Review
The story is being told by EJ McKay, a financial consultant from Cedar Rapids, Iowa. He has been referred in to Badger Agriculture Manufacturing in Tomah, Wisconsin to advise on a company expansion project. He met Maddie O'Rourke over morning coffee where they exchanged a brief, initial conversation. In a drive through town, EJ came across the O'Rourke name at a city park and the library. On a Google search, he learned that the O'Rourke family had a long history in Tomah, and with the Badger Ag company.
The three previous installments to this story are in blog entries dated 3/2/2013, 3/3/2013 and 3/17/2013. These entries can be accessed by opening the Blog Archive listing to the right of this space, clicking on 2013, then on March 2013. You'll then need to scroll through to get to these dates.
The story picks up now at the start of the business meeting at Badger Ag. The first few paragraphs from the March 17, 2013 entry have been repeated here so that the players in the meeting are re-introduced to the reader.
Badger Ag Meeting
EJ stepped into the conference room and was immediately met by a tall, middle-aged woman with short, salt-and-pepper hair, dressed in a dark business suit and a white blouse. The woman wore little make-up, small black onyx earrings and a complimentary strand of onyx pearls around her neck.
"Hello, Mr. McKay. Welcome to Badger Ag. I'm Rhonda Reynolds." She extended her hand and made a firm shake while continuing, "I know that Mr. Mandel is very happy that you adjusted you schedule to come to Tomah today. He just got in from Chicago a few minutes ago, and should be down here from his office shortly. Let me introduce you to the other gentlemen here."
Rhonda released EJ's hand, stepped back and motioned for EJ to follow her over to an open area at the far end of the conference room where three other men were standing. "Gentlemen, we have our last participant with us now. This is EJ McKay from Cedar Rapids." EJ was just a step behind Rhonda and made eye-contact and an acknowledging nod to each of the other men. Handshakes and short greetings followed each introduction.
Roger Simmons looked to be 40-something with a receding hairline and was maybe developing some middle-age girth around his midsection. He was the internal controller for Badger, meaning that he might be the head bean-counter with the company, but Karl Mandel had not elected to promote him to CFO when his veteran financial assistant had retired. He would be the guy responsible for all of the data used for management and financial accounting within the business.
Dan Carpenter might have been 35, had on a well-tailored Brooks Brothers gray suit with a magenta-colored tie, and flashed overly white teeth with a politician's smile. He introduced himself as the regional representative from the Wisconsin Economic Development Office. "Bingo," EJ said to himself. "Politician."
The last hand shake was with Michael Stinnis, from Woodbury Figge & Stinnis, CPA's. Michael was in the standard CPA uniform, dark suit with an unremarkable tie. He let EJ know that his firm had done the audit and tax returns for Badger Ag for the last six years. EJ could tell that the 50-year-old Stinnis took some care with his fitness and wondered to himself, "Marathon man? Maybe. I'm betting a cyclist though from the tale-tell tan lines above his wrists. Biker gloves." Unlike Carpenter, Stinnis came across as a low-key type who might have preferred to have been back at his own office where he could control his own productivity.
Sounds came from the entry door to the conference room and the four men turned to see Rhonda Reynolds lead her boss into the room. Karl Mandel was a dark-complected, stocky man measuring an inch or two below six feet. His dark, short-cropped black hair carried just a few flecks of gray. He had the look of a Mafia soldier. The open-collared,dark-blue dress shirt, gold neck chain and gold rings, cuff links and Rolex added to the effect. EJ wondered if Mandel's Mother was Italian rather than German.
Mandel strode over to the group of men and greeted all, "Gentlemen. And EJ, especially, thanks for making the trip. Eddie said you were the man. I hope you have your thinking-cap with you. We're going to need it. Anyone need coffee? A soda?" And then turning to his assistant, " Rhonda, have them save one of the side rooms at the club for a 7 o'clock dinner. We'll work here until 6 or so and then head out there to continue our chat if we need to. And I think we'll need to."
"Yes, sir," she said. "I'll stick around until you break for dinner, just in case you need something. I'll be at my desk. Just ring me if I can help with anything."
Mandel then turned to the men and motioned them to the long conference room table. "Let's sit down and get started. Maybe Roger can give us a little summary of the lay of the land, and then we'll give a listen to Dan's idea about financing that new facility in the industrial park. You have the floor, Roger."
"Hello, Mr. McKay. Welcome to Badger Ag. I'm Rhonda Reynolds." She extended her hand and made a firm shake while continuing, "I know that Mr. Mandel is very happy that you adjusted you schedule to come to Tomah today. He just got in from Chicago a few minutes ago, and should be down here from his office shortly. Let me introduce you to the other gentlemen here."
