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Texas Gal
Chapter Thirty-Three It's Just Monopoly Money!
We spent Saturday afternoon studying with the French records to refresh our language skills. We hadn't used them since last summer and we were quite rusty. For the rest of the weekend we would use only French in the house. Conversations were often lengthy as we tried to convey our meanings, but we improved rapidly.
Saturday evening was devoted to baking. We made some pies, cakes and cookies to take with us on the trip, and for the pilots. It was fun, all of us working together in the kitchen again. Ricardo hung around to help out whenever we had an icing covered spoon that we were done with, and to act as our official taster when the cookies were finished. He struggled to comprehend our talk, using his knowledge of Spanish as a reference.
We attended services on Sunday morning, followed by a long horseback ride, and after returning to the house and cleaning up, we packed for our two-week vacation on the Riviera.
Grandma, her secretary, and Charles showed up around 3 p.m. The plane was scheduled to arrive at 3:30 and we had all the bags on the hanger ramp by then. Mother and Auntie had given Rosa and Ricardo their instructions and contact numbers, and we were ready to go. The plane arrived on time, as always, and the co-pilot got out to load the luggage as we boarded and took our seats. In addition to the stack of boxes that we carried containing the pies, cakes, and cookies, we also carried covered bowls of food that Rosa had prepared for our in-flight dinner.
Our flight path took us almost over the plant in Brandon and I looked down on Vermont as we soared high above but I wasn't able to make out anything except easily identifiable geological features. We stopped in Nova Scotia to refuel before making the jump over the Atlantic to our next refueling point in Ireland.
It was late morning when we arrived in southern France. We were all tired from the long ride, so we went to bed after unpacking our things.
I slept for about six hours. Susan stirred and woke up as I tried to climb gently out of bed.
"What time is it?" she asked.
"A little after 4 o'clock."
"I'm starving," she said as she pulled the sheet back and swung her legs over the edge of the bed, while squirming around so that her back never rose from the mattress.
"Then you'll have to get out of bed," I said giggling.
"I know… but I'm still tired, too."
"You sound just like Mary, but she'd rather sleep than eat, so I know what her decision would be."
"My stomach wins out this time. I'm getting up."
Susan and I put on our bathrobes and went downstairs. We found Judy having eggs and toast in the dining room. We took our seats and poured cups of tea for ourselves from the pot on the table. The cook that Grandma always hired when we were here came in from the kitchen carrying some fresh fruit and we asked her to cook some eggs for us.
"Any sign of anyone else yet?" Susan asked Judy.
"Nope. Mary just rolled over when I got up. I know that she'd prefer to sleep until dinnertime so I didn't even try to wake her."
We began to talk about what we were going to do with our time here. Just as the cook brought our food, Grandma came in and joined us. Then Mother and Auntie followed in quick succession. Once we had all been served our breakfast, Grandma asked the cook to delay dinner by three hours for this evening. None of us were going to be hungry again at 6 o'clock.
After eating, we bathed, dressed, and then sat outside on the veranda overlooking the Mediterranean. It was a beautiful, tranquil scene that had the same unique sort of calming effect as watching the sunset back home.
Our internal clocks were still messed up the next day, but we got up at the right hour and went down to the beach after having breakfast. Covering ourselves with suntan oil, we laid down to work on our tans. Grandma preferred to stay under an umbrella to reduce her exposure to the sun's rays.
After lunch, we changed and went shopping in the town. It was a system that we had developed in earlier years; swim in the morning and shop in the afternoon. Some days we would go for car rides in the countryside during the afternoon hours.
Where I had been fidgety during the early days of our trip, because I wasn't used to just sitting around, I had settled nicely into the routine by the second week.
We had always had a few admirers when we sunbathed, but this was the first year that any of them got up the courage to approach us. It was on Tuesday of our second week that Felipe and Timon approached us while we were standing in the shallow water of the sea. They were both in their early twenties and they told us that they were nightclub entertainers on vacation. They naturally paid most of their attention to Judy, now 19 and Mary, who is 18. Their English was about on a par with our French, but between the two languages we managed to hold a conversation.
We stood around talking with the water lapping at our feet until it was time to go back to the house for lunch. Judy told them that we were going shopping after lunch, but that we'd be back on the beach tomorrow morning. Timon wasn't timid and he tried to invite himself to lunch, but a stern look from Grandma was enough to change his mind.
Over lunch, Grandma said, "Watch out for those two boys. I didn't like the look of them."
