Tales of the Anglic Union Astrographic Service
by George Phillies
The Bankers Talk
Lawrence Morningstar stared into his computer display. He’d momentarily set it so it showed what its camera showed of him: Brown eyes, blond hair starting to fade to silver, a conservative left half-mustache, formal suit with broad necktie and an ornate paisley vest, the fabrics in the colors of his St. Louis Investment Trust. The last green light appeared on his display. “I believe we are all here, physically or virtually,” he said. “Ahead of schedule, even.” He stared around the table. “As the largest single noteholder – some of you represent groups of holders — my bank is stuck, err, obliged to be the convenor of this meeting. My counsel says we collectively represent more than eighty percent of the debt of Bulger Spaceship Holdings. Bulger is sixty days delinquent on paying interest on all of our notes, so any of us could have put a general lien on their operations…and almost all of us have. I see four proposals for taking control of Bulger as debtors in possession, each from a group with different claims. Those claims and proposals have all been circulated. Does anyone have anything new to add before I draw lots to open discussion?”
On the bright side, Morningstar thought, the Senior Partners back in Missouri all agreed that the loans were very nearly a total loss, so there was no point on forcing division of the pennies in Bulger’s bank account and their rust-pile of a shipyard. Nor would the loans give us ownership of one of Bulger’s four spaceships. There were too many other debtors. No one said anything. He drew a lot. “Great Lakes,” he said.
“Bulger has been losing a lot of money for quite some time, as witness their very substantial debts.” Benjamin Goldsmith spoke for the Great Lakes Merchant Bank. Goldsmith appeared to be a truly old man, his hair faded to silver, wearing the traditional heavy pullover sweater of that counted as formal dress just south of Lake Superior. “Our noteholdings are not quite as large as yours, Lawrence, or I would be stuck running this meeting, but they are the sizeable number in your report. The competitors of Bulger barely break even. How can we possibly recover? Ideas, gentleman”
Morningstar drew another lot. ‘Georgia’, it read. He nodded at their representative. “I am trying to imagine this group coming to an agreement.” Margaret Evans smiled innocently “As a practical matter, we have three proposals in which the differences would reduced us to haggling about miniscule sums, at one point, literally pennies. And then we have a proposal with no source, or details, no clear indication of which debt holdings are behind it, that proposes that ‘full repayment is likely’. I know I’m from the wrong state, representing the Georgia Benevolent Trust, but this has to be a ‘show me’ offer. Lawrence, I agree you’re allowed to, but why did you forward this gem to us?”
“Time to welcome our last representative,” Morningstar said, “one who represented enough debt that he was allowed to stay anonymous until he said something.” Morningstar pointed at the far end of the table, where waited a silver display screen.
The masked virtual representative uncloaked. The silver circle representing a masked speaker was replaced by a smiling face Evans knew all too well from High School history classes. “Doctor Chelan. We are honored by your presence. What may we do for you?” Why, she wondered, was she facing a famous historical figure?
“As it happens,” Chelan said, “I represent the New England Benevolent Trust, the South California Benevolent Trust, the Central California Benevolent Trust, the North California Trust, and most important the Oregon Trust, not to mention noteholders of the Harold Seldon Legion, and various other debtors. Bulger’s ground holdings are on Humboldt Bay, but they are an Oregon Corporation, so we will settle in Oregon Chancery Courts.” Chelan paused, letting his listeners remember that Oregon Courts always put the Oregon Trust first. “Counting debts transferring, I believe I will represent most of the remaining noteholdings. My offer is very simple: We can spend ten years litigating, doing a Bleak House imitation that will leave us all poorer, or we can come together under a uniform return scheme. Bulger should be highly profitable. No one seems to understand why they are not—,” namely he thought, many hands in the till and two investment funds looting the assets, “—but I am confident that with sound management Bulger will by and by become very profitable indeed. Also, being realistic, their assets cover only pennies on the dollars we are owed.” Not currently profitable, he thought again, except for the two investment funds. “We would be seizing the assets, not negotiating with Dewey or Rothham. You may each need to discuss this with your principals.”
“I propose that you will agree to a CEO and appoint an Audit Committee,” Chelan continued, “and that as you are repaid you will relinquish your claims, and in the end the Seldon Legion will take ownership. In round numbers, there are costs needed to keep money coming in. There will then be income in excess of costs. Half goes to paying off debt. Half goes to expanding the income stream. I will be the CEO. There are considerable technical details in my full proposal. However, the math is clear. Bulger has few financial assets. Anyone who wants dissolution and distribution, rather than in possession, will be getting very little indeed. My offer means risk little, and likely gain much.”
“I very much want to see the details,” Eli Bywater announced. “Agnelli and Hong had discussed this option, but concluded we didn’t have the expertise needed to make it work. Do you?”
