Chapter 149: Crisis

[Chapter 149: Crisis]

The year moved into 2002, signaling a fresh start.

In the luxurious living room of Godwin Manor, Ian was flipping through The Wall Street Journal. The headline caught his eye: "Enron Admits to Accounting Fraud, Over $600 Million in Profit Overstating."

"Damn!"

He had completely forgotten about Enron. Ian felt frustrated. It was clear he was no financial expert, having missed such a significant opportunity. He missed out on the news and on a chance to profit in the stock market!

But he couldn't blame himself entirely, considering that Enron's collapse occurred a few months later in another parallel universe.

Just as he was feeling dejected, Gaskill's phone call rang through. "Ian, do you have a moment? Come by my place."

There was a hint of urgency in his tone, and Ian instinctively sensed something was off. After hanging up, Ian pondered for a moment and then stood up to leave.

The butler approached discreetly, "Do you want me to call Brydon?"

"No need," Ian replied, lightly shaking his head.

Grabbing his tailored jacket from Balenciaga, Ian stepped out of the mansion.

He got into his newly purchased Lamborghini and headed toward Montecito.

...

An hour later, Ian arrived at Gaskill's house. The butler opened the door for him and ushered him inside. Gaskill and Lena were in the living room.

Lena sat on a white floral-upholstered sofa, her slight belly showing, yet her expression carried a hint of despair. Next to her, Gaskill was puffing on a cigar, looking more worn out with graying hair and a pale complexion.

Ian quickly approached, wrapping his arm around Lena's shoulders. "Whatever happened, don't take it to heart. Trust me and Gaskill; we'll figure this out."

Lena nodded softly, planting a gentle kiss on Ian's face. It was only after that Ian moved to sit beside Gaskill, taking the cigar from Gaskill's hand to examine his expression. Thankfully, it didn't appear to be a health issue.

"What's going on?" Ian asked.

Gaskill's face turned a shade bitter, "The board removed me from my chairman position and is demanding repayment of all the loans to Carr Media."

Ian's heart sank. Though he had sensed earlier that something unpleasant was in the air, he did not expect the situation would escalate so quickly.

The bank pulling their loans spelled disaster. If they proceeded with that, they could kiss the follow-up $336 million goodbye. Ian wouldn't be able to fulfill the contract to receive the final 3 percent payment, and the CBS board could easily retract the previous 12 percent of shares, effectively leaving them with nothing, including the fourth-quarter dividends from 2001.

And Etna could comfortably refuse to pay up as well. All in all, the trouble caused by the bank's withdrawal was monumental for Ian.

He slowly picked up the bottle on the table and poured himself a drink, adopting a relaxed tone, "The bank may have the right to call the loans due early, but they need a breach of contract on my part to do so, right?"

The bank couldn't just pull the loan at will; they needed clear evidence of a default.

At present, Carr Media had a debt ratio of 69%, which was fairly healthy, especially considering their solid operating performance and strong profitability, leaving no grounds for the bank to withdraw funds.

Gaskill spoke softly, "You purchased a house in Beverly Hills."

"What?" Ian was taken aback, "Is that it?"

Earlier that year, Ian had borrowed over $100 million from Linno Bank to acquire three newspapers, including the Signet Daily, using those newspapers as collateral. He later sold those papers and bought himself a mansion in Beverly Hills and shares in Spark TV. Of course, Gaskill supported this decision - that mansion would allow Ian to move freely into Beverly Hills, gaining access to more valuable information.

Moreover, a CEO's life is work.

Some people boast of not having taken a vacation in forty years, which was not far from the truth. A CEO's life could be considered all work; whether on the golf course with clients or renting yachts for social gatherings, everything was tied to business. Even dining out could be about discussing deals.

Despite the lack of clients, the CEO's well-being also mattered and was part of the job description.

For Ian, the Beverly Hills mansion served a more practical purpose, especially since the property itself was also collateral. With Gaskill's backing, there was no problem.

