to those who demanded that the federal government stop the states from passing laws that interfere
with LBO activity. For that notorious corporate raider and disciple of Chairman Mao Liedtke, T.Boone Pickens, the message was clear:
I know that Vice President Bush is a free enterpriser. I don't think there is any doubt if you look at
what Vice President Bush has said and what Gov. Dukakis has said that Bush is pro-stockholder. I
would say Dukakis is pro-management. *
The expectations of Pickens and his ilk were not disappointed by the Bush cabinet that took office
in January, 1989. The new Secretary of the Treasury, Bush crony Nicholas Brady, was only a
supporter of leveraged buyouts; he had been one of the leading practitioners of the mergers and
acquisitions game during his days in Wall Street as a partner of the Harriman-allied investment firm
of Dillon Read.
The family of Nicholas Brady has been allied for most of this century with the Bush-Walker clan.
During his Wall Street career at Dillon, Read, Brady, like Bush, cultivated the self-image of the
patrician banker, becoming a member of the New York Jockey Club and racing his own
thorougbrePrescott Bush. Brady, like Bush, is a member of the Bohemian Club of San Francisco and attendedd horses at the New York tracks once presided over by George Herbert Walker and (^)
the Bohemian Grove every summer. Inside the Bohemian Grove oligarchic pantheon, Brady enjoys
the special distinction of presiding over the prestigious Mandalay Camp (or cabin complex), the one
habitually attended by Henry Kissinger, and sometimes frequented by Gerald Ford. When Senator
Harrison Williams of New Jersey was driven out of office by the FBI's "Abscam" entrapmentoperation, Brady was appointed to fill out the remainder of the term to which Williams had been (^)
elected. Brady is also reportedly a victim of dyslexia.
At the Regency in Lower Manhattan, Brady rubbed elbows each morning at breakfast with Joe
Flom and the rest of the the Skadden Arps crowd, Arthur F. Long of DLipton, Arthur Liman, Felix Rohatyn, Boesky's friend Marty Siegel, and Joe Perella of First Boston..F. King and Co., Marty (^)
Brady's LBO experience goes back to the 1985 battle for control of Unocal, the former Union Oil
Company. T. Boone Pickens and Mesa Petroleum attempted a hostile takeover of Unocal through a
complex "two-tiered" tender offer by which those shareholders willing to help Pickens to a majoritystake in Unocal would receive cash payment for their stocks, but those forced to sell to Pickens after (^)
he had gone over the top would be compelled to accept junk securities. In order to defend against
this two-tier, front-loaded hostile tender offer, Unocal management called in Brady's Dillon Read
together with Goldman Sachs.
Working with Goldman Sachs, Brady helped to devise a new form of anti-takoever defense for
Unocal: it was in effect a self-inflicted leveraged buyout, a self-tender for a large portion of
Unocal's stock which the company offered to buy back at a higher price than the one stipulated in
the Pickens tender offer, although Unocal would refuse to accept any of the shares held by Pickens.
Pickens tried to overturn this selective self-tender in the courts of Delaware, but he was defeated.
The self-tender sponsored by Brady's investment bankers was actually a usurious chicken game:
Unocal's tender offer to buy 80 million shares at an astronomical $72 per share in comparison with
the $54 offered by Pickens. This meant $5.8 billion in new high-interest junk-bond debt for Unocal,
in another triumph of demight very well take over Unocal, but the new debt burden would mean that the company wouldbt over equity. The premiss was that if Pickens insisted on going ahead, he
soon go bankrupt and Pickens would lose all his money. In this case, the Unocal management
advised by Nick Brady was more than willing to gamble with the existence of their entire company,
and thus with the livelihoods of thousands of workers and their families, to ward off the advances of
Pickens. In the end, this device would load Unocal with a crushing $3.6 billion of high-interest debt