Why Should White Guys Have All the Fun? (36 page)

The article continued, “Though Lewis may want to be thought of as just another tycoon, he is also an inspirational symbol—the first black businessman to gain full access to the giant pools of capital on Wall Street.”

Feeling somewhat rested after a few days in the South of France, the next major thing on Lewis’s agenda was discussions with a Canadian buyout group, Onex, that was interested in Beatrice’s Canada division.

I came back to the United States and tried to tie the deal down with Onex. I sort of delegated that to Cleve Christophe. John Sheehy introduced Onex to us. Our first major screw-up was that I had bid the deal after asking Cleve Christophe what kind of cash did the Canadian business have. He said $10 million. It turned out they had $40 million. So I had to get involved personally with the Onex people and we split the $30-million difference on the cash. And we kept 20 percent. But it was my first realization that my team was not as disciplined as it should have been. And it was also the beginning, I think, of sort of a mini-falling out with Christophe. At that point,
I relegated him to purely administrative type stuff, which he did admirably. But in terms of all the major policy decisions, he was out at that point, because as far as I was concerned, he had cost me $15 million
.

Christophe, who kept several spiral ring notebooks of notes from his days with Reginald Lewis and TLC Beatrice, doesn’t dispute that he was associated with a major miscalculation on the Canadian assets. He claims the miscalculation occurred because Lewis was rushing to do the Canadian transaction quickly without first conducting adequate due diligence.

Whatever transpired, it’s doubtful that anyone other than a very, very close friend of Lewis’s could have remained in his employ after being linked to a transaction that lost Reginald Lewis millions of dollars.

“Reg had always introduced me as his partner,” Christophe recalls. “That changed after about three months.” There could only be one boss in an organization headed by Reginald Lewis, as Christophe was to painfully discover. That reality led to the spectacular disintegration of a friendship that had been nurtured and fortified over 17 years.

Because of the Onex deal, the once tight relationship between Lewis and Christophe was coming apart at the seams, but Lewis had far more pressing matters to deal with than the disintegration of an old friendship.

He was moving rapidly to get the Beatrice deal closed. A contract to sell the Canadian assets for $235 million was put together in August 1987, the same month Lewis won the bid for Beatrice. A contract to sell the company’s operating unit in Australia for $105 million was also put together that month. Thus far, Lewis’s strategy of selling assets to help decrease the actual amount of money he would need to buy Beatrice appeared to be working brilliantly.

Lewis would be called on to jet around the world to conduct due diligence at various Beatrice operating units. The constant grind of flights and international negotiating sessions was made somewhat easier by the fact that Lewis temporarily had Beatrice’s corporate jet at his disposal. But it was still an incredible physical grind that wore down his travel companions and, to a lesser degree, Lewis too.

But first came the task of finding a new quarterback to take care of the nuts and bolts of the complicated transaction, following the unceremonious benching of Christophe.

       
International Headaches and Domestic Roadblocks

In order to come up with the financing for Lewis to purchase Beatrice, Drexel, Burnham, Lambert had to create a private placement memorandum that would be given to potential investors. The aim of the memorandum, which had to be finished by the end of August 1987, was to sell $340 million in preferred stock as well as debt notes.

The private placement was about three weeks late getting to Drexel, a fact that was driving Lewis up a wall. Did he have to manage every phase of this deal to make sure that things got done right? He was a perfectionist who wanted things done correctly, but at times it seemed he was the only one who felt that way. So it was a supremely irritated Lewis who read the riot act to his staff at 99 Wall Street. The memorandum was due three weeks before and it was critical to getting the Beatrice deal done! Whatever the problem was, Lewis wanted them to fix it and fix it
fast
. Lewis laid down an edict that the memorandum had to be finished in 24 hours.

Satisfied that he’d addressed the issue and assuming it was in good hands, Lewis was out-of-pocket the next two days. But decisions still had to be made on how the book should be put together and what information about Beatrice and TLC should be included. Christophe figured that since he was Lewis’s partner, he’d make the call. “I had
been up for 48 hours trying to get this book out, so Drexel could get started, in effect,” Christophe says. “Reg disappeared on me for those 48 hours and there were some critical decisions that had to be made, and I made them.”

