Interesting Times
Chapter 12

Copyright© 2011 by Ernest Bywater. All rights reserved

Games of Grace

After listening to his grandmother’s complaints for many minutes Matthew manages to calm her down and enter into a serious dialogue on the issues raised in her monologue.

Matthew opens the discussion with, “Right, Gran. As I see it you’re upset because you see a very good business opportunity to save a lot of people’s jobs and improve Grace Entertainment is being avoided due to in-house politics by my uncles because they don’t want Uncle Don to look better as a replacement for George as the Grace CEO when he retires during the next decade or so. You also don’t like the way they and George have changed how Grace operates in the last four or five years and you can’t see a way to change it back to how it was. Correct?”

“Yes, Matt. I think that’s a fair summary.”

“Well, the next question is the hardest. Considering the aggravation you’re getting from the board meetings of late, and the way they’re changing the business: How important is it to you to save Grace? I ask, as the only way you can fix this is to sack the lot of them to put in new people who’ll do it your way. To do that you need to have suitable ones on hand and ready to take over.”

“Damn it, Matt! Grace was my father’s dream and I hate to see it destroyed like this. But I don’t have any suitable replacements.”

“Time to bite the bullet, Gran. It was your father’s dream, not yours. So, is the trouble it’s causing you now worth the big fight to keep your father’s dream alive?” There’s a very long pause with no sound. Long enough that Matt asks, “Still there, Gran?”

“Sorry, Matt. I’ve been thinking. That’s a nasty question you asked. In retrospect, I think most, if not all, of what Dad wanted to accomplish has been done. But I don’t like how they’re changing his legacy.”

“That’s the point, Gran. It’s his legacy and my uncles’ inheritance. It’s now their dream, whatever that is, not great-grandfather’s dream!”

“Yes, I suppose you’re right,” she says with a sigh.

“Uncle Don is the only good one of the bunch, and the one closest to what your father was like as a businessman. What will it take to cut Grace Entertainment out of the main company so he can own it and run it how he wants without the interference of the others?”

A moment’s silence before Connie says, “The only way to achieve that is for him to buy the sub-company. But that requires the approval of two thirds of the board, which he won’t get. The board is now your uncles, George, your proxy, and myself. With just Don and me voting for it that’s three out of seven with your proxy. Two short.”

“Gran, I seem to remember the company by-laws have a bit about board decisions can be voted on by shares and the board must go with the vote once it’s decided that way.”

“Yes. But approval requires eighty-three percent of the shares, and if it’s the sale of an asset to a shareholder or board member they aren’t allowed to vote or vote their shares. With Don out of the vote his five percent doesn’t count, and my other sons’ fifteen percent means that’s twenty percent not in favour. Thus it fails.”

“Gran, from the sounds of that I think I finally have a need to know exactly what my share holding is. Can I call you back after I ask Dot to brief me on it?”

“No need to call her, Matt. I know because I’ve your proxy. But to get to that I need to give you a little history of the shares so you understand how it happened. OK?” He agrees. “Right, Dad originally had an owner operated business. When he incorporated with shares he had fifty-five percent, Mum got twenty-five percent, and I got twenty-percent. When Dad died his shares were split up with five percent to each grandchild and fifteen percent each to Mum and me. When Mum died she gave you her entire share holding, which was put into your trust account. Then the five percent of your mother’s was added to that. You own forty-five percent of the shares, but only Dot and I know that. With my thirty-five we have eighty percent, not enough to pass the sale. So we can’t get it through that way.”

Matt thinks for a moment, smiles, and says, “I see a way to manage this. Can you organise a conference call for you, Uncle Don, and I on a safe line where he isn’t likely to be interrupted? We’ll need to know the exact amount he’ll need to set up to buy the other company, buy Grace Entertainment, and to operate for a year.”

“Yes, I can do that. I’ll call you back in about an hour.”

Connie hangs up and Matt hits the speed dial for Dot. She answers, and he says, “Sometime in the next week I may need a lot of money for a special project. What can I have?”

He hears keyboard activity then Dot replies, “Matt, today we’ve got about five million we can divert. But Tuesday morning we’ll have the insurance and other money we loaned Grace back plus some of the previously invested funds maturing, so you can have just on a hundred and fifteen million if we do nothing else with any of it. That’s after accounting for the current commitments we have.”

