“So he agreed to pay you,” Robert said hopefully, “in the spirit of sharing for which the Thanksgiving holiday was first created?”
“Actually,” Coco said, “he picked up an electric turkey carving knife from the table, lifted it over his head and began moving toward me.”
“Did the man actually try to kill you over a time charter?” Alistair gasped.
“It wouldn’t be the first time a man has been killed over a time charter that’s gone bad,” Coco said as he kept his eyes on Robert for an unnaturally long time. “And it may not be the last.”
“Oh dear,” Alistair said.
“Just as the Kraken was about to carve me up like a big bird, Rocky’s six-year-old granddaughters started going wild,” Coco said.
“What do you mean ‘going wild’?” Robert asked.
“It started with your basic kicking and screaming and then each of the girls grabbed onto one of his legs like a Koala bear on a Eucalyptus tree,” Coco said. “Rocky dragged those two little screaming kids halfway across the dining room until one of them bit into his knee. That’s when he finally stopped.”
“Children have an excellent sense of justice,” Alistair interjected.
“What happened next?” Robert asked.
“Rocky agreed to cough up the $64,000 of unpaid charter hire,” Coco said with satisfaction. “I won.”
Alistair Gooding’s mouth dropped open before he spoke. He was stunned. “Are you saying that your legendary, multi-decade feud with Rocky DuBois started over $64,000?”
“That was a lot of money back then,” Coco said.
“A lot of money? Coco, I’ve seen you spend more on a sushi. My God man, you paid $5 million for the bauble you bought Alexandra at Bonham’s.”
“Ja, but this thing with Rocky isn’t just about the money,” Coco said. “It’s about justice.”
“And at least there was a happy ending,” Robert said. “And I bet your relationship is all the stronger for having gotten through that difficult time. They say that…”
“That’s still not the end,” Coco interrupted.
“Of course not,” Robert sighed.
“Just as I was saying thanks to that little girl for biting old grandpa’s knee, Rocky called the police and told them I’d assaulted him,” Coco said. “Ten minutes later a dozen heavily-armed Houston police stormed the building and dragged me out wearing handcuffs.”
“So that’s where TradeWinds got the photograph,” Alistair said. “Coco, you must remember to send them a nicer picture for their file.”
“Once the cops had me in the clink, Rocky’s lawyers tacked-on half a dozen more charges to the complaint including trading with North Korea and Iran,” Coco said. “One of my bunker suppliers in Houston was kind enough to pay my bail but now I’m wanted by the FBI because I was too busy to go back for the trial.”
“So that’s why you can’t enter the United States,” Robert concluded.
“But that was a long time ago,” Alistair said. “I’m sure you’d get along with Rocky DuBois now.”
“Once a back trader, always a back trader,” Coco said. “I don’t know exactly how we will do it, but the moment my tanker party ends Rocky will figure out a way to default or re-trade the time charters at a lower level – precisely when I have no leverage to defend myself.”
“I think you’re being paranoid,” Robert scoffed. “American Refining Corporation is an investment-grade corporation. They don’t just go around renegotiating on every contract that doesn’t go their way.”
“Ugh,” Coco moaned as he began rubbing his temples. “Can we open up this bottle of aquavit and stop talking about this; it just reminds me how much I still have to teach you, Fairchild. So what on earth is this exciting news you wanted to tell me?”
Robert stared at Coco with bulging eyes and said, “That was the exciting news.”
“What was?” Coco asked. “Did I miss something?”
“The exciting news is that American Refining Corporation has agreed to pay ten of our ships $50,000 per day for five years.”
Robert watched the color drain from his boss’s brown face. “Are you actually telling me that you dragged me all the way to London just to tell me that Kraken DuBois will pay me $50,000 for ships that are about to earn $250,000?”
“For five years,” Robert added weakly. “And it will be good for our long-term relationship.”