After two days without sleep, Christophe went to his home in Connecticut and went directly to bed at 2 o’clock in the morning. At 4 o’clock, the phone beside his bed was ringing.

“Who in the hell do you think you are?” Lewis’s voice boomed across the telephone line.

“You know goddamn well who I am,” Christophe answered sleepily.

“Where do you get off making these decisions?” Lewis demanded. “Who gave you the authority to make these decisions? Who in the hell do you think you are?”

“Because they had to be made and you were no place around,” Christophe shot back in a loud, abrupt voice. There was a momentary silence on the other end.

“Who in the hell are you yelling at?” Lewis screamed.

“The same crazy son-of-a-bitch that’s yelling at me,” Christophe screamed back.

Then and there, Lewis decided to appoint a new quarterback to direct the complicated Beatrice transaction.

Four hours after his heated Sunday morning conversation, Lewis placed a phone call to Maine, to the lawyer who had helped shepherd through the McCall deal for Lewis—Tom Lamia. It was time to take Lamia, who was in Maine on vacation, out of deep freeze.

“I’m having some problems with my team and I want you to do what you did before, which is be my quarterback,” Lewis said. Lamia shelved the rest of his vacation and left Maine that night for New York. The following morning Lewis came into 99 Wall Street around 7:30
A.M
. He ignored Christophe, who was already at work, went into his office and slammed the door. Lamia arrived about an hour later and the two of them could be seen engrossed in animated conversation.

Sometime later, Lewis’s secretary, Deidra Wilson, called Christophe, Kevin Wright, and Charles Clarkson into Lewis’s office for a meeting. Lamia was already present.

“We’ve really come a long way,” Lewis said once everyone was present. As was his custom, Lewis was wearing his suit jacket and his shirt was buttoned all the way to the top. Rather than loosen his tie,
Lewis preferred to leave it tightly knotted. His sleeves were down, too, with his gold cufflinks in place and fastened. “This is tough duty, this is emotionally demanding duty,” Lewis continued, speaking deliberately. “I’ve had some time this weekend to kind of reflect on how we’re proceeding. I’m quite frankly getting a little concerned that some of us may be working too hard. And for that reason, I think maybe we need to make a few changes.”

Lewis paused momentarily to let his words sink in.

“One
of
the changes that I’m going to make is, Cleve, I want you to step back from some of the things that you’re handling. I really think that you are getting overextended. And I’m going to ask Tom to pick up responsibility for putting together the bank syndicate.” The meeting was handled in vintage Reginald Lewis style. He had an objective to pursue and intended to keep his eye on the ball, no matter what. He tried to patch things over with Christophe later, but not until the Beatrice transaction had closed. Lewis had an amazing ability to filter out distractions and maintain a clear picture of what he wanted to accomplish, keeping his priorities well-defined.

Christophe made up his mind that after the Beatrice transaction was closed, he was history. “We were like the atom,” Christophe says of himself and Lewis. “When we came apart, we came apart.”

With sales contracts agreed upon for Beatrice’s units in Canada and Australia, and the work on the Drexel private placement memorandum now finished, the Beatrice deal was getting back on track. There remained a problem in Spain with the Ballve family, which co-owned a Beatrice meat packing facility there. Pedro Ballve was essentially claiming that Lewis’s purchase of Beatrice violated an agreement that Ballve had signed with the company. The upshot of Ballve’s argument was that he should be able to buy 100 percent of the company, and at a price lower than the $90 million Lewis was demanding.

The next thing was there was an extensive negotiation with Pedro Ballve and he ended up paying my price of $90 million. And there was an extensive negotiation with Cadbury Schweppes out of
Australia, where they ended up paying us $105 million. We really were right on target. All these were done by September of 1987, because we were hoping to close the deal in October.

