by Jeff Buick
“They want to convert to an income trust.”
Leona leaned back in her chair, the slight trembles gone, replaced by a calm, but thoughtful expression. “An income trust,” she said quietly. “What’s their logic behind that?”
“Shareholder value. By converting to an income trust, they can raise the value of their shareholders’ stakes by almost forty percent overnight.”
“I’m not sure I get their line of thinking. Income trusts aren’t that desirable anymore. Not a lot of tax advantages.”
Halladay smiled. “The guys at Coal-Balt found a way around the tax laws. Nothing illegal, simply good business.”
“What are they proposing?” she asked, her interest piqued.
“There are three separate vehicles Coal-Balt can use—Enhanced Income Securities, Income Participating Securities and Income Deposit Securities—to tie together a share of stock and a high-yield debt. The junk debt and shares, stapled together, replace the trust in its truest sense.”
“Interesting approach. Will it work?”
Halladay shrugged. “They’ve run the figures, Leona, and I’ve seen the breakdown. It does work. The restructuring is a stroke of brilliance.”
“What about regulatory approval?”
“The regulatory guys at the stock exchange have given the transition a green light. They need some more paperwork, but approval is pending. That paperwork needs to come from us.”
“Why do they need us onside?” Leona asked.
“We hold two hundred and eighty million in demand loans. Our agreement to the conversion is one of the caveats the exchange requires to okay the deal.”
Leona asked, “Who do you have in mind for my team?”
“You pick the people you need. This is your deal.”
“Okay.”
“It goes without saying how important Coal-Balt is to us,” Halladay said. “I don’t foresee any problems with this conversion. I hope you don’t either.”
Leona glanced at her watch. It was ten minutes past twelve. “I have an appointment for lunch,” she said. “It’s too late to cancel.”
“No, that’s fine, you go ahead.” Halladay rose from the chair. “When will you be moving upstairs?”
Leona couldn’t stifle the smile. “Whenever you’re ready for me.”
“Then I’ll see you Monday morning. Your personal effects and computer will be moved up after work tonight.”
Leona nodded and Anthony Halladay turned and left her office. She liked and trusted the CEO and having the position of vice president dropped in her lap was more than a nice touch. But she didn’t like offers that came with strings attached. Never had. And the Coal-Balt file felt like a major string. I don’t foresee any problems with this conversion. I hope you don’t either. That didn’t sit right with her. Like Halladay was telling her the outcome of her team’s findings before they began. It was out of character for the man.
Leona switched off her reading lamp and hurried to the elevator. Her lunch date was waiting. But she wasn’t too worried. If the restaurant served beer, which they did, he would wait.
3
Mike Anderson sipped on his bottle of Budweiser and watched the lunch crowd. People-watching was one of his favorite pastimes, and there were few places better than downtown DC. Washington was all about power; if you had it you flaunted it. If you didn’t, you either faked it or played the attentive pup listening to the master. The percentage per capita of sycophants in DC had to be the highest in the country. In the world, perhaps.
He glanced around Kinkeads, knowing he was the square peg in the round hole. The luncheon crowd in the upscale seafood eatery was mostly suit and tie or dark pantsuit, gender dependant. He was jeans and a white T-shirt. Ex–New York cop, now mixed in with politicians and lobbyists. Gasoline and a match if he drank enough. It wasn’t a stretch to recognize Anderson as ex-cop—he looked the part. He was dead-on six feet, 210 pounds, most of it still muscle and bone. His waistline had finally settled in at thirty-eight, no belly hanging over his belt. No wrinkles creased his face, except for tiny crow’s-feet that stretched back from the corners of his eyes. He had a full head of dark hair, a strong jawline and quick brown eyes. Anderson finished his beer and waved at the waiter for a refill. He’d be good today, he was meeting Leona and she didn’t like it when he drank enough to get belligerent. He ran his hand over his chin, feeling the stubble. It was only one day but he already looked like he’d been on a six-day bender. It was common knowledge that that sort of thing happened when you hit fifty. For him, forty-five had happened a month ago. This meant he was five years ahead of his time—at looking old. Great.