"They seemed nice," Judy said.
"The worst ones always seem nice, until they strike. I'm not saying that your young friends are bad, but they might be. I didn't like the way that that one was trying to get into the house a few hours after you met him. We always have to be careful about thieves looking for an easy mark. The beaches are full of them this time of year. Just be careful."
"Okay, Grandma."
After lunch we changed and went into the town, spending the rest of the afternoon shopping. The merchants were always glad to see us because one of us usually bought something in every store that we visited. Walking back to the house in the late afternoon, our arms were loaded down with packages.
Judy and Mary heeded Grandma's warning and didn't allow Timon or Felipe to get too close. Both boys tried to get them to go out with them at night, promising them a wild time, but they kept turning them down. By Friday the boys had found new objects of desire, and didn't come around anymore. Both Judy and Mary wondered if they had done the right thing in rejecting the advances.
We left very early Monday morning, arriving in New Jersey in the afternoon. Dr. Clark had saved time from 2 o'clock in the afternoon on for our annual check-ups. Grandma remained on the plane while we went to Dr. Clark's office.
After a short visit, Dr. Clark began the examinations. When my turn came she had me take off all my clothes and then examined me from top to bottom after measuring every part of me.
"How have you been feeling, Darla Anne?"
"Fine, Dr. Clark."
"Your growth has slowed a bit. You may not grow much more than your present 5 foot 4 inches."
"That's okay. I'm about the same height as Judy and Mary."
"Yes, you're all within half an inch of each other. Do you ever wish that you could be a boy?"
"No, never! I'm happy being a girl."
"You'll still need an operation to complete the transition."
"I know."
"How are you doing in college?"
"I have a 4.0 average so far."
"That's excellent, Darla Anne. I hope that my girls work as hard as you do."
"How are they doing, by the way?"
"Very good. Not as good scholastically as you and your sisters, but good. They're typical ten-year-olds now and they've discovered boys. That occupies a lot of their time now."
"I wish that I could see them. Are you going to come out for a visit again?"
"I'd love to, but I don't think that I can make it this summer. I'll have to see."
"We'd love to have you and the girls come out if you can make it."
"I know. We'll see. Okay, you can get dressed now. I'm going to see Susan in the other examination room."
"Okay, Dr. Clark. Thank you."
I dressed and returned to the office where Mother, Auntie, Judy, and Mary were waiting. Susan was the last to be examined.
About twenty minutes later, Susan and Dr. Clark came out of the examination room. Dr. Clark said, "Must be something in the water in Texas. Everyone is perfectly fit."
"It's the fresh air," Mother said. "I highly recommend it."
We stayed and chatted for another half-hour, then said our good-byes to Dr. Clark and returned to the plane.
Rosa and Ricardo came down to the runway to greet us and help us with the bags when we arrived at the ranch. Charles loaded up the car with Grandma's, her secretary's, and his own suitcases, and they left after we thanked Grandma for the trip. Then we carried our own things up the house. We had to make a second trip to get everything.
We spent the rest of the week at the ranch, stretching our normal two-week vacation into three. It was still earlier than we usually finished, because college finished three weeks earlier than Hillock Academy.
We spent our days riding, walking, baking, or sitting on the porch together. On Monday, Judy and Mary would go to their summer jobs, and I would already be up in Vermont. Susan would leave on an inspection tour on Monday, after the plane had returned from bringing me north.
It was a great week and I hated to see it end, but all good things do. Both Mary and Judy would have jobs with greater responsibility this year and they were anxious to start.
Earl was waiting for me when I arrived in Vermont Sunday night, and he put the bags in the limo as the plane taxied back out to the active runway. The jet passed overhead as we left the airport grounds and headed for the hotel.
I didn't receive my usual suite because it was occupied, but I was given the one right next door. It was almost identical except that the layout was reversed.
I arrived at the plant at the beginning of the first shift on Monday morning and walked to my office, returning greetings as I went. After preparing a cup of tea from the pot that Nancy had brewed for me, I read through my mail. There was the usual collection of trade magazines, and proposals from people looking to sell companies. I put the folder with the proposals aside. There wasn't any hurry since, as always, I had no intention of buying anything.
I was on my second cup of tea when Bob called to find out if he could come over. I told him to come in anytime. A few minutes later he arrived carrying a mug of coffee. He knew that I never drank it and could only offer tea.
"Hi, DD. Welcome back."
"Hi, Bob. Thank you. How are you? Have you been reacquainting yourself with your family?"
