Reborn American Giants

In New York in January, just after the holidays, a frontal airflow passed through New York State, making the snowy sky rarely clear.

But the good weather didn't improve the mood of Texaco CEO Aaron Elvis.

Early on the morning of January 14th, the company's legal department director Sam Eric called him. He said to the CEO on the phone: "Aaron, I think we are in big trouble this time."

On January 13, the Delaware Court of Chancery held the first review of the validity of Penzer's Getty Oil acquisition agreement.

The Court of Equity was faced with more than 4,000 pages of various documents and files produced by Penzer's legal team during negotiations with the Getty Petroleum Company's board of directors.

Finally, in front of the copy of the final agreement issued by Penzel Company, Justice Alan Swartz decided to temporarily adjourn the meeting. The court staff will conduct a detailed investigation and confirmation of the true situation of these documents. At the same time, the second court session will be held.

It is scheduled for a week later, when Getty Oil Company will submit different evidence.

In the president's office on the 42nd floor, Aaron was silent as he listened to Sam Eric's call.

The lawsuit has attracted everyone's attention, causing some of Texaco's public relations lobbying efforts to be conducted privately and at a slow pace.

Those politicians and judges could only vaguely state that they could only do their best to help Texaco, but they could not give definite guarantees.

Sam Eric did not receive an answer from Aaron. He urged on the phone: "Aaron, you must find a way as soon as possible. In my experience, the board of directors of Getty Oil cannot provide any useful evidence to prove.

It has not signed any relevant agreement with Penzel Company. Faced with the evidence presented by Penzel, the Court of Balance may very well make an illegal judgment against us.

It is a very unfavorable judgment." After a pause, as if to take a breath, Texaco's legal director continued: "In short, you must seize the time and cannot wait until the judgment is issued. Even if Getty Oil Company files an appeal, it will

Faced with the ruling of the first instance, the Federal Supreme Court is also likely to choose to support the Delaware Court of Equilibrium..."

Aaron was still pondering, and Sam Eric on the other end of the phone was also waiting. Finally, from the other end of the phone came the CEO's faint words, "Got it," and then the phone hung up...

All day long, Aaron Elvis heard only negative news about Texaco.

In order to acquire Getty Oil, Texaco made a large "repo loan" from Deutsche Bank and Morgan Stanley. This is a short-term financing loan that can be traded between the two companies or

Transactions between institutions and investors are generally very similar to equity financing.

As a borrower, Texaco must provide a certain size of securities to its counterparty, the bank, in exchange for cash, which Texaco then uses to inject working capital into subsequent transactions. Later, Texaco

Its counterparty returns the cash, thereby redeeming the lent securities.

This is a short-term loan method invented by Wall Street banks and financial institutions. Most Wall Street companies use this method to finance daily transactions.

In order to raise acquisition funds without losing shares, Texaco chose this method of financing. However, compared with conventional equity loans, this method also has a drawback, that is, it has leveraged transactions, or 30:

debt to cash ratio of 1,

The equivalent of 1 US dollar in cash held by Texaco is equivalent to a loan of 30 US dollars from other institutions. Texaco has become the most indebted company in the United States. What kind of "crisis of confidence" will happen once a borrower like Texaco falls into

Like this, its fragility will be exposed.

"We're really in big trouble this time," Aaron said to himself, "I have to go downstairs right away."

"Mavis, immediately notify the heads of the company's departments and the directors at home to convene an emergency meeting." Although the CEO felt bad inside, he still didn't show it on his face. The situation was bad enough, and we couldn't let the company's internal chaos continue.

Get into chaos...

When Aaron came to the conference room on the 6th floor, other executives and directors of the company also arrived one after another. By the time the last one, Molly Colmes, the director of the Rockefeller Foundation, arrived, it was already time.

Points to 09:05 minutes.

Aaron is now surrounded by a group of company executives. In the past few years, these people here have supported each other, fought with each other, and have been eyeing each other's positions and salaries. The greed and greed between each other.

The complex political struggles within the company have plunged Texaco into a kind of pathological prosperity. But now, it's time for everyone to put aside their differences and work together.

"I think everyone is aware of the situation the company is facing now. I just received a call from Sam Eric. He told me that during the first review held yesterday in the Delaware Court of Chancery, Penzel did a lot of careful work.

"We are prepared, and now it looks likely, that Justice Alan Swartz of the Court of Chancery will make a decision that we don't want to see."

Sitting next to Aaron is his deputy, the company's chief operating officer, 55-year-old Tom Upton. As Aaron's friend and subordinate for many years, he has stood by Aaron's side in every meeting.

Faced with the situation that Aaron told him at this moment, the operating officer who was loyal to the company turned his head towards Aaron and asked the question that everyone wanted to know: "Is the situation really this bad?"

"Although as the CEO of the company, I don't want to admit it, the reality will not change because of my denial," Aaron said with a bitter look on his face as he watched everyone present fix their eyes on him.

No one could have imagined that an ordinary acquisition would actually put a behemoth like Texaco in this predicament. When Aaron proposed the acquisition of Getty Oil, everyone enthusiastically voted in favor, looking forward to the acquisition.

After the operation was successful, Texaco further narrowed the gap with the No. 1 Exxon Company or even surpassed it, becoming the No. 1 oil company in the world, greatly increasing the value of its stocks.

Molly Colmes, who was sitting next to Tom, spoke, asking the company's financial director: "How much working capital does the company have now?" There was no mention of working capital. As a banker, Molly was very

Understand that in order to acquire Getty Oil, Texaco has squeezed out every drop of milk it can squeeze out. Under the current circumstances, the company must have a portion of funds that can be used at any time.

As a graduate of the West Point Military Academy, Finance Director Jimmy Vincent has a strong ability to withstand stress. He rushes to the company from his home in the suburbs of Connecticut at 7 o'clock every day, and then completes all the company's financial arrangements in the office before leaving.

, it is often around early in the morning, and he does this every day, completing the finances of Texaco's huge empire in a tense state, and keeping the company's cash flow flowing.

Facing Molly Colm's question at this moment, Jimmy opened the notepad in his hand, did a quick calculation and replied: "The company still has 7.3 billion in cash, but 270 million of it needs to pay ConocoPhillips and

Devon Energy’s equipment models…”

7.3 minus 2.7 equals 460 million, which is a huge sum of money. For an ordinary person, this amount of money is undoubtedly an astronomical figure, but for Texaco, a sales network spread all over the United States and in more than 30 countries.

It can be said that resource exploration and extraction are too little compared to the behemoth that maintains sales of petroleum products in more than 130 countries.

Morley was silent. No one could have imagined that the company's situation was so serious. If the outside world knew that Texaco's cash flow was about to dry up, there would be no need to wait for the enemy to take action. In the financial market, those investors who hold Texaco shares would be enough.

Let Texaco be wealthy eight hundred times after his death.

Now affected by the bad news, Texaco's stock has fallen from its peak of $157 to $121, a full 23% loss in market value, and has a further downward trend.

However, Texaco has not taken any action to keep its stock price stable, which has aroused concerns among investors. The reason why there has not yet been a large-scale sell-off is simply because Texaco has been strong for a long time and investors are looking forward to Dexaco.

The completion of the merger between Texaco and Getty Petroleum and the "confidence" brought about by Texaco's further growth. If they knew that Texaco's cash flow was about to dry up, Morley, who was well versed in capital investment, would never have imagined such a situation.