Rhonda released EJ's hand, stepped back and motioned for EJ to follow her over to an open area at the far end of the conference room where three other men were standing. "Gentlemen, we have our last participant with us now. This is EJ McKay from Cedar Rapids." EJ was just a step behind Rhonda and made eye-contact and an acknowledging nod to each of the other men. Handshakes and short greetings followed each introduction.
Roger Simmons looked to be 40-something with a receding hairline and was maybe developing some middle-age girth around his midsection. He was the internal controller for Badger, meaning that he might be the head bean-counter with the company, but Karl Mandel had not elected to promote him to CFO when his veteran financial assistant had retired. He would be the guy responsible for all of the data used for management and financial accounting within the business.
Dan Carpenter might have been 35, had on a well-tailored Brooks Brothers gray suit with a magenta-colored tie, and flashed overly white teeth with a politician's smile. He introduced himself as the regional representative from the Wisconsin Economic Development Office. "Bingo," EJ said to himself. "Politician."
The last hand shake was with Michael Stinnis, from Woodbury Figge & Stinnis, CPA's. Michael was in the standard CPA uniform, dark suit with an unremarkable tie. He let EJ know that his firm had done the audit and tax returns for Badger Ag for the last six years. EJ could tell that the 50-year-old Stinnis took some care with his fitness and wondered to himself, "Marathon man? Maybe. I'm betting a cyclist though from the tale-tell tan lines above his wrists. Biker gloves." Unlike Carpenter, Stinnis came across as a low-key type who might have preferred to have been back at his own office where he could control his own productivity.
Sounds came from the entry door to the conference room and the four men turned to see Rhonda Reynolds lead her boss into the room. Karl Mandel was a dark-complected, stocky man measuring an inch or two below six feet. His dark, short-cropped black hair carried just a few flecks of gray. He had the look of a Mafia soldier. The open-collared,dark-blue dress shirt, gold neck chain and gold rings, cuff links and Rolex added to the effect. EJ wondered if Mandel's Mother was Italian rather than German.
Mandel strode over to the group of men and greeted all, "Gentlemen. And EJ, especially, thanks for making the trip. Eddie said you were the man. I hope you have your thinking-cap with you. We're going to need it. Anyone need coffee? A soda?" And then turning to his assistant, " Rhonda, have them save one of the side rooms at the club for a 7 o'clock dinner. We'll work here until 6 or so and then head out there to continue our chat if we need to. And I think we'll need to."
"Yes, sir," she said. "I'll stick around until you break for dinner, just in case you need something. I'll be at my desk. Just ring me if I can help with anything."
Mandel then turned to the men and motioned them to the long conference room table. "Let's sit down and get started. Maybe Roger can give us a little summary of the lay of the land, and then we'll give a listen to Dan's idea about financing that new facility in the industrial park. You have the floor, Roger."
Roger Simmons stood and immediately handed out a small packet of papers to each of the other men at the table. "These are the company's financials for the quarter that ended last month. Sales are above projections and the balance sheet is solid. We really don't have any issues with current operations. But we'll definitely have to go to the banks for any plant expansion financing."
EJ scanned down the pages in front of him. "Nothing very remarkable," EJ said to himself. The statements showed no debt except for current accounts payable. If they wanted to do a bond issue for a new factory, the banks would have no problem making the loan with the collateral that the company had available. "Why am here?", he said to himself.
Simmons spent another 15 minutes going over the statements, responding to Karl Mandel's inquiries a couple of times to explain the handling of accrued income taxes and deductions for the company jet. Stinnis, the CPA, confirmed when asked by Simmons, that his firm expected to issue a clean auditor's opinion on the year end statements. EJ's mind drifted.
"Absolutely, Mr. Mandel. I'm ready to go," said Dan Carpenter, bringing EJ's attention back to the meeting.
"Its a pleasure being here with all of you here today. Thank you. The Governor sends his greetings as well. The Development Office stands ready to assist with this exciting new expansion. We think that there may be as much as $10 million in eligible state tax credits for the project, and perhaps another $3 million in Federal subsidies if you comply with the green-energy regulations."
Carpenter had his own packet of hand-outs, a glossy folder with your typical inserts of state sponsored programs to encourage the creation of home-grown manufacturing jobs. He went into additional details on the qualification rules, the time limits involved and the math on just how the dollars flowed to the company over the period of construction. EJ was biased against these government incentive deals as the beneficiaries tended to be the developers, not necessarily the work force. But its hard to fight City Hall, the Governor's Mansion, or Capital Hill.