"I think that I got back just in time. My wife was beginning to think that I had abandoned her, and the kids were forgetting what I looked like," he said smiling.
"At least the plants in Maine won't keep you away for very long."
"All done. We had the closing this past week. Kurt has his money, and last I heard, he was getting ready to take his first vacation trip in twenty years."
"That was fast."
"It was really straightforward. No debts, no liens, no problems. Like you said, it was like Danbury."
"How's it going up there?"
"Good. The plant managers seem very competent. I'll continue to watch them closely for a while. We're still working on closing down the accounting office up there. We'll just be leaving a few positions at each plant, as we do at all the plants. One of the sales people accepted a transfer to work here, but none of the accounting people wanted to move."
"How are sales?"
"Good. They had a pretty steady clientele before you bought them, with almost all of their sales coming from customers in New England. Matt jumped in and got all three regional office sales groups trying to sell newsprint. They've had good success so far, and it should grow quickly because of the special commission bonus that we added for all newsprint sales to new customers for the rest of this year. In the meantime, both plants are quite profitable and not a drain on the rest of the company."
"Excellent. It sounds like you've been busy. Thank you for doing such a great job, Bob."
"My pleasure, DD. Really. I love coming to work every day. So what's next on the schedule?"
"Nothing scheduled. I think that we need to spend some time getting out from under the debt that we've accumulated. We owe roughly 67 million on the plants that we've added since Greenfield. Only Brandon, Greenfield, and the three Owosso plants are debt free."
"With the revenues that are coming in, we can start retiring some of our debt, if you want to."
"I want to. Where should we concentrate the payments."
"Danbury is the best arrangement so we shouldn't make any advance payments there. The loan on Glens Falls has the highest rate, followed by Concord. The rest of the debt is all through our regular bank."
"How much can we afford to pay off from our cash reserves?"
"We can pay off Glens Falls easily, and pay off about half the outstanding balance on Concord without leaving ourselves short. If things continue as they are, we should be able to retire the balance on Concord by the fall."
"Great. That'll leave us with just the fifty million on our notes for Appalachian and Maine, and the Danbury note."
"Okay, I'll start working on the transfer today."
"Good. Have you done anything in the matter of our data processing center?"
"I've solicited bids from five contractors who perform that kind of work. The deadline for the bids is July 15th, and the date for the completion of the work will be December 31st."
"Good. I've been thinking about where to place the new department, organization wise. I think that the manager should report direct to you."
"I agree. That way I can more easily decide where the resources should be devoted. I know that Bill and Matt will be competing for resources from the new department once it gets rolling. Do you have any thoughts on what applications we should concentrate on?"
"From what I've read, most companies go for development of a payroll system first, but I think that I'd prefer that we concentrate on developing a complete general accounting system. There are quite a few companies who can provide us with a software package that we then only have to adapt to our needs, and input the data. That'll save us from having to write the system from scratch, and we could be fully operational within a year."
"Okay. I'll have Stan start investigating the various accounting packages that are available. Maybe he can find one that includes a payroll application."
"Good. Make sure that we get the source code so our own people can make changes instead of paying the software company for every little change. What about the computer?"
"There's no sense paying rental charges until we're ready to use it so we can delay that for a while. There's a four month delivery time from the date that it's ordered."
"Does Stan have any ideas on how we can tie all the plants together?"
"We could get mini-computers for each of the plant offices but it would be rather expensive to get a dedicated telephone line to connect them. The best system for now seems to be a Telex terminal in each plant."
"Okay. We don't have to wait for the computer to do that. We could use them now to replace the constant phone calls."
"Agreed," Bob said. "I'm surprised that none of the plants that we took over had the system already."
"They were all single plants except for Owosso, Appalachian, and Maine. Appalachian's financial condition probably stopped them from getting into it, and Maine seemed to shun office automation. Owosso would have been the most likely candidate. I guess that their system worked well enough that they didn't feel a need for it, but we've grown large enough now that we should have it."
"True. Each acquisition adds more of a communications burden. The Telex system will give us a hard copy message at each plant instead of handwritten notes made from phone calls."
"It'll be much better," I agreed.
"I saw an article in The Paper Press about South-Core closing down the South Shore School Supplies operation. They're writing off a loss of seven million."
"I saw that. It was reported that they bought it for almost five million, but I don't know how they got up to seven. The building is worth one million by itself, so they must have sunk three million into it trying to bring it back to life."
