The Liar's Ball by Ward Vicky

Author:Ward, Vicky [Ward, Vicky]
Language: eng
Format: epub
ISBN: 9781118421512
Publisher: Wiley
Published: 2014-10-04T00:00:00+00:00

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Like everyone else in the building, Icahn was friendly with Macklowe. In November 2006, Macklowe and Icahn ran into each other in the lobby. They reminisced about a deal they'd both been involved in—the Time Warner Center, according to court records. Macklowe said he had an idea for Icahn, and he'd call him about it.

On the phone Macklowe asked if Icahn might be interested in partnering with him on a potential deal to acquire the real estate investment trust Reckson Associates. The firm owned buildings in Manhattan, on Long Island, and in New York's outer boroughs. SL Green Realty was bidding to buy it, but Macklowe thought its offer, at roughly $43 per share, undervalued the properties. If he and Icahn teamed up and outbid SL Green, they'd get a great deal. The initial offer would need to be all in cash, but Macklowe assured Icahn that raising the money wasn't a problem. “Don't worry about the banks,” Macklowe said. “I've got the banks. Don't even think about it.”

Time, though, was critical. They had to make their $3 billion offer by the end of November. On November 15, Macklowe and Icahn signed an agreement to each put $600 million into a joint account. Icahn added a penalty clause, to which Macklowe agreed, stating that if either party failed to do this, they'd have to pay the other $60 million.

Billy Macklowe later admitted he didn't like this unusual arrangement, but his father told him to acquiesce.

Advising the Macklowes was a banker Billy brought in named Andrew Bednar. He was one of Perella's partners at Perella Weinberg.

By late November, Icahn began phoning the Macklowes. Where was their money? They were scrambling. Over Thanksgiving Harry made an SOS call to Rob Horowitz on his cell phone. Horowitz immediately called both Steve Stuart at Fortress and Eric Schwartz.

Fortress promised to lend Macklowe the $600 million—but according to Horowitz, they were not comfortable with him putting the money into a joint account with Icahn. Fortress wanted control, so instead the money was posted to a separate account with Bear Stearns. They told Macklowe he could access it if the joint bid was successful.

This was not what Icahn had requested. He phoned the Macklowe offices looking for both Harry and Billy. “What the hell is going on here? You have got to put up your money!”

Macklowe was cooling on the deal. Someone at Deutsche Bank had told him that the Reckson portfolio was worth far less to him than he thought.

“He gave Fortress back the $600 million, and Fortress said, ‘That's fine, but you owe us $606 million.’ Six million was the fee,” Rob Horowitz explained. “So Harry wrote them a check for $6 million. He had the money outstanding for one week.”

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