Untold Story of the Survival of the Penn Central by Donald Prell - HTML preview

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To Zurich

 

So on Monday, December 26th, after a taxi to Heathrow,  and an early Swissair flight, Owen and I checked into the  Baur au Lac Hotel, where I had earlier reserved a two-room  suite. Switzerland’s weather, which can be disappointing in  the extreme for summer visitors, is often at it best during  winter. For us Zurich was dry, with even some weak winter  sunlight. The lake view from this fine old hostelry is quite  attractive. We both explored the Old Town before dinner  then retired early.

 

Now anticipating my meeting with the recalcitrant Dr.  Lauder, the next morning I telephoned his office to confirm  our 10:00 a.m. appointment. Then with a suggestion to  Owen that he go off and explore the town of Lucerne, and to  ask the concierge where to catch the train, I promised to  meet him back at the hotel for lunch. Lauder greeted me at  his office with stiff reserve. In his late fifties, well tailored  and manicured, a stereotypical Swiss businessman - who  also had investments in Sao Paulo, Brazil. He had been  advised that I was a senior officer of Union Bank and that I  wished to discuss the problem of the Penn Central notes.  Polite but haughty indifference would best describe his  attitude as he bade me take a seat.

 

With concise brevity I explained the current situation and  how, "if the notes are not restructured the company will go  into bankruptcy and many innocent investors --- widows and  children --- will suffer." His response was immediate and  direct. "I really don't care. I was lied to and cheated by  Pressprich and the Penn Central. So let them all go to hell."

 

I was grateful that his English was excellent because my  circa WWII German was limited. I outlined how Union Bank  had invested $3,000,000 in the same notes and that I would  sell our notes today for $300,000 (if I could find a buyer).  But if he were prepared to go along with the restructuring, I  was authorized to pay him $150,000 and he could keep his  restructured notes and the free warrants, which were sure to  be worth a lot of money in the future.

 

Aware I could always offer to pay up to 100 cents on the  dollar, I first wanted to get a feeling of how tough a  negotiator he was. I quickly found out. "You can pay me  100% for my position. I am still not interested. I was lied to  and cheated, and they will just have to suffer.”

 

So far he was proving obdurate but this was still Round  One. The art of negotiation requires time before the little  windows of opportunity appear. "Do think, Dr. Lauder, of the  thousands of people who will be hurt if the company goes  under."

 

"Ich interessiere mich nicht für sie." was his response,  which I took to mean, “I don’t care about them.”

 

Now it was almost one o'clock, when I was due to  return to the hotel to meet Owen for lunch. With a sad  smile and a brief shrug of resignation I indicated I was  prepared to leave.

 

“Dr. Lauder, this is my first trip to Zurich and I have my  son with me. We are at the Baur au Lac and I wonder if you  would consider joining us for dinner this evening? Your wife  too, of course, if she is with you.”

 

Lauder considered this request. “You are staying at my  favorite hotel, you know.” Perhaps confident all business  between us was now over he finally acceded that he and Frau  Lauder would indeed be able to dine with us at 8 o'clock.  With an air of quiet resignation I departed. At least another  meeting had been established.

 

At lunch, Owen described his trip to Lucerne; how  helpful the concierge had been; that his still limited French  had sufficed in this German speaking canton. I was mindful  how this nice-looking boy, tall for his age, had a quiet  maturity in advance of his eleven years. Then I described my  morning meeting. During the flight over I’d briefed him on  what I was here to accomplish. This evening’s dinner with the  Lauders, I explained, would be an opportunity to show them we  were both decent, right-minded Americans, so “just be yourself,  Owen.”

 

That afternoon I needed to visit the bank where the funds  had been deposited. Not that for a moment I doubted I  would be able to withdraw them; I just wanted to be certain.  Directing Owen to ask the concierge for suggestions on what  he could do until we met again at 4 o’clock, I too availed  myself of the concierge for directions. He suggested a taxi.  Next I telephoned the bank to inform them I would be  visiting that afternoon. I was told, “Zwei dreizig Uhr, mit  Herrn Schmidt, danke.”