"I can't wait to see their balance sheet this year. Maybe I'll buy a share of their stock just to get the annual report sent to me here at the plant each year."
"What's their stock trading at?"
"Last time I checked it was about 14, down from a high of 25 two years ago. Stockholders seem to be showing their displeasure with the poor management."
"How many shares do they have outstanding?"
"About 10 million, I think. Thinking about a buyout?"
I grinned. "No, it would probably take about 200 million to acquire all the stock."
"You could probably get a seat on the board with 5 percent of the outstanding stock."
I chuckled. "I can think of better things to do with 7 million dollars."
Bob smiled. "You're probably right. I don't think that we have to worry about South-Core anymore. We're definitely larger since we added the two plants in Maine."
"I'll continue to worry about them for as long as they're around. I've heard that I'm public enemy number one in their eyes."
"I can understand that. They're probably getting paranoid when it comes to you. They probably even blame you for the South Shore School Supplies debacle."
"Me? I had nothing to do with that. They jumped because they thought that they were stealing a march on me. I can't be held responsible for that."
"They might think that you set them up if they're getting paranoid about you. In less than two years, after seemingly appearing from nowhere, you've built a company larger than theirs, in part by buying plants that they had thought were as good as theirs."
"Well… if they're afraid of me, then maybe they'll stay away from us. How are things going with the bagging operation in Concord?"
"It's the fastest growing operation that we have. We're already running two full shifts with the three machines that we initially installed, and we'll have to go to three shifts very soon. We should think about acquiring another three machines so that we can double our capacity."
"Do we have enough room for three more?"
"We have enough room for twelve more now that the office space has been converted back to warehouse use."
"Okay, better order three more machines for Concord."
"By the time that they arrive and are installed, we'll need them."
"How are things going elsewhere?"
"Glens Falls is on two full shifts. I don't expect that we'll have to put on a third because we can still shift some of the workload to the two new plants in the Southeast Region. Greenfield is doing well. The boxing operation is running 24 hours every day now. We'll have to think about adding equipment there soon, although the rate of growth indicates that we won't reach full capacity for another 8 months."
"What happens if we have one or more of the machines develop problems that can't be resolved quickly?"
"Then… shipping time may slip."
"Do we have room for more equipment?"
"Yes. Like Concord, we have most of the space that used to be devoted to offices."
"Okay, let's order several more box making machines. Stagger the orders so that they arrive as needed."
"Do you want to go with the four-color machines?"
"What do the orders indicate?"
"We're running the new machine that we installed last summer at full bore. A lot of our single color customers have upgraded to the four-color. It seems to be the wave of the future."
"Okay, make them four-color. It's beginning to look like we'll be postponing our plan to pay down our debt."
"The equipment won't arrive for several months so we can proceed with the initial repayments that we discussed. The new equipment can be paid for from company revenues received over the next quarter. In the meantime our interest expense will be lower."
I nodded.
Bob continued with, "Danbury is doing very well. We're running two shifts and we expect that sales will soon be double what they were when we assumed ownership. Millinocket and Norridgewock, our new plants in Maine, seem to be doing well also. I guess that's about it."
"How are things going in the Midwest and Southeast Regions?"
"Very well. Gerard's keeping the plants humming in the Midwest Region, and Ron's doing a great job with the Southeast Region. Actually, Ron's working a little too hard. He's visiting each one of the plants and sawmills every week. I told him that he should slow down a little before he burns out. He said that after this week he's only going to visit each plant or mill once every three weeks."
"That sounds like a little better arrangement. We'd have to get him a plane to keep up the other schedule."
"That's not a bad idea for both of us."
"For the Northeast too?"
"Yes. I really got an appreciation for what having a small plane available means after I spent several days with Pete Sloan. Now that we have the new plants in Maine, a small plane would make sense. As the crow flies, we're about 250 miles from Millinocket, our furthest plant. A small plane would make it in about 2 hours, while it takes about 6 or 7 hours to drive there because there are no direct roadways. Oddly, the Brandon plant is further from airports than any of the other plants. Our nearest is 8 miles north, or 11 miles south to Rutland."
"It sounds like you've been thinking about this before today?"
"I have. I've seen how handy it's been for you. Of course, we don't need a jet up here, as nice as it would be to have one."
"It wouldn't be as useful since a jet can't land on a non-paved runway. It wouldn't make sense to have a pilot sitting around for the occasional flight, so I assume that you want to learn to fly?"
"I'd love to."
