Coming From Behind Ch. 05-06

Chapter 5 Opportunity Knocks

I found Catherine's address easily with the 'nav' unit and saw that it was a twelve unit apartment building: three floors of four units each. She was standing out front waiting for me as I drove up.

"Drive around to the parking lot, Terry. I'll get my clubs out of the car and put them in yours."

I followed her instructions and within two minutes I was putting in the directions to the Bending Willows Golf Club in Gresham. We took the I 205 bypass to Hwy 26, then headed east for ten minutes. A turn back south on a rural road led us toward the course. We were on the southern outskirts of Gresham in some pretty hilly country. I wonder what kind of land the course would be on.

I almost missed the turnoff to the driveway but Catherine warned me and we moved slowly down a narrow tree-lined lane before pulling into the parking lot a minute later. It wasn't much to look at. The buildings were wood frame and appeared to be quite old. There were a number of poplar trees so we couldn't see much of the course from where we were.

"How old is this course, Cat?"

"I'm not sure. I think it was built just after World War Two. It's a really interesting layout but, as you'll see, it's been neglected."

There was no sign of a clubhouse save an open area that might have been the site some time ago. She led me to the pro shop and we entered the small, dark room.

"Hey, Scotty, I'm here," she announced.

A burly, older man appeared from a back room dressed in a tweed vest, shirt and tie, and plus fours. He was in full costume for a Bobby Jones banquet.

"Ach, Lass. There ye are. Come gie ye olde uncle a hug, darlin'."

Cat gave him an affectionate hug and a kiss and then turned to me.

"Terry, I'd like you to meet Walter Ferguson. Everyone knows him as 'Scotty' around here. Scotty, this is the man I told you about, Terry Monahan."

"Oh Aye, ye would be bringin' me an Irishman too, Lass?"

"I'm afraid so, Scotty," I said, holding out my hand. "Nice to meet you."

"Aye ... and you, Lad. Catherine tells me you be here to play a round, then?"

"Yes. She mentioned Bending Willows to me so I thought I'd like to play it."

"Well, she must have been a wee bit tipply if she recommended it. It'll nay stand proud to Ghost Creek ... or the others."

"I've been warned. To be honest, I'm looking at the course to see what it might need to put it in better condition. It might make a reasonable investment."

Scotty was not smiling as he rubbed his thumb and fingertips together, making the universal sign for money.

"Cash, Laddie. Aye ... lots of cash," he said in dour voice.

"Well it's all premature right now. I'm just investigating the options and seeing what it would take. No point in getting anyone's hopes up yet," I warned.

Scotty understood completely. He'd probably given up waiting for someone to rescue the place. He didn't want to get too excited by some stranger coming in and sniffing about, even if I was a friend of his honorary niece.

I paid the green fees for us and we set off to the first tee. By the time we had played three holes I knew this course was on its deathbed. To be fair, the fairways were mowed and the rough wasn't impossible. The greens showed signs of some kind of blight that was killing parts of them. They looked like they had 'the pox.' The water holes were more suitable for breeding mosquitoes and the traps were in desperate need of some sand. All in all it was an unhappy sight. But in truth, many of the problems were cosmetic and that gave me some hope.

As we played it gave me a chance to learn more about Catherine Walston. She was a graduate of the University of Oregon in her home town of Eugene. She was a Business Administration major with a minor in Physical Education. Her love of golf led her to a partial scholarship and she excelled to the point where she was encouraged to go to qualifying school and try to earn a LPGA card. She succeeded at that and her pro career began.

As I listened, it all seemed like it was a surprise to her. She loved to play golf, but never once thought of it as a career. One of her rewards for earning her card was to be approached by local sponsors. It was a necessary ingredient for an aspiring young woman to sustain her first years on the tour. That and some results that would indicate she could compete. For Catherine, it was never easy and success was flighty and infrequent.

We quit keeping score when it was apparent to both of us that it didn't matter. We would write this off to an experience and I allowed myself to concentrate on what I was seeing and what it would take to make it viable. I was beginning to see some significant dollar signs. I wasn't discouraged simply because I didn't know what the owners wanted for the operation. That was our next step.

