THE BRIDGE TO CARACAS (Volume 1 of The King Trilogy)

CHAPTER 19

The oil industry was large, but the community of gasoline independents was small. The players all knew each other, and keeping a secret was virtually impossible. So everyone knew there was an aggressive rookie in the market and that he was the man with a price.

In spite of Mike's persistence and the attractive prices he offered, he collided with reality. Too many gasoline independents had signed contracts that could not be broken without severe legal repercussions. To an independent with a signed contract, a good price was interesting but meaningless. After four weeks of concentrated effort, Mike had managed to sign only four independents.

He met with Owen Christian to give him a progress report. "Owen, I have some good news and some bad news," he said without expression. "I have four signed gasoline contracts. That's the good news."

"What's the bad news?" Christian asked.

"To the limit of exaggeration, they have a combined annual volume of ten million. I expect IFB will lose at least a hundred grand on the deals."

Christian chuckled. "Chump change!" he scoffed. "We're going to lose a hell of a lot more than that if we can't buy fuel oil.... But keep going, Mike. We need big ones. Find us some elephants."

In his search for elephants, Mike met Tom Fletcher, a consummate entrepreneur. The timing was perfect. Mike needed a large gasoline customer, and Fletcher desperately wanted a new supplier. A large, overweight man with thinning and slightly graying blond hair, Fletcher was ten years older than Mike. In only twenty years, Fletcher had managed to parlay his meager savings into a very respectable fortune by developing strip plazas in southern Ontario. All of them had been built on one- to three-acre parcels of extremely strategic commercial real estate, and he owned and operated retail gasoline outlets on thirty-one of his thirty-five properties.

Fletcher's gasoline outlets were all branded by major oil companies with whom he had signed cross-leases before the outlets were built. The cross-leases had provided Fletcher's company with triple-A lease covenants, together with a great deal of money in the form of pre-paid rent.

Initially, the cash proved to be a wonderful supplement to his plaza financing, but the emergence of enormous gasoline surpluses had changed the happy arrangement. With the surge of discounting independents, his gasoline outlets had become miserably uncompetitive. He now realized that if he had not been inhibited by the "exclusive supply" clause of his cross-leases, he could buy gasoline at substantially better prices and make a lot more money.

Mike's first meeting with Fletcher took place in a Tim Horton doughnut outlet in one of Fletcher's Toronto plazas. Fletcher's hazel eyes seemed to protrude from his reddened face as he relentlessly criticized the majors.

"They're ruthless, Mike! The bastards have absolutely no conscience. They should be in jail for what they're doing to me," he raged, and then poured a third heaping spoonful of white sugar into his coffee.

"Tell me what they're doing."

"Their contracts say they're giving me a franchise, but that's a laugh. They supply me with one hand and compete against me with the other. They've built and operated their own outlets directly across the street from five of my outlets. If that's not bad enough, they're dumping wholesale gasoline on the market at ridiculous prices. The independents are buying it and posting retail prices at ten cents a gallon below mine."

"Have you complained to them about it?" Mike asked.

Fletcher nodded. "Exercise in futility. The idiots they authorize to talk to me have no authority to do anything but talk. It's like dealing with robots."

"What about the cross-leases? Has your lawyer looked at them?"

"Iron clad. No way in hell we can break them."

Mike raised his eyebrows. "Maybe there is."

Fletcher leaned forward, suddenly very interested. "How?"

"Have you or your lawyer ever taken a good look at the demised premises in the cross-leases?"

"Sure. Why?"

"How much of your land do they cover?"

Fletcher's puzzled expression gradually gave way to a broadening smile.

"Mike, you're a genius. Why the hell didn't I think of that? I've spent my whole life in the real estate business and I didn't see it. It's beautiful. I could offer a major price and an independent price. That'd be a million laughs!"

The technicality Mike had noticed was that the portion of Fletcher's land covered by the cross-leases—called "demised premises"—was only a fraction of the total area he owned. Although the demised premises were occupied by the gasoline outlets, Fletcher was legally free to do as he pleased with his remaining land, all of which was properly zoned.

"It won't be pretty, or cheap, and it'll piss the majors off, big time," Mike warned.

Fletcher laughed like a kid with a new toy. "I don't care who it pisses off. I think it'll work. How much do you think it'll cost?"

"How many outlets do you have?"

"Thirty-one, including this one."

"I think the whole thing could be done for less than a million if you did them all and limited them to bare-bones installations."

Fletcher turned his palms skyward, shrugged his shoulders, and stared at Mike. "So tell me where I'm going to find a million. I'm leveraged to my eyeballs."

Mike returned Fletcher's stare. "If you'll give me an exclusive supply contract, I'll dig up the money," he said, hoping fervently it was true.