The Bridge to Caracas

  “Well if that’s what you want, you can have it, but you’re going to pay for it, and you can forget about seeing your daughter.” Barbara’s angry blue eyes showed no tears, and no regret.

  The acidity of her tone and the speed of her response revealed a preparedness that he had not expected.

  “Divorce isn’t what I want, Barb. What I want, and what I’ve wanted from the beginning, is for you and I to be happy in our marriage. It appears that isn’t what you want, and if that’s the case, then divorce is the only viable alternative.”

  Barbara threw her napkin to the table and snatched her purse from the floor. She stood, causing her chair to make an awful squeal against the hardwood floor. “I want to go home, now!” she shouted.

  Mike set down cash for the two unfinished drinks and followed Barbara to the car. He was relieved to see tears in her eyes, and he confronted her for the second time. “Why have you never told me the whole story about yourself?”

  Barbara glared at him, her eyes glazed with indignation. “What the hell do you mean?”

  “You haven’t told me the whole story about your former relationship. Every time I bring it up, you’ve deliberately lost eye contact with me. You did it again tonight. There’s something you’re not telling me, something important!”

  Barbara turned to face the window to her right. “There’s nothing!” she insisted.

  “Please don’t insult my intelligence. I think you owe me that much.”

  She slumped in her seat and covered her face with her hands. Finally, she wiped her eyes and spoke, barely loud enough for Mike to hear. “I’ve made a terrible mistake.”

  “You never stopped loving him, did you?”

  She turned to face him, her tears flowing fast. “No.”

  It was like a hole had been punched in his heart. Barbara had never loved him. She had only wanted to replace the child she had given up for adoption.

  Even if there was a hope of saving the marriage, Mike realized that he no longer wanted it.

  CHAPTER 22

  A week later, a messenger of the courts presented Mike with Barbara’s petition for divorce. The document alleged that the reason for the breakup of the marriage was that the husband of the petitioner had been mentally cruel. It further alleged that his cruelty had resulted in intolerable mental and emotional stress and anxiety for the petitioner.

  Barbara moved out of the house, taking Kerri and most of the furniture to a luxurious two-bedroom apartment in north Toronto.

  Mike wept. He wept because he was alone once again, because Kerri had been taken from him, because his marriage had been an enormous failure. It would be easy to blame the whole thing on Barbara, and yet he felt responsible.

  After months of adversarial contact between the lawyers acting for Barbara and Mike, a settlement was concluded. It ordered that Barbara would retain custody of Kerri and be awarded all of the net proceeds from the sale of the matrimonial home, which Mike was ordered to offer for sale forthwith. It further provided for generous child support and alimony payments to Barbara. Mike was granted reasonable visitation privileges.

  After their country home sold, Mike rented a one bedroom apartment close to his office and, in an attempt to forget, plunged deeper into his work.

  Mike had always known that XG Petroleums walked a tightrope between success and failure. His worst fears had lately become a reality. Facing prolonged and intolerable gasoline surpluses, the refiners had decided to protect their investments in retail gasoline facilities and restore the dignity of their brands, once and for all. Until then, they had watched passively as independents proliferated in all markets, even those that had once been considered the majors’ private domain. By posting brutally competitive retail prices, the refiners moved to recapture the huge and growing price-sensitive segment of the retail gasoline market.

  The outcome was massive and prolonged price wars. The enormous profits the independents had once enjoyed evaporated in a matter of weeks. For highly leveraged XG Petroleums, the fallout was immediate and massive. The only attractive feature of the company had been price competitiveness, and it had lost its edge.

  The arithmetic of the new situation was ominous. If IFB retained its fifty percent interest in XG, it would lose millions. Even worse, Darcy Bell’s fifty percent interest in the company compelled him to make up fifty percent of the losses. A prolonged continuation of hyper-competitive market conditions would almost certainly bankrupt him, leaving IFB with one hundred percent of the catastrophe.

