by Stephen Frey
“It’s such a terrible thing about Bill,” Stockman observed, crossing his legs at the knee as he sat down. “But one man’s loss is another’s gain. Isn’t that true, Mr. Gillette?”
“It’s a zero-sum world,” Gillette agreed quickly, gesturing toward Cohen. “Senator, meet Ben Cohen.”
Stockman tilted his head slightly without looking over. “What do you think happened to your boss, Mr. Gillette? Was it an accident like the police are saying? Or did Bill have help filling his lungs with water?”
“Why would I think Bill was murdered?”
“Because if you’d come out of the church thirty seconds earlier, we wouldn’t be having this conversation.”
The office went deathly still for a few moments.
“Why did you want to see me?” Gillette finally asked.
“I thought it made sense for us to get together as soon as possible.” The senator smiled. “To talk about ways we can work together.”
Stockman and Donovan had never gotten along. They’d always made a point of being good at public palm-pressing, but they were at opposite ends of the political spectrum, and that had ultimately turned into an intense personal dislike. There was no chance that they would have ever helped each other. But maybe there was an opportunity here.
Gillette opened one hand and gestured. “I’m interested.”
“I’d like to ask a few questions about Everest first.”
“Go ahead.”
“How many companies do you control?”
“Twenty-seven.”
“And how much do those companies have in combined sales?”
“Wait a minute,” Cohen objected. “That information is highly confidential.”
“It’s fine, Ben,” Gillette said smoothly. “Senator Stockman would never disclose anything confidential about us to anyone. Would you, Senator?”
Stockman smiled thinly. “Of course not.”
“Answer the question, Ben.”
Cohen took an irritated breath. “The twenty-seven companies have combined sales of over eighty billion dollars.”
“How many employees is that?”
Cohen shot Gillette a quick look.
“Tell him.”
“Almost a million.”
“A million employees,” the senator said wistfully. “That’s a lot of votes. How many of those companies are you chairman of, Christian?”
“Seven,” Cohen answered for Gillette. “But with Bill’s death, as the new chairman of Everest Capital, Christian will automatically take those chair positions as well. That’s another thirteen.”
“Jesus. Chairman of twenty companies. And chairman of Everest.” Stockman chuckled. “I hope they can clone you, Christian. Otherwise, you won’t have time to take a crap let alone—”
“What do you want, Senator?”
Stockman folded his hands in his lap. “In a few days I’m going to announce my candidacy for president,” he explained, his voice low. “I want Everest Capital’s support, specifically those million votes. Employees listen to their chairman.”
Over the last few weeks, Gillette had heard rumors about a Stockman campaign for the White House.
“As you know,” Stockman continued, “I’m a Democrat. As you also know, Bill Donovan was a conservative. A senior member of the Republican National Committee, in fact. It never made sense to ask him for help. I would have had better luck with a brick wall. But I hear you’re different. I hear that even though you grew up in Beverly Hills, you relate to the common man. To the blue-collar set, especially minorities. Those people are a significant piece of my constituency. So, I want your support, Christian. I want you to tell all those Everest employees to vote for me, and I want you to be active behind the scenes. Calling on people who matter and getting them to support me.” Stockman glanced at Cohen for the first time. “We’re not talking about a one-way street here.” He ran the fingertips of his hand over the lapel of his suit jacket. “As I’m sure you both know, I have friends in high places. At the Securities and Exchange Commission, for instance.” He paused. “Over the years Everest Capital has made billions selling companies it controls to the public. True, Mr. Cohen?”
“True.”
“In fact, one of my aides told me you still own big pieces of several of those companies. In addition to those twenty-seven companies you own outright. Is my information accurate?”
Cohen nodded.
“With all the scrutiny on corporate accounting and control these days, public offerings can easily get bogged down by SEC bullshit. Even shelved sometimes.”
Cohen flashed Gillette an angry look, anticipating what was coming.