"Okay, Bob, find a flight school and begin taking lessons. The company will foot the bill. When you get your license, we'll buy a small plane for the Region."
"You've got a deal, DD."
"Anything we haven't covered?"
"Not that I can think of, except for talking about any proposals for buyouts."
"I haven't even looked at them yet, and there's not much chance that we'll be buying anything for a while unless something comes along that's too good to pass up. When we get our note down to 25 million, we'll start shopping again."
"That could take us a couple of years."
"I know, so let's concentrate on making some nice profits that we can use to pay down the note."
"Okay, DD. I'll get to work on processing those loan payments that you want made. I'll talk to you later."
"Thanks, Bob."
I fixed another cup of tea after Bob left. I was serious about not buying anything until we got our note balance down, so I didn't know how I was going to occupy my time during the next week. Still, I decided to look through the proposals before giving them to Nancy to prepare refusal letters.
There was quite a pile for my absence of only three weeks. I looked through them quickly, separating them into piles based on the type of refusal letter they would get. Small businesses didn't even get a second look. I read through all the others, putting proposals for companies outside the North American continent into one pile, and proposals from companies that made products outside our normal product lines into another. The rest I read through again, more carefully. I wasn't interested in purchasing any of them, but I wanted to become familiar with who was looking to sell.
When I was done, I took all the proposals to Nancy, telling her to take her time preparing the letters. It was only mid-morning so I went for a walk through the plant. I was able to greet everyone that I met by name, and I was able to kill almost an entire hour by stopping at several places and talking to the foremen. It was nearing lunchtime when I returned to my office.
On my way back to the office I had stopped by a bulletin board and checked on today's menu in the cafeteria, so I got my employee badge out of the desk and went downstairs. I went through the line, picking up some fruit, a salad, and a plate with a piece of chicken, corn, and green beans.
As I reached the checkout, Beatrice smiled at me. "Hello, Miss Drake."
"Hello. Beatrice. How are you today?"
"Just fine, Miss Drake. Welcome back to Vermont."
"Thank you. It's nice to be back. Here's my ID badge."
"Oh, you don't need to carry it, Miss Drake. Not now that I know who you are. I'm sorry about the last time."
"No need to be sorry, Beatrice. You did absolutely the correct thing."
"Thank you, Miss Drake."
"Have a nice day, Beatrice."
"You also, Miss Drake."
I took the tray of food upstairs to my office and put it on the conference table while I got out silverware, then sat down to eat. I immediately got back up again and turned on the radio to have music while I ate. I also picked up a trade magazine to read during lunch.
After lunch, I washed off the plates and put them in the rack to dry. I took the magazine that I had been reading and went into my living room area. The recliner was the perfect place to kill the afternoon.
At 6 o'clock I called Earl to tell him that I was ready to leave. Grabbing my purse and several magazines, I headed for the exit, meeting Earl as he brought the car around.
The next day looked like it was going to be another day of reading trade magazines, but around 9 o'clock Nancy buzzed to tell me that Mr. Morris Wells was on the line.
"Good morning, Miss Drake. I'm glad to finally find you in."
"Good morning, Mr. Wells. I hadn't gotten any messages that you called."
"I didn't leave my name when they told me that you were away."
"I see. Did you have something to report?"
"Yes. I wanted to give you an update. My operative has been accepted and people have begun to talk openly in front of her now. You're not very popular at South-Core, but you already knew that. They seem to blame you for their purchase of a company that floundered and failed."
"We suspected that they might. They thought that they were beating me out of a company that I wanted to purchase."
"And they weren't?"
"No, I had already decided that the company wasn't viable, and I had moved on."
"I see. Then their bitterness is a bit misplaced if you had nothing to do with their decision to buy the company. Anyway, my operative hasn't learned of any plots against you or Piermont, but has heard a rumor that they'll soon be taking over a paper plant in Gorham, New Hampshire. Do you wish us to continue the surveillance?"
"Yes, I do, Mr. Wells."
"Very well, Miss Drake. Good-bye."
"Good-bye, Mr. Wells."
After I hung up the phone I thought about the plant that Mr. Wells had mentioned. It seemed to me that I'd heard about a plant in Gorham that was available. I called Nancy.
"Nancy, about the time that we bought the plants in Michigan and Wisconsin, we had other offers that we turned down. I think that one of them was from a plant in Gorham, New Hampshire. Would you see if you can find that letter please?"
"Of course, Miss Drake."
"Thank you, Nancy."