Valley Investments were the titled owners I was told by the county records department. I was given their address and phone number and I called them.

"My name is Terry Monahan and I understand you are trying to sell the Bending Willows Golf Course. Are you the person I should be talking to?"

"Yes ... I'm Norman Fears, President of Valley Investments. What can I do for you?"

"I'm interested in discussing Bending Willows with you. Would you be willing to meet with me and my associate?"

"Yes, I think that can be arranged," he said carefully, as if looking up his schedule to fit us in.

I figured he was being cagy, wondering if he could dump that loser property for more than it was worth.

"When would it be convenient to meet?"

"Perhaps tomorrow ... at nine o'clock in the morning ... at my office." He was trying to set up the situation in his favor. He had no idea I'd seen all this before and by much more accomplished businessmen than him.

"Fine ... nine am at your office. We'll see you then," I said, hanging up. I didn't want him asking any more questions at that stage. Let him wonder who I was and what this was really about. Did I know something he didn't know?

"That was pretty quick," Catherine said. "You didn't give him much to go on."

"Intentional. He tried to give me the 'I'm in charge' routine and I didn't want him to think I was going along with it. You'll find our meeting tomorrow will be quite interesting ... from a spectator point of view."

"You want me there too?"

"Yes, ma'am. You're part of this deal so you need to know exactly what's going on."

"Terry, I've only known you for one day. I just agreed to take you out there and introduce you to Scotty. I didn't plan on being involved in any scheme."

"It isn't a scheme ... at least not yet. It's exploration. I want to know what he's holding onto this property for. I'm guessing this area falls under the County Commissioner's office. I think a visit there might be worthwhile. Two sets of eyes and ears are always better than one. You know this part of the world and I don't. I really could use your help."

She looked at me with a deadpan expression, probably wondering just what I was up to. I didn't dare tell her that I was wondering too.

I spoke on the phone with Delores Sandoval, the commissioner for the district that included the club property. A ten minute discussion gave me some key information and some ammunition for next morning's meeting.

"Norman Fears is not highly regarded in development circles," I told Catherine. "He tried to slip the rezoning of the golf course by the county but someone tipped them off that it wasn't supported by the locals. Delores did some digging and decided that Mr. Fears was not the kind of person they wanted as a developer in Multnomah County and she convinced the rest of the council to reject his application.

"Apparently he wasn't pleased. In fact, he tried to undermine her by going around her to the Chairman and offering him what would amount to a bribe. Something about a land exchange and some cash. That went over like a lead balloon so Norman was quickly dispatched. His chances of rezoning that property in this lifetime are zero. So he's stuck with what he's got: a dying golf course that is undoubtedly bleeding cash as we speak. I think we might be in the driver's seat."

"The driver's seat for what?" she asked. "Are you thinking of buying it?"

"I am. I've been mentally tallying the costs of bringing it back to life and what it would cost to make the improvements I think it needs. Once I know that I will know how much I need to borrow and roughly how much the debt service will be. Then it's a matter of how much cash it can generate. That's where the speculation comes in. I'm guessing there aren't any dues paying members left?"

Catherine shrugged, obviously not knowing.

"So there you are. That's my thinking. It will depend on what I can get out of Mr. Fears tomorrow. I wish I had time to find out just how desperate he is. Maybe if I stall tomorrow I can find out."

"And you want me involved?" She still seemed to be dubious about my motives.

"Absolutely, if you're willing. We've also got Scotty to draw on for hard information. I'm assuming he knows the workings of the operation inside out?"

"Yes ... he does. But why do you want to buy a golf course?" she asked, backing up to the question that was obviously causing her to wonder about me.

"Well ... let's see. I've decided I want to own my own business. I've decided I want to own a business that I like ... one that I can enjoy. I've decided I want a change of scenery from the Midwest. I've decided I want to be in charge of my future and my own life. Owning a golf course could fill all those needs as long as I don't get carried away and let it own me. Does that explain it?"

"I guess," she said, still not quite convinced.

"You look doubtful."