“There’s no such thing as long-term relationships in this business,” Coco said. “Shipowners are hunters, not farmers.”
“Yes, but…”
“I control most of the open ships near the Arabian Gulf and there are close to eighty cargos that need to be loaded in the next ten days. Robert, I am about to kick off the biggest tanker party in history and you want me to go to bed early?”
“Well…”
“This is your great news?” Coco shrieked in Robert’s face.
“Yes,” Robert confessed as he watched the sparkle fade from Coco’s eyes like the scales of a dying fish.
“Let me give you some advice, Robert; it’s never a good idea to enter into a long-term charter in a market that is either very good or very bad,” Coco said. “Because someone will always get hurt – and that someone is always the shipowner,” Coco said.
When Robert failed to respond to the logic, Coco turned to his lender for moral support. “Allie, please tell me he’s kidding,” Coco begged. “Fairchild is a rookie who needs an education, I get that and I am trying to be patient with him, but you are a veteran shipping banker. You should know better. Tell me there is some good news, and that you guys are just torturing your old pal Coco before sharing it with me.”
“Long term employment for some of the vessels isn’t such a bad idea,” Alistair said. “I hate to point out the rather fragile state of your finances, Coco, but we did cut things a tad close last time.”
“You think that was close, Allie?” Coco asked with a dismissive swat of his hand.
“Coco, you were one bunker arrest from disaster,” Alistair reminded his behemoth borrower that if an unpaid fuel supplier had put the equivalent of a “mechanics lien” on one of his ships for non-payment it might have started a cascade of worldwide vessel arrests as creditors scrambled to get their hands on collateral.
“Allie, every shipowner who plays hard is one bunker arrest away from disaster,” Coco explained. “It’s called cash flow management.”
“But keeping all your ships in the spot market is no different than driving a car on a twisty road at night with the headlights switched off,” Alistair said. “You have no idea what’s coming at you.”
“And this is why it makes me feel alive,” Coco said. “Guys, if my ships were on time charter I would have no reason to get out of bed, which would be okay if Alexandra was still in the sheets,” Coco smiled. “Are you absolutely sure she’s not here?”
“I did it,” Robert blurted out, the three words escaping from his mouth like gas that could no longer be contained. After the spontaneous eruption he and Coco looked at each other with equal parts of surprise and confusion.
“Excuse me?” Coco said slowly as he glared at his deputy. “Did what?”
“I agreed to put ten of our ships on time charter to Rocky for five years and a rate of $50,000 per day,” Robert said. “I already lifted the subjects and went firm.”
“But this is impossible,” Coco laughed.
“No, it’s not.”
“But you aren’t authorized to buy office supplies without my consent,” Coco said, “never mind charter-out a substantial number of my vessels to the squid.”
“Actually I am,” Robert replied. “According to the by-laws contained in our corporate governance documents and Limits of Authority manual, the Chief Executive Officer of Viking Tankers has the full authority to enter into legally enforceable contracts of this quantum.”
Coco’s eyes bulged as he turned to Alistair who nodded solemnly. W
hat Robert declined to mention was that such a large commitment of tonnage did require the consent of Allied Bank of England – and that Alistair had personally signed off on the request earlier that day when Robert came in from Heathrow.
“But how could you do this without even telling me?” Coco asked.
“I did it because you told me to,” Robert said.
“What do you mean I told you to?” Coco shouted.
“Coco, don’t you remember telling me that there will always be many good reasons not to do things in life, but people who achieve great things are the ones who believe in themselves and find reasons to do things even when sometimes they do things that are not so smart.”
“Well,” Coco sighed, “you certainly embraced the part about doing things that are not so smart. Now it looks like we’ve both been played by Rocky DuBois,” Coco said.
“I guess we have that in common,” Robert said thoughtfully, hoping he could use his folly as a way to bond with his Norwegian boss.
“Hey Robert,” the Norwegian said calmly as he sipped the aquavit.
