Anderson folded his arms defensively and thrust his chin up.
'Why? What's the problem?'
'No problem,' Nelson said. 'I was just wondering how long they'd been shareholders.'
'It's in the accounts.'
'The accounts only show shareholders with more than five per cent of the company. They could have had a small stake for years.'
Anderson nodded, conceding the point. 'About three years,' he said. 'They came straight in with their seventeen per cent holding.'
'How did they hear about the company?'
Anderson looked across at Freeman as if pleading for support.
There was nothing Freeman could say. It had been Anderson who'd brought them in as investors. At the time Freeman had been chained to a boiler in a cellar in Sarajevo. 'I can't remember,' Anderson said. 'I'll go back through the file. I still don't see what the problem is.'
'To be honest, Maury, CRW doesn't strike me as a speculative investment. Venture capital is like seed corn, it's not fertiliser.
You don't use venture capital to shore up a loss-making company.'
'They thought our problems were temporary, that we're due for a turnaround,' Anderson said.
Nelson scribbled a note on his leather-bound writing pad.
He nodded without looking up. 'Where would they get that impression from?' he asked.
Anderson was lost for words. He looked at Freeman, then at Katherine, then back to Freeman. Freeman shrugged. 'I don't get this,' Anderson said. 'The banks won't lend any more to us, diis guy's waiting like a vulture for the first signs of weakness, but when I come up with people who are willing to invest in us, he sits there asking why. Look, Lonnie, have you ever heard the expression "don't look a gift horse in the mouth"? Like, maybe we should just thank them and take their money?'
Nelson studied Anderson for a few seconds. He seemed totally relaxed, except for the slow tapping of his pen, whereas Anderson had wound himself into a state of considerable agitation. 'First of all, it's Lennie, not Lonnie. Second of all, if ,: we're throwing proverbs around, what about "beware of Greeks bearing gifts"? There's a very good reason why the banks won't increase your credit lines just now. There's no good reason why a group of venture capitalists would want to put more money into |; the firm. That's all I'm saying.'
'; Anderson's cheeks had reddened and he was clenching and unclenching his hands like a weightlifter preparing to go for his personal best. 'So, what do you suggest, Lennie?' he said. K Nelson smiled and shook his head. 'I'd just like to know more about them, that's all. You're CRW's financial director. It goes without saying that I trust your judgment.'
I ', 'Well, that's something,'Anderson said, though he didn't look any happier.
'We're still going to have to vote on whether or not to issue the new shares,' Freeman said.
'And it'll have to go before a full shareholders' meeting,'
Nelson said. 'The annual meeting is next month, right?'
Freeman nodded. 'That'll be soon enough, right, Maury?'
Anderson said nothing, but he nodded. At least he'd stopped clenching his fists. Freeman called for a vote, and it was unanimous. The board's decisions usually were. Jo minuted the decision and Freeman turned to Nelson. 'There was something you wanted to say to the board, Lennie?' he said.
Nelson pushed his chair back and stood up, surveying the room for a moment or two before speaking. 'I wanted to say a few words about the business, and where I see it going, so that we can all give some serious thought to the future of CRW.' He looked at the portrait of the firm's founder. 'The defence industry has changed a lot since Mr Williamson began manufacturing armoured vehicles in his barns near Annapolis.
He was astute enough to see in the early years the importance of electronics, and to redirect the company to its current activities missile guidance systems and video circuits. But I think it fair to say that if he were alive today, he'd realise that the company must undergo another change if it is to survive into the next century.'
Katherine looked over at Freeman, and he knew exactly what she was thinking. What right did this man have to say that he knew what her father would think? He'd never met the man.
And if they had met, Freeman doubted that {Catherine's father would have been impressed by the thrusting young banker.
'The whole defence industry is labouring under heavy debt with shrinking profits and low margins, and it seems to me that the larger contractors have sought various solutions: some have gone after more international orders, others have diversified into other businesses, down-sized or gone into joint ventures. What I have in mind for CRW is a combination of these solutions, tailored to meet our needs.'
Freeman exchanged worried looks with Anderson and Katherine. He didn't like the way the conversation was going, but Nelson was effectively holding a loaded gun to their heads.
Without the bank's backing they were dead in the water.
'Joint ventures, coupled with aggressive down-sizing,' Nelson continued, oblivious to their looks. 'That's the way to go.'
Freeman frowned. 'Aggressive down-sizing?' he said.
'Many developing nations are lining up to get involved in licensed production of weapons systems. It gives them an opportunity to build up an indigenous defence industry, while at the same time earning foreign currency. There are lots of examples, especially out in Asia. Countries such as Singapore and South Korea, Indonesia and Taiwan. Of the countries I've looked at, Taiwan and Singapore have the most appeal.'
Anderson leant forward, his chin in his hands. 'The most appeal for what?' he said.
'For the sub-contracting of the company's manufacturing interests.' Nelson waited for them to react.
Katherine's mouth dropped. Even the portrait of her father seemed to express disbelief. 'You mean close down the factory?' she said.
'Only the manufacturing facilities,' Nelson said. 'Sales and administration would continue to be based here, but obviously a smaller workforce would require fewer support services.
Personnel, accounting, clerical – there would be savings in all departments.'
Freeman held up a hand like a policeman stopping traffic.
'Wait just one minute,' he said. 'Are you saying that we stop manufacturing here in Maryland? That we lay off our employees and move to Taiwan?'
'I estimate that we would save approximately six million dollars in operating costs in the first twelve months, though admittedly that doesn't include the one-time closure costs. But diere would also be one-time profits from the sale of the company's properties.'
Freeman shook his head emphatically. 'Let's get something straight,' he said. 'We're a manufacturing company. We make things. We make things and we sell them. That's the way it's always been. That's the way it'll stay.'
'It doesn't make sense,' Nelson said patiently. 'You can halve your manufacturing costs by switching production to the Far East. You can put the company back on a firm financial footing.'
'This is a business,' Katherine protested. 'It's made up of people. Human beings. We owe them our loyalty. Some of those men have been on the payroll for more than thirty years.'
Nelson sighed patiently. 'It's those men who are dragging this company down,' he said. 'Think of CRW as a tree, a tree that's starting to die. You can either stand by and let it wither away or you can prune the dying branches.' He looked at the board members one at a time as he spoke, like a defence attorney giving his closing speech to a jury. 'And I can tell you here and now, if you don't do something, the bank will. In my opinion, you have something like six months to act. After that there'll be nothing left to save. Even Chapter 11 won't be an option.'
'That sounds like a threat,' Katherine said.
'Mrs Freeman, we're a bank, not the Mafia. We don't make threats, we make loans. But we have the right to foreclose on those loans.'
'But we're talking about people here. Men with families.
Men who depend on us for their livelihoods.' Katherine took a cigarette from her handbag. Her hand shook as she lit it and inhaled. Her eyes narrowed as she studied Nelson through the smoke. 'You know nothing about this company, Mr Nelson. You don't have the right to tell us to throw our workforce on the scrapheap.'