Fire Density

“Even if we can pull this off, we still need to get somewhere almost 400 million more,” I voiced my doubts.

“Well, either you have to attract an outside investor, and he, if he gives us the money, is bound to want to be a part owner of the company, or you have to go to the bank for a loan which is about as complex as leasing.”

“No, let’s try to do without co-owners. This can lead to management problems. All I need is a conflict between shareholders. Prepare the documents, Leo. Tomorrow we’ll try our luck at the Federal War Bank. The defense industry enterprises receive credits from this bank, so our subject matter should be close enough, and they have their own leasing company.”

* * *

“Good afternoon, gentlemen. My name is Ilya. I’m the manager of our bank’s new clients. How can I help you?” greeted us from the screen of my tablet a short and very thin young man, apparently a small clerk, the main task of whom was to meet first-time clients. It was some kind of filter that was needed to keep nonentities from bothering serious people.

“Good afternoon,” answered for us Rabinovich and presented us all. “We represent the Lavroff Weapons Company: development and manufacture of weapons and military equipment.

“I’ve never heard of your company before. How long have you been in this market?”

“Our company has just received a state license for this activity.”

“And what services do you need from our bank?”

“Equipment leasing and working capital replenishment credit. Also your bank account, of course.”

“Well, please send me your package of documents.”

For ten minutes, the clerk looked at the files he had been given. We waited patiently.

“What can I say, gentlemen,” has he finally said,“your company is new, has not yet started and has no experience of successful work in the chosen field. That is a negative, and a very significant one. Your own funds account for only four percent of the loan and lease amounts requested. That’s not good either. The sources of repayment of credit and lease payments cannot be considered reliable. If you’d already had contracts with the Ministry of Defense already, it would have been different, after all, you may not win the contest. Those are the downsides. Now, the upsides. You have a very serious license, which means the government thinks your company is well-off and capable of conducting your chosen activities. Besides, you have positive results of combat tests of some of your models, these documents are not standard actually, but this is something. And one last plus: your company has a distinguished scientist and a team of qualified engineers and researchers. All together, the picture is quite contradictory. I’m afraid we won’t be able to provide you with the amounts you’ve asked for.”

“Are there any additional factors that could affect the bank’s decision?” – I entered into the negotiations.

“Of course. For example, the presence of strong guarantors or a quality collateral whose value exceeds the amount of credit requested.”

“Will copyright be a good collateral?”

“This depends on the case and, above all, the amount of royalties in recent months. What do you have to offer?”

“The patent on the treatment of asteroid fever. I’ve sent you the file.”

The manager examined the document for a while and then gave a thoughtful speech:

“Not a bad asset. Of course, it requires a professional appraisal, but I think it’s worth around 200 million. That’s if it’s as a whole. Your share in it is twenty percent… Well, you can get 30 million with this collateral. But as you can see, it doesn’t change the situation. Is there anything else?”

“The shares of our company. Given the license, do they have any value as collateral?”

“Unfortunately, it’s an illiquid asset. Your shares are not listed on the exchange, so I don’t think the bank will be interested in them.”

“Tell us, Ilya,” Rabinovich has decided to lay down our last trump card,“Have you carefully read the documents relating to our license?”

“Well, I looked at them. They all fit the bill.”

“Please note who has signed the license recommendation.”

The manager found the document and went into the reading. This time, he looked up to us almost immediately.

“It’s very unusual, gentlemen,” he spoke with doubt in his voice,“from the point of view of the regulations approved by the bank’s board of directors, the identity of the signatory is not a significant factor. But your case is clearly out of line. I’m going to have to submit your application to the director of our branch. He will contact you shortly.”

The director of the capital branch of the Federal Military Bank was also unable to make a decision on his own. He contacted us and said that he had given our documents to the board of directors for consideration. They held us for three days, after which we received a categorical rejection from the bank. Not only were we not given the requested amount, we were denied service at all. The head of the branch who told us the news sounded confused and surprised. Either he was a great actor, or he didn’t truly understand what had happened. And a new anxious bell rang in my head, and an evil little worm pounded his hammers with a double force.

* * *

Five other big banks have failed us, too. Two of them categorically refused to deal with us. The others were ready to open accounts for us, and one of them even promised to consider a loan application for 10 million, and the manager assured us that we had every chance of getting approval from the bank management. But it certainly couldn’t solve our problem.

Everything became clear on the third day. I was contacted by a confused and clearly upset Rabinovich.

