CHAPTER 24

Sharp at eight the following morning, Mike met Tom Fletcher at the Sunrise Restaurant, an aging but clean Greek establishment located a block and a half from Fletcher’s office. It was time to take his audacious plan to a new level. With Paul Conrad’s letter of intent in his briefcase, he now had access to money, which was the prime mover and most crucial component of his plan. If he was unable to convince Fletcher to participate, he was prepared to go it alone.

“What’s new?” Fletcher asked as Mike took a seat on the opposite side of the table.

“Everything,” Mike said, smirking.

A waitress delivered two clean mugs and a canister of freshly brewed coffee to the table, and the men gave her their breakfast orders.

“I had dinner in New York last night. My host was Paul Conrad, the president of Golden National Oil.”

“You’re kidding!” Fletcher said, genuinely impressed. “How the hell did you do that?”

“I phoned him and asked for an appointment. You seem surprised. You know him?”

“I don’t know him personally, but I know a hell of a lot about him.”

“Tell me what you know.”

“The guy’s a living legend—one of the most incredible rags to riches corporate stories I’ve ever heard. He wanted to drill a wildcat well in Alberta, but couldn’t find partners. He was the only human being who believed there was oil in the Red Rocks area, so he mortgaged everything he owned and did it alone. The rest is history. That well hit it big and he kept on going. They said he had the Midas touch.”

Mike suddenly realized why Conrad had questioned Mike’s decision not to go it alone. “Did he ever find a partner?” he asked.

“I guess you could say he did. He owned a hundred percent of the common stock when he incorporated Golden National. I don’t think he owns any more than ten percent now… but tell me what he had to say.”

“He told me all the reasons they built a new refinery, but one of them wasn’t downstream market timing. They couldn’t have picked a worse time to be looking for wholesale gasoline distribution. They don’t have any retail distribution of their own, so they’re desperate for large volume gasoline supply contracts.” Mike removed Conrad’s letter of intent from his briefcase and handed it to Fletcher. “He told me they’re looking for contracts like this one.”

Fletcher shook his head from side to side as he stared at the letter in disbelief. “This is incredible! Either Conrad’s really desperate or you’re one super negotiator.”

“It’s a sweetheart deal for you and me, but it’s at least as important to Golden National.”

“Why?”

“Put yourself in their position. You own oil wells and you know you can sell every barrel of oil you produce to some country or refiner for a dollar. But if you owned your own refinery, you could sell those same barrels to your refining division for three dollars. Then your refinery can separate those barrels into petroleum products and sell them for four dollars a barrel.”

“I think we’re wasting our time,” Fletcher said, shaking his head again. “Maybe you and I should go find some crude oil.”

“You’ll cry when I tell you what else he told me.”

“Go ahead. Make me cry.”

“Golden National doesn’t sell its crude production directly to its refinery. Every barrel is sold to its wholly owned Bermuda subsidiary. The Bermuda company never physically takes possession of the oil. It just temporarily owns it on paper, and then sells it to Golden National’s refining division. The profit on the sale is tax free.”

“That is a beautiful story. It doesn’t make me cry, it pisses me off. They scoop tax free millions while slobs like us beat our heads against the wall trying to make a buck that’s bare ass to the tax man.”

“And slobs like us still have to eat, right? Let’s have breakfast.”

“Do you think IFB will actually sell its shares of XG to us?”

Mike nodded. “They’ll practically give them to us.”

“I’ll believe it when I see it,” Fletcher mumbled. “How much do you think they’ll want?”

“Not much more than a buck. I’ll tell you the minute I know for sure. Probably today.”

“How much does Bell want for his half?”

“Twenty thousand. He needs it to cover his legals.”

“So you’re telling me we can pick up the whole damn company for twenty grand?”

Mike nodded. “Yup. And the meter starts running as soon as we do.”

“Sure it does. And so do we.”

Fletcher pressed his hand against his forehead.

