Sing Like You Know the Words (29 page)

Long term inactivity and
depression were not in his nature. He began to make plans to at
least put the money in the service of something useful, but the
time he could not avoid spending at Cromwell left him bored and
exasperated in equal measure. It was a chore that he only wanted to
be done with as quickly as possible. When Foster brought the Board
a proposal to take over a U.S. competitor, his protests were muted.
He told the Board that in his view the plan was too ambitious for a
company of their size.

-Our gearing will be frightening
afterwards. They are bigger than we are now. If interest rates
rise, we’ll be horribly exposed. Plus, Andrew tells me that their
order book is full, but I have visited their main site as you
gentlemen requested, and I have to tell you that if our plant is
not state of the art, theirs is a decaying ruin in comparison.

-The fixed assets are weak,
Foster conceded, but fully depreciated. Fortunately the US military
supports US business, so as David said the contracts are solid.

-I didn’t say they were solid. I
skimmed through some of the main contracts: they didn’t seem all
that firm to me

-But as David himself has also
told you gentlemen, he has not practised law for years and he’s not
a specialist in this field. And as you would expect, our due
diligence includes a full review from expert lawyers which
concludes that everything is as they would expect to find it.

-That doesn’t really help us
Andrew, unless you can explain what they expected to find and
whether it’s worth anything?

-It’s just the way they put
these things in the US, David. There is really nothing to worry
about gentlemen. We’ll be as careful as we can be. We’ve seen
enough for me to assure you that anything else our diligence work
turns up will only be the sort of issue that can be dealt with by a
reduction in the price. Of course we’ll look hard to find as many
of those issues as we possibly can.

Foster’s conspiratorial smile
reassured them that they were all men of the world and that Andrew
Foster knew his way around it better than most. Probably he would
find ways to get the best of the naïve Americans over the details.
The deal went through quickly, and before long more of Foster’s
former associates were recruited to supervise a process that he
called integration.

Within eighteen months of the
acquisition, the company’s situation had deteriorated dramatically.
Things went from bad to worse in ways that even David wasn’t fully
sure he understood. Most frustrating was that he had no authority
to do anything about it. Matters came to a head late one Friday
evening, when he and the chairman were summoned to an urgent
meeting by Andrew Foster.

David arrived with Peter Douglas
at the appointed hour, feeling like an intruder in his own
boardroom. Foster was already there, with a stranger. Too young,
too neat and looks too smart, thought David; I don’t trust that one
any more than I trust Andrew. After the greetings, Foster insisted
on opening the proceedings in a very formal way. Taking refuge
behind process, David thought. Trying to depersonalize the
situation; planning something nasty obviously.

-Thank you for attending at
short notice gentlemen. Present, David Thomas, founder, Peter
Douglas, chairman, myself Andrew Foster, chief executive, and this
is Grant. He’s a lawyer.

-Where’s the company lawyer?

Foster slowly poured himself a
glass of water from one of the bottles set out on the table before
replying.

-It’s not that kind of meeting
David. We’ll dispense with the rest of the formalities. Right,
first and only item of business, what are we going to tell the
banks on Monday morning?

-About what Andrew?

-About the performance of the
company Peter. I know the two of you don’t like to trouble
yourselves with the finer points of company law, so let me put it
simply. The half year results have to be announced next week.
Remember I explained to the Board that they would be delayed and
they agreed that you two should have delegated authority to approve
them with me. Well, the results are not good: worse than we
expected in fact. I have been advised that we are obliged to issue
a profit warning, but it is also clear to me that if we do that in
the current fragile state of our finances, the share price will
crash.

-But we’re doing well. Very
well. The factory’s never been busier, and the order books are
full…

David interrupted the
Chairman.

-It’s the US acquisition
Peter

-Correct David, the problem is
the US. It’s burned a lot of cash. The contracts that they had when
we purchased turned out to be more like letters of intent. No
minimum orders, no guarantees, no exclusivity, and as it turns out,
no business as yet, though we are still optimistic in the medium
term. We’ve stood down half the work force there, but of course
there’s a lot of fixed cost that we can’t do anything about. And
then there’s the matter of the debt to service.

-I told you all that company was
a dud

-You did that David and your
opinion was duly minuted; but you are a member of the Board and the
Board heard my presentation and voted unanimously to go ahead with
the deal.

-Forty million of debt.

-Yes, forty million.

-And the bank covenants?

-Not looking good David, not
looking good at all

-To say that the U.S. purchase
was your deal, and it looks like bringing down the company, I have
to say you seem quite cheerful Andrew.

Foster had the nerve to smile at
him.

-But inside I’m wounded. Here’s
what though. One door closes and another one opens. Grant.
Explain

The young man unloaded a thick
sheaf of presentation folders from his briefcase.

-My client is a private
investment fund, which shall remain nameless for the moment. You
may know the sort of company I mean. We are sometimes referred to
as venture capitalists.

-Vulture capitalists you
mean.

-As you like Mr Thomas. In any
case my client has been taking an active interest in your company
for some time. You know that the shares have not been very liquid
since you floated the company, given that Mr Thomas has held on to
around forty percent of them

-Forty seven percent, David
corrected him.

-Quite, but it is the
fundamentals of the company that have interested my client. I can
say that we have followed your progress, to the extent of
foreseeing the imminent cash flow difficulty in which you find
yourselves

-It sounds like you’ve been
doing a little more than reading our press releases. Did you have a
friend on the inside by any chance?

-We have some very talented and
thorough corporate analysts in our company Mr Thomas.

-I’m sure you do.

