[Katerina Carter 01.0] Exit Strategy

by Colleen Cross

  “Morning, Kat. Change of plans. You won’t be attending the board meeting after all. They’ve got more important matters to consider right now.”

  Susan pushed the press release towards Kat and motioned for her to take a seat at the table.

  A takeover. What other surprises did Liberty have in store? Porter Holdings, a company Kat had never heard of, was offering to buy all outstanding shares. Kat scanned the paper and stared in amazement at Nick and Susan.

  “How is this even possible? I mean, how can anyone mount a takeover without a majority of the shares? With Nick and the trust controlling the company, how can Porter gain control?”

  Kat’s question was directed at Susan, but Nick broke in.

  “It’s not going to happen. No goddamn way will I lose the company my father built. Porter’s not going to get anywhere with this crap. I am not going to lose Liberty!” Nick slammed his fist on the table.

  Nick conveniently omitted Henry Braithwaite, the other co-founder, Kat thought. Morley Racine, Nick’s father, didn’t start the company by himself. And Liberty did not belong to Nick. All the shareholders owned it. He just happened to have a bigger stake than the rest.

  Nick didn’t exactly answer the question.

  “But how—”

  Susan interrupted Kat, talking to her like she was a preschooler.

  “Because the trust is pulling a fast one. At least that’s what we think. The trust lines up a buyer generous enough to bribe enough Class B shareholders who, along with the trust, have enough for a majority.”

  “But even together they don’t have enough shares,” Kat stated. No one was listening. Both Susan and Nick ignored Kat as Nick continued with his rant.

  “I’ve invested far too much sweat equity in the company to let it go without a fight,” Nick said.

  Kat couldn’t help herself. “Nick, maybe this is a ploy to increase the stock price. Some of these corporate raiders are known to take a run at a company just to stir things up. Once the share price increases in reaction to the announcement, they’ll sell their shares and move on with a tidy profit. Since you or the trust could block this sale, it gives them a very low probability of success, and a very good chance of making a quick buck, risk free. Unless of course, you or the trust want to get rid of Liberty. Do you?”

  “Of course not. Why the hell would I want to do that?”

  “I’m not saying you would. It’s just odd that they would target Liberty and not a company that’s widely held, where they could get the shareholders on board.”

  Nick sneered at Kat like she was beetle dung. He pointed a finger at her dismissively. “You should stick to your number crunching. You don’t understand how the business world works.”

  Ouch. She wasn’t the one born with a silver spoon in her mouth. She knew a lot more than Nick. He had never even worked anywhere else besides Liberty. The rage churning in the pit of her stomach was about to boil over. But she stayed silent—she needed the paycheck.

  Susan broke in.

  “She’s got a point, Nick. It’s not unheard of. Besides, why would Porter even try a stunt like this when there’s a control block of shares that’s not going to accept the offer? You’re not selling your shares, and from what you’ve told me about Audrey Braithwaite, the trust isn’t going to either. You know the takeover won’t be successful. I know it too, but the public doesn’t. The stock’s already risen twenty percent since the market opened. No matter what happens or doesn’t happen, Porter gets a nice little bounce in the value of their Liberty stock. So do we.”

  Nick glared at Susan as he replied.

  “Well, you have your theories and I have mine. Unlike you, I don’t have the luxury of thinking about it all day. I’ve got to get back to the board meeting,” Nick replied curtly with a wave of his hand as he rose and left Susan’s office.

  Kat waited for him to leave and then leaned across the desk to Susan.

  “Susan, are you really sure Nick would vote no?”

  “You heard him, Kat. He sounded pretty convincing to me.”

  The table pounding was mighty persuasive too, Kat thought cynically. Not to mention melodramatic.

  “What about the trust?”

  “The beneficiaries under the trust are Alex Braithwaite’s estate and his sister, Audrey. With Alex gone, Audrey’s likely to go along with whatever Nick and the board recommend.”

  “So you’re saying the board is united and against the takeover.”

  “Well, from what Nick says, it sounds like it. They are going to recommend rejection of the offer. Nick was adamant about that.”

