Slouched in his chair, cigarette in hand, RJR Nabisco treasurer Frederick W. Zuckerman is recalling the $6.5 billion loan he arranged with his bankers seven months ago. The terms, he says, were "normal for an emerging credit" like RJR.
Suddenly, William Apostolides, RJR's assistant treasurer, interjects: "Better than normal."
Mr. Zuckerman doesn't argue.
As a key player in two of corporate America's biggest financial restructurings - first at Chrysler Corp. in the 1980s and now at RJR - Mr. Zuckerman has displayed a knack for getting lenders to deliver on his own terms.
If all goes as planned, RJR will become less dependent on bank loans as it evolves from history's biggest leveraged buyout into a mainstream investment-grade corporation.
As Mr. Zuckerman turns increasingly to the capital markets for financing, his commercial bankers hope he will remember his friends and give them a piece of the action.
Whatever happens, though, Mr. Zuckerman can be counted on to cut the best deal for his company.
Though he professes not to seek the last basis point, that's just what Mr. Zuckerman got last year, when he sought - and obtained - a new credit line priced a full 2 percentage points below the rate RJR had been paying.
It helped, of course, that the new bank line was part of a broader financial restructuring that erased the junk-bond credit rating of RJR, 40% owned by Kohlberg Kravis Roberts & Co., the buyout firm.
Still, some say Mr. Zuckerman got away with murder with his lenders.
A Favorite with Lenders
Even so, cries of "bank basher" are rare. Instead, many bankers express what appears to be genuine affection for the 57-year-old executive.
It was at Chrysler that Mr. Zuckerman acquired a reputation in banking circles as a straight-talking, no-nonsense executive - a style not unlike that of outspoken Chrysler boss Lee Iacocca.
"He's a very effective, very open, candid guy," says Michael Murray, executive vice president at Continental Bank Corp. in Chicago.
"You never have the feeling that you have to ask the right 10 questions," adds Mr. Murray, who got to know Mr Zuckerman after he left Detroit.
Even when talking off the record, bankers are effusive in their praise.
"He's delightful," says one.
"I have nothing but absolutely terrific things to say about him," adds another.
In addition to his candor, Mr. Zuckerman's open-door policy with bankers wins high marks.
"In the auto industry, he was probably the most accessible treasurer," says Loretta Leoni Summers, who worked closely with Mr. Zuckerman in the 1980's as the Chrysler relationship manager at Manufacturers Hanover Trust Co., which was then Chrysler's lead bank.
|Care and Feeding'
Given Chrysler's shaky financial footing, Mr. Zuckerman needed all the friends he could get.
A year and a half into his job at RJR, with a new multiyear loan agreement under his belt, Mr. Zuckerman still spends a considerable part of his time devoted to what he describes as the "care and feeding of lenders."
RJR's bank group, though smaller than the previous one, still has 67 lenders, including five lead banks and 18 that also committed vast sums as "managing agents."
People from each of the top 23 banks drop by four or five times a year for briefings from Mr. Zuckerman and his staff on RJR's financial condition. The other participants in the bank group send representatives at least once a year.
A visit with Mr. Zuckerman at RJR's midtown Manhattan offices can cause near asphyxiation.
"When I call on them, they all smoke, and it drives me nuts," complains one banker, an official in the New York office of a major European bank.
A large air purifier sits on the floor near Mr. Zuckerman's desk, overwhelmed by the smoke generated by the treasurer and his aides.
He quit smoking during his Chrysler days but took it up again after joining RJR.
"It's Billy's fault," he jokes, pointing his finger at the chain-smoking Mr. Apostolides.
Whatever the reasons, smoking is clearly socially acceptable behavior at RJR, maker of Winston, Salem, and Camel cigarettes. After all, the company's tobacco business generates three-quarters of its worldwide cash flow.
Life on the Edge
By all accounts, including his own, Mr. Zuckerman enjoys life on the edge.
There was a time at Chrysler in the early 1980s, when the company's closing cash balance at the end of one day often amounted to just a fraction of the next day's projected expenditures.
"Fred, you operate on a pretty tight margin," Jeffrey Sell, a senior vice president at Chase Manhattan Bank, recalls commenting to Mr. Zuckerman at a briefing for Chrysler's bankers.
Though the worst of a buyout-related financial crisis was over when Mr. Zuckerman arrived at RJR Nabisco in February 1991, the company was still on a tightwire.
"I came to RJR because I viewed this as the most complicated balance sheet in America, and I'm turned on by complicated balance sheets," says Mr. Zuckerman.
The success of RJR's deleveraging moves, accompanied by the negotiation of the favorable bank credit agreement, makes that balance sheet less daunting today.
Remembering Who Helped
But Mr. Zuckerman promises not to forget the bankers who helped make the turnaround possible.
"We will remember which ones were the 23 when we go forward," he says, referring to the band of banks that played the RJR's recent bank deal.
Indeed, those commercial banks with underwriting powers expect to get a fair hearing when they bid to lead or co-manage future RJR debt and equity offerings and the like.
J.P. Morgan & Co.'s securities unit won a coveted spot as co-manager of an RJR note offering earlier this year.
Morgan's securities subsidiary would not have been considered for the underwriting assignment had Morgan's commercial banking unit not participated in RJR's revolving credit last December.
"The ticket of admission for consideration was being in the credit agreement," says Mr. Zuckerman.
Still, he says, there was no "quid pro quo." And commercial bankers are under no illusion that Mr. Zuckerman will give them a free ride.
"All Fred can do is make us aware of opportunities that exist," says James Ferguson, managing director of banking and corporate finance at Chemical Banking Corp. "We've got to come to the table with competitive products."