Barbarians at the Gate (97 page)

* Later, Tom Hill and others would claim the special committee never emphasized the need to leave stock in shareholders’ hands. The evidence suggests otherwise. According to several people, Lazard and Dillon had done exactly that in their meeting with Hill on Monday. Chaz Phillips of Salomon, who attended the session, recalled the bankers’ admonition, but admits his group was overconfident and refused to listen. “We basically ignored it,” he says.

* “If I thought they were, I would take out my knives and kill them personally,” Goldstone said later. “It would be one of the stupidest moves in all of Wall Street history.”

* When Hill learned of the Waters call months later, the color drained from his face. “You’re kidding; I can’t believe that,” Hill said. “If I’d ever known Kravis was trying to get ahold of Ross, that would have totally changed our strategy. It would have had a lot of significance.” Alone among Johnson’s strategists, Peter Cohen insists he never doubted Kravis would contest their bid.

* Nor could he reach Andy Sage, who stopped returning Beck’s calls after Johnson began looking at the possibility of an LBO. “I couldn’t tell the truth,” said Sage, “and I didn’t want to tell him a lie.”

* Kravis said of Wasserstein: “We didn’t want the guy anywhere near us. [I feared] the same problem we had from the beginning of the deal, when Beck and Wasserstein got on the phone and started leaking.”

* Cohen recalls having taken a less combative stance; this version is largely Beattie’s recollection.

* Shepard denies the magazine was influenced by company pressure, saying any changes in the story were the result of normal editing.

* Johnson denies the trip was made just for the dog.

* In early 1987 Drexel Burnham and Michael Milken came under federal investigation for violating securities laws as part of the Ivan Boesky insider-trading probe. Drexel ultimately settled sweeping charges of wrongdoing with prosecutors in December 1988; Milken was indicted the following spring.

* Only later would Johnson and Wilson learn, to their embarrassment, that one of the investment bankers involved in the negotiations was funneling inside information to the arbitrager Ivan Boesky, who fueled the run-up by loading up on Nabisco stock.

* Dr. O. C. Adams did not agree to speak to the authors about Ross Johnson, his client’s chief executive, until Johnson had consented.

* Both Michigan and Massachusetts ultimately declined to back Kravis in the RJR Nabisco deal, citing RJR’s investments in South Africa.

* Johnson denies asking Hugel about severance benefits.

* Wilson denies being the source of the leak.

* Macomber denies nominating himself.

* Forstmann denies attempting to mislead Kravis by heading for the wrong elevator.

* The Finn–Rosen link came up again the following week, when First Boston requested Rosen’s services on a separate deal. According to Finn and Rosen, Atkins vetoed Rosen’s hiring to avoid any appearance of impropriety.

* Forstmann had been a sometime escort of Carolyne Roehm’s before her marriage to Kravis. A friend of her first husband’s, he had been an usher at Roehm’s first wedding. Roehm insists she and Forstmann were “just friends.”

* Wasserstein denies this, saying he saw no reason to be part of “the technical team” sent to Skadden Arps that morning.

* Wasserstein says he doesn’t recall this conversation, but says it is “perfectly plausible…. We basically deferred to Morgan Stanley on the fee discussion. You’re better off talking to Eric.” Gleacher says he doesn’t recall the conversation.

* Jerry Seslowe wasn’t the first to bring RJR Nabisco to Jay Pritzker’s attention. Through a number of intermediaries, Smith Bagley had succeeded in talking with one of the investor’s aides. Nothing came of it.

* Kravis denies having told Cohen and Hill he had to be involved in a deal for RJR Nabisco. Newspapers reported that Kravis vowed to protect his “franchise,” a word Kravis denied having used.

* During the early days of the deal, Hamish Maxwell had at least one conversation with Ross Johnson about a Philip Morris–RJR Nabisco combination. Johnson would later say he never expected Maxwell to generate any real enthusiasm for an RJR bid. Any merger agreement would almost certainly have been blocked on antitrust grounds.

* Goldberg joined First Boston in 1989.

* Cohen later froze Peter Solomon out of the RJR Nabisco deal. He made the decision, Cohen later said, after Andy Sage demanded it. Incensed, Solomon fled the city for a New York Yankees fantasy baseball camp. Sage denies making any such request.

* The big restricted-stock grants actually engendered almost as much ill will in the ranks of tobacco’s management as Nabisco’s. While the top executives had gotten generous restricted-stock grants, many other managers had been browbeaten in August into surrendering their stock options. The company had offered to buy in options for $53.50 a share; the decision was supposed to be up to each employee. But Ed Horrigan spread word that everybody had
better
tender their options. Those who did lost big when the stock leapt weeks later. He wasn’t out to cheat anyone, Horrigan later maintained, noting he had tendered options on 59,000 shares himself. On the other hand, he was receiving 50,000 shares of restricted stock at the same time.

* Johnson doesn’t remember this exchange.

* In September 1989, Bilzerian was convicted of numerous securities law violations and sentenced to four years in prison. Shearson wasn’t accused of any wrongdoing.

* Total value calculated by
Business Week.

* They spoke to Smith Bagley, but the effort went nowhere.

* n addition to Johnson and Horrigan, the group included Sage, Henderson, Ed Robinson, John Martin, and Vice Chairman Jim Welch.

* Lou Roberts died in 1977.