“Damn, I knew the trust was wealthy but I had no idea it was that big a value in cash. OK! Here’s what may be happening. Gran and I are looking to cut Grace Entertainment out and sell it to Uncle Don. He’ll need a loan and we’ll need to buy his shares. Long term, I’m seriously considering selling all of my Grace shares. It’ll be a decade before I can get involved in its senior management and by then my uncles will be well entrenched so I doubt I’d get to do much, anyway. Thus I see no point in the plans Mum had for me to take over Grace management later. I’ll leave that to my uncles and their kids.”

“Hmm. I know Candice wanted you to take over Grace but I believe you’re right in that you won’t get a chance at top management there for thirty years or more, so why bother. What’s Connie think of this plan?”

“I’ve not told her the last half yet, but I will when she calls back. Thanks for that information. I’ll let you know how much we need.”

For the next hour and a bit Matt does some Internet research as he thinks about his current situation and plans for the next several years. His lunch arrives and is eaten.

A little after lunch Connie calls back. She opens the call with, “Matt, I started to have some concerns on security so I had a company check my office and Don’s. Someone at Grace bugged Don’s office. So we’re at the conference room of a security company and they’re doing a check on this line while we talk.”

“Very interesting. I wonder if it’s George, Uncle Alan, or Uncle Cam! Uncle Ben wouldn’t think of doing that.”

“Our thoughts, exactly. I just got the OK for this line so let’s get down to business. To buy Grace Entertainment he needs thirty million, as per the latest balance sheet from this morning’s meeting. The company he wants to buy is another fifteen million and four million to operate for the next year for sure. I think he needs to look at fifty million plus the couple that’s in the Grace Entertainment bank account and valuation.”

“OK, Gran. We can organise this. But I also need to know how much you have in liquid assets as well.”

“Matt, I’m not going to answer that until I know what you’re up to.”

“Well, the first move is to have Uncle Don sell you or me his shares. The next move is to have one of us loan him the rest of the fifty million bucks. After that I want to talk to you about selling you all of my Grace shares. As I see things, by the time I finish my education my other dear uncles will be running Grace and I won’t get into senior management there for thirty years or more; beyond a board vote that is. So I see no value in me being involved in Grace Enterprises at all, not since it’s now headed in a very different direction to what I’d like. Thus I want to get out of any involvement with it. I know this isn’t what you and Mum planned, but it’s a realistic evaluation of the current situation.”

Dead silence for a minute or so, which is a long time like that. “OK, Matt! I can see that and I agree with your evaluation. It doesn’t mean I like it, but I do agree with it.”

“Gran, once Don cuts out Grace Entertainment and goes his way I think we both should let the others just have the company and be done with it.”

Another long silence. Connie finally says, “Damn, I hate to agree, but you’re right again. OK. Here’s what I can do. I don’t have the cash on hand but I do have shares in other companies I can sell and some investments I can cash in early. I think what I should do is buy Don’s shares and then just give all of my heirs the major part of their inheritance early. That should see Don right without any borrowings, but it’ll take a few weeks to convert the bonds and shares.”

“Gran, I checked my cash flow and I’ll have quite a bit of cash on hand by Tuesday morning. What say we organise for me to buy some of your bonds so you have the cash for Don. Then we can do an asset swap of your other bonds and shares for my Grace shares for as much as we can organise. Then I approach my other Uncles, on the quiet, about selling them my Grace shares.”

Don finally speaks up, “Thank you! This’ll allow me to buy and run Grace Entertainment as it should be, and to get the other company. I’ll get to keep a few hundred people employed in the industry too.”

Connie says, “We need to keep all of this absolutely quiet until next Thursday’s board meeting then we’ll spring it all on them at once. Matt, have Dot contact your uncles to quietly sell them your mother’s five percent of shares for cash as of Friday morning next week, after we do Don’s deal. Five percent of shares are fifteen million at the moment, as per the balance sheet. That way you get rid of fifteen percent on the Friday and I’ll take the rest as an asset exchange. After you get your cash from them I’ll give the other boys Grace shares as their inheritance. That gets rid of most of my investments and personal assets as it closes out a lot of other things too.”