  “But Susan, assuming Porter isn’t going to all this trouble simply to pump up the stock price, and they know it’s unlikely they’ll succeed in a takeover, why would they take a run at Liberty?”

  Susan paused a little too long before answering Kat’s question. She leaned towards Kat and replied in almost a whisper.

  “That’s what worries me, Kat. Takeovers are too expensive and time consuming to do unless you’re serious, and I think Porter is. Porter wouldn’t attempt this unless they expected to win. Nick’s in denial,” Susan said. “The board is working on a strategy to fend off the takeover, but it won’t be easy. With this offer on the table, there will be a lot of pressure from the other shareholders to accept. Or at the very least, come up with a better offer from someone else.”

  Susan handed Kat a copy of Porter’s 13D disclosure form, filed with the Securities and Exchange Commission yesterday. It was required under securities laws to disclose the intent of the purchaser once it owned five percent or more of total shares outstanding. The 13D indicated Porter’s intention was to either purchase Liberty outright, or take a controlling interest in the company.

  “I don’t get it. Why would Porter lie on the 13D? That could get them in a lot of trouble legally.”

  “They wouldn’t, Kat. Something else is going on.”

  “So while Nick and the board are recommending rejection of the offer, you think there is a back door deal going on?”

  Maybe the board wasn’t united after all.

  “A takeover should be impossible.” Susan drew a deep breath and continued, “That is, unless Nick or the Braithwaite Family Trust want something to happen. They control the company with their shares and can swing the vote. Whoever wanted to take over Liberty would have to gain control over a majority of the A shares. And no one will know how Nick or the trust actually vote their shares.”

  “Wouldn’t it be obvious by the number of shares voting in favor?”

  “If seventy-five percent or more tendered to the offer, it would mean they both voted yes. But that would be after the fact. If the percentage were less than that, it would mean that one of them voted for Porter’s offer. Which one might remain a mystery.”

  So Nick could play the good guy, but still vote in favor of the offer without anyone knowing. Kat was betting that whatever Nick wanted, Nick got.

  21

  Ortega rose from his leather chair, pacing through his spacious office. It was noon, and from his full-length window he could see people scurrying along on their lunch hour in the street below. Mohammed’s voice whined through the speakerphone, spouting a litany of excuses Ortega had heard too many times before.

  “Mohammed, spare me the lies. I’ve had it with your lame reasons on why you can’t deliver. These diamonds are crap—you know it and I know it. Why don’t you admit it and spare me the bullshit?”

  Ortega was fuming. He was sick of Mohammed’s endless apologies. He sat back down.

  “But Señor Ortega, I promise you that—”

  “Enough!” Ortega slammed his fist on the carved mahogany desk. He had been ripped off by Mohammed and his Lebanese cohorts, plain and simple.

  “My diamonds are the best quality. Please, I do not understand what you are talking about.”

  “I think you do. I had the diamonds tested. You’re ripping me off, Mohammed. I can’t unload crap like this.” Ortega tapped on the
desk with his pen. “I had them tested, so don’t lie to me.”

  The assay results had shown the diamonds were an even lower grade than he initially suspected. Not only had the volume dropped, but so had the quality.

  Ortega strode over to the leather couch in front of a flat screen television mounted on the wall. He poured the steaming hot milk into his coffee from the tray Luis had silently brought in moments earlier.

  On the screen was the exterior of Mohammed’s shop, with the same lazy men wasting their day at the coffee shop next door. Ortega had installed cameras at the outset of their agreement to monitor the activities at Mohammed’s store. Times like these made all those extra precautions worthwhile. In a moment he would ensure Mohammed was not able to rip him off again.

  “Mr. Ortega, I will make it good. I will talk to my suppliers immediately.”

  Mohammed’s whining continued as he pled his case, but Ortega felt no sympathy. He was caught in a supply-chain squeeze because of this cheat. He had an endless need for the diamonds, but Mohammed had not delivered at this most critical of times. Unwinding his plans at this late stage was impossible. Mohammed was about to pay very dearly for this infraction.

