Part 3 (1/2)

”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 s.e.xual hara.s.sment 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 s.e.xual hara.s.sment 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 d.a.m.ned 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 antic.i.p.ated 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 And U.S. Petroleum will take over that Citibank loan. You'll be free and clear of that.” 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 more than enough,” Harris retorted. 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 a.s.set.”

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.” 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.”