By Sean Pendergast
By Sean Pendergast
By Sean Pendergast
By Jeff Balke
By Richard Connelly
By Jeff Balke
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By Craig Hlavaty
Ken Hersh, Rainwater's right-hand man, says his boss and Pickens "had ongoing discussions" during the years that Mesa was sliding toward insolvency.
A former Mesa employee who heard Boone describe those encounters remembers the talks as extremely one-sided.
"Boone had always seemed to like Rainwater because of the energy around him," the former employee says. "But he also had reservations about him. He would complain after visiting with him, 'God, you don't get any talk time with that guy.' "
The employee remembers that Pickens never wanted it to look as if Mesa were desperate, but the terms Rainwater offered were always those acceptable only to a desperate man. The former Mesa employee remembers that Pickens would return from a trip and say, "Those guys are crazy. Why did we waste two hours going out to Fort Worth?"
But ultimately Pickens was desperate enough, and Rainwater was his only salvation.
The Mesa board was convened for a meeting, and Pickens sat patiently for six hours as Hersh told the Mesa board what his boss was prepared to offer for the company. (Rainwater did not even bother to attend the meeting, instead sending Hersh and keeping in touch by speakerphone.)
The whole scene must have gotten under the skin of a competitive guy like Pickens.
"Here was Boone," recalls a participant at the meeting, not in the Pickens camp. "A guy who fancied himself as near the top of the industry, and here was a young guy [Hersh]. There were just points where [Hersh] didn't treat [Pickens] with the deference that you would have expected." It seemed, the participant recalls, as if Pickens "was biting his tongue."
Pickens was in a hurry to get the deal done, and asked his board to approve it that day. Batchelder's allies balked at the rush, and the board decided to wait overnight.
But in a telephone conference call the next morning, the board approved the deal over the objections of the two members from Batchelder's group.
Joel Reed, one of the directors representing Batchelder's group, recalls conducting a 30-minute monologue about why the deal was overly rich for Rainwater and shorted the shareholders. He argued then -- and later in a letter of dissent -- that Rainwater was getting a 70 percent discount on the market price of the stock, and that the board had failed to search adequately for a better alternative. But Reed recalls that Pickens cut him off.
"All right," Reed remembers Pickens said, "I think we have heard enough. Let's vote." In April, the Rainwater proposal was unveiled to the public for the first time. At the press conference held for the occasion, Rainwater and Pickens presented a picture of warmth and cheer. The 51-year-old Rainwater, dressed casually and sporting a deep tan, recounted how the two had struck the deal on a golf course. He joked that Pickens was still the better golfer.
Superficially deferential at that moment, Rainwater would show in short order that he was undoubtedly Pickens' new boss by committing the ultimate act of an employer: firing Pickens.
On June 13, Pickens announced that he was retiring from Mesa. The company's stock price gained 12 cents that day. Nearly a week earlier, Pickens had met with Rainwater for an hourlong meeting in a New York City suburban airport. The two had decided, Pickens told the press, that it was best for Pickens to leave.
But well before the formal announcement, it was clear, to anyone who cared, that Pickens was on his way out. In an SEC document filed in May, the Rainwater group had written about an "orderly transition" of the management at Mesa.
(Less than a month after the annual meeting at the Omni, Mesa announced that Rainwater had indeed found Pickens' successor: Jon Brumley, an oil-industry veteran who had defended Southland Royalty against a Pickens-led raid.)
Nowadays Rainwater's group must walk a fine line, careful not to gloat too much or trample over Pickens and Mesa shareholders. The Rainwater team is sensitive, for instance, to charges that it stole Mesa. "Bankruptcy is worse," Hersh asserts. "Our deal made the stock durable."
About Pickens, Hersh uses kid gloves. "We made him part of the process," he says. "He was CEO of the company."
But the new management team at Mesa already has unraveled much of what Pickens had sewn. The Rainwater team immediately laid off 10 percent of the Mesa work force. Pickens' top executives have left. "I didn't come here to work for a $200 million-a-year oil company," explains Andrew Littlefair, the departing vice president of public affairs. "I came here to work for Boone Pickens."
Rainwater has halted Mesa's investment in one of Pickens' pet projects -- research into natural-gas-powered vehicles. And he has sold Pickens' corporate jet.
As for Pickens, he has on his own disassembled much of his high-profile life, resigning from the boards of other major companies and reducing his public speaking engagements. His name isn't being bandied about as a gubernatorial prospect. And in Dallas district court, his marriage to a woman whom he described in his book as his "best deal" is disintegrating.
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