TAKEDOWN – Chapter VI

VI

After seeing Steyn out of the building, Feinstein went back to his private office and picked up the phone. He dialled Serck’s private number and the latter replied immediately.

“OK, Jason, you were right. I just had a visit from a very downbeat DeWet Steyn. As you said would be the case, he’s pretty much stuffed if he doesn’t unload a decent part of his stake in Congo Copper. There are no other feasible assets he could dispose of, while he wants to keep his lifestyle, which, again as you said, seems to be his most important consideration.” He paused for a moment, then continued, “Wrong priorities; I wouldn’t be sitting here if my forbears had taken that course, despite what I told Steyn. But anyway, I’m authorised to look for a buyer, and I’m guessing you’re still interested.”

“Yeah, I can pay enough of a premium to get him off the hook – until the next time, of course, but that’s his problem.”

Serck named his ideal price, and let himself be talked up a bit by the banker; in truth, what he was interested in was the size of the stake, to give himself full control, rather than the price. With what he intended, the value was going to rise sharply, so his entry price was a secondary concern. But he was a canny investor, and he wouldn’t have felt he had done himself justice if he didn’t negotiate. The regulator, incidentally, would probably not have been best pleased had he heard the conversation. After all, whatever Feinstein may have claimed, it was difficult to see anyone really looking after Steyn’s interests; still, Feinstein’s private line was not recorded, and he knew the documentation of the deal – once it had happened – would be scrupulously correct. Feinstein’s were good like that.

Having settled what Serck would pay, it didn’t take long to get Steyn’s agreement – after all, it was the only lifeline in a very deep sea for him. He muttered and groaned, particularly when Feinstein refused to give the buyer’s identity – he was structuring a purchase and sale with Feinstein’s as a principal between the two, earning a turn for the bank (as agreed with Serck), so the buyer remained anonymous, at least for now.

A couple of days later, Serck made the flight down to San Francisco again, and took the ride out to Tesla in Palo Alto. Again, Musk welcomed him and the two spent some time closeted together in the latter’s private office. Although details of exactly what they discussed are sketchy, it is known that Musk was able to confirm that the meetings his team had had in London had been successful, and that from his side he was ready to proceed. The Tesla General Counsel and two of his legal team were summoned into the meeting and the headlines of a formal agreement were thrashed out, with the intention of producing the necessary contracts within the next week. Again, Musk and Serck dined at the private club and other members confirm the high spirits both seemed to exhibit.

Back in New York two days later, Serck gave a full briefing to his lawyers and they then went out to California to work with the Tesla legal team. He then had one more call to make before heading off again to London, to finalise his project.

“DeWet, how are you? I thought I should let you know, before we make it full public, that I have acquired a further shareholding in Congo Copper, and the regulations require that at the level Leopard-Star has now gone to, that we have to make a public offer for the outstanding equity we don’t own, or more correctly, is not committed to us. So we shall be making a public announcement through the London Stock Exchange in the next few days. Technically, I should definitely not be telling you this now, so tread very carefully for the next few days.”

“What do you mean, you bought a stake? Did you buy part of my holding? Without having the decency to tell? What the hell are you playing at, Jason?” Steyn’s voice rose as he spoke.

“Relax, DeWet. I have no idea who I bought from. I was approached by a banker who offered me a parcel of shares. I thought about it, and I decided to buy. There has been a lot of negative publicity about Congo recently, as you obviously know, and the price has dropped sharply. I’m a raw materials fund manager, and we also own the world’s foremost metal trading concern. I judged that at the price I was offered, the resource in the ground was attractive. We’ll exploit it in the future.”

Steyn was almost incoherent with rage on the other end of the line. “You bastard. You complete bastard. You’ve stitched me up completely. You started those bad stories about Congo, they had your imprint all over them. And your company cut back on its purchases just at the wrong moment. All we needed was time, and you stole that time and now you’re taking the whole company.”

