“Would it be worth it?”
“I won’t know, until I’ve had Hallett make the analysis.”
“The best,” said Bunch, awe in his voice. “They’ll be protected.”
“Faysel doesn’t think so.”
“Do you want it?”
Rudd didn’t reply at once. “Yes,” he said. “I think I do.”
“It would be another mountain,” said Bunch, remembering the poolside conversation.
“The biggest,” agreed Rudd. The prospect excited him.
The message from the Washington ambassador was judged sufficiently important for a full gathering of the king’s council in the white palace at Riyadh. They were twelve ministers under the chairmanship of the Crown Prince, Mohammed Faoud.
“There’s no doubt that this was officially inspired?” asked Abdul Hassain. He was the Finance Minister and chairman of the Saudi investment fund.
Faoud shook his head. “The ambassador was particularly careful about that,” he said. “The meeting was clearly arranged by the Secretary of State and the senator has been used that way before.”
“Then we should respond positively,” said Khalil Mitri, the Foreign Minister.
“It will be expensive,” warned Hassain. “We’ve sufficient reserves to create an almost immediate glut and that will certainly reduce the spot price of oil. And spot price selling, in addition to our agreed contracts, was providing the liquidity for our investment. Our guaranteed income is committed to established projects.”
“Libya and Iraq might argue otherwise,” said Faoud, “but we are the leaders in the Middle East. If we accept that responsibility, then we must take it seriously. The lessening of investment funds, which would be temporary anyway, is a small price to deprive the Israelis of the means of warmongering.”
“And not just the practical means,” said Mitri. “It can be leaked that the warplanes have been denied because of their belligerence, so there will be diplomatic gain, as well.”
“I think we are decided,” said Faoud. There were nods of agreement from everyone present.
5
Lord Condway had come from another company meeting, so it was convenient to use his car, even though the distance between the headquarters of Buckland House and the City offices of Samuel Haffaford and Co. was very short, hardly more than a quarter of a mile. The car, a Rolls Camargue, and the chauffeur, were provided by Buckland House.
“Didn’t expect the need for this,” said Condway, as Buckland entered the car. It was heavy from cigar smoke and the vice-chairman’s face was more flushed than usual.
“Neither did I,” admitted Buckland. He’d committed the afternoon to high stack blackjack at a private casino in Hays Mews and didn’t want to arrive after it started; he liked to feel his way into the cards and gauge the strength of the other players. It was always different after play had started. He looked across at the older man, obviously contented after a celebration. “Good meeting?”
“Eighteen per cent declaration,” disclosed Condway. “Company’s way ahead in microchip development.”
“Pity we can’t drive our ships with them, instead of oil.”
“Are Haffaford going to be difficult?”
“Don’t see why they should be,” said Buckland. Nor did he see why they had requested the meeting with both of them. In his father’s day the banks had come to them.
“Don’t think Snaith has the proper attitude,” complained Condway. “Like a damned housewife worried about housekeeping money.” He leaned forward to the cabinet recessed into the partition dividing the back from the front of the vehicle. It dropped open on the cut-glass decanters and glasses.
Buckland looked out to see how close they were to the merchant bank. “We’ll be there in a moment,” he said, shaking his head.
Condway poured himself a brandy. “Port gets tossed about too much in a car,” he said.
“I regret getting tied up with these bloody people,” said Buckland. “They were attractive at the time, at one and a half per cent lower than anybody else, but if I’d known it was going to be like this I’d have gone for the higher rate. Another £10,000,000 is a pittance against the company’s valuation.
“Maybe it’s a good idea we’re going to see them,” said Condway. “Opportunity to speak to somebody with some commercial sense.”
Snaith was waiting in the foyer when they arrived in the Haffaford office. There had been no contact between them since the earlier meeting and Buckland said at once, “I’d hoped the request would be a formality.”
“The board here didn’t feel it could be,” said Snaith.
“Perhaps it was badly put forward,” said Condway.
“I don’t think so,” said the financier.
In silence they rode up through the floors in the lift and Snaith led the way into the boardroom. There were three men already waiting. Snaith’s introductions were in order of seniority: first Richard Haffaford, the merchant bank’s chairman, then Sir Herbert White, the vice-chairman and lastly Henry Pryke, the senior director. They were all young and Buckland regretted the red face and brandy breath of Lord Condway. There was a conference table, but Haffaford led them away from it to an area of the room arranged with easy chairs and a low coffee table. Everything was modern, light-coloured oak and rubber tree plants and smoked-glass windows.
“We’ve had your needs fully explained to us,” said Haffaford, indicating Snaith. He paused “We felt there would be some advantage in further discussion.” He was a heavy-featured man, with thick dark hair and full eyebrows which dominated his face. The spectacles were wide and horn-rimmed and he constantly pushed them back along the bridge of his prominent, aquiline nose.
“It’s very simple,” said Buckland. “A matter of liquidity: we need our facility extended by another £10,000,000.”
“You make it seem a temporary arrangement,” said White.
“That’s how I regard it.”
“Your trading figures don’t support that,” said Haffaford. “We’ve subjected your workings over the last five years to a costed analysis: there’s a continuing downturn. Compared to five years ago you’re operating with eleven per cent losses against cost increases of twenty-two per cent.”
