Quiet, Chloe. The adults are talking. Julian looked at Elena with a shark-like grin. I'm going to ask you a question.
A test of your critical thinking. If you get it right, this $500 is yours tax-free. Probably more than you make in a week. Elena looked at the money, then at Julian.
"And if I get it wrong?" "If you get it wrong," Julian leaned in, his eyes gleaming with malice. You have to stand on that chair and announce to the entire restaurant that Julian Thorne is the smartest man in Chicago. The table erupted in nervous laughter. Brett and Cole looked uncomfortable, but didn't dare interrupt the boss.
I'm here to serve food, Mr. Thorne. Not to be your entertainment, Elena said, her voice steeling. Oh, come on. Are you scared?
It's just a question. Unless you know you're too stupid to answer it. He took a sip of wine. That's it, isn't it?
You know your place. The restaurant seemed to quiet down. People at nearby tables were glancing over. The tension was palpable.
Julian was bullying a server and no one was stopping him because he was Julian Thorne. Elena took a breath. She looked at the bills on the table. Then she looked at Julian's smug face.
She recognized that look. She had seen it in boardrooms in Tokyo, London, and New York. The look of a man who had never lost. "Ask your question," Elena said.
Julian clapped his hands together, delighted. Brave, I like it. Foolish, but brave. He sat back, swirling his wine glass.
He wanted something impossible, something she couldn't possibly know. He wouldn't ask about pop culture or sports. He would ask about his world, the world of high finance and elite strategy. He wanted to expose her ignorance so thoroughly that she would feel small forever.
Let's talk about value, Julian began, his voice taking on a professorial condescending tone. I just acquired a logistics firm. We are looking at the Veblen effect regarding their branding. He paused, waiting for her to look confused.
She didn't. Here is the question, Julian said, holding up a finger. I am considering a leveraged buyout of a competitor, Kensington Steel. The company has high assets but low cash flow.
If I buy Kensington using 80% debt financing at a 7% interest rate, but the company's return on assets ROA is only 5% classic economics says I lose money. I go into negative leverage. I bleed cash. He leaned forward, his eyes locking onto hers.
Yet I am going to do the deal next Monday. And I guarantee you I will make $100 million in the first year without firing a single employee or selling a single asset. How is that mathematically possible? What is the one hidden variable I am exploiting that a waitress could never understand?
Brett and Cole looked at each other. Even they didn't know the answer. This was a specific complex financial structure involving tax loopholes or derivatives. It was a question for a CFO, not a server.
You have 10 seconds. Julian smirked. Tick tock. Chloe looked down, unable to watch.
Julian, this is cruel. 5 seconds. Julian counted. Better warm up your voice for your announcement.
Elena stood perfectly still. Her mind didn't panic. Instead, it clicked into a gear she hadn't used in 3 years. She visualized the balance sheet of a company like Kensington Steel.
She thought about the year. She thought about the location. And then she remembered who Julian was. He was a predator.
He didn't build. He exploited. Time's up. Julian slammed his hand on the table.
Up on the chair, Elena. Say it loud. You're not buying Kensington Steel for the steel, Elena said. Her voice wasn't loud, but it cut through the noise of the restaurant like a scalpel.
Julian froze. Excuse me. You asked how you make a profit with negative leverage. Elena continued her tone shifting.
The waitress voice was gone. In its place was the authoritative cadence of an executive. You can't make a profit from the operations if the interest rate is higher than the return on assets. The math is absolute.
Exactly. Julian sneered. So I'm a magician and you lose. No, Elena said, taking a step closer to the table.
You aren't relying on operations. You're relying on the Pension Protection Act of 2006 regarding legacy real estate assets. The color drained from Julian's face. Kensington Steel owns its land, Elena explained, looking directly at Brett and Cole, who were now gaping at her.
They've owned it since the 1920s. On their books, the land is valued at purchase price peanuts. But Kensington is located in the new green zone redevelopment district the city just approved last month. The land isn't worth millions.
It's worth billions. She turned her eyes back to Julian. You aren't buying a steel company, Mr. Thorne. You're buying a real estate portfolio disguised as a factory.
You'll take the 80% debt. Use the reappraised value of the land to refinance the loan immediately at a lower rate because your collateral value just tripled and then you'll strip the pension fund to pay the closing costs. You make your $100 million on the refinance spread, not the steel. The silence at table 4 was deafening.
It was heavy, suffocating silence. Julian's mouth opened slightly, but no sound came out. He looked like he had been struck in the chest. This wasn't public information.
The zoning details were buried in city council minutes. The refinancing strategy was something only his inner circle knew. Elena reached down to the table. She didn't take the money.
Instead, she pushed the $500 back toward him. But you missed one thing, Mr. Thorne," Elena added, her voice dropping to a whisper that only he could hear. "The Green Zone Redevelopment Act has a clause. Section 4, Paragraph B.
It prevents rezoning for commercial use if the land has been used for heavy industrial waste for more than 50 years. Kensington has been dumping slag there since 1925. Julian's eyes went wide. "You can't reszone it," Elena said, a small cold smile touching her lips.