“I anticipate hiring considerable new staff,” Chelan said. “There is already a corporate division that more than pays for itself, and an income stream from freight haulage. You need to read the details.” And, he thought, not ask too many questions about how we did the partial survey of the shipyard. Seldon Legion Dark Commandos are indeed stealthy.
“Income stream?” Evans asked.
“A sensible question,” Chelan said. “We are substantially limited to running mining products back from remote Proserpine, the Kuiper asteroid the Anglic Union almost lost, to Earth. The miners on Proserpine would be happy to mine more, but shipping is the limit. We have four quite aged Pelnir class freighters, each of which should be able to haul 70,000 tons of nickel-iron every six weeks, or two million tons a year. They actually haul much less. Our three competitors divide the other ten million tons of Anglic Union steel consumption between them. There is demand for much more steel, but, of course, the Stellar Republic won’t sell the Union more bulk haulers, and on-earth mining has long since become uneconomical. To add insult to injury, the Stellar Republic charges our competitors an arm and a leg for routine maintenance. The Union has no shipyards. We should be doing our own maintenance, meaning we should be profitable.”
“And our competitors don’t see this?” Goldsmith asked. “I inherited this account last month, when the former managing partner may he rest in peace couldn’t explain how we’d ended up this far in the hole.”
“May I?” Evans asked. There were nods of assent. “Our competitors all have substantial holdings from Stellar Republic citizens. They’re corporate founders with privileges. The Stellars can’t expand those holdings, thanks to current securities laws, but they refuse to sell, even at a huge premium over market prices. And the corporate charters let them force our competitors to use Republic maintenance firms and graving docks.”
“How did they pull that off?” Goldsmith asked. “Surely that’s not in the interest of the other shareholders?”
“Their founders inserted in the charters that they had first claim on outside corporate spending, within some unreasonably generous limits,” Evans said. “There are reasons why our competitors’ shares are not quite penny stocks. And, curiously, since the last altercation, the Stellar Republic has embargoed sales to the Union of space freighters. They were quite annoyed that the Space Guard managed to buy from the Zengor a stack of patrol craft and the three corvettes.”
“Waste of money,” Robert Patterson grumbled. He shifted in his chair, spreading the teal opera cloak that identified his corporate loyalties. “A weak space fleet contributes nothing to security; the Republic has squashed piracy in-system.”
“A waste of money now facing substantial reductions in force,” Goldsmith mumbled.
“If I might speak,” Chelan said. “A century ago, our ancestors could barely maintain steam engines. At the time, the charters were really quite generous.”
“Republic bastards,” Morningstar mumbled.
“Bulger represents the only nominally functional spaceship repair yard in the Union,” Chellan noted. “The Space Guard shares repair space in China with two dozen other earthly nations, but the treaty establishing that yard limits it to military ships. Of course, most of the founding nations have since joined the Stellar Republic, in Associate Status, but they can still vote on treaty modifications – not to mention those yards are in Manchuria, which has since joined the Republic – and they all vote against modifying the treaty to allow maintenance of civilian ships.”
“I see the detailed proposal text,” Patterson said. “We’d like to study it for a day or two. Is that acceptable?”
“Should be,” Goldsmith said. “Also, Bulger bonds are now below one cent on the dollar, so at some point the people who want to buy into this can buy out anyone who doesn’t.”
“That bothers me a bit,” Morningstar said. “There is an income stream, there are assets on the ground, the debts other than to us appear to be quite small unless there is something hidden, but we have a better chance of knowing about that than the hoi polloi do, there are four spaceships…how does an auction not beat one cent on the dollar?”
“Assets are not saleable,” Goldsmith said, “a detail very well hidden unless you know exactly where to look. Dewey and Rothham somehow procured a large subsidy from the Space Guard, making their ships and Yard a Defense National Asset. If they cease operations and go under, the Space Guard gets to claim the material assets of the company.”
“How did due diligence not pick up this liability?” Morningstar asked. “And where did the money go?”
“Strictly speaking, it’s not a liability,” Chelan said. “It’s not money the company owes. It does reduce what the assets are worth as loan collateral, but they sold to the Space Guard recently. At a guess, Dewey and Rothham claimed to have found the Guard as a buyer, and collected a commission, based on the nominal value of the facility, the commission being larger than what the Space Guard paid.”
“Coming back to the one cent on a dollar,” Evans said, “the value of the bonds, and hence the ability of we or any of our space merchant competitors to borrow money, has been under systematic attack by the press’s isolationist wing, notably the Fiscal Post and the Motte and Bailey Avenue Bulletin. They’ve done a large series of exposes of the worthless economic nature of space flight.”
“Two days?” Morningstar asked.
“Unless we all agree sooner?” Patterson suggested. Heads nodded. The meeting ended.