"And as we have noted previously, Mr. Madel, for this all to work, that lease with the O'Rourke Foundation will have to be changed. The tax credits require that rents on facilities with this type of funding must be paid to a taxable entity, not one that is tax exempt like the foundation."
EJ was immediately interested as this little factoid had widespread implications for the adverse parties. And Maddie O'Rourke would certainly be an adverse party to a change in the long-standing ground lease. Had this point been out openly in the discussion previously? If Mandel and Carpenter had talked about it previously, was anyone else in on the information? It sounded like a curious provision, one EJ had never seen in incentive deals from Development agencies. "Who's pulling the string on this one?", EJ thought to himself.
"Well, I haven't exactly put that out there to the Foundation," said Mandel. "I spoke with attorney Howard Epstein in Chicago this morning, and he wants to read the lease agreement further. But he thinks that we may be able to just let the lease lapse once the new facility in the industrial park is completed. The Foundation can then have this place back and go find another tenant. I'm tired of that monthly payment to the Foundation."
Alarm bells started ringing for EJ. This was definitely taking the shape of a power-play for Karl Mandel with ramifications that could negatively impact just about everyone else involved with the proposal. He didn't have the feeling that he wanted to be a spear-carrier for Mandel in this battle.
Once Carpenter was done with his presentation, a discussion went on for several minutes about whom else the company needed to bring into their group to promote the benefits of the proposal. The mayor of Tomah and the Governor were political allies who had backed this legislation in the state senate, but putting themselves across the table from the O'Rourke family was not inviting. Yes, the campaign contributions likely to flow from Karl Mandel had an appeal, but the Baby Boomers would remember all of those positives over the years from the O'Rourke family. And Baby Boomers vote.
At 6:15, Karl Madel offered, "I've had a long day. Let's break and get out to the club for a cocktail."
EJ was definitely ready to go. But not to the club. As the men stepped away from the table, he pulled Karl Madel aside and said, "Karl, I appreciate this opportunity, but I really don't think I'm the man you need for this job. Your financials are strong. Roger has done nice work with them. You can get conventional financing at any of the big banks. I think you're looking at a political situation. The Governor must have some contacts who are better suited for this work than a financial planner from Cedar Rapids."
Mandel said, "I know that. But I'm looking for someone with a fresh perspective. New ideas. That kind of thing. Freddie said you were the guy."
"Freddie is an optimist", responded EJ. "To be honest, I think you're swimming upstream on this one, Karl. My senses are that the public won't like you rocking the boat. Sounds to me like the O'Rourke's have been pretty good to this town for a long time. And to your company as well."
"But,...", Mandel tried to speak before EJ had finished.
"I'm sorry, Karl. My business is just too busy to take this one on. Call the Governor."
EJ extended his hand to Madel who reluctantly shook it, still muttering under his breath. EJ made his good-byes to the other men and walked out to his car. He was debating whether to just head South and get home after midnight, or stay the night in anticipation of an early departure in the morning. He pulled out of the Badger Ag parking lot and headed back to the Hampton Inn, thinking that a glass of wine might be his best move.
Thursday Dinner at Ristorante Luigi's
It was nearly 6:45 when EJ pulled into the parking spot at the Hampton. On the way over, he had decided to stay the night in Tomah. The room was paid for, he was tired from the trip up from Cedar Rapids last night, and his appointments for tomorrow had already been shifted to next week. Given those factors, there just wasn't a compelling reason for him to take the abuse of another late night drive on two-lane roads. He wasn't sure exactly what Tomah offered for an evening meal, but he hoped that it was more than Burger King.
EJ was running that dining debate through his mind as walked into the lobby. As he passed the wide opening to the continental breakfast area and glanced in, he was surprised to see Maddie O'Rourke sitting by herself at one of the tables. She was looking straight at him with a broad smile. A bottle of Silver Oak Cabernet and two glasses were on the table.
"EJ McKay. Welcome to my world", she said with a small laugh. "Rumor has it that you favor a dry Cabernet. Care to join me for one here before dinner? We have a reservation for 8 PM over at Luigi's, not that they should be that busy tonight anyway. You and I have some things to talk about. You can close your mouth any time now. Come. Sit. It will be OK."
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To be continued.
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The appearance of this entry is odd as Blogger handled the copying of the last part of the 3/17/2013 entry screwily. Sorry. And the wide breaks in paragraphs is also a Blogger issue I can't control. I hope that the final installment will be more normal.
This is not award-winning literature. I know that. But I am challenging myself to complete things. Ya get what ya get.
Make it a good day in your neighborhood.
BCOT
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