Ten minutes later I was re-reading the offer that I had turned down last year. Gorham Paper was a manufacturer of newsprint paper, which is why I had refused the offer without investigating further. At the time, I wasn't interested in newsprint, but now that we owned the plants in Maine, we had entered that end of the paper business.
In the letter, a Mr. Paul Nedermyer was offering Gorham. There wasn't very much more information in the letter; it was just a request to meet with me to discuss the offer. A copy of the letter that we had sent in reply was attached.
I put the letter down on my desk and thought. It was possible that this was an attempt to sucker us into a bad deal. South-Core might have discovered the true identity of Mr. Wells' operative, and they had revived an old plan to take us down a peg. Only one way to find out. I called Bill and asked him to come in.
"Hi, DD. What's up?"
"Hi, Bill. I wanted to ask you to look into something for me. This must be kept in strictest secrecy. I've learned that South-Core is making a move on a paper plant in New Hampshire. I guess that when they lost Concord, they moved their sights a little further north. We got a letter from those folks last year when we were buying Owosso, but I turned it down."
"Which paper plant is it?"
"Gorham Paper."
"I'm not real familiar with Gorham, but I've heard of them."
"I'd like to see what you can dig up without alerting South-Core. They might speedup their timetable if they think that we're looking into Gorham."
"Okay, DD, I'll see what I can get for you."
"Thanks, Bill.
After Bill left, I called the investigator that had done tax record searches for us in the past. He was out, so I left a message with his answering service requesting that he call me. Next I called Bob Warren.
"Hello, Bob."
"Hi, DD."
"I just asked Bill to do a little investigation work for me. Have you processed the papers for the payment on Concord yet?"
"I took care of that and the lump-sum payment on Glens Falls this morning."
"Hmmm… How much cash do we have left?"
"I held back $1.5 million in the reserve account, and we have about 4.6 million in the operating accounts."
"How much of that could we use for an acquisition?"
"All of the 1.5, if you need it. It won't affect operations. If we draw from the operating accounts then we may have to begin delaying payments to some of our creditors, depending upon our receivables collections."
"Okay. Thanks, Bob."
"Who's the target?"
"Gorham Paper in New Hampshire. Are you familiar with them?"
"I've heard of them, but that's all. Are they in trouble?"
"It appears so. There's a rumor that the South-Core vultures are circling overhead."
"Sounds like our cup of tea. How bad off are they?"
"I don't know yet. Bill may learn something, but I warned him not to let anything about our interest leak out, so that will restrict his access somewhat."
"Mind if I look into it also?"
"Not at all. Just keep it on the Q.T. because we don't want South-Core to learn of our interest."
"Okay, DD."
There wasn't anything that I could do about Gorham that I hadn't already started, so I returned to my reading of the trade magazines.
Just before 10 o'clock I received a call from the local investigator. I told him what I wanted, how quickly I needed it, and promised the usual double fee for his immediate attention. He said that if he were to get there in time to do anything today, he would have to fly up. I told him that I would pay the extra expenses. He said that he'd be on his way to Gorham as soon as the call ended.
I spent the rest of the day reading.
Just after I arrived on Wednesday, Bob called to ask if he and Bill could come in. I was still fixing my first cup of tea when they arrived. After greetings, we got down to business.
"I spoke with a few of our people in Concord and Maine about Gorham," Bill said. "They were able to shed a little light on circumstances up there. It seems that Gorham had a fire about four years ago that destroyed the part of the plant housing the paper forming machines. It was attributed to a lightning strike. The insurance company paid off promptly because about a dozen people had witnessed the strike. Unfortunately, the plant was under-insured. The amount of coverage in the policy had been set twenty years earlier, and had never been adjusted. The owners plunged ahead anyway, rebuilding the plant and installing new paper forming machinery. The pulping equipment wasn't seriously damaged, and just needed some cleanup and refitting. The plant was out of operation for more than a year, and during that time it lost all its customers, yet it continued to pay 33 percent of salary to all of its employees who agreed to wait for the plant to reopen, after their unemployment benefits ran out. Since restarting operations they've managed to get back some of their business, but they never really got back on their feet properly. That's all that I was able to pick up."
"That's substantial, Bob. Thanks. It gives us some insight into what's motivating the sale."
"I wish that I could add as much," Bill said. "All I was able to learn is that Gorham is running late on most of its payments and most suppliers have cut them off. They have to buy their chemicals and supplies from companies that specialize in dealing with delinquent accounts and charge much higher prices. Higher costs make it lot more difficult to compete on paper product prices."