“Yes, Coco?”
“Do you remember when we were sitting on the terrace of that nice restaurant on the cliff in the South of France drinking wine with Grace?” Coco asked.
“Oh yes, we were in the village of Eze-sur-mer, high above Cap Ferrat,” Robert smiled just as Coco’s telephone began to ring. “That was a lovely afternoon.”
“And do you remember when I gave you a hug and told you that you had finally become a Shipping Man?” Coco asked as he examined the screen of the tiny phone.
“That was one of the best days of my life,” Robert said.
“Well I take it back!” Coco snapped as he rose to his feet.
“You what?” Robert gasped.
“I take it back,” Coco repeated.
“What? But why?” Robert begged.
“Fairchild, you have put me in a very bad position here…very bad. And what troubles me most is that you’ve been playing at the shipping game for more than a year and you still don’t seem to understand that this business is volatile and cyclical,” Coco said, pronouncing the word as though it was a mental state.
“I know, Coco, and that’s why I am using the charters to eliminate the volatility,” Robert said.
“Eliminate the volatility?” Coco shouted. “Fairchild, the volatility is the only way to make any money in shipping! Without the volatility, this would be like the railroad business and I would be competing against guys like Jimmy Buffett.”
“Warren Buffett,” Alistair interjected.
“Exactly!” Coco shouted and slammed his fist down on the table. “I am not going to war with that old guy. He is too smart for me.”
“But every business in the world uses hedging strategies,” Robert defended himself.
“Shipping is not like every other business in the world,” Coco snapped back. “Fairchild, I swear if you weren’t so old I would send you to Cass Business School here in London so Professor Costas Grammenos could give you a proper education in ship financing,” Coco grumbled.
“But…”
“But nothing!” Coco snarled just before answering the incoming call on its fourth and final ring. “I know I said I would be your mentor just like Hilmar Reksten was a mentor to me, but this is just too much work. I give up.”
“You give up?” Robert asked with panic. “What’s that supposed to mean?”
“It means that you’re fired, Fairchild!” Coco said.
Chapter 11
Aristotle Onassis
Aristotle Onassis arrived in Argentina in 1923, reportedly with $60 in his pocket. He worked as a telephone operator by night and imported Turkish tobacco by day, a venture that earned him his first million. Noting freighter prices had dropped in the Depression, Onassis used his savings to launch the scrappy beginnings of a global shipping empire. In 1932, he bought six freighters for $20,000 each, their scrap value. By 1940, recognizing increasing demand for oil, Onassis started building supertankers. At the time of his death in 1975, Onassis had amassed more than 50 ships and had a personal net worth of $500 million, $1.97 billion in current dollars.
Forbes
The industrial orange lights of rain-soaked Gimpo Inter-national Airport glowed through a blanket of fog as the gleaming white Falcon 7X shot down the 11,800-foot runway. Propelled by a trio of Honeywell turbo fans producing 19,000 pounds of thrust, the aluminum aircraft tipped upward and shot skyward as if flung from slingshot.
Within seconds the fifty-two-foot cylinder of riveted flesh had slipped into green-black clouds, tearing through the foul weather like a shark through a school of fish. Once the aircraft had battled its way to the prairie of cornflower blue sky at 30,000 feet above the Sea of Japan, the pilots throttled back to a cruising speed of 560 miles per hour and picked up a heading bound for Athens.
“Sir, you may use the telephone now,” the pilot, a former captain of the Greek Air Force, announced to the sole occupant of the narrow cabin. The shipowner picked up the small white telephone affixed to the bulkhead wall next to his seat and dialed a mobile telephone number he had committed to memory.
“Kalispera, Coco,” the Greek said when he answered on the fourth ring.
“Ti kanis, kapeteine,” Coco replied.
“Coco,” the Greek said as he rolled a string of worry beads between his nine-and-a-half fingers, “I wanted you to be the first to know that I have just finished the final negotiations.”
