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.