Richwhite

"Alongside Gibbs and Richwhite, two Fay, Richwhite men, Rob Cameron, a former senior Treasury official, and Steve Walker (‘Wakka’), a young thruster, rounded off the core of the team. For a while they called themselves the ‘Steam Team’, after a local brew in San Francisco (Anchor Steam) which they’d drunk in large quantities on American visits. In May 1989, a few months into their quest for Telecom, Gibbs was stunned to learn that Michael Fay had successfully obtained a 30 per cent stake in the Bank of New Zealand for Capital Markets, a public company Fay, Richwhite controlled. Richwhite remembers Gibbs yelling, ‘Why the hell did you want to buy a bloody bank?’ ‘He rang up a few hours later to apologise and said it was an amazing deal, well done; but Gibbsie’s first reaction was right.’ It emerged that the BNZ was laden with bad debts, mostly in Australia, making the investment a sour one."

"Gibbs and Farmer called Fay and Richwhite in early 1989: ‘We think we should buy Telecom. There’s a huge play here, we can probably get it for a good price, but we can’t do it ourselves; we’d love to work with you.’ Gibbs said that he’d handle the deal from their end; after a short discussion at the other end, Richwhite was nominated as their leader."

"Richwhite negotiated the fee, which, if they were successful, would be very lucrative. Gibbs’ efforts to gain a slice of the business took longer to bring to fruition. Initially they thought in terms of joining the bid as fully paid-up partners with the Americans. In that scenario, their aim was to persuade the Americans to apply plenty of leverage to the deal. If, say, they bought Telecom for $4 billion with 75 per cent debt, only $1 billion worth of equity would be required. Freightways and Fay and Richwhite’s Midavia Holdings would need to find $100 million to take a 10 per cent stake. If the Americans went in with only 40 per cent debt, however, the New Zealanders would be scrambling to find $240 million for a 10 per cent stake. That would be distinctly less attractive."

"Meantime, Gibbs and Richwhite ruminated constantly on how they could make the maximum amount of money out of the deal. Initially, reflecting their different mindsets, Richwhite concentrated on extracting the largest possible merchant banking fee from the Americans, while Gibbs focused on gaining an option to take an equity stake in the business. ‘The real value opportunity is to become a principal,’ he repeatedly said. Later Gibbs joked that he was happy to ignore the fee if he got an option, but Richwhite quickly decided that they needed the option *and* the fee. But Gibbs’ quest for a slice of the action was critical to their relationship with the Americans; as merchant bankers seeking only a fee, they were servants and the Americans were masters; as partners they stood more as equals."

"Gibbs and Richwhite pared back the Telecom task to its essentials. Rob Cameron’s team carried out a very detailed and robust valuation exercise; Richwhite thought they’d have to pay at least $3 billion, a lot more than their resources. The primary object, then, was to find the hungriest potential buyers overseas, since they’d pay the most and thus were most likely to win the tender. Gibbs and Richwhite divided responsibilities; Richwhite dealt with Telefonica in Spain, BT and several American companies, while Gibbs concentrated on other Americans. As early as May 1989 Gibbs had met with Bell Atlantic. He quickly concluded that they and Ameritech, another US firm, were ‘the hottest to trot’."

"In a decade of deal making, this one had brought Gibbs close to heaven. The $4.25 billion privatisation of Telecom proved to be the sixth largest deal done anywhere in the world in 1990.[24](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-24) The merchant banking fee that the Americans would pay Freightways and Fay, Richwhite, which they calculated at $52 million, was unmatched internationally that year. Gibbs was cock-ahoop. It had been a great team effort that combined the determination and deal-making brilliance of Gibbs with the breadth of talent and relationships that Richwhite had fostered at his merchant bank. The Telecom deal was also Richwhite’s proudest moment in business. He summed up their collaboration: ‘Gibbs wouldn’t have won it without us; we wouldn’t have made so much money without Gibbs.’[25](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-25)"