-The point is Mr Thomas; we
believe that there is a way through your current problems that
could be for the benefit of all concerned. We are in a position to
make an offer to buy the full shareholding of the company and to
de-list it from the stock exchange. That offer would of course
include the purchase of your own remaining shares.

-This is my company, why would I
want to sell?

-It’s actually a public company
Mr Thomas; you already did sell when you listed the company on the
stock exchange. I think you did quite well out of the deal. Now you
are only the principal shareholder and an officer of the Board of
Directors, the same as your colleagues here. As a matter of law,
and in common with other Board members, you have duties to the
company Mr Thomas; as does Mr Foster being the Chief Executive and
Mr Douglas here. You should think very carefully before rejecting a
generous bid, when it seems that there may be no viable alternative
for the company.

-I’ll go to the banks. They know
me well enough.

Foster shook his head. David
imagined that he chuckled.

-I’ve already spoken to the
banks David, informally of course. They want this deal to
happen.

-You’ve done what Andrew?

-Time is short.

-You’ve planned all this
carefully in advance haven’t you? You bought the US business to get
us into debt. The deal never made any commercial sense. Tell me who
is going to be the CEO of this new de-listed company. Surprise
me.

Grant answered the question.

-Mr Foster has agreed to stay on
as CEO for the time being to ensure there will be a period of
stability. Everyone will want to see that, in the interests of the
company.

-And with a better package and
more share options for him, I suppose.

-I can only say here that the
CEO will be offered a remuneration package, including equity
participation, consistent with the need of the company to retain
its top talent, at this difficult time.

-Thanks Greg, and what have you
decided you are prepared to pay me for my stake in the business, at
this difficult time?

-It’s Grant actually. I have the
calculations here before me Mr Thomas. You are free to look at them
here, though for obvious reasons I cannot authorise you to take any
copies away from this room at present. You will see there are three
alternative bases of calculation set out and that we have taken
into account various possible future scenarios for the
business.

-That’s not what I asked but
thank you. How much per share?

-Forty nine pence

They’re worth two pounds sixty
you bastards.

Foster shrugged his
shoulders.

-They were priced at two pounds
sixty at close of business today David. Next week you have an
announcement to make, and by the end of that day, I guess that
forty nine pence will look more than generous. However, by next
week it would be too late.

Peter had remained silent, his
face becoming more flushed. Now at last he spoke.

-We’ll need to think about it.
You can’t expect us to make a decision just like that.

David shrugged.

-I think that’s exactly what
they expect of us Peter.

-It’s just stealing, nothing
better. Andrew, you’re behaving like a crook. There’s no difference
between you and a common criminal.

-Actually there is a big
difference Peter; In the first place I haven’t broken any laws, and
second, when you look at the numbers involved here, there is
nothing common about it. You shouldn’t look so glum boys. You will
still be very well off at forty nine pence, and no need for you to
worry about the company any more. David, you made a fortune already
when you floated. Now it’s someone else’s turn. That’s the way of
things. Nothing personal gentlemen, you’ve both been very agreeable
to work with. It’s just the way the wheel turns

-What are you talking about?

-Natural selection. Business.
What can be broken must be broken. You know, there are two types of
company boss nowadays. The old sort, like you David, they start the
company off; probably know something about how the business works,
but not about much else. The other sort is more like me. We come
after. We’re not so much interested in the business for its own
sake, but we know how to make money from it; mostly for ourselves
perhaps, but you see, others like ourselves benefit. That’s why the
City loves my kind of boss, because around us, there’s always going
to be some action that gives smart people a chance to make a lot of
money quickly. I’m the sort of boss who comes highly recommended.
We are the future. And once you have invited us over the threshold,
there is no way back.

-This is against the rules,
Peter shouted. He was now red with indignation.

-Really Peter? And how am I
breaking the rules, you tell me? Because as far as I can see, I am
having this chat with you, and that means that any rules I am
breaking you are breaking too.

David stood up.

-Alright, I’ve heard enough, you
can both leave now.

-We need your decision
David.

-You’ll have it on Sunday night,
not before. Give me your contact details.

-We can’t do this kind of deal
overnight.

-I’m sure you have it organized
so that you could do it in an hour.

-We have to have your decision
now

-Well, you can’t have it. You’ll
make them wait Andrew, because just now, if there’s no decision,
you have something to lose as well as me. And I’ll be taking these
calculations with me, for what they’re worth. You’ll have to trust
me that they will stay confidential.

Grant sprang up.

-I don’t have instructions that
would allow me to release those papers to you.

-Tough shit Greg. Do me a favour
now and piss off. I need to talk to my Chairman.

Five minutes later the two men
were alone; Peter sitting slumped with his head in his hands, and
David standing, pacing the room.

-Thank god they’ve gone at
least, he said. We’ll have to get this room steam cleaned next week
to get rid of the slime.

-I’ve let you down David, I’m so
sorry.

-You have let me down Peter, but
there’s no point dwelling on it. Go home and leave me to think

-What will you do?

-Have my head examined for
trusting that little shit Foster. Then I’m going to make a few
calls and see if I can find anyone who has spare cash lying around
and might want to help us. Fifty million should do it wouldn’t you
say?

***

That same evening, Matthew’s
phone rang. He picked up the call.

-Get your passport handy Matt,
we have a flight to catch to Zurich

-When?

-Early tomorrow. And don’t
forget it’s a cold city. Dress warm.

Matthew started to protest that
it was not so easy for him to drop everything and run just because
David said so. David asked him what he had to do that was so
important. He did not sound in a mood to be argued with: he only
added that it was about the business and that he would explain
later. Matthew pleaded that whatever David’s difficulties might be,
he would be the last person to be able to help. David replied that
he did not need anyone to tell him what to do; only someone he
could trust to be with him.