“And…” Coco asked.
“And everything is in order,” he said. “I must admit that have never seen anything quite like this in all my years,” he added. “As soon as we finish this call I will instruct my bankers in Zurich to wire the $500 million.”
“But this is good news,” Coco said, “so why do you sound so serious?”
“I learned today that we have just three months before the next $500 million installment is due, and I am referring to your installment,” the Greek added. “Are you still confident that Robert Fairchild will have the money ready?”
“I’m more confident than ever,” Coco sighed as he watched his CEO throw back a shot of aquavit and then lay his head down on the table. “Robert is putting the money together as we speak.”
***
No more than twenty feet away from the bar at which Coco was talking on the telephone, the increasingly intoxicated Alistair Gooding and Robert Fairchild were in Naughty Corner commiserating and debating whether or not Robert should leave the room and end his shipping career with a whimper. Despite their hours of rehearsing the good cop/bad cop routine in advance of Coco’s dramatic arrival that evening, the two men knew they had blown their pitch badly. The only thing left for them to do, they concluded, was beg Coco for mercy after he finished his telephone call.
“I give him a lot of guff but the truth is that Coco is the best client I’ve ever had,” Alistair said thoughtfully as he stared at his client whose head was now resting on the bar.
“Why do you say that?” Robert asked.
“Because there are two kinds of borrowers in the world: the kind who pay you back even when they can’t and the kind who don’t pay you back even when they can,” Alistair said. “Coco is the first kind – and he’s willing to pay fees.”
“And I totally spoiled him with those junk bonds,” Robert sighed. “That was when he figured out that money that misprices risk is the same thing as free money.”
“Yes, but what Coco fails to appreciate is that he’s damaged his reputation on Wall Street,” Alistair said. “The man borrowed $300 million of ten-year money and didn’t make a single semi-annual interest payment.”
Like many European lenders, Alistair Gooding felt there was something morally hazardous about creditors writing off principal before the company’s equity was wiped out – either that or he was just jealous of Coco’s cat-like ability to land on his feet again and again.
“I respectfully disagree,�
� Robert said. “The only investors that we bought-out at a discount were the ones who wanted to sell and most of them had also bought the bonds at discount. There’s nothing wrong with that in the U.S. Capital Markets,” Robert said. “The only thing we did was provide those investors with liquidity.”
“Oh please,” Alistair said, “you guys used the money the bondholders put in escrow to buy them out at discount and you didn’t pay a single coupon!”
The moment Alistair Gooding said the word “coupon,” Robert Fairchild experienced a badly needed flash of inspiration. Although he was sitting in the Naughty Corner at the swanky Brown’s Hotel he felt as though he’d been magically transported back to the investment bank high above Park Avenue where he had listened to an orange-haired banker describe the benefits of a structure called the Master Limited Partnership – known on Wall Street as an MLP.
Because an MLP had the tax benefits of a limited partnership and the liquidity of publicly traded stock, the banker explained, investors would determine its fair valuation based on the dividend it produced – not solely the value of the company’s assets the way traditional shipping investors did. There was only one catch: the MLP had to have contracts with financially solid counterparties in order to pay a reliable dividend – which was exactly what Robert had thanks to the ten rogue time charters he had fixed to ARC.
Robert shot a glance at the bar and watched Coco close his telephone.
“Coco, I can do it!” Robert shouted across the room.
“Do what? Destroy my company even more?” The Norwegian asked as he lumbered back to the Naughty Corner. “You know something, Fairchild, during the course of my career I have survived half-a-dozen shipping crises, countless pirate attacks, jail time, typhoons, earthquakes, a nuclear meltdown and even a missile strike in the Red Sea but you, Robert Fairchild, a skinny little kid from New York City are going to be the thing that takes me down. Risk lurks in the most unlikely places in the shipping business,” Coco said philosophically.
Viking Raid Page 9
