The Collectibles (16 page)

J
oe found Preston slumped in a chair in the corner of a small conference room, with his hands on his knees. Casey, two chairs down, was reading the sports section of
The Charlotte Observer.

“This is a disaster,” Preston said, rising. “I knew this would be bad, but I didn't know they'd blow us out of the water. They're going to shut us down, and that one guy, Cutter, that son of a bitch wants to see us both in jail. He's not going to let up. It's pretty clear to me that Cutter and Ritter are really tight, and those two lawyers are obviously running the show.” Preston paced in circles. “The president is going to do whatever his lawyers tell him to do. That's obvious. He hasn't said a word.”

With tears in his eyes, Preston collapsed in his seat. “I'm fucked,” he said. “So are you, Casey.”

“I'm not fucked,” Casey said. “I'm actually feeling relieved. We're finally dealing with all this, not in the state of . . . suspension we've been in. Something's going to happen. I will say that I'm disappointed in the food.” Then Casey looked up at Preston and with an exaggerated scowl, said, “They brought us some tiny sandwiches and tea. Can you believe it? A big bank like this, and we get tiny sandwiches and drink tea from tiny cups.”

“What the hell is the matter with you, Casey? We're going down the chute, and all you can think about is food.”

“Preston, save the lectures and settle the hell down. I'm not as dumb as you think. I talk about food as a distraction. Well, I do like it. But it's like sports. You're the only guy I know I can't talk sports with. I know you're feeling cornered. So like I've done for too many years, I make myself the goat to try to make it easier for you. You know what? I'm not doing that anymore. Screw the food. At least talking about it. By the way, you won't want to hear this but, I think you're only listening to their side of the table. I'm listening to Joe on our side. Like he said, they need time to absorb all this. Hell, we do, too. You're just freaking out because you're scared. I'm scared, too, but I'm glad we've got Joe sitting here with us doing the talking and the thinking. Like I said to you on the phone, you either want to go along with Hart or you don't.”

Preston looked like he'd been kicked in the stomach but didn't say a word. After a while, Joe asked, “How about those Red Sox, Preston?” At that point, all three burst out laughing.

Finally, Casey turned to Joe. “I really appreciate what you are doing. So does Preston, believe me; he's just scared and hasn't gotten around to telling you yet. We're both with you 100 percent. Whatever way it comes out.”

“Thanks, Casey. Actually, it's going reasonably well at this stage. If anything, we're ahead of the game. But it's not over until it's over. It's a process, as I explained earlier. We have to take it a step at a time. But we've taken a few steps. This afternoon's meeting is going to be with a much smaller group. The lawyers, except for Mr. Bower, the bank's corporate counsel, are going to take a rest, as are the loan officers. They'll be on standby. This afternoon I expect we'll concentrate on next steps and execution issues. In other words, how can we structure the workout to get the bank repaid without foreclosures and litigation?”

Preston sauntered over, wrapped his arms around Joe, and hugged him. He still had tears in his eyes. “I'm a horse's ass, Joe. And I do appreciate what you're doing. And I do have confidence in you. It's me I don't have confidence in, but I'm working on it. Casey's right. I am scared . . . really scared . . . but I'm ready to keep going.”

“Preston,” Joe said in a soft, even voice, “this is a turnaround and a workout. That's what we're doing here. You'll have plenty of time for soul-searching with time left over to beat yourself up. None of that is what we need now. Once we get this ship off the rocks and heading back into deep water, we have to execute on the workout plan. You're going to be central to that. You think this is all about money. It's not. As much as the money's important, the bank needs to determine whether they can believe
you
, whether it should bank on
you
. In the past, you've given them every reason not to trust you. I need you to demonstrate to these guys that you are aware of what has gone wrong and have the capacity
and
the desire
and
the will to turn it around and make it right.

“The president of the bank and the chairman asked me privately what I thought of you. I told the bank that I believe you are committed to leading this company out of this mess and back to success, and that I believe you will keep your word. You may be having a bunch of self-doubts right now, but I believe you can do this. I need
you
to believe it now.”

