Consolidated Cigar

"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."

"“Even though Forbes magazine would have us believe otherwise, Mr. Perelman, who runs Pantry Pride today, seems to have had the ability of knowing what to do with his money. . . . In the last six to seven years, not only has he taken a few million dollars and purchased MacAndrews and Forbes, and then bought Wilbur Chocolates, and then took the company private, and then bought Consolidated Cigar, and then bought Technicolor, but [he] has subsequently invested money in Pantry Pride. . . . Pantry Pride was only selling at three and three quarters before Mr. Perelman took it over, and is now selling somewhere between eleven and twelve—in a matter of less than one year. Why? Because a management team has been brought to bear, which was willing to take the risk, who had the vision of value, and to find the backing of you in this room and other institutional investors around the country, willing to loan them money with the understanding that they had to commit to repay your interest and principal, and have the vision or foresight, which was the scarce resource, to identify those assets that are undervalued in the marketplace, the difference between a perception and the reality, and to use your money wisely. ."

"“Even though Forbes magazine would have us believe otherwise, Mr. Perelman, who runs Pantry Pride today, seems to have had the ability of knowing what to do with his money. . . . In the last six to seven years, not only has he taken a few million dollars and purchased MacAndrews and Forbes, and then bought Wilbur Chocolates, and then took the company private, and then bought Consolidated Cigar, and then bought Technicolor, but [he] has subsequently invested money in Pantry Pride. . . . Pantry Pride was only selling at three and three quarters before Mr. Perelman took it over, and is now selling somewhere between eleven and twelve—in a matter of less than one year. Why? Because a management team has been brought to bear, which was willing to take the risk, who had the vision of value, and to find the backing of you in this room and other institutional investors around the country, willing to loan them money with the understanding that they had to commit to repay your interest and principal, and have the vision or foresight, which was the scarce resource, to identify those assets that are undervalued in the marketplace, the difference between a perception and the reality, and to use your money wisely. . . ."

"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."