Rufus Lumry

"To further sweeten the picture, Lumry and Hooper did everything they could to shift costs from daily expenses to capital accounts, where spending would not count against cash flow (that is, revenue left after operating expenses). Nearly everyone in the organization focused on CFAM, cash flow after marketing. Was that dollar spent on just main- taining something—an operating expense—or on extending its useful life—a capital expense? If a plausible case could be made for the latter, then that's where the money would be slotted. For example: Didn't Cal Cannon spend a lot of his time overseeing construction of that new plant? Sure. So 30 percent of his salary became a capital expense, and CFAM looked rosier. How about Cal's staff and their expenses? Same thing. Independent auditors accepted the shifts. "We got to know the accounting rules very well. We really stretched the definition of 'expanding the useful life of an asset,' " Hooper says with a laugh. Moreover, as the McCaw organization did more borrowing, Wayne Perry, Rufus Lumry, Steve Hooper, and others carefully worked over the loan agreements to give the company wiggle room. The McCaw team fogged definitions of debt or capital expenses, built "back doors," and otherwise structured agreements to follow Craig McCaw's oft-repeated dictum, "Flexibility is heaven.""

"The McCaw strategy involved sending several different messages: to convince LIN shareholders that the better deal was with McCaw; to persuade others in the cellular industry that McCaw was the better steward of LIN's critical licenses; and to build pressure on BellSouth through political means and by convincing them they were in a fight with a ruthless opponent. Normally eager to avoid reporters, McCaw started sending signals through the news media that he wanted LIN at practically any price. McCaw compared his company to anti-imperial Scottish warriors, the Islamic Jihad, and the anti-Soviet Afghan rebels. "We want them to think we're maniacs," he told Forbes magazine. He sent John Stanton, Rufus Lumry, and other McCaw executives on a worldwide trip to raise money from bankers who were privately assured that McCaw would make no crazy offers. The group raised $5.5 billion—proof that Craig McCaw was not dependent on Michael Milken, who was about to have serious trouble with the law. Meanwhile, on Wall Street, the McCaw team tried to raise doubts about BellSouth's offer by pointing out the Material Adverse Change (MAC) clause in the Baby Bell's offer. Routinely used by many compa- nies in buyout offers, the MAC clause allowed the cautious BellSouth an out if problems erupted. The McCaw company had similar outs in its offer, but the team stressed how long Bells usually took to close deals compared to McCaw's history of rapid closures. A slow-as-molasses Baby Bell deal, they implied, stood a good chance of triggering the MAC clause and killing the whole arrangement. Other McCaw aides tried to make political trouble for BellSouth, telling state regulators that the LIN deal would drive up local charges or violate agreements. Two U.S. senators from Washington State agreed to introduce a bill to block BellSouth. Then came McCaw's flanking maneuver, what Perry calls "the beginning of the end" for BellSouth."

"McCaw also knew that playtime moves minds. To build relation- ships with lenders, McCaw would invite them on river-rafting trips in Oregon. Chief Financial Officer Rufus Lumry helped with the planning for these outings, fussing over each participant's preferences. If someone preferred Evian to Perrier, Evian it was. The spectacular Rogue River provided the entertainment. After a few hours, friendly splashes turned into roaring water fights under the sun, and men with loan portfolios felt like boys again. Word got around about the ultimate squirt gun fight that was settled when McCaw's team called in a helicopter—equipped with a water cannon. The days would end with hamburgers around the campfire and a little business talk."