“DeWet, relax and listen. I’m going to tell you some things you need to know. First, don’t tell me all you needed was time. That’s nonsense. You’re like the guy who goes bust complaining that he would have been fine in two days, if only the creditors had waited. Well, that’s crap. If you don’t have the cash flow, the creditors aren’t going to wait. If you don’t have the cash, at that point nothing else matters. You’re gone. In this case, I’ve saved you, because I do have the cash to keep funding to company. You’ve lived off it for years, and if I hadn’t acted, the shareholders would have been left holding the baby. And, by the way, everything I’ve said about the company is true. Right now, it’s got problems; you can’t finance it, I can. That’s all there is.

“Now, listen very carefully, DeWet, because I’m going to help you. Leopard-Star will make its formal offer for the balance of the shares imminently. Most of the shareholders will take it, because they won’t want to be in a small minority with us in control. I would advise you, though, not to accept the offer. You will be better rewarded by holding whatever stake you currently have. And, by the way, obviously right now you’re still ceo. just don’t do anything stupid, DeWet, and take my advice.” With that, Serck hung up.

Steyn calmed down, but he couldn’t understand what game Serck was playing. Why now? There was no indication that the copper price was going to improve any time soon, so why would Leopard-Star’s interests be served by increasing their exposure to the business? Sure, with the way the company had been talked down, Serck had got the new stake at a low price, but beyond a knee-jerk reaction when the market saw the fund’s growing involvement, there didn’t appear to be anything else to make the situation improve. As a long-term play, it gave Serck’s other interest, Metal-Exx, a copper bank to support future trading, but, whichever way he looked at it, Steyn couldn’t see the imperative to move now, as Serck had done. He was missing a piece of the puzzle, but he couldn’t quite see where.

VII

London’s Mayor, Sadiq Khan, who had replaced Boris Johnson a couple of years earlier (leaving the latter free, to the surprise of some, to become Britain’s post-Brexit referendum Foreign Secretary), was feeling very pleased with himself. He strode into the press conference, in City Hall, across the river from the City domain of the Lord Mayor, accompanied by his guest and surrounded by both of their entourages. There was a rustle of excitement among the hacks gathered in the room when they saw the guest. Was that really Elon Musk?

Khan began speaking, immediately the two principals had sat.

“Ladies and gentlemen, first of all may I thank you for coming here today. We have a very exciting announcement for you, which will mark a major step in the development of London’s transport system. But first, let me backtrack a little.

“We have, in this great city, a problem with environmental pollution. I’m sure you have all seen the reports identifying Oxford Street – on occasion – as being one of the most polluted streets in any city in the world. Overall, the quality of air in this city is frankly not good enough. We – and, to give them their due – the previous administration, have attempted to ameliorate this situation. We have a congestion zone, which, although its primary object is indeed to reduce congestion, also contributes to cutting emissions, simply because it dissuades some journeys. There has been a move towards fuel cell powered buses, but this is a long-term initiative. On the other side, if you like, we have undertaken to plant large numbers of trees, which will have a beneficial effect, but again, that’s for well into the future. We need to do something else, and something which will have a rapid effect. So we have been talking to Mr Elon Musk and his engineers from California who are building electric-powered – so fume-free – vehicles. At first, we considered a scheme to ban private diesel and petrol-engined cars from a central part of the city. However, although I am a great supporter of public transport – after all, my father was a bus driver” (the in-joke caused a ripple of laughter in the audience, and left a quizzical expression on Musk’s face) “– but in the end, that would have been too draconian a measure. We cannot make it our business to restrict the free movement of citizens around the city, however much we may wish they would abandon fossil fuels. So, having ruled that out, we thought again, and came up with a much simpler idea. Two years from now, all London taxi-cabs will be required to be powered by electricity. That will not eliminate all atmospheric pollution, but it will be a massive step in the right direction.