They talk a bit more and then hang up so Connie and Don can go to organise things at their end while Matt rings Dot to explain the plan and what she has to do for him in regards to it.

That afternoon Dot contacts each of Matt’s other uncles and asks them to call her back from a public phone. When they call she explains she’s organising to quietly sell five percent of Grace shares Matt has to get some cash for his trust fund for a special project. They all want to buy the shares at the current price.

The next day Connie spends a lot of time in Dot’s office while they work out the details of the asset swap / sale to Matt’s trust account. On the Tuesday Dot transfers the cash for the bonds she’s buying from Connie so she has the cash to buy Don’s shares as well as giving him an extra thirty-five million in cash.

The Grace Board Meeting

The Thursday meeting of the next week is a very interesting one, and a bit of a shock for some. The agenda goes very fast with neither Connie or Don having much to say until they get to new business.

Don says to the meeting, “I wish to purchase Grace Entertainment for thirty million dollars. Its current balance sheet value is twenty-nine and a half million.”

Some discussion occurs, and it’s voted down when his brothers vote against the sale. All look smug as they do, as they like putting Don down.

After the vote Connie says, “As a major share holder I’m declaring a re-vote to be taken by share holdings.”

They have no choice on this so the vote is taken. Alan against, five percent; Ben against, five percent; Cameron against, five percent; then the shock is when Connie votes and declares eighty-five percent as shares in her own right with proxies in her name. Since the vote only requires eighty-three percent the sale must go through.

George says, “Connie, dear, you do know that because this sale is to Don you can’t proxy vote his shares?”

She smiles when she replies, “George, the other day I bought Don’s shares so he’d have enough money to buy the company he wanted to buy last week. It’s his now and he just added Grace Entertainment to it. One of the reasons Don hasn’t voted on anything today is he no longer has a vote on this board because he’s no longer a share holder.”

The other board members aren’t happy with the result, but they do like the cash this brings them and the fact the board is now smaller.

A few other items of new business are dealt with and the meeting breaks up. Connie asks her sons to stay for a chat but George has to leave so he can sign the documents for the sale to Don, who left to get that organised as soon as the vote was in.

After the door closes behind George Connie says, “Right, I know you weren’t happy to learn I’ve control of enough shares to make things go my way. So here’s what I propose. Monday morning I’ll sell ten percent of my shares in two five percent blocks to whoever has the fifteen million cash to pay for them. That gives you three time to argue over who gets to buy them and to find the money to do so. That’ll reduce my total personal share and proxy voting to seventy-five percent, so I’ll need one of you on my side for any future ‘by share’ votes.”

Connie leaves them to a heated discussion. Later in the day they call her on a conference phone to tell her Cam and Alan will buy the shares because Ben can’t come up with the money in that time frame. They make arrangements for the deal.


During the morning Dot visits three brokers to meet Matt’s uncles to hand over the certificates for five percent of the shares as soon as she confirms the bank transfer of the fifteen million dollars cash to Matt’s trust account. Each of the men leaves happy to know he now has ten percent of the company shares, two of them are even happier since it means they’ll soon have fifteen percent of the shares each.

That afternoon Dot is busy with Connie finalising the asset transfers for cash and shares they organised the week before. Matt no longer has any Grace shares but he has an extra forty-five million in the bank plus other shares and bonds totalling one hundred and sixty million dollars because what he’s given from Connie includes Matt’s share of her estate which is sixty-five million dollars worth of shares in other companies.

After Connie leaves Dot is busy talking with Matt and her broker while they rationalise Matt’s portfolio in light of the major growth of it. She also spends time organising the short term investment of the excess cash the trust has at the moment.

Monday Week Nine

Connie meets with Cam and Alan to exchange some of her Grace share certificates for cash transfers into her account. Once that’s done she takes a moment to transfer another thirty million dollars cash over to Don’s account she has the numbers for from last week.