 

Swiss banks are unique; one doesn’t casually amble into  them from the street as one can in America. A porter greets  you outside, to whom you state your purpose, the door is  held open, and you are then ushered inside to a small  conference room. At this bank I was taken to a miniscule  sitting room, replete with over-stuffed chairs and a table with  pots of both coffee and tea.

 

A few minutes passed before Herrn Schmidt joined me.  He handed me a sheet of blank paper upon which I was  asked to write the number of “my” account. Leaving the  room for a few moments he then returned with another sheet  of paper.

 

This showed the present balance in the account. “Would  you like to make a withdrawal?” he asked. “Not at this time,”  I replied. “Perhaps during the next few days.”

 

Back at the hotel I met Owen and we called London to find  out how Mom and Erin were faring then opted for a nap  before the evening ahead. Refreshed, Owen teased me that  no matter how stern the Lauder’s might prove as dinner  companions, nothing would spoil his appetite tonight.

 

Waiting near the entrance to the hotel’s Restaurant  Francais, I reflected on my chances of getting Lauder to sign  off on the exchange given his opinion of the Penn Central  and its methods. Before I was able to foster any likely  strategies, he was before us, introducing his wife. Although  they would be our guests at dinner it was immediately  apparent who were the principles in this establishment. The  Maitre d’hotel stepped forward to greet us:

 

“Doktor, Frau Lauder, ein Vergnugen! Ihr ublicher  Apfellkuchen heute nacht?”

 

I had caught the word “Apfellkuchen” and Doctor Lauder  explained that he and his wife always ordered their own  special apple cake.

 

Lauder not only knew the menu by heart but the wine list  as well. I insisted that the dinner would be on my expense  account, but adroitly deferred to his expertise by asking him  to assist me select something fine from the Sommelier.

 

At a table for four Frau Lauder sat opposite me, with Owen  on my right and Lauder on my left.

 

Light conversation began between us, all in a pleasantly  inconsequential vein. Since their English was excellent the  exchanges were easy and swift. The insouciant Herr Doktor,  playing ‘mein host,’ suggested Lake Fish for starters followed  by a restaurant specialty, Wild Boar in wine sauce. The best  Swiss wines accompanied each course.

 

As the evening progressed I initiated a quiet side conver-  sation with Lauder, asking him about his business interests  in Brazil. With one ear, I absorbed some of the conversation  between Frau Lauder and Owen, discerning a few exchanges  in French. She inquired about his school subjects, about his  mother and sister in London, what he thought of Zurich. She  seemed surprised that he was only eleven, and that he  actually enjoyed school and reading books. It seemed she  had expected American children to be somewhat ill  mannered and lacking all interest in Europe.

 

When we reached the cheese course, I related a story of  an earlier trip I had taken to Europe as a typical American  businessman, spending two days in Paris, two in Rome, two  in Stockholm, then back to the states. Sud Aviation’s head  had invited me to lunch at a famous restaurant in the Bois  de Boulogne. From course-to-course my host talked about  how beautiful the trees were at this time of year, the  renovations at the Tuileries, and everything but business,  which I was most eager to do. Finally I was driven to say,  “Monsieur Dalliet, don’t the French ever talk business at  lunch?” He replied, “Oui, Monsieur Prell, but only between  the fruit and the cheese.”

 

“So is it permissible now, Doctor Lauder, for me to  spend a few minutes talking business – between the cheese  and your special Apfellkuchen?” That was when the crisis  ensued. He became very upset, expounding in an agitated  voice how he was lied to, cheated and wronged by all. He  would not agree to any proposal I might make and he  certainly didn’t want to hear about the poor widows who  would lose their investment. It took Frau Lauder's inter-  cession to quiet his tirade.

 

Before the evening ended, I overheard Frau Lauder ask  Owen if he had purchased something to take back to his  mother in London. She then suggested collecting him from  the Baur au Lac the next morning to take him shopping,  adding, “Remember to ask your father for his credit card.”

 

Returning to our room later, I thanked Owen for his  contribution to the evening and for entertaining Frau  Lauder. While it certainly did not look as though the trip  would be successful I was still happy we had made this  excursion together.