“Obviously, that’s not something you want,” Stockman pointed out, following Cohen’s glance. “I can help you there.” He raised his eyebrows. “Or not.”
“Hold on,” Cohen snapped. “We’ve taken fifteen companies public over the last ten years. We know plenty of people who can—”
“Have someone in your office call my assistant,” Gillette instructed Stockman, cutting off the conversation. There was no need for this to escalate. Not right now, anyway. “Her name is Debbie.” He rose and moved out from behind the desk. “Have them arrange a lunch for us next week,” he continued, taking Stockman’s hand, helping him up out of the chair and guiding him to the door. “We’ll go to the Racquet Club. Would you like that?”
“That’s a nice place, Christian. I haven’t been there in a while. Yes, I would like that.”
Gillette opened the door. “I look forward to hearing more about your campaign, Senator.”
“Thank you.”
“What a prick,” Cohen muttered when Stockman was gone. “Threatening us like that with his SEC contacts. Like we’re babes in the woods when it comes to IPOs. And telling us he’s so damn sensitive about minorities. I’ve checked his track record, Christian. He’s big business all the way. He’s just got a great PR machine behind him.”
“Have Tom McGuire put together a report on him,” Gillette instructed, sitting back down. “Tell him to get me everything on the guy. I want it by tomorrow afternoon.”
“You’ll have it,” Cohen promised.
“And, Ben, I don’t want to have to show someone out of a room like that again. You’ll do those things from now on. Got it?”
“Uh-huh,” Cohen agreed hesitantly. As though he wasn’t sure he wanted to be anyone’s butler.
There was a soft tap on the door, and Gillette’s eyes flicked to Cohen’s.
Cohen rose and moved to the door. “Now Richard Harris wants time,” he called.
“Fine.”
Cohen gave the okay to Harris’s messenger.
“Do you think Mason is having affairs with women who work at his portfolio companies?” Gillette asked. Mason was chairman of the other seven Everest-controlled companies, and there were always rumors that he used his position to manipulate women into bed. But nothing had ever been proven.
“I . . . I don’t know.”
“I didn’t ask if you knew, Ben. Just what you thought.”
“I don’t want to speculate. Troy’s my business partner. And my friend.”
“Damn it, Ben, tell me what you think.”
Cohen squinted and adjusted his glasses. “I’d guess it’s possible.”
“Really going out on a limb, aren’t you?”
“Huh?”
“Nothing.”
Another reason the investors hadn’t given any consideration to his being chairman of Everest, Gillette realized. And why Donovan had never made Cohen chairman of any of Everest’s portfolio companies. Cohen could calculate numbers better than any quant jock on Wall Street, but he couldn’t be tough. If there was one thing a top private equity professional had to be, it was tough. Sometimes even with friends.
“The guy is a walking sexual harassment suit,” Gillette said flatly.
“Oh, I don’t know. I think a lot of that stuff is overblown.”
“It’s a lock he’s banged women
who work at his companies.”
Cohen didn’t respond.
“A big, well-publicized sexual harassment suit could negatively impact our reputation and our business prospects. Wouldn’t you say, Ben?”
“Maybe.”
Gillette stared hard at Cohen for a few moments, irritated by his indifference. “When you speak to Tom McGuire about Senator Stockman, have him find out if Troy’s doing anything stupid when he goes to board meetings.”
“I’m not comfortable doing that. It’s not right.”
“I don’t care if you’re comfortable, Ben. Just do it. Understand?”
There was another knock at the door.
This time Cohen was up immediately. A moment later, Richard Harris followed him into the office.
After shaking hands with Gillette, Harris sat in the same chair Stockman had used. “Congratulations, young man,” he offered warmly. As chief executive officer of U.S. Petroleum, the country’s largest industrial company, he was one of the most influential men in corporate America. “Your promotion was well deserved, Christian.”
“Thank you.” Gillette gave Cohen a quick nod of approval. Harris had always called him “Chris.” Obviously, Cohen had given Harris the message at the door. “What do you want?”
