Houston. Friday, November 9.
Dark clouds had been accumulating and growing on Enerco’s corporate horizon for months. Highly leveraged positions taken by the company’s enormous worldwide trading division had historically been enormously profitable. Lately, however, the division had found itself on the wrong side of more than the usual number of trades, resulting in gigantic mark to market losses. Through the skilled and fraudulent trading and financial maneuvers of Jeffery Wheeler, the company’s chief operating officer, and Andrew Speers, the company’s chief financial officer, the losses had been hidden in offshore limited partnerships. In other words, the financial and trading wizardry, so far, had succeeded in keeping the losses from showing up on Enerco’s financial statements, thereby preserving the wild enthusiasm of Wall Street’s analysts. Their praise for the company’s performance and upbeat projections had kept Enerco’s stock price well above ninety dollars. Investors continued to buy in anticipation of its ascent into the stratosphere.
All of the fraudulent maneuvers had been done with the full knowledge and consent of Ken Layton, Enerco’s chief executive officer. Layton, a brilliant and street smart individual, was aware that Enerco could not continue to hide gigantic losses forever. Like the little boy with his finger in the dyke, it was only a matter of time. He had to move fast. Time had become his enemy. The company needed to increase its cash flow to finance its losses. It needed to acquire companies to increase its cash flow, and it needed currency to make the acquisitions. Enerco’s stock was the only currency available to it. Keeping it high was crucial.
To discuss his concerns and to plot a course of action, he called an emergency meeting of Wheeler and Speers, his two highest level lieutenants. He began the meeting with a sobering declaration. “We’re running out of time, gentlemen. We’re going to have to quicken the pace. I want to move on Iacardi immediately. In that connection, I sent the company plane to New York this morning to pick up Peter Tavaris and Walter Deaks. They should be here momentarily. Meanwhile, I want to make it clear to both of you that we don’t want to breathe a word about Enerco’s precarious position to these people. I want them to love Enerco, and to want its stock so badly they can taste it. Is that understood?”
Both Wheeler and Speers nodded, aware that their entire financial futures were tied to the value of Enerco’s stock.
A muted warble from Layton’s desk telephone console caught everyone’s attention. Layton pressed one of the console’s buttons. “Yes, June,” he said.
“Mister Tavaris and Mister Deaks are here.”
“Send them in.”
Tavaris and Deeks entered and were warmly greeted by all three Enerco executives. Layton invited his guests to be seated on the white leather upholstered couch close to his desk, then ordered coffee. He forced a smile. “Welcome to Houston, gentlemen. I trust you had a pleasant flight.”
“Wonderful. You’re most kind,” Deaks said.
“Then let’s do some business,” Layton said, anxious to proceed. He focused on Tavaris. “Peter, tell me how you’re coming along with the Iacardi shareholders.”
“Better than expected. I mean we’re getting responses far faster than we anticipated. So far, we’re received written or verbal responses from the estates controlling ninety-two percent of the shares outstanding. All of them have indicated that they will support and accept the proposed Enerco acquisition. We expect similar responses from the the remaining shareholders, except Kerri King of course.”
“That’s very good news. What about Kerri King. Do you detect any change in her position?”
Deaks shook his head. “That’s not going to happen easily, Ken. She’s adamant about helping the non shareholders. You should know that recently, she made a loan to Iacardi of one hundred million dollars of her own money.”
Layton frowned. “Wow! The more I learn about this woman, the more she surprises me. You have any idea where she got the hundred million?”
“No, but I suspect it came from the estate of Louis Visconti, the man she killed in Monaco in nineteen ninety. We know he was very wealthy, and we know she was living with him at the time.”
“I would appreciate if you would do some more research on that, Walter. It might be very useful. Your statement that she still wants us to behave like a charitable organization surprises me not. In spite of her intransigence, however, we think it’s time to proceed with a formal written offer. In that connection, I’ve asked our investment banker to prepare the offer, substantially in accordance with the terms and conditions I outlined to you on September twenty-second. I reiterate that we are not prepared to pay the extra billion it would take to satisfy Kerri King.”
Both Deaks and Tavaris smiled, delighted with Layton’s announcement, yet worried that a successful purchase was still far from a faits accompli. Kerri King could still submerge it. “What do you plan to do about her?” Deaks asked.
Layton squinted, the contraction of his facial muscles revealing an evil expression. “We’ve done some research on her financial activities. We think we have enough information to encourage her to change her mind about our offer.”
“You care to share that information with us?” Tavaris asked.
“I’ll give you the short version now. The long one later...She has four hundred and eighty-seven million in a Swiss bank,” Layton said, deliberately excluding any mention of the source of his information.
“That’s what I was telling you in September,” Tavaris declared.
Layton ignored Tavaris and continued. “She’s planning to distribute all of it to the estates of the Iacardi employees who died on September eleventh.”
“How could you possibly know that?”
Layton winked. “Let’s just say that you and Lorenzo Mengalli did a good job.”
“Where in God’s green earth did she get that kind of money?”
“Like you said earlier, that might be the three billion dollar question. Unfortunately, we still don’t have the information we need to prove it’s hot money, but the fact that she’s been hiding it in a Swiss bank for ten years is strongly suggestive. I really wanted to delay the offer until we had something iron clad against her, but it looks like getting it might be too time consuming. Right or wrong, we’re going to move on the offer now. If Kerri King gives us trouble, at least we’ve got enough information to scare the shit out of her.”
Deaks was impressed, but still skeptical. “It might scare her, but it still might not be enough to change her mind with respect to the offer,” he warned.
“That’s where we’re going to need your help, Walter. If she refuses to accept our offer, I’m also going to ask both of you to organize the shareholders to launch a class action suit against her. It shouldn’t be difficult. By refusing the offer, she’s effectively denying them a ticket to ride into the sunset, happily ever after. Don’t worry about the costs. We’ll look after all of it... I’m also going to ask Jeffery to bluff her by threatening to disclose our information to the Feds.” He glared at Deaks, then at Tavaris, his grey eyes portraying intense determination. “I want Iacardi, gentlemen, and I intend to get it.”