  Ortega frowned as he watched the screen. He was tired of waiting. Time to get it over with. He counted to five and pressed the detonator. As he watched impassively, the blast erupted from inside the store, sending windows and walls exploding outwards. The phone line went dead. Men ran from the coffee shop, screaming as they raced across the street to escape the blast.

  Ortega always preferred to terminate contracts personally. Unless he did it himself, he could never be sure of the outcome.

  He sipped his coffee as he marveled briefly at the technology. This show of force would have been impossible to pull off without detection a few years ago. Now he was able to eliminate his enemies with a push of a button from the comfort of his office. It was untraceable. Clean and simple. Ortega valued efficiency.

  The first reason for Mohammed’s demise was retribution. Ortega believed in getting even, although it did not make up for what would be large financial losses if he weren’t able to execute his contingency plan quickly. A second reason was intimidation. Mohammed could be easily replaced, but Ortega wanted the message to get out to the next supplier. He would neither be marginalized nor allow others to move in on his business. There simply was not enough room for anyone else, and there was too much at stake. The Lebanese either dealt with him, or they dealt with no one. Ortega could afford no compromises. Next on his list was to eliminate the buyer of the diamonds that were supposed to be his. He would get them one way or another, but time was running short.

  His cell phone rang, interrupting his thoughts. It was Nick Racine, someone else who needed to be taught a lesson. Ortega played over the Liberty events in his mind, only half listening to Nick as he poured a second cup of coffee.

  The investment in Liberty just before the Mystic Lake discovery had done well, providing a tenfold profit when he sold at the peak of the market. Shorting just before Bryant’s theft hit the news had earned him another easy double. The massive short had depressed Liberty’s stock price so much that it was practically worthless. The coup de grace was his pending takeover of Liberty at a fire sale price.

  Now all that was in jeopardy, since his Canadian brokerage account under the name of an investment company, Opal Holdings, had been frozen by the Canadian authorities. He had planned to close out the account and use the proceeds to finance the Porter bid. If that weren’t enough, now Nick Racine was double crossing him, looking for another bidder to trump the Porter offer.

  “Look, Nick. We had an agreement. I bailed you out. In return I expect you to keep your part of the deal. A deal that does not involve other bidders for Liberty. You got your money. Now I want what’s due to me.”

  Ortega lit a Cohiba and took a long pull, savoring the spicy undertones and touch of chocolate. It was turning out to be a long day.

  “Emilio, listen,” Nick said. “I know what I’m doing. You want this to look legit, right? Unless there’s a second bidder, it will look like the board hasn’t done its due diligence. The shareholders might reject the offer.”

  Nick might need to be eliminated a little sooner than planned.

  “Another bidder only drives up the price for me. And for the most part, you are the shareholders. All you have to do is lock up the Braithwaite shares. With theirs and yours, it’s a sure thing. We’ve got an agreement. I’ve been good to you, Nick. Don’t double-cross me just to make a few extra bucks.”

  “Emilio, finding another bidder will deflect suspicion. I can’t publicly support an unsolicited bid. As a director, I have to show that I’ve evaluated other alternatives and recommended the best one. At least if another bid surfaces, it appears competitive. Porter can increase the bid slightly and then you’ll have Liberty.”

  “Nick, take this as a warning. I’m not increasing the bid. And get rid of that forensic accountant. She’s asking too many questions.”

  “I’m working on it. We’ll fire her. But we need her report implicating Bryant first.”

  “You said she wouldn’t find anything else.”

  “I didn’t think she would. She’s better than I thought.”

  “Well, firing isn’t good enough. You need to get rid of her.”

  “What are you talking about?” There was a long pause on the other end. “You mean kill her? Isn’t that a bit extreme? I didn’t sign up for that.”

  “You didn’t say anything when Bryant disappeared. You were happy as long as your gambling debts were paid off.”

  “That was different. Besides, you said you would make him disappear. I didn’t think you would kill him.”

