. He cursed jetlag as he heaved his legs over the side of the bed, aware of what still needed to be done.
He dressed and went into the dining room to find his breakfast already laid out: bacon, sausages, black pudding and four fried eggs, which he washed down with half a dozen cups of steaming black coffee.
At 7:35 he left the penthouse and took the lift down to the eleventh floor. He stepped out onto the landing, switched on the lights, walked quickly down the corridor past his secretary’s desk, and stopped to jab a code into the pad by the side of his office door. When the light turned from red to green he pushed the door open.
Once inside, he ignored the pile of correspondence waiting for him on his desk and headed straight for the massive safe in the far corner of the room. There was another longer and more complicated code to complete before he could pull back the heavy door.
The first file he dug out was marked “Liechtenstein.” He went over to the shredder and began to feed it in, page after page. Then he returned to the safe and removed a second file marked “Russia (Book Contracts),” and carried out the same process. He was halfway through a file marked “Territories for Distribution” when a voice behind him said, “What the hell do you think you’re doing?” Armstrong swung round to find one of the security guards shining a torch into his face.
The Fourth Estate Page 57