The waiter dropped another beer on the table and gave the untouched glass a sideways look that said, trailer trash. Anderson shook his head, wondering how even waiters in DC could be such sanctimonious pricks. A few seconds later Leona entered the restaurant and he caught her attention by waving. He watched as she picked her way through the throng of tables. When she walked, her body was a dichotomy, different parts moving in different directions. The result was sultry. Her breasts swayed slightly, but not too much. Her hips moved with a wavelike motion and he could see the heads turning as she made her way through the tables. From the first moment he had met her, he’d thought she was sexy—her body and her smile. He liked working for her charity. It meant he got to see her and talk to her, one-on-one. She settled into the chair opposite him.
“Sorry I’m late,” Leona said, flashing him one of her natural, disarming smiles. Fact was, she was almost always late, despite setting her watch ten minutes early. It was a minor character flaw—one she felt could be overlooked. “Unexpected business at the office.”
“I’m happy. I ask for a beer, waiter brings one.”
Leona glanced at the bottle. “How are you, Mike? You okay with the booze?”
“Yeah, I’m fine. Sticking to beer these days. No hard stuff.”
“How are things with Susan?” Leona asked.
Anderson shrugged. “She’s an ex-wife I still love. And she’s living with another guy. How do you think things are?”
“You have to let her go.” Leona slid her hand across the table and rested it on his thick forearm. “Life goes on.”
He didn’t respond other than to take another sip of beer with his free hand. The waiter approached and asked Leona what she wanted to drink. His tone was nicer now, civil even. Leona was business class—she belonged. Christ, he hated the whole DC hierarchy thing. Maybe because he was on the outside looking in. The fat kid with pimples sitting by himself in the school cafeteria.
“How’s Kubala?” Leona asked, concern creeping into her voice.
“Not good. The poachers are still pissed at him over what happened when you were there three months ago. Every day is dangerous right now.”
Mike Anderson was Leona’s point man for her nonprofit foundation. Save Them was dead in the water without him, and she knew it. Once the accountants finished totaling the donations from the fundraisers, Anderson took the money and made sure it got to the right people in Nairobi. Distributing cash from a nonprofit in the US was easy and safe, but in Africa it took on a whole new dimension. Arriving in Nairobi with a suitcase full of bearer bonds was an invitation to a permanent home in a small pine box. The first few times were scenes out of a bad movie. The corrupt immigration guards at the border, the dark cars that tailed them to the bank. Invitations, at gunpoint, to meet some of Nairobi’s most important, and dangerous, people. Those who could ensure the foundation’s money filtered down to those who needed it to protect the elephants. For a fee, of course.
By his fifth trip to the Kenya capital, he had established the pipeline. Thirty-eight percent of Leona’s hard-earned donations went to three distinct groups who provided protection for the remaining sixty-two percent. The most difficult part of deciding who to pay was figuring out who was the most despicable. No sense paying someone in Nairobi who was subservient to somebody else, or you ended up paying two people. Find
the most corrupt, most despicable, most loathsome guy on the block and deal with him. It was the approach Mike had taken, and it had worked well.
The poachers were another story. Since the incident back in April, they had been stalking Kubala and his team, taking potshots at them from the bush. Two of his men had been wounded, one in the arm, the other in the leg. Nothing fatal, but almost enough to scare them into submission. Almost, but not quite. Kubala Kantu was not a man who was cowed by adversity. Not even when the adversity came in the form of bullets and machetes.
“When are you heading back to Africa?” Leona asked.
Mike shrugged. “You’ve got a fundraiser tonight. I’ll wait for the accountants to release whatever you raise at your function before I go. Probably a week or so.”
“Should be a good one tonight,” she said. “We’ve got a few new faces in the crowd. It’s nice when donor fatigue isn’t an issue.”
“Donor fatigue?”
“You know, when the room is always full of the same people. After a while they get tired of giving. New donors get their checkbooks out a little quicker.”