"I've never been involved in a situation like this. I guess I've lived a different kind of life. Being on the tour is nothing like being in business."

"That's partly true. But ask yourself how many current and former golfers are involved in setting themselves up in business for when they can't or don't want to play any more. All kinds. And that includes the ladies tour as well I'd bet."

She nodded. "That's right. I can remember some of the locker room talk about just that kind of thing. Women talking to each other about investments and what to do when the ride is over. Most of them want to take advantage of their careers."

"There you go. That's what I'm talking about and that's what you were talking about when you mentioned the decision that's facing you. Wouldn't you like to find a job that let you stay in touch with the one thing that you know best?"

For the first time since we'd been discussing my loosely formed plan, she smiled.

"That does sound better than some of the jobs I've been applying for. I guess it can't hurt to tag along and see what comes of this."

"Good for you," I grinned. "This could be fun. You never know how these kinds of deals are going to turn out."

When we walked into the office of Valley Investments, the front desk was empty. The single door to an office was slightly ajar and soon a fifty-something man came out and approached us.

"You are Mr. Monahan, I presume," he said with a stern visage.

"That's right. And I assume you are Mr. Fears?"

"Correct."

"This is Ms. Walston, my associate."

"Ms. Walston," he acknowledged, barely looking at Catherine.

"Won't you come in? My secretary is out on an errand right now."

We followed him into his office. Like the outer office, it was sparse. There was no sign that this was a prosperous business.

"You said you wanted to talk about the Bending Willows property," he began.

"Yes. I've had a chance to view the property and look at the improvements, if you can call them that. It's in pretty run down shape."

"I was intending to have it rezoned and develop some two acre plots for upscale homes. That plan has been delayed due to a minor glitch with the county council."

"Yes, I heard. But I wouldn't call an outright refusal a minor glitch. In talking to Delores Sandoval I'd say you were dead in the water with your proposal."

His eyes widened in surprise when he realized I had been talking to the woman who had held his fate in her hands.

"There are other avenues we can pursue, Mr. Monahan. It's still a desirable piece of property."

"I agree. However, I see it as a golf course, only a properly developed and managed one. Right now it has almost no value other than as farm land which, according to Ms. Sandoval, is the only other zoning she would endorse."

Norman Fears was not enjoying this conversation at all. I could see him getting a bit red in the face and I was wondering if he was about to lose his temper. That would be a bad business move. I was now pretty sure he was desperate to unload this property. He just wanted to get the most out of it that he could.

"I've had offers on the property so I'm not in a panic to sell," he said with more confidence than his eyes revealed.

"Really? Who is acting as your agent?"

"We've been handling it ourselves. I have a real estate license."

Another piece of useful information. A real estate agent trying to be a property developer. How novel. Not!

"Well, Mr. Fears, I have some further information to collect before I make an offer. When that is in my hands, I will contact you and we can meet again."

"Very well, Mr. Monahan, but don't be too long. The other offers are quite hot and I wouldn't want to see them withdrawn waiting for you."

"Understood, Mr. Fears. I'll make sure I'm back to you promptly. Here's my card with my phone number and e-mail address. Feel free to contact me if you have any questions.

"Thank you. I'll look forward to hearing from you," he said, rising from his chair but not offering his hand.

I nodded and escorted Catherine out of the office.

"That was short," she said as we took the elevator down from the fourth floor.

"No need to drag it out. I got all the information I could out of him this trip."

"What kind of information?"

"Well, let's see. If his secretary is out on an errand she is going to be a long time getting back. There's no sign of anyone else in the office besides Fears. Secondly, I'm betting he has no other offers. When he tried to bluff us with that crap about a minor glitch in the zoning I called him on it and he was pissed that I caught him. Now, he has to brazen out the non-existent 'other offers.'

"My bet is that I will be hearing from Mr. Fears by the day after tomorrow at the latest, probably claiming that he's about to accept another offer but wanted to give me the opportunity to bid ... being the good guy he is," I snorted.

"You got all this from that conversation? I mean, I agree, there is no secretary. No woman has a desk with absolutely nothing on it. But that business about the competing bids. Why are you so sure?"

