Barbarians at the Gate (77 page)
Read Barbarians at the Gate Online
Authors: Bryan Burrough,John Helyar
Tuesday afternoon the Kohlberg Kravis troops began to scatter for the holidays. Roberts boarded a plane for San Francisco. Ted Ammon headed for a resort in the Dominican Republic, while Scott Stuart opted for Barbados. Raether flew to Florida, where he planned to spend Thanksgiving with his family at Lost Tree. Kravis planned to fly with Roehm and his three children to Vail at two-thirty Wednesday afternoon.
As he prepared to leave, Kravis took a call from Linda Robinson, who was phoning from a limousine en route to Connecticut. Robinson insisted she wasn’t calling about business. Having just bought a horse together, they had talked about buying a second, which had now become available.
“We’ve got to make a decision on this this week,” she said. “Other people are waiting in line to buy him.” She groaned. “Oh, this all is just terrible, isn’t it? It just goes on and on.”
“You mean RJR?”
“Yeah.”
“I don’t find it terrible at all.”
“Why not? God, it’s horrible.”
Kravis didn’t believe for a minute that Robinson was calling about horses. She wanted to know if he would bid again. For the first time, Kravis decided to lay it on thick. He wanted Linda Robinson to run back to her husband with news that he was out of the bidding.
“Nah, I don’t find it bad at all, Linda. We’re in great shape. We’re in third place. It’s a terrific position to be in.” Kravis hoped the obvious sarcasm would have its intended effect.
“I’m just tired,” he went on, turning on the sincerity. “I’m leaving this
afternoon. I’m taking my children and Carolyne to Vail to spend Thanksgiving. I can’t wait. I’ve told all my people they ought not to think about this deal, not even think about it, while they’re away. I really don’t know what we’re going to do about next week. We probably won’t even bid at all.”
Months later Linda Robinson insisted she didn’t believe for a minute that Kravis was bowing out. “I thought Henry was trying to snow me. He was trying too hard.”
Wednesday afternoon John Martin’s assistant, Bill Liss, took a troubling call from one of RJR Nabisco’s media buyers. The company was one of
Time
magazine’s largest advertisers, and the buyer said he had just heard from a contact at
Time
that the magazine planned a cover story titled “Greed on Wall Street,” featuring none other than F. Ross Johnson on the cover. It was a courtesy of
Time’
s advertising department to alert a major advertiser to a negative piece so that it could pull its ads, if it chose.
Liss called John Martin, who relayed the news to Linda Robinson. All three were worried: A hard-hitting
Time
cover was all they needed with bids due in less than a week. It had to be stopped, and Robinson and Martin agreed their only leverage was Johnson. Every major news organization wanted an interview with him, and so far all had been declined. The two instructed Liss to use the prospect of an exclusive Johnson interview as a bargaining chip with
Time.
Maybe, just maybe, they could keep Johnson off the cover.
Liss was in a difficult position. Since the formation of the special committee, he had become its official spokesman with media around the world. But Liss was a Johnson loyalist, and when Martin gave him orders, he went fervently to bat for Johnson with
Time.
At Robinson and Martin’s direction, Liss called
Time’
s Atlanta bureau chief, Joe Kane, Wednesday night offering an exclusive interview with Johnson if the magazine would take him off its cover. Kane demurred, saying it wasn’t his decision. Desperate, Liss offered to make Johnson available if
Time
would only put Johnson in a “gallery” of pictures. At least Johnson wouldn’t stand out, they figured. Kane begged off, suggesting Liss call his bosses in New York.
In Florida, Johnson wasn’t at all sure he wanted to give his first interview. Looking for advice, Johnson called his pal Jack Meyers, the former
Time
publisher who had been at the Castle Pines shindig that August. “Jack,” he asked, “do you think this is something that is, you know, worthwhile?”
Meyers found out that the story’s writer was a veteran
Time
correspondent named Frederick Ungeheuer, and he suggested Johnson go ahead with the interview. “Ross, I guess I don’t see any downside here,” Meyers said. Johnson was already taking a beating. How could it be worse? Johnson agreed. “You know me,” Johnson said. “I’ll give ’em the straight story.”
Ungeheuer was flown to Jupiter for an interview Friday morning. Martin and Linda Robinson coached Johnson at length beforehand: no flip remarks, stress shareholder value, expect tough questions on the management agreement. The night before, Robinson had relayed news of the interview to Peter Cohen, who was immediately alarmed. Cohen had returned from Brussels—he had slept all the way to Europe—and had spent Thanksgiving puttering in his garden. Like Steve Goldstone, he was worried what the unpredictable Johnson might say. But Robinson assured him Johnson had been well coached.
The next morning Johnson met Ungeheuer at the Jupiter Hilton, and the
Time
correspondent found RJR Nabisco’s president his usual, breezy self. Afterward Ungeheuer dashed off to write his story—the magazine was due on newsstands the following Monday—and Linda Robinson called to ask Johnson how it went.
