neighbor, ” Porter said, visibly pleased with himself. “I told them I was in real estate, and had handled a contract or two, and that he asked me to sit in.”
“Craig,” Helene Craig said, “I’ve asked you again and again not to call him that.”
“Put him on a diet, Helene,” Lowell replied, then asked: “What did they propose?”
“What they’ve done is set up a Bahamas corporation,” Porter explained, “Intercontinental Air Holding, Ltd., capitalized at three million, already paid in. They used not quite two million to purchase all the assets of Intercontinental Air, a Delaware Corporation, based at Miami. The assets consist primarily of a Boeing 707 and two Douglas DC-7s, all configured for cargo, and a lease on a hangar with office space. Getting to the bottom line, the people who owned Intercontinental Air walked away with about half a million, since the debt on the aircraft was about 1.5 million. ”
“This is going over my head,” Mrs. Helene Craig said.
“All you have to do, my darling,” Porter said, “is sit there and be beautiful and make sure the champagne flows.”
“Go to hell, Porter,” she said.
“They have also set up a Delaware corporation,” Porter went on, “Intercontinental Air Cargo, Inc., which is a wholly owned subsidiary of Intercontinental Air, Ltd., and at the moment has zero assets.”
“What shape is the 707 in?” Lowell asked.
“So-so. The engines are half gone,” Jean-Philippe said. “And it’s getting pretty close to its annual. It was one of the airplanes I looked at when I went out there . . . before Leonard found me. The DC-7s are pretty well down the road to rebuild.”
“Leonard didn’t know that,” Porter said. “I mean he didn’t know there was as much useful life left in the 707 as Jean-Philippe did.”
“What did they propose?” Lowell asked.
“What they proposed was thirty-three percent to Jean-Philippe for his services as president,” Porter said. “What we agreed on was thirty-five percent to Jean-Philippe, who will be in any case the chief operating officer, subject to the orders of the president, who will be elected by the stockholders.”
“You’re losing me here,” Lowell said. “They’ll have sixty-five percent of the votes.”
“Jean-Philippe has the option of purchasing additional stock, when and if the sale of Air Simba goes through, before a sixty-day period has elapsed. They were happy to grant that, inasmuch as they think Mobutu has Jean-Philippe over a barrel, and there won’t be any sale within sixty days, even at distress prices,” Porter said.
“And?”
“Just as soon as the contracts are signed—and they can’t back out; we have a memorandum of agreement; they wouldn’t want us to take that to federal court for noncompliance—Jean-Philippe hands them a check for a million . . . maybe, just to be sure, a million point five. That gives him enough votes to elect himself president. ”
“Where does he get the million point five? From us?” Lowell asked.
“Yes, of course. We loan him a million point five against Air Simba. And then we wait Mobutu out. As long as Mobutu eventually comes through with a million five, and Air Simba’s worth, bottom figure, at least twice that, we can wash our hands. For an investment of a million five, plus his services, Jean-Philippe gets control of Intercontinental Air, Ltd., with assets of over two million. ”
“They’re going to want to buy aircraft for the new company,” Lowell said. “What about that?”
“That can be handled in several ways,” Porter said. “As president, Jean-Philippe will have the authority to either borrow money to purchase aircraft, to lease aircraft, or to offer additional stock to raise the necessary capital. What I think will happen is that if President Portet is unwilling to offer additional stock, and the stockholders go along with him—”
“And he will have the votes to say ‘no way’, won’t he?” Lowell said, smiling. “Porter, I take back most of the unkind things I’ve been saying about you over the years.”
“—Mr. Leonard’s associates will have the choice between leasing aircraft, which I don’t think they’ll want to do, because people who lease aircraft want to know where they’ll be flown and why,” Porter went on, “or finding someone from whom to borrow the money, who won’t ask questions.” He paused and smiled. “I have always wanted to borrow money from my government at a favorable rate.”
“Give Chubby both ears and the tail,” Lowell said.
“The trick is to give Jean-Philippe at least fifty-one percent of the stock immediately after we sign the contracts,” Porter said.