However, procedurally, there was indeed an issue. The initial collateral was the three newspapers, which were sold without consent; changing collateral needed bank approval. Gaskill's leniency had led to a procedural violation!

Thus, they could claim that he was running afoul of the regulations by using funds designated for business for personal expenses, granting them the right to withdraw the loan.

In simpler terms, when they wanted to help, it was all smooth sailing; when they didn't, any little thing could turn into a sticking point.

Under Gaskill's leadership, a $1 billion acquisition was a $1 billion collateral; without collateral, they could secure credit loans, even negotiate special agreements to pay only interest without touching principal; while Gaskill was out of power, suddenly that $1 billion asset was only worth $700 million in collateral!

Thus, Lino Bank believed Carr Media had violated operational guidelines, citing insufficient collateral and unfair special agreements as grounds to withdraw loans.

...

Once Ian understood everything, confusion settled deeper in.

"This is a deliberate plot against me!"

He looked at Gaskill curiously, "Why does this happen?"

Gaskill replied gently, "Someone's scheming against you!"

"Who?"

"Bernard Madoff."

"It's him?" Ian was shocked.

Gaskill elaborated, "You've angered him, and CBS is of value to him. He can call in favors in key financial sectors. He promised some shares to my shareholders."

Damn!

Ian connected the dots. Yes, he had indeed crossed paths with Madoff, but it wasn't just a matter of a few words at a dinner party; it was about Giuliani and his crew.

Doubt, once planted, could take root. Ian's display of distrust toward Madoff at the dinner had sparked concerns that had already pushed Giuliani to decide to pull his money out in a year.

That would greatly affect Madoff. His elaborate scheme thrived on most investors only taking the interest while leaving the principal behind. Once the tide shifted toward principal withdrawals, it would lead to cash flow issues and could even expose the entire scheme.

So, Ian could choose not to invest, but his release of this distrust, compounded by its invisible influence, resulted in some of Madoff's clients opting to cash out.

That was dire for Madoff, especially knowing that once Ian publicly called attention to this through the media, the trouble could escalate.

Thus, he targeted Ian first - destroy you, and then whatever you say wouldn't hold weight. Even when you accused Madoff of fraud, he could easily spin it as Ian's retaliation.

Ironically, Madoff's reward was securing shares for Lino's shareholders in his company, all but saying: "You help me, only then will I fraud you!"

Exactly!

High-end scammers operated this way: you had to beg them to let you be fooled! Their financing avenues were limited, and they didn't offer them to just anyone.

...

Additionally, Gaskill's gunshot injury played a role in this.

Though that shot didn't end his life, the spasms and recurrent headaches led to doubts about his management capabilities among the board at Lino Bank.

This might be forgivable, but the real issue was Gaskill's overwhelming support -- the private bank's shareholders favored loans because of profits and the ease of lending. Gaskill's preferential treatment toward Ian leaned heavily, leaving other shareholders feeling disgruntled.

With Madoff's influence looming over the situation, Lino Bank's board became resistant.

In the board elections earlier that year, Gaskill was ousted as chairman, and Lino Bank's board planned to recall their loans, leading to severe consequences, including Etna potentially rejecting their loan issuance.

In this scenario, the Los Angeles Hearld, the Los Angeles Times, and Mayhill Construction together could easily set a price tag at around $1 billion.

Any further loans became impossible -- who would lend to a company facing foreclosure? Madoff would undoubtedly blast the narrative of Carr Media being in debt.

Suddenly, Ian's projected $1 billion profit was wiped out, and he risked being in debt!

What a lesson for the youth -- greed led to overreach.

The path to expansion through debt relied heavily on being able to continually borrow, and once that flow stopped, doom awaited, leaving one vulnerable to hidden predators ready to pounce.

It could only be said that Ian's alliance with Gaskill was both a blessing and a curse. Without Gaskill's backing, Ian might have progressed steadily, but with his guidance, Ian found himself on an accelerated path filled with unprecedented opportunities, albeit at the cost of greater risks.

*****

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