Regan had felt unhappy about deposing his uncle, but that had not stopped him from doing it. Bruce Regan had the right ideas, but he was getting old, he was becoming a vacillator. The world situation was too precarious for vacillation now. New, hungry nations were getting into the take-off stages of their economies. They were crowding around the old powers like sharks, nibbling away.
Bruce Regan hadn’t understood that. In his eyes, the United States was still the world’s greatest and wealthiest country, because it was impossible for him to imagine it being any other way. Nigeria? Brazil? Israel? China? The Congo Federation? Upstarts! What did they know about business? How could they hurt the United States?
So Claude had had to topple Uncle Bruce. It was a pity, for he genuinely liked the old fellow. But Bruce had failed to see how best to meet the challenge of Asia, Africa, and Latin America. He was still Europe-oriented, twenty years after the fact. Claude could not afford to wait out his uncle’s life; Bruce was strong as a bull, and had a good twenty years left to him, at the minimum.
The proxy fight had been short and brutal. When the smoke cleared, Bruce Regan was Chairman of the Board-without any executive authority. He could still call himself Factor Regan, if he cared to, and he undeniably still owned twelve percent of the common stock of the company, which put him comfortably into the billionaire category. But power had departed from him.
Of the eleven men on the Global Factors Board of Directors, six were Claude Regan’s appointees. He owned them. The old guard faction comprised Uncle Bruce, Rex Bennett, and two other founders of the corporation. Claude himself was the eleventh man. He ran the show.
In token of that, Uncle Bruce speedily turned the meeting over to his nephew-not without a sour, sidelong glance of distaste.
Regan got quickly down to business. “You know about my plans for a World’s Fair bond issue. Six billion dollars bearing a three percent coupon. I’ve formed a corporation to underwrite the issue: Columbus Equities Corporation. Forty percent of the capital stock of Columbus Equities is being purchased by the 1992 Columbian Exposition, Inc., which is the corporation actually presenting the Fair. I’m offering Global Factors a chance to buy another forty percent of Columbus Equities.”
‘Who’ll own the rest?“ Rex Bennett asked.
‘I will,“ Regan answered. ”As a private investor, I’m taking twenty percent of the capital stock.“
‘In other words,“ Bruce Regan said slowly, ”the underwriting of these bonds will be handled jointly by the Exposition Corporation, by you as a private individual, and by Global Factors.“
‘That’s right,“ Regan said.
‘But neither you nor the Exposition corporation has any staff for distributing these bonds,“ Bruce Regan observed.
Regan nodded. “Right again.”
‘So it would seem that Global Factors will have to do one hundred percent of the donkey work-in exchange for being allowed forty percent of the profits.“
‘Wrong,“ Regan snapped. ”Global will contribute its financial contacts. I’ll contribute my individual money-raising talents. The Exposition corporation will contribute the prestige of the Fair itself. It’s eminently fairly divided.“
‘How much will Global have to pay for its interest in this underwriting outfit?“ Rex Bennett asked thinly.
‘I think a dollar a share is adequate,“ Regan replied. ”There are one hundred shares outstanding. Global can buy in for forty dollars.“
‘A nominal fee,“ Rex Bennett remarked. ”Fair enough for a dummy corporation. But what sort of profits can we hope for?“
Regan distributed mimeographed sheets. “I’ve worked it out on a basis of one percent for the underwriters. One percent of six billion bucks is sixty million. Of course, our expenses will have to come out of that. Say, ten million.”
‘The corporation stands to clear some fifty million on this bond issue?“ Bruce Regan said, startled.
‘Probably. Of which Global’s share will be forty percent. Twenty million.“
‘Suppose the bonds don’t all sell?“ someone asked.
‘They’ll sell,“ Regan said. ”Well? Shall we vote on acquiring stock in Columbus Equities?“
‘Wait,“ Rex Bennett said. ”I want to understand this. As underwriters, Columbus Equities will have to deliver a check for six billion to the 1992 Columbian Exposition Corporation. It’s then up to Columbus Equities to unload the bonds.“
‘Correct.“
‘But the capital of Columbus Equities will only be one hundred dollars, at the outset. How is it going to advance the money to 1992 Columbian if it doesn’t have it?“
Regan smiled. “Global Factors, as a forty percent stockholder in Columbus Equities, will advance the whole six billion. Obviously 1992 Columbian, though it also holds forty percent of the stock, doesn’t have the capital to make the advance. Nor do I. So Global will have to do it.”
‘Which is to say that Global is really assuming one hundred percent of the risk in hopes of gaining forty percent of the profits?“ Bennett persisted.
‘Yes,“ Regan said smoothly.
He sensed unrest in the room. It was pure flim-flam, and he had hoped to bull it through on the strength of his control of the directors. But these old men were being too coy with him. They resented his using Global Factors as though it were his own personal holding company. Regan began to think he might have overstepped himself. Could he hold together his seven-to-four majority on the board?
Tim Field-one of his own men-spoke up now. “Factor Regan, what assurance is there that Columbus Equities will be able to sell its six billion dollars’ worth of bonds? It’s only a three percent coupon, after all.”
Regan said, “In my estimation, Tim, there’s no risk. As of this moment, with the fund drive hardly under way, I have commitments for nearly a third of the total issue. It can’t miss, or I wouldn’t have involved Global in it at all. Global will have to extend the advance only for a very short while-and will pick up an easy twenty million for its trouble. I’ll stake my own good name that those bonds will be sold.”
‘Remember ’76,“ Rex Bennett grumbled.
Regan shrugged. He remembered, all right-the celebrated Philadelphia fiasco of 1976, the Bicentennial Exposition. That had been a much less ambitious fair; the bond issue floated in ‘73 had been a mere quarter of a billion. But then had come the Panic. The fair had never been held. The bondholders lost their entire investments.
‘Are you suggesting that people will shy away from these bonds because of the experience with the last major World’s Fair in this country?“
‘That’s what I’m suggesting, yes.“
‘Conditions have changed since 1976, Bennett It’s a brand new world. With the prestige of Global Factors behind these bonds, we’ll have no problems. I call for the vote.“
‘Seconded,“ Tim Field said.
They voted. Each board member nudged a stud in the table in front of him, and lights flashed on a panel set in the wall. Green lights for Yes, red lights for No. It was a straight division, Regan’s faction against his uncle’s. Seven green lights, three red ones. Bruce Regan, as Chairman, did not vote. There was no need for him to bother.
‘Motion carried,“ Bruce Regan said bleakly. ”All right. We now are committed to buy a forty percent interest in Columbus Equities. Is there anything else on the agenda, Claude?“
‘There is,“ Regan said. He took a deep breath. ”I now propose that Global Factors purchase one billion five hundred thousand dollars’ worth of World’s Fair bonds from Columbus Equities.“
The gasps that greeted this proposition were not altogether from the Bruce Regan faction of the board. Regan’s own men were gasping too, taken aback not so much by the magnitude of the sum as by the audacity of their chief.
Rex Bennett rose, his face livid, his lips trembling. The old banker pointed a shaky hand at Regan and said, “Just a moment ago you told us that you had obtained commitments for nearly a third of that total issue. Did you mean by that the commitment you just proposed?”