  “We have the makings of a major catastrophe here, Mike,” Owen Christian declared, stomping back and forth in front of his desk. “Unless something is done about that company fast, one of us is going to be extremely embarrassed.” Christian stopped his pacing and pointed an accusing finger at Mike. “And it isn’t going to be me. I told you before and I’ll tell you again. I’m not going to be the one who takes the hit for XG. I don’t care how you do it, but I want IFB out of this deal and I want it done soon. I don’t think I have to remind you that your future is riding on how you handle it.”

  Mike was torn between rage and regret, unable to express either. It was embarrassing to watch a man for whom he once had a great deal of respect covering his ass in such a pathetic, bullying manner. Christian had been delighted with the enormous gasoline volume the XG acquisition had given to IFB, and he had gloated upon announcing that the fuel oil supply of IFB had been saved. And Christian’s signature was on the acquisition proposal, the same as Mike’s. His initial inclination was to remove Christian’s teeth, but he elected instead to swallow his pride. “Thanks for the vote of confidence, Owen,” he said, gritting his teeth. “I accept the challenge.”

  Christian’s face reddened. “You’re damn right you accept the challenge! You have no choice!”

  “Would you mind doing me a favor?” Mike asked.

  “What?”

  “Tell me how much IFB is prepared to accept for its interest in XG. If I’m going to dispose of it, I need to know the ground rules.”

  For decades, Darcy Bell had operated his business without having to cope with negative conditions, but now the risks he had never considered were a reality. Mike listened patiently while Bell blew off steam, condemning the majors for their incredible stupidity.

  “How can they possibly make money at those prices?” he shouted. “The sons of bitches are blowing their brains out! Their fucking credit cards are costing them at least four cents a gallon, and they’re not even grossing that much on the street! They can’t be!” He paused to give Mike a questioning stare. “What’ve you got to say about this mess?”

  Mike shrugged his shoulders. “Sooner or later everybody rolls snake-eyes, Darcy. It looks like it’s your turn.”

  “What the hell do you mean? I didn’t even get a chance to roll the dice.”

  “Would you do me a favor?” Mike asked, fully aware that Bell had frequently rolled the dice.

  “Sure. What?”

  “Tell me how much you want for your fifty percent of XG.”

  Bell chuckled. “If you can find anyone dumb enough to pay me twenty thousand, I’ll buy your lunch.”

  “Why twenty thousand?”

  “To pay my fucking legals.”

  Mike smiled. “Thanks. I hope we have lunch real soon.”

  “Me too.”

  Mike made a deliberate and obvious glance at his watch. “I’ve got to go. I have another appointment in fifteen minutes, and it’s at least half an hour away.”

  “Then get the hell out of here,” Bell said with a smirk. “But don’t forget. Call me about that lunch.”

  “Will do,” Mike said as he shook Bell’s hand.

  “You said you wanted to talk. What about?” Fletcher asked.

  “How would you like your business to get a lot bigger?”

  Fletcher grinned. “Not particularly. Big isn’t necessarily beautiful. Besides, the whole thing’s in the tank right now. You know that.”

  “Sure it’
s in the tank, but it’s created a beautiful opportunity.”

  Fletcher was immediately curious. “Tell me about it.”

  “It involves XG Petroleums.”

  Fletcher nodded. “I know the owner. I thought I was a high roller, but Bell makes me look like a penny-ante piker. I think he belongs in an asylum…”

  Fletcher and Mike shared a grin. Then Mike leaned forward. “Were you aware that IFB owns fifty percent of XG?”

  “Yup. Why?”

  “Everybody wants out.”

  “I’m not surprised.”

  “The company can be bought for a song.”

  “Who the hell would want to?”

  Mike’s eyes lit up. “You and me.”

  Fletcher laughed. “You and me and what bank?”

  “Don’t worry about the money,” Mike said, his heart in his throat. “Leave that problem to me.”

  “Okay, let’s assume you round up enough money to buy XG. What are we going to do with it? The company’s a mess. It’s unsalvageable.”

  “I admit it needs some radical surgery. The company would have to be downsized, in a hurry.”

