Free To Trade

I was surprised by his reaction. He was enthusiastic. 'Sure, why not?' he said. 'I went to a lot of effort to make sure the Tahiti is as clean as a whistle, and this Tremont Capital business nearly screwed all that up. It sounds fun. I was planning to come to England soon anyway. And it would be nice to get you off my back.' I assured him I would forget all I had ever learned about him. We discussed dates and details for a few minutes and then hung up.

I dialled Cash. 'How did you get on?' he asked.

'Everyone agreed to help. Piper even seemed to relish the idea,' I said. 'I think I have found the company we are looking for.' I told him the name. 'Can you check out how it is trading? Who owns bonds, whether there are any sellers likely to emerge in the next few days, that sort of thing?'

'OK. Talk to you later.'

It was good to be in a suit again. As I walked into the Colonial Bank building and took the lift up to the twentieth floor, I felt tense but ready.

The small trading room froze as I walked in. Jeff, Rob, Gordon and Karen all stared at me for a second or two, before putting their heads down to paper and telephone. Hamilton took no notice of my entrance. There was a young man with glasses sitting at Debbie's desk. Her replacement. I was glad that Hamilton had not yet found a replacement for me.

I strode into the room. 'Morning, everyone,' I said loudly. There were a few murmured responses. 'Hallo, Karen. Miss me?' I shouted across to her. Karen, at least, smiled. It was something.

I walked over and introduced myself to the young man at Debbie's desk. He said his name was Stewart. 'My name's Paul. I work here,' I said. I saw Jeff stiffen out of the corner of my eye. Stewart was thrown into complete confusion, and blurted out something incoherent. He clearly knew who I was. He was torn between natural politeness and not wishing to be seen consorting with a criminal.

Hamilton finished his call, and came over. He was friendly enough, at least by his standards. 'Morning Paul. Nice to have you back. You can sit at your old desk.' The word 'old' jarred. 'A couple of ground rules. I would rather you didn't have any contact with the market at all whilst you are in our offices, so don't answer the phone, and don't make any calls to any salesmen.'

'You don't mind if I use the phone to ring headhunters, do you?' I asked.

'No, that's fine.' He dropped some papers on my desk. 'I have got a couple of US regional banks I would like you to take a look at. They have just been downgraded to triple B, and their bonds are yielding almost 12 per cent. If they are safe, I would like to buy some.'

Typical of Hamilton, I thought. He would make the maximum use of me that he could whilst I was there. But I was glad to have some real work to do. I would be more inconspicuous with my head buried in an annual report than hanging around trying to make work for myself.

No one talked to me all morning. I only caught the odd sideways glance. I couldn't really blame them, no one likes a crook. It was sad. They probably felt let down by me. Well, all that will soon be over, I thought. I tried to catch Rob's eye, but he was having none of it. He made sure that he was always deeply involved in phone conversations, eyes fixed on the screens in front of him.

The morning wore on. I looked at the clock on the trading-room wall. Ten fifty-nine. At eleven o'clock precisely, I heard Rob call, 'Hamilton! Claire on two.'

I watched Hamilton as he spoke to Claire. I knew what she was saying, but it was impossible to see Hamilton's reaction. They talked for five minutes. After they had finished, Hamilton leaned back, and stroked his beard. A good sign. He was nibbling at the bait. He sat like that for two or three minutes before suddenly getting to his feet and walking towards me. I quickly stared down at the balance sheet in front of me.

'Paul, I wonder if you would have a look at something for me?'

'Certainly. What is it?'

'It's a company called Mix N Match. Have you heard of it?'

I pursed my lips in concentration. 'Yes, I think so. It's a retailer based in Florida. It has been having a tough time recently, I think.'

'That's right,' said Hamilton. 'Do you know anything else about it?'

'No, I'm afraid not,' I lied.

'Well, I got a call from Claire about it just now. The bonds are trading at twenty cents on the dollar, apparently. Everyone expects the company to file for bankruptcy. Claire says there is a rumour it is about to be taken over by the Japanese.'

I raised my eyebrows. Hamilton caught my expression. 'Yes, I know,' he said. 'It's only a rumour. And Claire knows very little about junk bonds. But if she is right, we make eighty cents; if she is wrong, the most we can lose is twenty. I think it's worth a look. Claire should be faxing some stuff through soon. See what you make of it.' He walked back to his desk, and then hesitated. 'But make sure you don't talk to anyone outside the firm on this.'

'Right,' I said, and set to work. I collected all the data we had on Mix N Match from our own files. I didn't have long to wait for Claire's fax. Then I set to work, surrounding myself with papers, and tapping financial information into my computer.

I had selected Mix N Match as the best of the five companies I had looked at the previous day. It didn't look a bad investment at twenty cents; even in bankruptcy, bondholders should be able to get fifty cents on the dollar at least. With a takeover play to aim for as well, it made a hell of a good trade. Irresistible, I hoped.

For the next four hours I put together an elaborate analysis of the company in bankruptcy. I carefully valued all the assets, and put the results on a nice spreadsheet, which I printed off, and showed to Hamilton. He had been hovering over my shoulder for much of the time, and had read a lot of the material himself. He looked at the spreadsheet and stroked his beard, thinking.

I left him to it, and made a quick phone call. Cathy answered. 'He's ready. Get Cash on the phone to him now,' I whispered, and hung up.

Within thirty seconds, the light flashed on the phone board. Karen picked it up. 'Hamilton! Cash on line one!' she called.

Hamilton was lost in thought. 'Tell him I will get back to him,' he said. Damn! I hadn't considered that Hamilton would play hard to get.

Karen got rid of Cash and called across, 'Get back to him when you have a moment. It's about "Mixer Mash" or something.'

Hamilton stiffened slightly. I knew he wouldn't call Cash back straight away, that would appear too eager. He waited five minutes before picking up the phone. He and Cash spoke for half an hour. When he had finished he called over to me.

'Well, you picked a good day to come back. I'm glad you are here, you can make yourself useful. Mix N Match may be more interesting than we thought.'

'Oh yes?' I said. I didn't have to fake excitement.

'That was Cash. Funnily enough he wanted to talk about Mix N Match. Apparently the Tokyo Stock Exchange is full of the rumour that the company is about to be taken over by a major Japanese retailer.'

I interrupted. 'You can't trust Cash on something like that, can you?'

'That's right, you can't. But it's nice that Claire's rumour is corroborated. The really interesting thing is that Cash is coordinating a consortium of investors to buy up the outstanding debt of Mix N Match.'

'What's the point of that?' I asked.

'The idea is to form a Special Purpose Vehicle that owns most of the debt of Mix N Match, and then force the Japanese to pay out par on the bonds when the company is taken over.'

'I see. So who are the other investors?'

'Just one so far. But he is big. Irwin Piper.'

'But he's a crook!' I said. 'You don't want to have anything to do with him, surely.'

'He might not be whiter than white, but he is smart,' Hamilton said. 'He is putting in twenty million dollars. Cash wants twenty million from us, and he thinks he has an investor in the States he can get another twenty from.'