They valued the existing four businesses at $1,400,000,000; $1.4 billion dollars. Bradford was amazed at the final number.
Phase 1 Project Summary (Current Valuation)
1.1 Cabo San Lucas, Mx Resort and Casino $350M - ($750)
1.2 Miami Beach Marina and Condominiums $150M - ($150M)
1.3 Dominican Republic Mixed Use Facility $275M - $325M)
1.4 Las Vegas Casino & Golf Course $225M - ($225M)
Total Phase I Funding Requirements - $1B - ($1.4B)
Phase II Estimate - $3.2 Billion
Mario’ Buyout Option (67% Owner) - $ 462 M
Sven Buyout Option (33% Owner) - $ 938 M
Global Management (5%) Commission
“Once you get all the permits and break ground, the value of your investment jumps 50%,” Jane explained. “And when you open for business, there is another bump. Just look at how fast the condo market is growing.”
They estimated the value of Mario’s option on the Phase II projects was worth $50M, including the $40M in cash that Mario and Romano have fronted.
Bradford spent two hours going over the assumptions with Chris, Roger and Jane. He played devil’s advocate.
Dave concluded that Zurich was getting short-changed. “Shouldn’t the $850M they have already funded be deducted from their buyout?” he asked.
“We covered that another way. The debt is carried on the Cabo Balance Sheet as a liability. Our valuations are net of liabilities. If Mario wins, he would need to repay the loans.”
They had done a good job, and at 11:00 AM the evaluation was emailed to Mario and Alberto, and Sven and Dag.
Mario called after lunch. “Alberto says he has no problem with the values you assigned; your people did a nice job. We need to know if we have the next round of funding in place. Can we buy Sven out?”
“Yes, but not in time. It will take 30-45 days to close.”
“What about getting me the $200M for Phase II? I don’t want to forfeit $40,000,000.”
“You might try to sell them to Sven. Offer to buy him out of the casino and other three projects, and let him have the Phase II deals. I’m not sure he will go for it, but you could try.”
“I’ll consider that, Dave, but I agree with you. I doubt if Sven would give me anything for the options. Sven wants it all. No matter, I am working on getting the $200M. Maybe we can come up with the $462M and buy them out.”
“Good luck, Mario. I’ll see you tonight. Let’s get together after the funeral tomorrow. If you really think you can come up with $542M I have an idea for determining who will have first option for the buyout.”
“I’m interested,” Mario answered quickly.
“Okay, we can talk about it tomorrow. By the way, are you betting on Buzz or me Saturday?”
“No offense, Dave, but I’ve played golf with both of you. If I were a betting man, I would have to put my money on Buzz; no offense.”
“None taken, Mario. Gary Gagne, the club pro, is running a little betting pool on the match. Thought you might want to get in. 7-5 odds. If you bet on Buzz you need to bet $7.00 to win $5.00. Just like in Vegas, but here the house isn’t taking 10% off the top. What are you in for?”
“Tell Gary I’m in for $140 on Buzz. I’ll keep Buzz sober Friday night and shoot him if he tries to drink Saturday.”
“Darn! Now I need to come up with a new strategy for winning Saturday. Okay, you’re in for $140.”
Sven was on a plane from Zurich to Tampa for the funeral, but Dag would have an opportunity to review Bradford’s package before Sven arrived. They had a dinner meeting at the club scheduled for Thursday evening.
Chris came into Dave’s office and Dave repeated his conversation with Mario. “Getting Mario to bet on Buzz won’t be a problem,” he said. “Getting Sven to back me might be more difficult.”
“I don’t know, Dave. He might just go for it. What is interesting is Mario’s statement that he might be able to get the money from a friend. I’m guessing Romano. That’s worth passing on to Steve.”
“How is the legal work proceeding? Are we still on schedule? Steve wanted the contracts ready by Friday, but attorneys never do anything quickly except bill you.”
“I’ll check, Dave, but that shouldn’t be a problem.”
It was almost noon, and Dave had a 1:00 tee time with three friends from the club. He needed the practice. He hit the ball pretty good, and shot a 77. More importantly, he won $20 from his playing partners by sinking a six-foot birdie putt on 18. Now, that’s pressure.
Mary and Dave arrived at the funeral home early to pay their respects. Dave wasn’t sure why, but he was disappointed it was a closed casket. Mary had not told him.
They knelt before the casket with tears in their eyes. Dave apologized to Ken for getting him into this mess. He thanked him for all the good work he had done and promised to find out what had happened. He thanked him for being his friend. “I’ll make you him proud of me Saturday,” he whispered.
Ken’s family arrived soon after. His parents had passed away several years ago, but his sister, ex-wife and teenage sons, Ken Jr. and Jessie, were there. Bradford had met the boys twice before and offered condolences. They said the stuff you said at funerals to people you hardly know. Similar conversations would be repeated many times over the next three hours.
By 9:30 the last visitor had left and the Dave and Mary were ready to go home. It had been a long day.