Harris blinked several times. “Well, I can see why the limited partners chose you to take over the firm. It’s like I’m speaking to Bill. Never a wasted second.”
Gillette glanced at his watch.
“You own a Canadian production company that’s got some very nice oil and gas reserves,” Harris continued quickly, catching Gillette’s impatience. “Laurel Energy.”
So, that was the reason for the meeting. Harris wanted Laurel. Which could be a tremendous opportunity to solidify his position in the minds of the Everest limited partners right away, Gillette realized. To negotiate a sweetheart deal to sell one of the portfolio companies at a high price immediately after being elected chairman. Early wins were so important.
“I want it,” Harris continued.
“A lot of people do,” Gillette countered.
“I’ll pay you whatever amount gives Everest Capital a 50 percent annual return. That’s damned good. Your limited partners will be very happy. It’ll be a nice announcement to make so soon after taking control.”
“What did we pay for Laurel Energy, Ben?” Gillette wanted to know, irritated that Harris had anticipated his desire to have a big win right after becoming chairman. That wouldn’t help his negotiating position.
“Two billion,” Cohen answered. “We used three hundred million of equity out of Fund Six, and we put together a $1.7 billion loan from Citibank to close the transaction.”
“When did we buy it?”
“Almost three years ago.”
“How much of the billion seven debt is still out?”
“Around a billion two, but—”
“So I’ll pay you a billion in cash for your equity,” Harris offered. “That’s seven hundred million more than the three hundred million you invested. And U.S. Petroleum will take over that Citibank loan. You’ll be free and clear of that.”
Gillette glanced at Cohen. He seemed nervous. Like he was calculating his share of the $700 million profit, and he was worried the deal might not go down. “What do you think, Ben?”
Cohen shrugged.
“It’s not enough,” Gillette said, shaking his head, frustrated with Cohen again.
“It’s more than enough,” Harris retorted.
“I’ve got a suggestion. A way to bridge the gap.”
Harris looked warily at Gillette. “Oh?”
“U.S. Petroleum owns an oil field service business based in New Orleans. You picked it up a few years ago when you bought out that exploration company up in Alaska. It’s not a core asset.”
Harris smoothed his tie. “No, it’s not,” he admitted.
“I’m told that the company does a billion a year in revenue and a hundred million in net income.”
“That’s about right. So what?”
“So I’ll pay you four hundred million for it.”
Harris’s face turned red. “Four hundred million? Four times net income? You might as well steal it from me, Christian. You could turn around and sell it the next day for at least a billion and a half. My public shareholders would crucify me.”
“Don’t tell them,” Gillette suggested bluntly. “We won’t say anything about the deal. It’ll be quick and clean. No publicity.”
Harris shook his head. “It wouldn’t work. Our accountants would make me put the transaction in the footnotes to the year-end financial statements. That’s when the shareholders would find out.”
“No way. U.S. Petroleum is huge. Two hundred billion a year in revenues. Your accountants shouldn’t make you mention it. It’s immaterial to the overall size of the company. But, hey, if the green eyeshade guys start yammering about sticking it in there anyway, let them know you’ll move the accounting engagement to another firm.” Gillette pointed at Harris. “What do your accountants make a year off U.S. Petroleum? Twenty, thirty million?”
“More like forty,” Harris muttered.
“Then it’s an easy decision for the lead partner. It’ll be like our transaction never happened.”
“I don’t know.”
Gillette let the suggestion sink in for a moment. “Well, that’s my offer, Richard. You sell me the oil field service company for four hundred million, and I sell you Laurel Energy with all those sweet oil and gas reserves for a billion dollars plus the Citibank debt.” He hesitated, tapping the desk. “Look, I know why you really want Laurel,” he said flatly. “It’s got exploration options on several large tracts of land up there in Canada that may contain a huge new field. We haven’t shot our seismic tests yet, and it’ll be a while until we do and we get the results back. But if all that oil and gas is there, it’ll make a billion dollars plus debt look like pocket change. At that point, my investors will be crucifying me. Let’s not dance without music. It’s a waste of time. Now, do you want to do the deal or not?”