  “How big is it?”

  “Two hundred and eighty-four outlets in Michigan, New York, and Ontario. Only twenty-five of them make any money. The rest are dogs. They just spin volume and lose money.”

  “How the hell could anyone get rid of dogs in this market?”

  “It wouldn’t be easy, but it can be done. Every one of Bell’s outlets is on leased land. But if you take a good look at the lease terms, you’ll see that they’re all short, with options to renew. Most of them include options to purchase or rights of first refusal. We wouldn’t have to keep any of the dogs for longer than five years—then we just let the lease slide.”

  “Well, suppose I’m interested.” Fletcher set his elbows on the table. “What kind of deal do you have in mind?”

  “A lot of independents aren’t going to survive this war, Tom. The ones who do are those who own the real estate under their pumps, and they will do it by reducing their dependence on gasoline and placing more profitable businesses on contiguous property. You happen to be in that fortuitous position. I’m confident that we can do the same with XG. All of its leases on the twenty-five profitable outlets have options to purchase.”

  “You really think you can find the money?”

  “Yup,” Mike said. Doubt pounded his brain.

  “If you do, we’ll talk again. I’m interested.”

  “Great!” Mike said, grinning wide. “I’ve got to go look for the money. But you might want to look at this in your spare time.” He removed a folder from his briefcase and gave it to Fletcher. “It contains a complete list of XG’s properties, their addresses, and their individual financial statements. Don’t waste your time looking at the dogs. Look at the profitable outlets. Some of them are amazing.”

  Fletcher put on his reading glasses, scanned the contents of the folder, and began to process the equation of Mike’s proposition. Even if the XG deal was only marginally attractive, his instinct prodded him to participate. Mike understood the gasoline business and the players in it—if the gas wars continued, his cooperation would be invaluable. He glanced at the adjacent window over his glasses and grinned. “All of a sudden, I feel like a kid again.”

  CHAPTER 23

  Seventy-two hours later, Mike was in New York, his nerves jangling as he sat in the vast and ornate waiting room at the head office of Golden National Oil. What had he been thinking? Even if he could find the money, it was possible that XG would drag him down just as thoroughly as it had Bell…

  His thoughts were interrupted by the approach of a tall, handsome man in his early fifties. His neatly groomed, graying hair complemented his perfectly tailored, black pinstriped suit. His dense black eyebrows and deep set brown eyes defined wealth and power. “Mike King?” the man asked, his voice resounding with authority.

  Mike sprang to his feet. “Yes… Mr. Conrad?”

  “Call me Paul. Welcome to New York, Mike. Did you have a pleasant flight?”

  Mike nodded. “Fortunately, I picked up a late cancellation. It was very kind of you to see me on such short notice. I’m sure you’re very—”

  “Don’t mention it,” Conrad interrupted. “In fact, I’ll share a little secret with you. When you told me you were looking for gasoline, I was prepared to fly to Toronto to see you. I’m sure you know we have a lot of it to sell.”

  “And I have a lot of it to buy,” Mike responded.

  “Let’s go into my office.”

  They sat together on one of two brown suede covered couches, and Conrad’s secretary delivered a silver plated urn of hot coffee.

  Conrad crossed one leg over the other and leaned backward. He stared at his guest. “Mike, I must confess I salivated when you told me the volume. I hope you’re interested in placing the whole thing with Golden National.”

  “If the price is right,” Mike said, sensing it was too early to reveal who the real buyer would be.

  “I can assure you it will be.”

  Mike sipped his coffee. “Paul, I’m curious to know why you chose to build a refinery in Buffalo.”

  “The location was easy. The site we picked had access to pipelines from all directions—it’s on the St. Lawrence Seaway, and Buffalo is close to the center of gravity of industrialized North America. But the timing…” He shrugged. “The decision became very difficult when we considered the surplus of refining capacity in the United States and Canada. But when we factored everything into the equation, it was still the best option. We have been extraordinarily successful in finding crude oil in the past seven years, and had to satisfy ourselves with normal crude profits. The refinery is the great multiplier. As you know, the sum of the parts of a barrel of crude is a lot greater than the cost of that barrel. Instead of selling our production to the highest bidder, we can sell it to our refining division for a lot more, and the markup is tax free.”