Mike nodded as the waiter reappeared and took their food order. He surveyed the room as Leona pointed to the menu and made sure her fish wasn’t going to be battered or deep-fried. He doubted there was a man in the room who would survive a week in Nairobi with five hundred thousand dollars in his briefcase. Most would be dead inside twenty-four hours. Yet here they sat in their thousand-dollar suits, ordering fifty dollar lunch entrées and drinking twelve-year-old scotch. Different skill sets. Theirs just paid better.
“Poachers seem to have forgotten about killing the elephants,” he said as the waiter disappeared into the kitchen with their order. “No new carcasses since April.”
“Too busy trying to kill people.” Leona sipped on her soda water. She glanced around the restaurant for the first time, drinking in the clientele. “What’s with us? As a species, I mean. Why are we constantly trying to kill each other?”
Mike peeled the label off the beer bottle. “It’s easy to figure out why people want to kill lawyers. Determining motive for the rest of us is a little tougher.”
“You had a good lawyer,” Leona chastised him. “You still have your house.”
“Lost my balls, though,” Anderson snapped back. She didn’t respond and he said, “Where’s the fundraiser tonight?”
“At the restaurant. Eight o’clock. You should come. Tyler’s cooking up something special.”
“It’s a surprise. He wouldn’t tell me.”
“It’s your restaurant. You own it. You’d think that if anyone could find out what’s on the menu it would be you.”
She grinned. “Doesn’t work that way. You know what chefs are like. Masters of their domain. I might own the place, but Tyler runs it.” The grin slowly faded. “Try to make it this evening, Mike. You need to get out more. I’m worried about you.”
He finished his beer and set the bottle on the polished table. “I’ll try.” They were quiet for a minute, the background noise in the restaurant suddenly louder. “What’s new at the office? You said something unexpected came up.”
“One of the big boys came down from twelve and dropped a file on my desk,” she said, purposely omitting the promotion to VP. “It’s a utility company. They generate electrical power.”
“Coal or water?”
“Coal. Why?”
“Big issue these days, burning coal to produce electricity. Lots of it going on now that natural-gas prices are through the roof.”
Leona leaned forward. Mike Anderson was well-read and intelligent. His opinion was usually worth listening to. “What’s wrong with burning coal to produce power?”
“Depends on how it’s done and what kind of coal they’re using. You can burn coal cheap and dirty, or you can burn it clean and expensive.”
“I don’t know the difference.” She leaned back as the waiter set their plates on the linen tablecloth. “But I can guess how you burn it affects the bottom line.”
“Big-time,” Anderson said. “Most of the older coal-burning power stations swallow tons of the stuff every minute to generate thousand-degree steam. The steam drives the turbines that produce the electricity.” He tasted the salmon, then a couple of veggies. The place might be full of sycophants, but the food was good. “By-product of burning coal like that is carbon dioxide. Lots of it. One of these big plants can dump tens of thousands of tons of carbon dioxide into the atmosphere every day.”
“Carbon dioxide is a greenhouse gas, isn’t it?” Leona asked. “The worst one. It traps the heat and won’t let it escape. Carbon dioxide is the main reason we’ve got global warming.”
“I’m assuming that’s the cheap way to burn coal.”
“Yeah, the expensive way produces almost no carbon dioxide because they don’t actually burn it, they transform it to something called syngas. I don’t understand the process, but it’s definitely better for the environment.”
Leona swallowed a mouthful of fish and said, “You mentioned what kind of coal they burn. I didn’t know there was more than one type.”
“Well, coal is coal, but it comes with a shitload of impurities. Bitumen, sulfur, that kind of stuff. There are even trace quantities of thorium and uranium in some coal beds. Clean coal is bad enough, but add in all this other crap and it’s plain disgusting. Killing our planet, and not slowly.”
“Why do you always know all this stuff?” She set her napkin on the empty plate.
He smiled. “Impresses the girls.”
“Worked on me,” she said.
“So where does this company fit in? Environmentalists or pillagers? There’s not a lot of middle ground on this one.”