Joe could see a subtle change in Preston's eyes. He knew he had hit his target. “Don't let 'em see you sweat. They, too, have a lot to think about. Don't underestimate Tom. He's a switched-on guy, and I think he wants to help us. At least, help us help him and the bank. And that's always a good sign. Let's go back in and keep working.”

The three men walked back to the conference room and to their seats. This time only five sat across the table.

“Tom will be here in a minute,” Bobby Bower said. “In the meantime, Lou Barenzo, our CFO, has some things he wants to check with Casey on a couple of the stores. Do you mind if Lou talks with Casey directly?”

“Not at all, Bobby. Come on over, Lou.”

With that, Lou picked up his full briefcase and the bound book for Charlottetown. He sat to the right of Casey, placing his books on the conference table, and his briefcase on the floor to his right. Casey swiveled his chair around. “What do you have?”

In a soft voice, Lou said, “Looking at Charlottetown, I've got a list of the last floor plan check. Mr. Hart's correct, we should have checked these a lot sooner and a lot closer. Can you help me with the SOT, particularly the cars we don't have, starting with the transits?”

“Sure, that actually is in the exhibits,” Casey said, reaching over the table to the light blue books in front of Joe. While Casey and Lou reviewed the exhibits and talked quietly, Preston was again looking out the window, and Joe excused himself to make a call to Alex Herman. Joe had arranged with Alex to fly to Charlotte the night before and hang out at the Sheraton next to the airport until he needed him.

“Hi, Alex. Joe. What are you doing?”

“Just sitting out on the balcony, smoking a cigarette, and watching the planes take off and land, Joe. It's real challenging. Thanks a lot for flying my ass to Charlotte.”

“You're welcome,” Joe said. “Are you dressed?”

“That's none of your business, Hart,” Alex quipped.

“I'd like to have you join us this afternoon. We're meeting on the thirty-ninth floor of the Olympic Towers downtown. I'm sure the people at the front desk can tell you the fastest way to get here, and they may be able to arrange a car for you, or you can take a cab. The bank has a copy of your report. I just want them to see what you look like in person and to listen to your silky bullshit.”

“That'll be a relief for them if they've been listening to you all morning,” Alex said. “I suppose you want to time my arrival?”

“Actually, I do,” Joe said, waving at Tom, who had just walked by and into the conference room. In a softer voice he said, “It's two-fifteen now. Can you walk in at, say, four?”

“You got it,” Alex said. “And I'll even get dressed.”

Joe went back into the conference room to his seat and addressed Tom. The air was lighter with the lawyers out of the room.

Tom leaned forward, as if he were taking in everybody in the room. He raised his right arm and then brought it slowly down, the fingers on his large right hand spread open and perpendicular to the table. “You all have got a big job to do and a small amount of time to do it in. Sometimes you've got to decide whether to fish or cut bait. This is one of those times. I'm asking you to work together to get this done. I know it's a little complicated. Let's put our heads together and see what we can do. Joe?”

“Thank you, Tom. Putting aside litigation, bankruptcy, and all that, we need to focus on just what Tom said, how to make this work. To give us the time and room to do that, we need to immediately have an agreement to withhold any legal action by all parties. The point is, from a legal point of view, everything stands still so we can concentrate on the workout.”

Wilson would provide a legal paper acknowledging the debt, a Confession of Judgment, which they could hold in escrow. He went on to explain additional ways in which the bank could feel confident.

“I've made arrangements with major accounting firms in each city where Wilson's stores are to come in and do a full-scale audit. I'm not talking about a compilation or a review, but an actual audit. They're expensive, but it will provide an independent, certified statement of exactly what the story is financially in each store. That will be the starting point. Assuming the bank allows the flooring to continue, the proceeds from the sales will be independently logged and reported on a daily basis with a weekly trust reconciliation. That information will not only go to Wilson, but also directly to the bank. Any time even one vehicle is out of trust, the bank will have the option to consider it a trigger event, cancel the line, and take whatever other action it deems appropriate.