The figures surprised Buckland. “Surely we must take account of the recession.…’ he started, but Pryke said, “The recession was severe and obvious and we built it into our calculations: the figures we’re quoting take account of it. Your losses are eleven per cent at the lowest mean average. A more reasonable figure is something like fifteen to sixteen per cent.”
“Buckland House is the best and most prestigious hotel chain in the world,” said Condway. “Don’t you realize that?”
“Tradition has nothing to do with what we’re talking about,” said Haffaford. “This discussion is about loan servicing and equity and viability.…”
“Viability!” protested Buckland, at once.
“Your African and Far East holdings, a total of fifteen hotels, showed a minimum operating profit,” said Haffaford. “They did so because labour costs are so low. In every other operation your running deficit exceeds by at least fifty per cent whatever you can expect from your income return. Each hotel appears to be run by the whim of its manager. You have no centralized cost control. There is a semblance of purchase control, but it’s patchy in operation, so that if any hotel feels justified it takes its purchasing outside the group. Your ships are hopelessly uneconomical: there wasn’t one voyage, even at the height of the season last year, when income compensated for operating costs. On the routes currently operated, your liners are cost defective and can only remain so, overmanned, inefficient and sailing distances ridiculous for current fuel costs. You’re running services people no longer want nor will pay for.”
Buckland blinked at the attack. He had expected a difficult meeting, but he hadn’t anticipated this. The damned man was practically accusing them of being bankrupt. The feeling wasn’t anger or outrage: it was an empty-stomache
d hollowness. Until this moment the thought of failure had never occurred to him. There were no hotels like theirs. They had everything. Tradition. Style, Service. Everything. Nothing could go wrong; not seriously wrong. He was sure it couldn’t.
“Will your bank extend the facility for a further £ 10,000,000?” asked Condway, with brandy-based belligerence.
“Not unconditionally,” said Haffaford at once.
“What conditions?” said Buckland, wanting to get in before Condway.
“A properly created management structure,” said White. He was a thin, pedantic man with a hesitating, word-searching way of talking, as if he were frightened of saying the wrong thing. He went on, “There would obviously have to be sub-divisions, because of the worldwide spread, but we would expect to see cost control within a year, with centralized buying and distribution. Unless you can diversify into shorter, economical cruises, the liner fleet should be scrapped or sold. Staffs throughout Europe would have to be drastically reduced and in places disposed of.…” The man looked down at some papers before him. “Biarritz, for instance. You’ve got a four hundred unit hotel dating back to a thirty-year-old popularity because Edward VIII and Mrs Simpson liked it there. It’s a museum piece. Converted to service flats, it could return a profit in two years.”
“Service flats!” erupted Condway. “Do you know what you’re suggesting!”
“Yes,” said the merchant bank director, unimpressed. “I know exactly what I’m suggesting. Buckland House is relying upon a history and tradition that doesn’t apply any more.”
“There are other merchant banks in this City,” said Condway, and Buckland wished he hadn’t.
“Of course there are,” agreed Haffaford. “To each of which you would have to declare your involvement with us and each of which would want to know the reason for your wish to change. And whatever the explanation, they would insist upon the sort of trading investigation we’ve undertaken. I’m sure their feelings would be the same as ours.”
“Are we talking about the full request for £10,000,000?” said Buckland.
“No,” said Haffaford. “Until there were positive indications of a trading improvement we would not feel able to offer you more than an additional £3,000,000.”
“To avoid drawing upon reserves we want to declare a dividend out of existing funds,” said Buckland. “Five per cent would mean £1,230,000. That leaves us dangerously low on liquidity if all you allow us is £3,000,000.”
Haffaford looked directly across the table at the Buckland House chairman. “There would be another condition,” he said slowly. “To avoid misunderstandings about personally signed cheques being assigned to investment funding we would want a three-monthly audit period. So there would be a quarterly review for additional funding.”
“This is not the sort of relationship I expected when I linked with your bank,” said Buckland. He decided against a direct defence of the blasted gambling debt. “You’re virtually taking management control for us.”
“That is precisely what we’re not doing,” insisted Pryke. The third Haffaford director was a fat, bulging man who reminded Buckland of their own Finance Director. “We’re seeking to get the management control that hasn’t been in operation for several years.”
They were rudely sure of themselves, decided Buckland. “I’m not satisfied that a proper case has been made out on our behalf,” he said.
“I can assure you that it has,” said Haffaford. “There’s not one argument that’s been overlooked.”
“You would want your own accountants monitoring our running?” said Buckland, intent on defining the terms.
Haffaford nodded. “And properly formulated proposals, showing how your sub-divisions would be controlled through upper management here in London. Once formulated we would expect them to be discussed with us before they were put into operation.”
They might deny it as much as they liked, but they were intruding upon the running of the company, thought Buckland. They were being dictated to, like recalcitrant children. He rose formally. “I will have to put these proposals before my board,” he said.
“Of course,” said Haffaford, rising with him. The merchant bank chairman extended his hand. Buckland hesitated, then accepted the gesture. “I wouldn’t want there to be any misunderstanding between us,” said Haffaford. “We genuinely want to help.”