  “Nick, what do you think happens when people disappear? Just because you didn’t pull the trigger doesn’t mean you aren’t complicit. Implicating Bryant was your idea, remember? You’re just as guilty.”

  Ortega ensured there would be no doubt of that. When they found Bryant, they would also find Nick’s DNA at the crime scene. Ortega just had to be patient long enough to complete the takeover of Liberty. Once he had Liberty, Nick would cease to matter. Ortega ended the call. Enough Nick for one day.

  He stubbed out his cigar in the marble ashtray and turned his thoughts to Clara.

  Still no word. As far as he knew, her actions were unfolding according to plan. Even so, the silence made him uneasy. She might be tempted to take risks. Unnecessary risks. All he could do was wait for her call.

  He had begrudgingly involved her in this business only at her insistence. He regretted that now. He knew her, and yet she surprised him at times. She was tough, smart and invincible, but she was also his daughter. He worried about her. His world was much too dangerous for a woman.

  22

  It was now almost ten p.m. As she drove, Kat continued to puzzle over the motive behind the hostile takeover. Liberty’s share price was at an all-time low, but it was also in a serious mess, making it an unattractive target. The CFO had stolen enough money to push Liberty close to bankruptcy, and two people associated with the company had turned up dead. Porter’s sense of timing was impeccable. Kat didn’t think for one minute it was a coincidence.

  Kat mulled over the possibilities as rain spattered on the windshield. If Nick and the trust both voted in favor of the offer, Porter got Liberty. Nick alone could force the sale only if he voted yes with his shares and all of the publicly traded shares also voted yes for a two-thirds majority. The trust, at thirty-five percent, did not have enough shares on its own to be a factor. Even if all of the publicly traded shares also voted in favor of the Porter offer, combined with the trust it would only equate to sixty percent, not enough for a two-thirds majority. What was she missing?

  She slowed as she left the smooth asphalt and streetlights of the main road. Her eyes slowly adjusted to the unlit road as she relied on the Toyota Celica’s sole working headlight. Navigating through the potholes and ruts while staying away from the sho
ulder and the river just a few feet beyond required all her concentration. The rain now pummeled the windshield in gusts, and it was hard to see beyond a few feet in front of her. Why hadn’t she retrieved the wooden box on her last visit to Takahashi’s? Discovering Ken’s body had been a shock, but even so, it didn’t occur to her at the time to just take it.

  Now she realized it was probably the only evidence she would ever get her hands on to prove the diamonds’ origin. Whoever planted those diamonds at Mystic Lake was connected to the stolen money—and she was betting to the Takahashi and Braithwaite murders. The police had probably confiscated it by now, but there was a chance they had overlooked it. She prayed it would still be there.

  Kat leaned forward, squinting as she tried to find Takahashi’s driveway through the torrential rain. The wipers cleared the windshield for a split second, revealing the ditch directly in front of her. She cranked the steering wheel a hard left, narrowly averting a mud bath. She pulled in the driveway and parked beside the house. She killed the engine and sat until her heart stopped thumping.

  She grabbed her flashlight and trudged down the muddy driveway towards the back door. The silence was broken only by the steady thump of drips from the leaking house gutters, splashing off the puddles in the driveway. No dog barking, no police investigators, and no murder scene, unlike the last time she was here. Kat wondered for a moment about the fate of Takahashi’s Labrador. She hadn’t really thought about him until now. Another victim, she thought sadly, as she rounded the back of the house to the stairs.

  The police tape cordon had now been removed, and all signs of the crime were gone. Shades were drawn on the windows. To anyone who didn’t know otherwise, it appeared as though the owners might have gone on vacation.

  Kat climbed the stairs to the back porch and tried the door. It was unlocked and the knob turned easily. She entered the mudroom, settling the flashlight beam on the wooden shelf above the coat hooks on the wall. She held her breath, almost afraid to look. The box was still there, seemingly untouched. Her hands trembled as she retrieved the box and lifted the cover. The three Mystic Lake diamonds Takahashi had shown to her on her first visit were still there. One from the original pipe, and two from the new one.