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CoMinG HoMe?
about the future. I had represented Lehman Brothers a few times before in connection with reasonably “plain vanilla” projects. This time, I was asked to represent them in connection with something that was any- thing but: a proposed open-ended commitment to finance the acquisition and redevelopment of approximately twenty already-identified rural hotel properties scattered throughout as many jurisdictions in the United States and Europe. And there was a big “twist.”
The twist that the promoter/developer-borrower had come up with, one that made absolutely no sense to me, was to create an exclu- sive hunting and fishing “club” that would consist of a select and limited group of “members,” yet to be identified, who, having paid hundreds of thousands of dollars for the privilege of belonging, would be entitled to reservations at the not-yet-owned locations (assuming, of course, that there would be space available when the member sought to pay a visit) and would have the additional right to pay a fairly steep daily rate for his suite.
Lehman would obligate itself to provide financing for each acquisi- tion, all construction work, all furniture and furnishings, all equipment (including rifles), and all promotional material. It was projected— laughably, I thought—that it would take four months to assemble the membership, which would provide the “seed money.” When I saw the spreadsheets, I realized that Lehman Brothers was planning to lend 100 percent of the projected value of the enterprise—creating more than infi- nite leverage from the point of view of the developer.
And when I found that the Lehman representatives were quite unhappy when any risk or difficulty attaching to the structure of the transaction was pointed out—or when any attempt at legal protection was recommended—I knew that, not for the first time in my career, the goal of getting the transaction quickly closed (which is to say, far in advance of the time at which annual bonuses to our client representa- tives were to be awarded)—far surpassed the goal of having the transaction survive.
It wouldn’t. But not because of the transaction’s intrinsic difficulties, which to me were insuperable. It did not survive because Lehman did
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