“I don’t know.” Leona motioned for the check. “But I’m going to find out. And soon.”
4
Reginald Morgan was a living icon. He was fourth-generation industrialist, and first-generation philanthropist. His great-grandfather, Ezra Morgan, had worked the Virginia coal mines for six years during the Civil War era as a butty, doling out the underground jobs and walking about the mine looking for sections that were susceptible to collapsing. It didn’t take long to realize the coal dust was killing him. He asked for a transfer to the head office, and since he had a quick head for math, was assigned to the accounting and payroll department. The patriarch of the Morgan clan rose quickly through the ranks, and by the age of thirty-six he was in charge of mining operations.
Ezra changed the way things were done. Child labor, used to mine the coal from the seams and then pull it to collection points in a coal dram, was eliminated. He designed a complicated network of underground railways to move the coal, and an updated version of the mechanized pulley system to bring the coal back to the surface. His mines were patrolled by men who understood the causes and dangers of methane gas and who knew what to look for when a collapse was imminent. Ezra Morgan’s mines were the safest in the country.
Over the generations, the family name became synonymous with not only coal but also electricity. They mined the coal, then transported it to their electrical generating plant a few miles away in the foothills bordering the Rich Mountains in West Virginia. Providing power to the eastern seaboard proved to be a very lucrative business and the Morgan family fortune grew exponentially. Control of the business was kept in the family, eventually settling on Reginald Morgan. But now it appeared the dynasty was about to end. He and his wife tried for many years to have children, something that had not happened. He remained at the helm, trying to stave off the day that his company would pass to an outsider.
But Reginald Morgan was getting old. His seventy-third birthday had come and gone and his physical strength was waning. His mottled scalp showed under remnants of what had once been thick silver hair and his face was almost with out color. Veins were visible under the paper-thin skin. He spent time staring at the back of his hands, likening them to road maps of some county he’d never visited. It struck him as odd that he didn’t
know the back of his hand anymore.
A second man entered the room and Reginald Morgan looked up from the papers on his desk. It was Derek Swanson, president of the Morgan empire of companies. Swanson was midfifties but didn’t look a day over forty-five. His daily regimen included a six-mile jog and weight training. And he ate properly. Vegetables, fruit, no fat and no sugar. His face was rugged and tanned, the result of the many hours he spent outdoors, and he carried a hundred and ninety pounds on a six-two frame. His deep brown eyes were focused and penetrating. If eyes were truly the window to the soul, Swanson’s inner persona was all business.
“You wanted to see me, Reggie.” He slipped into the soft leather chair facing the company’s Chief Executive Officer.
“Yes, thanks for coming,” Morgan said, his voice still surprisingly strong for the frail body. “And on short notice. I know you’re busy.”
“Making us money,” Swanson said.
“Yes, of course. Money.” Morgan steepled his fingers and cocked his head slightly. “I’m not sure about the conversion, Derek. I don’t think I’m going to back it.”
Derek Swanson’s face didn’t change. His breathing didn’t alter from its even cadence and he didn’t tap a finger or wiggle a toe. Nothing spoke of the internal turmoil those few words had set off. “What’s your reasoning for that?” he asked, his voice normal.
Morgan waved a hand as he spoke. “This company was built on solid business practices. Slow, steady growth with an eye to the future. Income trusts are dangerous, Derek. They deplete companies of surplus cash, and right now we need that cash. Lombard II needs work. It was state of the art when we built it, but not anymore. On your recommendation, we’ve been holding off installing scrubbers and moving to new technology since we hired you. That’s eight years, Derek. It’s time to move ahead. It’s time to clean up our act and stop polluting.”
“Why the sudden surge of conscience?” Swanson asked. Morgan shook his head. “Nothing sudden about it. I’ve been pushing for new technology for years now. You were against it. And your opinion was what the shareholders listened to. Higher share prices, larger dividends—all money driven. It’s time for that to stop. My family never knowingly destroyed the environment. Not while we ran the company.”