“Listen to this,” Mike soothed. “No more than seventy-five days after we ink the deal, the float on credit terms will put at least ten million dollars of Golden National’s money in our bank, interest free. You’ll put another two million in the bank if you merge your operation with XG. If you still need convincing, XG has at least a quarter of a million dollars worth of motor oil inventory on its shelves, and it’s all paid for. And we can junk XG’s unused hardware for at least another hundred grand, if all else fails.”

Fletcher leaned forward and placed both hands face down on the table in front of him. “All right, I’m in. Where do we go from here?”

“Fairly simple,” Mike said, elated. “We’ll incorporate a holding company. We’ll each have a fifty percent interest. The holding company will buy the shares of XG from IFB and Darcy Bell—then XG will be the operating company and the supplier of bucks.”

“I’m sure you know it’s more complex than that!”

“It is,” Mike replied, fully aware that he had not mentioned exactly how Fletcher’s company would merge with XG. “I want you to know that I was prepared to do the XG deal alone when I came here today, if you and I couldn’t agree. I still am,” Mike declared, desperately trying to maintain his confidence.

“Agree on what?”

“A formula for merging your company with the holding company.”

“I assume you have one,” Fletcher said, his lips tightening. “Why don’t you lay it on me? Maybe we agree. Maybe we don’t.”

Mike took a deep breath and exhaled. “I want the holding company to own all the real estate,” he said.

Fletcher frowned. “Not my real estate.”

Mike nodded without blinking.

“Then you can forget the whole deal,” Fletcher declared. “There’s no way that you or XG could afford it.”

“Maybe XG can, Tom. It’s going to have a hell of lot of cash in the bank from Golden National.”

“But for how long? How much cash is it going to have when we dump all the dogs?”

Mike knew Fletcher was right. The first priority after acquiring XG was to get rid of all but twenty-five of its outlets. The downsizing would dramatically reduce XG’s gasoline volume and its corresponding cash float. He raised his hands in surrender. “Okay, keep your properties, but at least give the holding company a right of first refusal on them.”

Fletcher’s frown gradually gave way to a smile.

“Speak to me,” Mike prompted.

“On one condition.”

“Name it.”

“We don’t pay IFB a dime more than we pay Darcy Bell.”

Mike shook Fletcher’s hand. “We’ll give them less,” Mike promised.

March 20, 1971.

At precisely 1 p.m., Mike brazenly marched into Owen Christian’s office and lowered himself into the chair directly in front of Christian’s desk. “You still haven’t told me how much IFB wants for its shares of XG, Owen,” he said, glaring at his startled boss.

“As much as a willing buyer is prepared to pay,” Christian replied, quickly regaining his composure.

“That’s good. Your problem with XG Petroleums will be history within seven days.”

Christian was delighted. “Wonderful! Tell me more.”

“A lawyer, acting for a willing buyer, will present a bona fide offer to IFB to purchase its interest in XG.”

“May I ask who that buyer is?”

“You can ask but I can’t tell you. I can assure you, however, that when the ink on the paperwork is dry, you and IFB will be permanently relieved of the embarrassment of XG Petroleums.”

“I presume that whoever’s making the offer will be interested in having IFB supply the gasoline. Am I correct?”

“If so, you would have to make a very attractive offer,” Mike said, delighted to watch Christian squirm.

“How attractive?”

“I doubt IFB could afford it, but give it your best shot.”

Mike’s cavalier response succeeded only in raising the level of Christian’s ire. “Is that right?” he protested. “I want to know who’s making the offer and where the money’s coming from. I don’t think I have to remind you that IFB still pays your salary.”

“That’s going to change seven days from now—this is my one week’s notice of intention to resign. And I think you know it doesn’t matter where the money comes from. XG isn’t worth a dime and you’re kidding yourself if you think anyone’s going to pay you even that much.”

Christian, scrabbling for answers, suddenly realized the reason for Mike’s insubordinate attitude. “You’re involved in this thing, dammit! If I find out you are, I’ll sue you and veto the sale.”

Mike clenched his teeth. The respect and admiration he once felt for his boss had been totally replaced by contempt. “We both know you won’t do that, Owen,” he said.