"And that makes it almost impossible to ever reestablish yourself again. I guess that we have a pretty fair picture of Gorham. They used up their reserves rebuilding and paying their employees a partial salary while they weren't working. Now they're hurting, unable to pay their bills, and probably letting equipment maintenance slide. The last piece of information that we need to know is whether their taxes are paid and what liens they've incurred. I sent an investigator up to Gorham's county seat yesterday to find that out for us. I should have a report today, but it sounds like a trip to Gorham is in order. Do you agree?"
"Absolutely, DD," Bob said. "Bill and I discussed it when we first came in today. It sounds like a project that's right up our alley."
I picked up the phone and asked Nancy to get Mr. Nedermyer on the line if he was available. A few minutes later she buzzed back and told me that he was on the line. I told her to put it through.
"Hello, Mr. Nedermyer."
"Hello, Miss Drake. I'm surprised to hear from you."
"Are you? You did send me a letter requesting that I contact you."
"But that was a year ago, and you replied that you weren't interested."
"That's not exactly correct, Mr. Nedermyer. I responded that other interests prevented me from considering your offer at that time. We were in the process of acquiring the Owosso Paper Company when I sent that response."
"But since then you've purchased Appalachian Paper, and Hockler Paper in Maine. I'd given up hope of ever hearing from you."
Mr. Nedermyer seemed to be trying to gain the high ground. That wouldn't do for proper negotiating so I decided that I had better set the appropriate tone right away. "Well… I'm sorry to have troubled you, Mr. Nedermyer. I was under the impression that Gorham Paper was still available. Good day."
"Wait… I'm sorry, Miss Drake. I didn't mean to give you the impression that the plant wasn't available. I was just very surprised to hear from you. Naturally, I'm pleased that you've taken time from your busy schedule to call."
That sounded a lot better. "I'm in the Northeast for a few days and I'll have some time available tomorrow, so I thought that I might come up and look at your plant."
"I'm at your disposal whenever you can make it. I don't think that our airfield can accommodate your jet though. The single runway is rather short, and it's a grass strip."
"That's okay. We can come up in a smaller plane. Can you arrange for us to be picked up?"
"Of course. The airport is only a few miles from the plant. I'll have the airport operator call when you land and I'll have a car there within five minutes."
"Fine. We should be there between 9 and 10 a.m. tomorrow."
"We?"
"Yes. I'll have three or four of my executives with me."
"I'll look forward to meeting you."
"Thank you. I look forward to meeting you as well. Goodbye."
After I hung up, I said, "Okay, Gentlemen, we're on for tomorrow morning. I'll arrange for a small plane to take us up to Gorham. We'll meet at the hotel at 8:00. It's about a hundred and ten miles so it's less than an hour of flying time."
"Who else will be going? John?" Bob asked.
"Yes, I'll invite John. Since it's only one plant, just our group should be sufficient. Bill, do you want to bring somebody else to help you?"
"If you have room, I'll bring the new Accounting Department manager. If the books are in a mess, it will help to have a second pair of eyes."
"We'll have to get a six seater anyway, so we'll have an extra seat available. Bring him along."
After Bill and Bob left, I sat and looked out the window. I couldn't think of any way that this could be a trap by South-Core. This company had definitely had its share of trouble. Since the plant was still operating, we would be able to fully evaluate the equipment. They would have had to have building inspectors pass on the re-construction of the plant after the fire, so the building should be sound. I finished my tea and then called to arrange for a plane and pilot for Thursday.
Just after lunch, the investigator, whom I had hired to fly up to Gorham, delivered his report to my office. I signed his invoice and thanked him for the prompt action. After he left, I read the typed report.
Gorham Paper hadn't paid their property taxes in two years. There was a two-million-dollar note on file, which listed their plant, equipment, and timberlands as collateral. 'That had to be the shortfall that the insurance didn't cover', I thought. I noticed that the bank that held the note was the same one that held the note on our Concord plant. There didn't appear to be any other loans or liens on file.
I called Bob and told him about the note. "Do you think that we could find out if the note payments are delinquent?"
"Banks are usually pretty tight-lipped about customer deposits and balances, but they don't seem to have any problems talking about their borrowers, especially when they're delinquent. I think that I should be able to learn something. I'll get back to you as soon as I know."
I returned to my reading since there wasn't anything else I could do until tomorrow.