“Now, the actual scheme we are proposing will be in conjunction with Tesla. There will be a scrappage scheme, under which individuals or companies that currently own cabs will receive a payment when they take them off the road. There will also be a ‘soft’ financing scheme for the purchase of the new vehicles, which we are happy to underwrite; in the current low interest rate environment, we have costed that and can make it extremely attractive. From their side, Tesla have been working for some months now on a new vehicle, which will be based on their Model X floorplan. It will embody all the features we have grown to love in the traditional London cab – ease of entry, the necessary tight turning circle, easy recognition – and so on, although, of course since we are not monopolists, other manufacturers will be perfectly at liberty to develop and market their own vehicle. Mr Musk is here because his company is already well on the road to producing what we want. They have also agreed to install a city-wide network of recharging points which will be exclusively available to cab drivers. This will ensure the vehicles are not delayed by queues for charging. Obviously, while that network is being installed, there will be some disruption and roadworks, but we are well used to that in this city.

“So, ladies and gentlemen, that is the essence of the scheme I wanted to tell you about. I will now hand over to Elon Musk, who will describe to you in more detail the vehicle they are going to produce. After that, we will take your questions.”

Musk and his engineers then gave a full presentation describing the work they had done, and how the finished vehicle would be, in terms of range, performance and so on. They touched on the technology and reminded the audience that they were already producing viable, in-demand private cars, and had been for some years.

When they had finished, after half an hour or so, there was a barrage of questions about the way the scheme could operate, what legislation was necessary and whether the lawmakers would approve it, and some questions about the future for cabbies versus driverless vehicles (identified by Musk as – maybe – a next step).

Then Khan gestured to take a question from a tall journalist, wearing a bright blue suit. He stood. “Kamal Ahmed, BBC News. One thing you haven’t covered is how you are going to keep the battery supply going. I understand that there is potentially a squeeze on the availability of lithium, which I assume you will be using in the rechargeable batteries. Demand for this metal – or compounds of it – is already growing rapidly, not least because of the success of your products. It seems to me that in announcing your readiness to build what will effectively be a new category of vehicle, you will either have to reduce your output of existing private vehicles, or you must have a great deal of confidence in your ability to source the material. Which is it?”

Musk leaned forward to the microphone. “You are absolutely correct in your assumption that we shall be using lithium in our battery packs. In order to give confidence to Mayor Khan and his team that we can deliver what we will be contracted to do, we have put in place some purchase arrangements – actually not only for lithium, but also for other materials, although let’s stick with lithium here – with suppliers. I can reveal the basic supply arrangement, although not of course the commercial terms. We have signed a tripartite deal with the mining company Congo Copper and the trading company Metal-Exx which requires the latter to deliver to us specified quantities material from the former’s deposits in the Eastern Congo. This is a new deposit, in the sense that it has not been exploited as yet, and the reserves have not been counted in global estimates of what is available. We are confident we will be able to fulfil our obligations.”

That last little exchange wasn’t played in any of the news bulletins’ reports of Khan’s coup, but the Financial Times picked it up the next morning, and bit by bit it spread through the mining community. They poured over Congo Copper’s reports and, sure enough, hidden in the notes, they eventually found what Serck had seen all those months ago, which had triggered the conversations with Elon Musk; with the benefit of hindsight, everybody could see the potential value. But Serck was the one who had seen it first, and acted on it.

He received a phone call the day after Khan’s press conference. Once again, Steyn was irate.

“Jason, you bastard. You did all this behind my back. Why? Why not tell me what you wanted to do?”

Serck’s voice was cold as ice. “DeWet, you of all people could have been aware of what was there. You could have done the research I did. But you didn’t. If I were you, I would relax a little. You’ve still got a healthy stake in the company; the share price is rising fast, and will keep on going. This is a big deal. But I think you should resign as ceo. I need somebody to run the company in the interests of the shareholders, not see it as a ticket for himself. I showed you the signs, DeWet, you ignored them. Good-bye, DeWet.”

And he hung up.