Jeffrey Archer - First Among Equals

“Opposition must be frustrating,” observed Archie when the ladies had retired after dinner.

“Yes, but it’s an excellent way to prepare yourself for Government and do some basic thinking about the subject. I never found time for such luxury as a minister.”

“But it must be very different from holding office?” said Archie, clipping a cigar.

“True. In Government,” said Simon, “you’re surrounded by civil servants who don’t allow you to lift a finger or give you a moment to ponder, while in Opposition you can think policy through even if you do often end up having to type your own letters.”

Archie pushed the port down to Simon’s end of the table. “I’m glad the girls are out,” said Archie conspiratorially, “because I wanted you to know I’ve decided to give up being chairman at the end of the year.”

“why?” said Simon, taken aback.

“I’ve seen you elected and settled in. It’s time for a younger man to have a go.”

“But you’re only my age.”

“I can’t deny that, but the truth is that I’m not giving enough time to my electronics company, and the board are continually reminding me of it. No one has to tell you that these are not easy times.”

“It’s sad,” said Simon. “Just as you get to know someone in politics you or they always seem to move on.”

“Fear not,” said Archie. “I don’t intend to leave the area, and I feel confident that you will be my member for at least another twenty years, by which time I will be happy to accept an invitation to dine with you in Downing Street.”

“You may find that it’s Charles Seymour who is residing at No. 10,” said Simon, striking a match to light his cigar.

“Then I won’t be getting an invitation,” said Archie with a smile.

Charles couldn’t sleep that night after his discovery, and his tossing and turning kept Fiona awake. He had opened the Nethercote file when he was waiting for dinner to be served. His first act with any company was to glance down the names of the directors to see if he knew anyone on the board. He recognized no one until his eye stopped at “S. J. Kerslake, MP.” The cook felt sure that Mr. Seymour had not enjoyed his dinner, because he hardly touched the main course.

On his arrival at Seymour’s, only moments after Clive Reynolds, he called for his chief executive. He appeared a few minutes later without his usual armful of files, surprised to see the chairman so early. Once Reynolds was seated Charles opened the file in front of him. “What do you know about Nethercote and Company?”

“Private company. Net asset value approaching £10,000,-000, running a current overdraft of £7,000,000 of which we service half. Efficiently managed with a good board of directors, will ride out the current problems in my view, and should be well oversubscribed when they eventually go public.”

“How much of the company do we own?”

“Seven and a half percent. As you know, the bank never take eight percent of any company because then we would have to declare an interest under section twenty-three of the Finance Act. It has always been a policy of this bank to invest in a major client without becoming too involved with the running of the company.”

“Who are their principal bankers?”

“The Midland.”

“What would happen if we put our seven and a half percent up for sale and did not renew the overdraft facility at the end of the quarter, but called it in instead?”

“They would have to seek finance elsewhere.”

“And if they couldn’t?”

“They would have to start selling their assets, which under that sort of forced-sale position would be very damaging for any company, if not impossible, in the present climate.”

“And then?”

“I would have to check my file and...”

Charles passed over the file and Reynolds studied it carefully, frowning. “They already have a cash-flow problem because of bad debts. With a sudden increased demand they might go under. I would strongly advise against such a move, Chairman. Nethercote have proved a reliable risk over the years, and I think we stand to make a handsome profit when they are quoted on the Stock Exchange.”

“For reasons I cannot disclose to you,” said Charles, looking up from his chair, “I fear that remaining involved with this company may turn out to be a financial embarrassment for Seymour’s.” Reynolds looked at him, puzzled. “You will inform the Midland Bank that we will not be renewing this loan at the next quarter.”

“Then they would have to look for support from another bank. The Midland would never agree to shoulder the entire amount on their own.”

“And try to dispose of our seven and a half percent immediately.”

“But that could lead to a crisis of confidence in the company.”

“So be it,” said Charles, as he closed the file.

“But I do feel—”

“That will be all, Mr. Reynolds.”

“Yes, Chairman,” said the mystified chief executive, who had never thought of his boss as an irrational man. He turned to leave. Had he looked back he would have been even more mystified by the smile that was spread across Charles Seymour’s face.

“They’ve pulled the rug out from under our feet,” said Ronnie Nethercote angrily.

“Who?” said Simon, who had just come into the room.

“The Midland Bank.”

“Why would they do that?”

“An outside shareholder put all his stock on the market without warning, and the Midland got worried about their position. They wouldn’t be prepared to continue such a large overdraft position on their own.”

“Have you been to see the manager?” asked Simon, unable to disguise his anxiety.

“Yes, but he can’t do anything. His hands are tied by a main board directive,” said Ronnie, slumping deeper into his seat.

“How bad is it?”

“They’ve given me a month to find another bank. Otherwise I’ll have to start selling some of our assets.”

“What will happen if we don’t manage to come up with another bank?” asked Simon desperately.

“The company could be bankrupt within weeks. Do you know any bankers who are looking for a good investment?”

“Only one, and I can assure you he wouldn’t help.”

Charles put the phone down satisfied. He wondered if there was anything that could still be regarded as secret. It had taken him less than an hour to find out the size of Kerslake’s overdraft. “Banker to banker confidentiality,” he had assured them. He was still smiling when Reynolds knocked on the door.

“The Midland weren’t pleased,” he immediately briefed Charles.

“They’ll get over it,” his chairman replied. “What’s the latest on Nethercote?”

“Only a rumor, but everyone now knows they’re in trouble and the chairman is searching around for a new backer,” said Reynolds impassively. “His biggest problem is that no one is touching property companies at the moment.”

“Once they’ve collapsed, what’s to stop us picking up the pieces and making a killing?”

“A clause that was slipped through in the Finance Act which your Government passed three years ago. The penalties range from a heavy fine to having your banking license taken away.”

“Oh, yes, I remember,” said Charles. “Pity. So how long do you expect them to last?”

“Once the month is up,” said Reynolds stroking a clean-shaven chin, “if they fail to find a backer the creditors will swarm in like locusts.”

“Aren’t the shares worth anything?” asked Charles innocently.

“Not the paper they are written on at the moment,” said Reynolds, watching his chairman carefully.

This time the chief executive couldn’t miss the chairman’s smile as Charles thought of Simon Kerslake and his overdraft of £108,000 now backed by worthless shares. Pucklebridge would soon be looking for a new member.