With the money sent Connie calls and asks Ben to join them then she calls Don and Matt on the conference line. With all present or on the phone she says, “In the last few weeks I’ve reviewed my investments to help Don out with setting himself up as an independent operation. I’ve also noticed, recently, Alan, Ben, and Cameron are all interested in running Grace as a trio. These events, and some conversations I’ve had with others, have caused me to totally rethink what I’m doing now and my future.” She gets some odd looks from those present, but the others on the phone know where she’s going so they say nothing. “I’ve made a decision to let you five have the great bulk of your inheritance now, so I’m now transferring, or have transferred, most of my estate to you.”

Don speaks up, “Ah, Mum, would that explain the large unexpected cash deposit in my bank account this morning?”

“Yes, Don. I gave you half of yours last week so you could buy Grace Entertainment and with the sale of some shares this morning I was able to send you the other half.” She places folders in front of her other three sons while she says, “Matt, yesterday I saw Dot about those bonds you bought from me so I had the cash for Don. While I was there I also did the transfer of some other bonds and non-Grace shares for your part of my estate.”

“Thanks, Gran. Dot rang me to discuss the reorganisation of my share portfolio. I thought it seemed a lot bigger than I expected.”

Connie continues, “Just so everyone knows the situation I just gave Alan, Ben, and Cam envelopes with a letter of transfer and the share certificates for twenty percent of Grace shares each. That means I no longer own any Grace shares and I won’t be attending any more board meetings. Along with the shares Matt sold these three last Friday they now own Grace between them. Ben has thirty percent while Alan and Cam have thirty-five percent each. I hope you enjoy them, boys.”

Her three eldest sons are stunned by this revelation, and they soon work out their mother and Matt had double teamed them to unload all of their shares for a good price. However, it does leave them in total control of the company they work for and manage, which is something they’ve wanted for some time. Without Don or their mother harping on how to do things differently they can now operate as they wish to.

All of the boys thank her for their gifts, and all are happy with what they got. Connie has one more thing to say, “I gave Don and Matt a little more in current value than you three got because the Grace shares will have a significant dividend this year due to the sale to Don. Thus the final total value should be the same, or a bit better for the shares.”

After the short meeting Connie visits George to tell him about the new share ownership situation and her not attending any future board meetings due to not having any shares. He smiles as he acknowledges her report while he wonders how this will affect his employment now the boys have full control of the company.

Cleaning out her office and leaving the building is a bitter sweet event for Connie because she’s spent many years working here full-time and part-time, and she’s now letting go of the last remains of her father’s dream and legacy. However, Matt is right, her father’s dream is over, finished, and she now has to make room for her sons to realise their dreams. It takes her a long time to leave the building because there are so many people to call on and tell goodbye, and so many who catch up with her to say the same.

Without having to worry about the company she now has time to go visit Matt, and to do a few other things she’s wanted to do for a while.

Week Ten

Breakfast is very quiet today because Dennis and the Ford girls are still on their way and Matt has a lot to think about. Since his talks with Dot and his grandmother concerning Grace Enterprises and his future he’s been doing a lot of thinking and research as well as talking to his guardians.

Dennis and the Ford girls arrive with their breakfast and Matt’s extra feed. They’re quick to eat it and to get stuck into today’s studies. The trio have done all of the maths they need to do and they’ll review it near the end of the year, also all of the early English stuff was done while Mary was with them during the school holidays. Now they’re into the Geography work and pushing through it fast due to working together.

They stop for lunch and Dennis takes the girls shopping afterwards. Matt puts his phone on his ear and he calls Dot. She answers, and he asks, “Dot, how’s Shorty doing for business now?”

“It’s good you rang, Matt. He’s doing a great job but there’s so much competition here he’s sitting idle much of the time. Why?”

“I’ve got an idea but I need to float it with someone else first. I’ll call you back as soon as I can. In the meantime, can you do a profit and loss statement on the company for me, please?”

“OK, it should only take a little while.” Matt smiles at the reply as Dot and Paul are now in the offices they made in the workshop of Kick Bikes at the back of his old home in Sydney, and now have more staff.

After looking up the number Matt makes another call. It’s answered, and he says, “Excuse me, Missus Piper, I don’t think we’ve ever met but I know Shorty well. I’m Matt Dyer.”

Lynn Piper responds, “Oh, yes, Matt! I’ve heard a lot about you from Shorty and your parents. Thanks for employing him. I’ve never seen him so happy in his work, but he hates all the down time as it’s boring.”

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