Harris fumed for a few seconds, then nodded. “Yeah, I do.”
“Good. Get your attorneys started on the documents right away. I want both transactions closed no later than January tenth.”
“I’ll see you to the door, Mr. Harris,” Cohen spoke up, catching Gillette’s subtle indication that this meeting was over.
“What do you think?” Gillette asked when Harris was gone.
“I think a billion dollars plus debt is a lot to pay for Laurel Energy if the engineers don’t find any major reserves on the option properties.”
“I agree, but Harris probably had his people do some preliminary work on the area. He’s making a bet. If he loses, he overpaid, but not by that much. If he wins, he looks like a superstar.” Gillette raised one eyebrow. “What he doesn’t know is that we’ll be finished with the seismic tests before January tenth so we’ll know what the deal is up there before we ink to sell. If we strike black gold, we’ll renegotiate. Right?”
Cohen shrugged. “Hey, caveat emptor.”
Gillette counted silently to five, then spoke. “Next time you want to say ‘buyer beware,’ just say it. Understand?”
“Come on,” Mason said quietly, running his finger down the woman’s arm. They were standing in a corner of the mansion’s great room, at the edge of the crowd. Mostly hidden from view. “Follow me.”
“You’re terrible, Troy,” she said, an anxious smile playing across her lips. “No, I couldn’t.”
“This isn’t a request, honey, it’s an order. Just like when I tell you to get me coffee.” He slid his hand down the back of her dress and squeezed one of her buttocks. “Now, get to the basement.”
“Troy!” she hissed, slapping his hand away.
“I’m just playing,” he whispered, leaning down and kissing her on the cheek, but not before first making certain no one was watching. “You know how much I care about you.”
“Where’s
your wife?” she asked.
“At home. Back in Manhattan.”
“How did you manage that?”
“The baby’s sick,” Mason explained. “Besides, my wife isn’t big on funerals.”
’’Oh.”
“Meet me downstairs in five minutes,” he instructed. “There’s a guest room down the hall past the pool tables.” He’d stayed at the mansion before and knew his way around. “The stairs to the basement are on the way to the kitchen.”
“Forget it. I’m not going to—”
“And take off your panties before you come,” he interrupted.
“Troy, you’re terrible. I’m not going to . . .” Her voice trailed off. He was already heading through the crowd.
“Thanks for stopping by.” Gillette shook Miles Whitman’s hand as they stood by the office door. Whitman was the chief investment officer of North America Guaranty & Life. “I appreciate it.”
“Glad you won.” Whitman glanced at Cohen, then back at Gillette. “I won’t take any more of your time, Christian. I’m sure lots of people are trying to get in to see you today.” He turned to go, then stopped. “Nine o’clock Tuesday morning, right?”
Gillette had requested a meeting with Whitman to discuss the new fund. “Right, nine o’clock.”
When Whitman was gone, Gillette headed back to Donovan’s desk. As he was sitting down, Cohen called from the doorway. “Now Tom Warfield wants to see you.” Warfield was the president of J.P. Morgan Chase & Co., one of the world’s biggest banks.
Gillette shook his head. “Warfield’s going to beg me to replace Citibank with J.P. Morgan as our house bank. He was always on Donovan’s ass to do that. I’m not going to deal with him now. Tell him to call Debbie to arrange a meeting. But no lunch,” Gillette added quickly, rubbing his eyes. His contacts were starting to burn. “Warfield tells too many stories. He bores me to death.”
Cohen relayed the message to the Morgan vice president waiting outside the office, then called to Gillette again. “How about Jeremy Cole? Got time for him?”
Gillette had met the Giants’ quarterback several times. The first this past September outside the team’s locker room after the season opener. “Yeah, five minutes.”
