chapter 21
No one was more aware than Elizabeth of the enormous responsibility she had assumed. As long as she was running the company, the jobs of thousands of people depended upon her. She needed help, but she had no idea whom she could trust Alec and Rhys and Ivo were the ones she most wanted to confide in, but she was not ready yet. It was too soon. She sent for Kate Erling.
"Yes, Miss Roffe?"
Elizabeth hesitated, wondering how to begin. Kate Erling had worked for Elizabeth's father for many years. She would have a sense of the undercurrents that flowed beneath the deceptively calm surface. She would know about the inner workings of the company, about Sam Roffe's feelings, his plans. Kate Erling would make a strong ally.
Elizabeth said, "My father was having some kind of confidential report drawn up for him, Kate. Do you know anything about it?"
Kate Erling frowned in concentration, then shook her head. "He never discussed it with me, Miss Roffe."
Elizabeth tried another approach. "If my father had wanted a confidential investigation, to whom would he have gone?"
This time the answer was unhesitating. "Our security division."
The last place Sam would have gone. "Thank you," Elizabeth said.
There was no one she could talk to.
There was a current financial report on her desk. Elizabeth read it with growing dismay, and then sent for the company comptroller. His name was Wilton Kraus. He was younger than Elizabeth had expected. Bright, eager, an air of faint superiority. The Wharton School, she decided, or perhaps Harvard.
Elizabeth began without preamble. "How can a company like Roffe and Sons be in financial difficulty?"
Kraus looked at her and shrugged. He was obviously not used to reporting to a woman. He said condescendingly, "Well, putting it in words of one syllable - "
"Let's begin with the fact," Elizabeth said curtly, "that up until two years ago Roffe and Sons had always done its own capital financing."
She watched his expression change, trying to adjust "Well - yes, ma'am."
"Then why are we so heavily indebted to banks now?"
He swallowed and said, "A few years ago, we went through a period of unusually heavy expansion. Your father and the other members of the board felt that it would be wise to raise that money by borrowing from banks on short-term loans. We have current net commitments to various banks for six hundred and fifty million dollars. Some of those loans are now due."
"Overdue," Elizabeth corrected him.
"Yes, ma'am. Overdue."
"We're paying the prime rate, plus one percent, plus penalty interest. Why haven't we paid off the overdue loans and reduced the principal on the others?"
He was beyond surprise now. "Because of - er - certain unfortunate recent occurrences, the company's cash-flow position is considerably less than we had anticipated. Under ordinary circumstances we would go to the banks and ask for extensions. However, with our current problems, the various litigation settlements, the write-offs in our experimental laboratory, and..." His voice trailed off.
Elizabeth sat there, studying him, wondering whose side he was on. She looked down at the balance sheets again, trying to pinpoint where things had gone wrong. The statement showed a sharp decline over the past three quarters, largely because of the heavy lawsuit payoffs listed under the column "Extraordinary Expenses (Nonrecurring)." In her mind's eye she saw the explosion in Chile, the cloud of poisonous chemicals spouting into the air. She could hear the screams of the victims. A dozen people dead. Hundreds more taken to hospitals. And in the end all the human pain and misery had been reduced to money, to Extraordinary Expenses (Nonrecurring).
She looked up at Wilton Kraus. "According to your report, Mr. Kraus, our problems are of a temporary nature. We are Roffe and Sons. We're still a first-class risk for any bank in the world."
It was his turn to study her. His supercilious air was gone, but he was wary now.
"You must realize, Miss Roffe," he began cautiously, "that a drug firm's reputation is as important as its products."
Who had said that to her before? Her father? Alec? She remembered. Rhys.
"Goon."
"Our problems are becoming too well-known. The business world is a jungle. If your competitors suspect that you've been wounded, they move in for the kill." He hesitated, then added, "They're moving in for the kill."
"In other words," Elizabeth replied, "our competitors bank with our bankers, too."
He gave her a brief congratulatory smile. "Exactly. The banks have a limited amount of funds to loan out. If they're convinced that A is a better risk than B - "
"And do they think that?"
He ran his fingers through his hair, nervously. "Since your father's death I've had several calls from Herr Julius Badrutt. He heads up the banking consortium we're dealing with."
"What did Herr Badrutt want?" She knew what was coming.
"He wanted to know who was going to be the new president of Roffe and Sons."
"Do you know who the new president is?" Elizabeth asked.
"No ma'am."
"I am." She watched him try to conceal his surprise. "What do you think will happen when Herr Badrutt learns the news?"
"He'll pull the plugs on us," Wilton Kraus blurted out.
"I'll talk to him," Elizabeth said. She leaned back in her chair and smiled. "Would you care for some coffee?"
"Why that's - that's very kind of you. Yes, thank you."
Elizabeth watched him relax. He had sensed that she had been testing him, and he felt that he had passed the test.
"I'd like your advice," Elizabeth said. "If you were in my position, Mr. Kraus, what would you do?"
That faintly patronizing air was back. "Well," he said confidently, "that's very simple. Roffe and Sons has enormous assets. If we sold off a substantial block of stock to the public, we could easily raise more than enough money to satisfy all our bank loans."
She knew now whose side he was on.