Before he was able to close the deal with Ballve, Lewis had to have a face-to-face meeting with him. Since France and Italy were also problem spots, Lewis went to Spain, France, Italy, and Brussels over the course of a whirlwind, four-day trip. Lewis flew to Europe in one of Beatrice’s jets, the first time he’d ever been in a corporate aircraft. He was accompanied by Bill Mowry, the president of Beatrice; Tom Lamia; and Butch Meily. The trip over was a pleasant one and their plane landed in Paris at 2 o’clock in the morning.

In addition to his formidable intellect and determination, one of the things that made Lewis so successful was incredible stamina. Meily and Lamia were dog tired, but Lewis insisted on holding a meeting in the lobby of the Intercontinental Hotel in Paris as soon as they arrived.

From Paris they flew directly to Barcelona, where they were supposed to meet with Pedro Ballve in a fancy Spanish restaurant. The Beatrice executive for southern Europe greeted them at Barcelona’s airport. They piled into his car for the trip into the city, but got lost because the manager couldn’t find the restaurant. Lewis was disgusted by the sorry display—the manager had plenty of time to find out where the restaurant was located, rather than waste Lewis’s time looking for it now. Lewis prided himself on his thorough preparation. If this executive couldn’t even find a restaurant on his home turf, how could Lewis trust him to look out for the best interests of Beatrice in southern Europe? Lewis made a mental note that afternoon to fire the man after the Beatrice acquisition closed.

The initial talk with Ballve was cordial, but inconclusive. Butch Meily was so fatigued that he kept drifting to sleep in the middle of the dinner. Several times he awoke to find the other dinner participants looking at him with bemused expressions, including Lewis.

Ballve later flew to New York in September and met with Lewis at the Harvard Club, where they arrived at an agreement for Beatrice to sell its Spanish meat packing facility to Ballve for $90 million. Lewis had simply used the calendar as an ally to wear down Ballve: As the deadline to close the deal drew nearer and nearer, it became obvious to Ballve that Lewis might sell the company to somebody else. Ballve’s
father had founded Campofrio and it was his dream to buy it back for the family.

After Lewis left Barcelona, the next stop on his itinerary was Verona, Italy, for a visit with the most nettlesome shareholder of all, Teofilo Sanson, who owned 30 percent of a Beatrice ice cream company in Italy, Gelati Sanson. Sanson took the extraordinary step of filing a lawsuit against Beatrice in an Italian court, which froze the shares in Gelati Sanson owned by Beatrice until the matter could be resolved.

“I never saw Reg treated so poorly as in Verona,” Lamia says. “Signor Sanson was and is a character.” Sanson is a populist who is a tough businessman and who had built his business from scratch. Two young, elegant women, who happened to be Sanson’s daughters, acted as interpreters.

Lewis’s goal was simply to arrive at a mutually beneficial agreement with Sanson. What transpired was a very tense, uncomfortable meeting for all involved.

Throughout most of the dinner, Sanson gave Lewis the cold shoulder and had little to say. When he did utter something, his comments were usually brusque to the point of being rude. Sanson’s daughters appeared quite uncomfortable at having to translate the remarks of their crusty, irascible father into English.

The gist of Sanson’s position was that Lewis was a leveraged buyout artist who was going to pledge all of Beatrice’s assets to get the financing to buy the company. Therefore, the company would no longer enjoy the financial strength it had, meaning Sanson wouldn’t have the same capital expenditure budget he’d enjoyed in the past.

Naturally Lewis didn’t take kindly to Sanson’s behavior, but he remained calm and charming and kept his eye firmly fixed on the overall objective. He was out to close a deal for all of Beatrice’s international operations, not get into a test of wills with the minority owner of one operating unit. He felt he could afford to take the high road and let Sanson be the one who came off as churlish and obstreperous.

Lewis requested a tour of Beatrice’s plant in Verona, a request Sanson rejected out of hand. He would not have Lewis and his people trooping through the plant, needlessly scaring workers into thinking a management change was imminent. Lewis found himself in the position of not being able to see an operating unit of a company he was in the process of buying. He had to do an end run around Sanson’s intransigence.