“Igor, I have some bad news for you,” he stated directly, “I was approached by people from Global Weapon Industries. They made it clear to me that they wanted to negotiate with the owners of the Lavroff Weapons Company about selling the firm. I’m very interested in working with you, but I want to warn you right now, if you decide not to sell, I will be forced to terminate our business relationship. My business is going to be ruined by such ill-wishers. These are very serious people, and I wouldn’t want them to be my opponents.”

“Thank you for your candor, Leo,” I responded thoughtfully, trying to shape my behavior in new circumstances, “I will not refuse to negotiate. Let’s see what these gentlemen have to offer me. Are you still ready to participate at this stage?”

“Until a decision is made to refuse, yes.”

“Then arrange a meeting for us, please.”

Representatives of one of the world’s largest arms manufacturers refused to come to our office. They chose not to invite us to their office either. We met in a neutral area, in the negotiating room of one of the most expensive business centers in the capital.

“So, gentlemen,” I took the initiative after our mutual introduction, “You have a proposition for me. I’m listening to you very carefully.”

“Igor Yakovlevich,” started quietly the Hispanic Enrique Cruz, the first negotiator of the arms corporation,“we are pleased to meet you. Such a young officer, and already a knight of the Gold Star and the Iron Cross. You’re a great military man, and obviously that’s where you come in.”

“Thank you, Mister Cruz,” I nodded my head, “but that’s clearly not the reason of our meeting.”

“Take your time, Mister Lavroff, I was just beginning my thought. So, you’re an exemplary officer with incredible combat experience for your age and rank. A brilliant military career awaits you, as you are now a student at the General Staff Academy, and graduation opens many doors to any officer. My colleague Martinez and I would like to understand why do you suddenly need to change your lifestyle abruptly and start a business that you don’t know too much about?”

“Gentlemen,” I answered with an accentuated surprise in my voice, “but it is more than logical. I was on two combat missions, and in both cases, I was able to achieve high combat effectiveness by improving standard weapons in the service of the Federation Army. Is this not a cause for optimism when we set up our arms business?”

“For optimism? Not at all. You don’t seem to know what you’re getting yourself into and what you have big ideas about. The development of weapons and military equipment requires enormous resources, both material and human. In addition, this field of activity had long been divided among the major players. We, Global Weapon Industries, have about 40 percent of the arms market. There are three other large corporations, but their shares are lower. And that’s it, Mr. Lavroff. There’s nobody else around. Of course, small companies do their own developments, but they’re not working directly with the Ministry of Defense, they are contractors of a large firm and perform some of their orders. And I can tell you honestly, most of these are either subsidiaries or dependent companies of the same major players in the arms market. But you, bypassing the usual procedures with the full licence to develop and manufacture weapons, have fallen out of this long-established pattern. Nobody needs a new market contestant with direct access to the Ministry of Defense competitions.

“Thanks for the informative tour of the arms business, Mr Cruz,” I said with a smile, “So what does the GWI management want from me?”

“We’d like to buy your company. Along with the license, of course, because it’s what’s most valuable. Our management is ready to offer you 100,000,000 rubles. It’s a very good price, Mr. Lavroff. Think of it. In addition, we are prepared to purchase separately all your work already done on the modernization of standard weapons and buy from now on all the promising improvements and new samples that you can create.”

Cruz stopped talking, and all three, including Rabinovich, looked at me waiting for an answer. Judging by the look on my consultant’s face, he found the GWI’s offer more than generous.

“This is a good offer, gentlemen. And if I were an ordinary businessman, I would take it without hesitation.”

“What’s stopping you, Mr Lavroff?”

“Only one thing. I didn’t start this business for profit. I already have enough money to live comfortably. But, alas, not for long. It will be hard for you to understand, gentlemen, I can already see, but still, try, at least to get my motives right to the people you’re here for. I just got back from the battle, and I know the reality on the fronts, as I’ve been moving in the highest military circles, I’ve been among real high-ranking military commanders. With the available weapons and resources, we will not be able to defeat the quargs, we will lose the war. It’s a matter of several years. Who would want the money you promise me for my company? Who would spend it and where?”

“It seems to me, Mr Lavroff, that you are painting the devil blacker than he really is,” said Martinez, but it seemed like I was making him uncomfortable, “That’s defeatism over the situation…”

“Do I look defeatist to you?” I mildly interrupted the GWI negotiator, “I’m sure you’ve studied my biography.”