Bob, Bill, John, and Larry March, the new Accounting Department manager, were waiting in the lobby of the Holiday Inn at 8:00. We climbed into the limo for the short ride to Rutland. The plane, a Piper-Six, was ready to leave as soon as we had boarded, and 45 minutes later we were descending into Gorham.
It took five minutes from the time that we touched down until we had taxied to the ramp and deplaned. By then, two cars had arrived from the plant to pick us up. The flight hadn't permitted us a chance to talk since it was so noisy in the small plane, so it was good that we had discussed everything yesterday.
The drivers took us to the plant and parked in front of the office. As soon as we entered the building, a man walked up to us and identified himself as Mr. Nedermyer. I shook hands with him and then introduced him to my executives. He invited us follow him to a conference room.
We took our seats in a spacious, but not overly large, conference room. As soon as we were seated, two more men arrived. They were introduced as the company comptroller, and the plant manager.
Mr. Nedermyer opened the talks with, "Thank you for coming here today. You'll have the run of the plant for your inspection. Anything that you wish to see will be available to you."
"Thank you, Mr. Nedermyer. Mr. Marshall and Mr. March will work in your accounting office while Mr. Fahey and I tour the plant. Mr. Warren will inspect the timberlands that the company owns."
"Inspecting the timberlands could take several days."
"Mr. Warren was with the Forestry Products Division of Ameri-Moore for many years. He's very adept at evaluating timber from the air. Our plane is standing by, ready to take him up. All we need are maps of the properties. I'd also like an accounting of the number of acres that have been harvested, and the records that show replanting efforts."
"I can accommodate you with that. We don't have the large holdings that you've acquired with other plants such as the timberland that you got with Owosso and Appalachian."
"How many acres do you have?"
"Roughly 68,000. We used to harvest and replant about 2,000 acres a year, and get the rest from independent loggers. About 30,000 acres haven't been touched in more than 20 years."
"Good. Shall we get started then?"
We stood up and divided into groups. Bill and Larry went with the comptroller, Bob went with the plant manager to get the timberland maps and Mr. Nedermyer led John and me to the plant.
As usual we started with the pulping operation. John immediately started a close examination of the equipment while I talked with Mr. Nedermyer. He told me about the fire and explained what they had done to rebuild the plant. He had completed the entire story before John even finished with the pulping operation. We made small talk after that. At the end of the first hour, I told Mr. Nedermyer that we would be at least two more hours and that he shouldn't feel obligated to stand around with me. He said that there were a few things that he should be doing, if I didn't mind his leaving. I told him that I understood and that we didn't want to disrupt his workday completely. He said that he'd see us when we were finished and then returned to his office.
It was after 1 o'clock when John finished his inspection. We took a walk through the warehouse and loading dock area before leaving the plant to take a walk outside.
"Well, John, what's the story?"
"Maintenance is slipping, but the equipment is sound. The two paper forming machines are only a few years old. They're about as fast as the ones down in Concord, and there's a space ready for a third machine if we wanted to add it, however it looks like the second machine hasn't seen much use at all."
"So your assessment is that the plant is sound."
"Absolutely."
"Okay, let's go see how Bill and Larry are doing. I wonder if there's a diner nearby?"
We found Bill and Larry in the accounting office, seated at a desk, with half a dozen ledgers spread open in front of them. They hadn't had anything to eat either, so I took their orders and went to Mr. Nedermyer's secretary. She agreed to place the order with a restaurant that would deliver the food to the plant, so John and I took a walk around the grounds while we waited. When we returned the food delivery was just arriving. I paid for it and gave the driver a tip, then took Bill and Larry's orders to them while John carried our food to the lunchroom.
We had finished eating and were talking about the plant when Bob got back. The driver had taken him to pick up a sandwich after he returned from the flight, so he had eaten.
We sat and talked about the timberland for a while before I asked John to see if Bill and Larry were almost done. When he returned, they were with him.
"All done, DD. We were just doing a little in-depth auditing as long as Bob wasn't back yet."
"How do things look, Bill?"
"About as we expected. They're delinquent across the board. Total payables are about $380,000. Receivables are about $60,000."
"Are the books up to date?"
"Yes, they are. No more than two days posting needs to be done."
"No other red flags?"
"Nothing that we could spot."
"Okay. Let's see if Mr. Nedermyer is available."
(continued in part 34)
Author's note : I want to express my grateful appreciation to Teddie Sue for her proofreading help and story suggestions on this series.
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