Perelman: Borrowed $1.9M to a Boeing 727 in Seven Years

"Then, in 1978, at age thirty-five, he decided to venture out. He borrowed $1.9 million to buy 34 percent of Cohen-Hatfield Industries, a jewelry distributor and retailer with $49 million in revenues that year. In 1980, Cohen-Hatfield spent about $45 million to buy MacAndrews and Forbes, a maker of chocolates and licorice extracts, and the Cohen-Hatfield name was dropped in favor of MacAndrews. In the fall of 1980, MacAndrews issued its first batch of junk bonds, a modest $33 million, underwritten by Drexel with Bear, Stearns. Over the next four and a half years, Perelman set out on a wholly leveraged, though relatively small-time, acquisition trail. He tried and failed to acquire the Richardson Company and the Milton Bradley toy and game company, but he made money in both transactions. He succeeded in buying, for a total of about $360 million, Technicolor, Inc., the film processor; Video Corporation of America, a major manufacturer of home videocassettes; the film-processing assets of Movie Labs; Consolidated Cigar; and a controlling interest in Pantry Pride. Roughly $140 million of this money came from Drexel junk-bond offerings, the rest from banks—and all built on that original (borrowed) $1.9 million, back in 1978."

"Asked when he conceived of the megaleap he made with Revlon, Perelman replied that it was “a process of bites.” No, he did not have this trajectory in mind when he started out in 1978 to buy the jewelry company, Cohen-Hatfield. “Go back to 1978: even if we’d defined it, we couldn’t have funded it,” said Perelman, who refers to himself in the first person plural. “This could not have been done without Drexel.”"

"IN SEPTEMBER ’86, in the opulent Revlon offices where he and “the Drexels” had arrived as hated interlopers and dropped ashes on Bergerac’s Persian rugs, Perelman now seemed at home. He and Drapkin had liked calling attention to Bergerac’s excesses, particularly the Boeing 727 outfitted with a gun rack for his safaris, and the Revlon offices in Paris which Perelman described as a “castle.” Now the company leased its corporate jet from a Perelman aircraft-leasing company. And now that the “castle” was his Paris headquarters, Perelman had decided not to sell it, after all. He was having the New York offices redecorated. And James, Bergerac’s butler, was now serving Perelman."