  “How is it tax free?”

  “Our Bermuda trading company makes the profit on the sale of crude to our refining division. According to Bermuda tax laws, profits generated by Bermuda corporations outside the territorial limits of the country are received tax free…”

  “Well there you have it.” Mike set down his coffee. “What are you going to do with all the gasoline you produce?”

  Conrad frowned, his lips tightened. “We have two less than palatable choices. We’re going to have to wholesale it or drink it. We’ll have to live with the former until we establish a retail distribution system of our own. Fortunately, we have money coming out our ears, so we plan to build or buy retail distribution as soon as possible.”

  Conrad’s words were music to Mike’s ears. The company was swimming in money and desperate for customers. Even better, the president of the company had welcomed him like royalty. Mike locked his blue eyes on Conrad’s. “What would you say if I told you that International Fuel Brokers was not the prospective purchaser?” he asked, his heart pounding.

  Conrad raised his eyebrows, but seemed otherwise unperturbed. “Who is?”

  “Me. Actually, it’s a partnership I hope to form, after acquiring XG Petroleums.”

  Conrad gave Mike a knowing grin. “This is interesting. I think you’re going to have to tell me a lot more.”

  “Not long ago, I was responsible for influencing the decision of IFB to acquire a fifty percent interest in XG. The deal worked well until the gas wars devastated XG’s bottom line. IFB gave me a directive to liquidate its interest in XG, but… the more I looked at XG, the more I saw it as an opportunity.”

  “What’s your objective?” Conrad asked.

  “I’m not sure I understand,” Mike said, perplexed.

  “Did you want to become an owner or did you see a profit opportunity?”

  “Both. I want to have more personal control over my future, and I believe that being an independent gasoline retailer is still a profit opportunity. Particularly with XG.?
??

  Conrad blinked. “And why is that?”

  “XG is a monster,” Mike said in a rush. “It operates far too many outlets. Only twenty-five of them make money. Furthermore, it doesn’t own any real estate. It pisses away cash flow on ridiculous rent payments. And it isn’t involved in a single ancillary or secondary business. That’s the real killer. XG has all the infrastructure, but no one willing to make the big changes. I believe diversification is the essential component of any gas war survival plan. If I owned XG, I would cut and keep on cutting until all we have left is profit. I’m absolutely convinced the company can be turned around, and I want to be the one who does it.”

  “Impressive,” Conrad said, smiling and nodding approval. “Obviously, you’ve done your homework. Tell me, who is your intended partner?”

  “Tom Fletcher. His home and office are both in Toronto. He’s experienced and his primary business is real estate. He owns over thirty small to medium sized shopping plazas, most of which include retail gasoline outlets.”

  “I don’t think you’ve given me a complete answer. What I want to know is why you think you’ll need Fletcher as a partner?”

  Mike resisted an urge to argue. “Fletcher’s experience in real estate development will be a tremendous asset.”

  Conrad glanced at his watch. “Will you be staying in New York tonight?”

  “I’m prepared to stay for so long as it takes to make a deal. If you tell me it can’t be done, I have no reason to stay.”

  “You have a lot of courage, son,” Conrad said with a broad grin. “If your expedition into XG doesn’t work out, come and see me. I’ll give you a job in a heartbeat.”

  Mike’s jaw sagged as he stared at Conrad. “Does that mean you can’t do anything for me?” he asked, flattered yet discouraged by the finality of Conrad’s statement.

  “Quite the contrary. It means I can and I will. You came to my office with two things Golden National needs. If I can’t have one of them, there’s no way I’m going to let the other one get away. I would love to have you come to work for me, but I know you won’t. It’s obvious you want to go it alone so badly that you can taste it.” Conrad stood and shook Mike’s hand. “Have dinner with me. I’m going to make you an offer you won’t believe.”