“The stores obviously need money to operate. They each have to be adequately capitalized. As part of the forbearance agreement, Wilson will agree that no monies except for ordinary business expenses will be taken out of the revenues, including no loans to officers and no salaries to Preston.”

James Olsen and Barry Hazelton were each taking notes on yellow pads as fast as they could write.

“I recommend that the eight million SOT amount on Charlottetown's flooring line be transferred to a capital note to BNA. A recent appraisal of the real estate shows that it's now worth fifteen million, more than enough to cover BNA's capital loan.” Joe knew the bank feared the current real estate market collapse and would be skeptical of appraisals, believing they would be self-serving. “BNA has a first mortgage on the property for 3.8 million, and a second mortgage for five million to secure the cap loan.”

Joe went on to outline his plan for each of the dealerships. He could see from their expressions and body language that the bank's finance guys were paying attention to the details and the lawyers could care less. He watched Lou rise from his chair and raise his hand.

“I know how you feel about being interrupted, Joe, but I want to ask you a few questions at this point, because, as I see it, we're going ass over teacup further into the hole. I understand we want to try to work this out, but the bank's risk is getting greater, not less. This just doesn't compute.”

“I think it does, Lou. But you have to see all the pieces.” Joe approached the whiteboard, selected a black marker, and drew squares denoting each of the six dealerships. “In order to make this work, we have to sell certain assets. We want to make those assets as strong as we can before we sell, and we want to sell the assets that are strong enough to be sold quickly.” He pointed to the board. “Houston is warming up, real estate wise, right now, and this property is in a prime location for automobile dealerships. The value is in one of the exhibits, which Casey can find for you. Those franchises, together with the hard assets and blue sky are worth fifteen million, even without the added 6.4 million equity in the sale of the real property.

“We follow the same strategy for Charlottetown. The only other store with SOT is San Francisco, and it's only $646,000. BNA should renew the cap loan for at least another eighteen months. With proper management, San Francisco can be profitable, pay off the SOT, and make the cap loan secure. The franchises are strong.”

“Can we take a break, Tom?” Debra Seabrell asked.

“Good idea,” Tom said, and they all got up and moved to the credenza where, in addition to coffee, tea, and soft drinks, fresh fruit and cookies had been brought in.

Lou and Paul huddled with Barry and Debra in one end of the conference room, apparently deep in discussion as they sipped coffee and nibbled cookies. At the other end, Bobby was talking to Joe with Tom.

“I know this is all in the plan in one place or another, Joe,” Bobby said, “but these folks are having a lot of trouble with all the ‘what ifs.' You know, what if the Texas store does not sell or brings much less than its valuation? What if the real estate doesn't sell? What about the commission on the real estate? What about the commission on the sale of the store, for that matter? All of that eats away from the bottom line.”

“Good points,” Tom said. “What about that, Joe? What I'm worried about, even if all of that can be worked out, is how are we – I should say I – going to be able to sell the idea to our Board that this bank should lend millions more to Wilson, when the idea was to get us paid back?”

“Well, Tom, sometimes you've got to prime the well. The pluses will take care of the ‘what ifs.' If we have to, we can sell Atlanta Motors. While the valuation on that store is good, I hate to sell more stores than necessary because when this mess is all cleaned up and turned around, I'd like to have BNA continue to make money. Manhattan Mercedes is a strong store, too. A lot can be done with it, including with the real estate. In fact, Tom, I'd like to have you call Sally back.”

Their conversation was interrupted when Barry came over to them, munching on a large Krispy Kreme donut. “Mr. Hart, with all due respect, you've done all the talking and we haven't heard a word from Mr. Wilson. Honestly, I don't see how BNA can lend more money – in fact, a lot more money – which is what you're asking us to do. How do we know that Mr. Wilson isn't just going to take that money and run? And what if the property doesn't sell? Or the stores don't sell? He could end up in bankruptcy anyway. Hell, the other creditors could force Wilson into bankruptcy if we didn't. It only takes three, doesn't it, Bobby?”