Word: vesco
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Dates: during 1970-1970
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...essence, the 34-year-old Vesco will be making a hefty bet on an I.O.S. comeback. In return for the loan, which will pay an initial 10% a year interest, I.C.C. will get warrants to buy up to 7,500,000 shares of stock in parent I.O.S. Ltd. at $2 a share. Last week the price of those shares rallied from $2.22 to $2.82 in London. I.C.C. stands to snare a profit of $7,500,000 for every $1 that I.O.S. stock rises above $2. Vesco in addition will have what he calls "veto power over I.O.S.'s checkbook...
Fast Footwork. The natty Vesco has already earned a reputation for fast financial footwork. The Detroit-born son of an autoworker, he left school at 17, learned management techniques on the job at Packard, Bohm Aluminum and Reynolds Metals. He went into business on his own at 24, arranging contracts and financing for deals to buy and sell small companies; sometimes he accepted stock as a fee. Partly through this method, Vesco in 1965 combined two tiny valve and control manufacturers to form International Controls, with 20 employees and sales...
Thanks to mergers, International Controls has since swelled into a mini-conglomerate, with sales of $100 million, 4,000 employees and 31 factories that make aircraft parts, bomb casings, radar components and dozens of other items. "We've built ourselves on financial agility," boasts Vesco. He persuaded Hale Bros. Associates, a San Francisco investment firm that controls the Broadway-Hale department store chain, to become an early backer by buying $80,000 of stock. I.C.C. was one of the first U.S. firms to tap the hoard of Eurodollars, raising $25 million through an issue of debentures...
Laundering the Deal. Some of Vesco's acquisitions have been painful. The top officers of Electronic Specialty, a West Coast maker of aircraft parts, bitterly fought Vesco's successful takeover attempt. Later they sued Vesco on charges of misrepresenting his offer. Vesco was exonerated on appeal. Both sides sued on similar grounds during I.C.C.'s takeover of Intercontinental Industries, a Dallas electronics firm. Vesco in 1968 paid $1,500,000 to buy Golden West Airlines, a regional carrier, only to sell it a year later for a mere $100,000 after suffering a $1,800,000 operating...
Despite his youth, Vesco often acts -and talks-like a figure from the early days of American capitalism. He sees his role at I.O.S. as helping the floundering financial combine regain the good graces of financial institutions and lenders. "It's our job to launder the deal," he says. In accepting Vesco's aid, I.O.S. announced that the loan-along with Cornfeld's return to the I.O.S. executive committee-"paves the way for an early revitalization of the company's affairs." That may be quite a challenge. I.O.S.'s sales force has shrunk...