Too Big to Fail [129]
Wilson, getting nervous that the spin-off plan wouldn’t be enough, told Fuld, “You have to really think about doing what’s right for the firm,” trying politely to suggest that he needed to sell the firm without actually using the word.
“What do you mean?” Fuld asked.
“If your stock price continues to slide, something might come out of the woodwork here with a price that doesn’t look that compelling. But you might have to take it to keep the organization intact.”
“What do you mean, low price?”
“It could be low single digits.”
“No fuckin’ way,” Fuld said heatedly. “Bear Stearns got $10 a share, there’s no fuckin’ way I will sell this firm for less!”
CHAPTER TWELVE
The news started crossing the tape late Monday night, and by 2:00 a.m., it had been picked up by every wire service in the world: The Korea Development Bank was no longer a bidder for Lehman. “Eyes on Lehman Rescue as Korea Lifeline Drifts,” the Reuters headline screamed.
Jun Kwang-woo, chairman of the Financial Services Commission in Korea, had held a briefing with reporters in Seoul that night and all but proclaimed that the summer-long talks with Lehman were dead: “Considering financial market conditions domestically and abroad, KDB should approach buying into Lehman at this point of time very carefully.”
Dick Fuld, alone in his office on Tuesday morning, sat staring at his computer screens, fixated in an unmitigated rage. To Fuld the talks had long since ended. KDB had returned briefly with an offer of $6.40 a share, though Fuld didn’t think they were serious. But to the public, which had heard about a rumored deal, the news would come as a shock. Shares of Lehman dropped precipitously from virtually the moment the stock market opened.
The timing of the report was especially embarrassing to Fuld in that it had come while Lehman was in the midst of holding its high-profile annual banking conference at the Hilton Hotel in Midtown Manhattan, just two blocks away from his headquarters. A CNBC van was parked out front to cover the second day of the event; Bob Steel, now of Wachovia, and Larry Fink, of BlackRock, were set to present that morning; Bob Diamond of Barclays Capital had spoken at the conference the day before.
Bart McDade walked into Fuld’s office just after the market’s open, but before he could say anything, Fuld started shouting and pointing to the TV. “Here we go again,” Fuld said. “Perception trumping reality once more.” McDade politely turned his attention to the screen.
CNBC’s headline warned: “Time Running Out for Lehman.” David Faber, the network’s seasoned reporter, elaborated on that theme, pointing out, “They need to do an awful lot between now and next Friday [sic], when the company reports earnings.” But then he added, somewhat prophetically: “Can they actually report the losses that are anticipated on Friday [sic] and simply say we’re continuing to review strategic alternatives? Perhaps they can, and perhaps they will have to. But there are certainly a lot of questions.”
As it happened, McDade had come to speak to Fuld about precisely the subject that Faber had raised. McDade told Fuld he thought they should preannounce earnings before the scheduled earnings call next Thursday—maybe as early as the next day. “We have to settle things down,” he told Fuld.
Fuld, nodding in agreement, said, “We’ve got to act fast so this financial tsunami doesn’t wash us away.”
McDade’s overture to Fuld was, at least in part, Kabuki theater, for at this juncture, asking Fuld’s permission was simply a courtesy. McDade had already told Ian Lowitt, Lehman’s CFO, to get the numbers ready. He was also