"Who would want to buy that place in the shape it's in? Only a nut bar like me," I laughed. "No ... the only offers he's likely to have are from farmers who might want to add it to their existing land. Even then, they'd have to invest to clear and reclaim the land to make it arable. It's unlikely they'd offer what tilled farm land would be worth. So it's a bluff and not a very good one."

Catherine looked at me and the beginning of a small smile began.

"You're good at this, aren't you? This is what you did in Chicago, isn't it?"

"Something like this ... except it was for much bigger bucks."

"How much bigger?" she asked.

"My last merger finished out at four point four billion dollars."

"Oh my God! Did you say billion?"

I nodded. "I was a player in the big leagues for ten years. I learned every trick in the book when it came to valuing businesses and looking for strengths and weaknesses. After a while, it becomes second nature. Mr. Fears is a rank amateur. So now it's a case of finding out just how much trouble he's in. That will determine how much to offer him. You with me?"

She nodded, still awestruck by the number I had thrown out.

"Okay, our next move is to the county commissioner's office. We need to do a title search on the property. Let's make sure Fears actually owns the property and see if they are any encumbrances. I almost expect that we'll find he can't sell the property without an okay from his lender. In other words, he can't just dump it at whatever price he wants. I'm betting there's a bank in the picture and that is where the pressure to move the property is coming from. If I'm right, they ... the bank ... will be listed and we can talk to them before we try and deal with Fears."

"Why would the bank talk to us?"

"Because we might represent some new business to them. New business that is a lot more secure than Valley Investments. They might just cut their losses in order to re-mortgage the property to someone who can prove they've got the wherewithal to handle the debt ... and, have the approval of the county commission."

"Oh. This is complicated. Does that mean we don't have to deal with Mr. Fears."

"No. If he's the titled owner we have to deal with him. But if the bank knows and agrees with our plan, they can put pressure on him to settle with us as the best deal he can make."

"What are you thinking of doing ... I mean, what can you offer?"

"I'll get a reputable real estate agent to give me a valuation of farmland. That's usually a per acre price. That will tell us what the bottom line is. Then we can put our proposal together from that."

"Are you sure you can borrow the money?"

"Yes. I have a source in Chicago that will lend me all I would need at one percent above prime. I doubt the bank will go anywhere near that low. Just the same, I'll give them the option. We may want to do business with them anyway."

She nodded. "You've given this a lot of thought haven't you."

"I guess ... but I've done all this before in one way or another, so I kind of know how to get all my ducks in a row in a hurry."

"It's too fast for me to follow ... but ... it is exciting," she smiled. "I'd like to see how this all turns out."

"Stick around, Catherine. The ride can be real fun when it gets going."

The county commissioner's office provided me all the information I needed to know. Valley Investments did indeed hold title to the land and Norman D. Fears was listed as the sole principal of that company. A one man show, just as I expected. Along side Valley, however, was the name of the bank that held the loan and the property as collateral. Once again, no surprise. Norman had made a gamble and it wasn't going to pay off.

I called the bank, asking for the chief loans officer. I made an appointment with him for the following day. Might as well get the ball rolling early. When I hung up, I looked at my watch. It would be two o'clock in Chicago so I gave my old friend, Darrel Popovich, a call.

Darrel was the prototypical venture capitalist and had provided funds for several of my smaller acquisition projects. He regularly worked at the low end of the interest scale with little more than a couple of points above prime. He promised, as a thank you for my turning business his way, that within reason, he would lend me what I needed at prime plus one. Within reason meant it wasn't too large a sum and wasn't too risky a venture. I thought this project fell within his spectrum.

It took less than fifteen minutes to get Darrel on board and that left only the bank and Mr. Norman Fears left to deal with.

"It was that easy?" Catherine said, shaking her head in wonder as I signed off the phone.

"Comes from my helping find some good projects for him to invest in. He'll own five percent of the golf course, but we'll get money cheaper than anywhere else, including some pretty big businesses. It's pretty small potatoes to him but he's grateful for my help in the past so one hand washes the other."