“Goddamn if I know,” he said. “Journalists are journalists. They’ll take out of it what they want to take out of it.”
After spending the holiday with his family, Maher was back in his office at First Boston Friday morning. Most of his teams had stayed through Thanksgiving, their feasts consisting of pressed-turkey dinners in Styrofoam containers from a nearby delicatessen. The place looked like a fraternity house on Sunday morning. Pizza boxes and nearly empty cartons of Chinese food were strewn about. A dozen pencils jutted crazily from the ceiling, no doubt a product of some late-night brainstorming session.
The Nabisco team was making headway, thanks to the appearance three days earlier of John Greeniaus. Greeniaus, after guiding Kravis through the company, was now blazing the same trails for First Boston.
Kim Fennebresque had become the Nabisco chief’s shadow. Fennebresque thought so much of Greeniaus he suggested hiring him to run the company if they won. Greeniaus demurred; they could cross that bridge later.
Tylee Wilson also joined the ragtag First Boston team. He and Smith Bagley had met with Fennebresque Tuesday morning. Bagley was mulling an offer to become an investor in the group (First Boston thought he might lend some name value), while Wilson was mulling an offer to be named CEO-in-waiting. Bagley declined; Wilson enlisted.
He attacked the mounds of RJR documents that had been delivered to First Boston. He interpreted numbers, cautioned on pitfalls, searched for an edge. Wilson was delighted to finally join the battle, although he had deep doubts about First Boston’s chances. Fennebresque was delighted to get Tylee Wilson’s credibility, although he had deep doubts about the man. “Wilson basically wanted to ride back into Winston-Salem in a blaze of glory,” Fennebresque would later say. “What he wanted from us was a cure for retired CEO-itis.”
Tylee Wilson did have his limitations. When it came to lobbying directors, he could only turn to two remaining friends on the board, John Medlin and John Clendenin. “Could you get word to Hugel that these people are for real?” Wilson asked. “They’ve got an interesting concept. I think it’s remote that it will work, but it’s a helluva lot more than is currently on the table.” When First Boston was cleared to interview some tobacco executives, they asked Wilson to come along. “No way,” he said. “If I walk through that door those people are going to clam right up. Do you think they could go back to Horrigan and say they’d told Tylee Wilson anything?”
Despite some progress, Maher was deeply worried. None of their preparation mattered if Greg Malcolm’s bank team couldn’t obtain the funding for Finn’s monetization proposal, and Malcolm was clearly having trouble. So far every major bank had thumbed its nose at funding Finn’s brainchild. With three major bidding groups, the banks were already spread pretty thin, and it was Thanksgiving, to boot. Citibank had the gall to demand $5 million just to look at their plans. Things didn’t look good, not good at all.
Maher retreated to his office to think. Maybe this was too much to pull off. Some deals, he knew, became watersheds in a Wall Street firm’s life. He thought back on the takeovers that had advanced Wasserstein and
Perella’s careers, half-forgotten takeovers such as Carborundum and Pullman and Conoco. Getting those done had made First Boston what it was today, or at least what it was before everyone left. RJR Nabisco, he had hoped, would bring back that old glory, but now those hopes were fading fast.
Maybe we ought to fold the tent,
Maher thought.
Cut your losses.
The possibility of giving up made him wince; humiliating wasn’t a strong enough word for what that would feel like. All day Maher silently fought his demons. Then, Friday afternoon, came a glimmer of hope.
Greg Malcolm called, sounding excited. Chase Manhattan had agreed to look at the monetization proposal, Malcolm said, “and from the tone of the guy’s voice, we may really have a chance.”
Maher crossed his fingers.
Friday afternoon Johnson squeezed in a round of golf and afterward suggested to Laurie that they invite John Greeniaus and his wife over for dinner. The Greeniauses were spending Thanksgiving at The Breakers in Palm Beach. Johnson sensed his protégé’s concern about Nabisco’s future and wanted to assure him that he would be taken care of. “It’s been tough for the kid,” Johnson told Laurie.
Greeniaus, who continued to talk daily with Fennebresque while in Florida, arrived at Johnson’s condo at seven-thirty. He was petrified. The two men hadn’t talked at any length for two weeks, and Greeniaus dreaded Johnson’s questioning what he had been up to.
Once inside the condo, with its views of the Atlantic in front and the lush greenery of the Intracoastal Waterway out back, Greeniaus found Johnson his normal, bubbly self. He’d just been interviewed by
Time,
Johnson said, and it looked like he was going to make the cover. The cover! He was excited. Not everyone made the cover, you know. “I’m not as bad as Khomeini,” Johnson joked, “but he made it.”
Johnson, as usual, monopolized the conversation. Afterward he sat Greeniaus down and talked to him about the incredible opportunities he faced now that Nabisco was going to be sold.