“I’ll make that clear, too,” said Buckland.
Snaith escorted them back to the foyer so it was not until they were back inside the car that they spoke.
“Didn’t get a proper chance to explain ourselves,” complained Condway.
“Bloody money-lenders,” said Buckland.
The Haffaford directors waited until Snaith returned before beginning their discussion. To their representative on the Buckland House board Haffaford said, “Smallwood was right to warn us.”
“I believe there are some good people in middle management,” said Snaith. “Smallwood is a sound man: been with the firm for years. But the problem remains that there’s not any decisive control.”
“They didn’t even offer a convincing argument!” said Pryke.
“We’re already committed in overdraft to £10,000,000,” reminded Haffaford.
“Which I think we’ve got to protect,” said White, with his careful delivery.
The game was already well established when Buckland arrived and he had to wait an hour before there was a vacancy he could fill at the table. He scribbled his signature against a house docket and received £20,000 in £500 denomination chips. It was a centre seat, which Buckland didn’t like. He played cautiously low, closing on fourteen. The two players to his left took risks, one actually calling for a card with eighteen showing and winning the hand when the dealer overdrew. The cards consistently went against him. He signed for another £20,000 and fought to get his money back from the two who were gambling carelessly, taking risks himself. He lost his second drawing within two hours.
Buckland pushed away from the table, obeying the gambler’s edict against chasing bad luck. It wasn’t until he stood that he saw Tommy Ellerby at the bar. As he approached Ellerby held out the champagne and said, “Bad run?”
With his free hand, Buckland gestured uncertainly. Ellerby had been with him at Trinity, Cambridge; introduced him to gambling, in fact. Ellerby had run the private house in Hays Mews for fifteen years: it was one of Buckland’s favourite gambling clubs.
“How much,” said Ellerby.
“Forty thousand,” said Buckland. He sipped his drink, looking around the club. It was filling up with evening gamblers, the majority in black tie and dinner jackets.
“Glad to have the chance to speak to you,” said the club owner.
Buckland looked back to the man.
“Your account’s a bit high, Ian.”
“How much?”
“A hundred and twenty, with what you’ve lost tonight.”
Buckland had thought it was half of that. He patted his empty pockets and said, “I’ll let you have a cheque tomorrow.”
“I’d appreciate it,” said Ellerby. “Not pressing, you understand. Damn book-keepers.”
“Don’t tell me,” said Buckland with feeling. “I know.”
“I wondered if I might find you here,” said a familiar voice behind him and Buckland turned, towards Prince Faysel.
“Playing tonight, your Highness?” said Ellerby.
“I don’t think so,” said the Arab.
The oil market is a volatile one and the unannounced Saudi release of unlimited supplies had an immediate affect. Spot price which was as high as $52 a barrel came down almost overnight, even though countries like South Africa, deprived of oil because of the Middle East producers’ apartheid embargo, hurriedly tried to stockpile through nominee companies.
The Washington announcement that the Israeli aircraft were being withheld caused immediate protest in Jerusalem. There was an emergency debate in the Knesset and the Israeli Foreign Minister flew to America to
meet the Secretary of State. Overconfident because of their past relationship and forgetting that the United States President still had three years of office and did not, therefore, need to cultivate the American Jewish vote for a further eighteen months, the Israelis scheduled a press conference during the visit, expecting to be able to announce a reversal of the American attitude. It had to be cancelled because of American insistence that the supply of arms could not be resumed until there was a positive indication of Israeli intentions, particularly in the Lebanon, linked to the logic of Palestinian recognition.
In Geneva, where the Saudi investment fund was headquartered, accountants calculated that the revenue loss because of the manoeuvre would be $120,000,000 in the remaining trading period of the current year and $210,000,000 in a full year. They recommended investment economies over a two-year span.
6
It was intended that Prince Faysel should remain in New York for only twenty-four hours, so he used Concorde for the flight from London. There was a helicopter connection arranged, which got him to the downtown heliport by nine-thirty. A company car was waiting; from Heathrow to the Best Rest headquarters the journey timed out at three hours, forty-five minutes. The Arab entered the boardroom to find the chairman, Walter Bunch and Richard Hallett already assembled. The dossiers which Hallett had prepared were laid out in readiness, the issue limited to four restricted copies all of which Rudd insisted on retaining in the private safe in his office: only Bunch possessed a key, apart from himself.
“What’s it look like?” said Faysel, indicating the file.
“Interesting,” said Rudd. He turned to the personal assistant. “Why not take us through it?”
Hallett’s face momentarily tightened into creases in his nervousness. He coughed, opening the folder. “Buckland House is the parent holding company for a total of four others,” he said, his voice strengthening almost at once with the facts in front of him. “It’s really a convenient split of countries, rather like our own. In London there are five hotels, with the Berridge being the front runner. They’ve all five-star ratings, but the Berridge is reckoned the leader, better than the Savoy, Claridges or the Dorchester.…” He hesitated, looking up at the other three men. “That’s the hallmark everywhere,” he emphasized. “They’re always the best.”
Takeover Page 6
