We lost a big-hearted prodigy on Sunday morning: Teddy Forstmann, financier, political player, philanthropist (especially for the young and in education) and a bit of an adventurer. I know. I accompanied him on some of his adventures and feared for my life. He was a member of the board of directors of the American Spectator in the 1980s and early 1990. He died of brain cancer, and we shall miss him.
Teddy was from a prosperous family, but his fortune he made on his own. He relished "the deal," sports and gambling. He also had an interest in the ladies - Princess Diana, Elizabeth Hurley and, recently, a television personality, Padma Lakshmi. He never married. He put himself through Columbia Law School in part through high-stakes gambling. He was a prosecutor, as I recall, and then flew around the country just managing to get together enough money to buy a company. He was down to his last nickel and last call, but he got the company, turned it around, and walked off with $300,000. He knew the game of the leveraged buyout (LBO) was for him.
In 1978, he created Forstmann Little & Co., an early LBO firm. He was on his way, buying up Dr Pepper, Topps Co., General Instrument Corp. and Gulfstream Aerospace, among others. He was on his way to a fortune estimated at $1.6 billion. He was among the first to buy companies with subordinated debt, rebuild them and sell them for hundreds of millions of dollars, occasionally billions. He bought Gulfstream in 1990 for $825 million and sold it in 1999 for $5.3 billion. Forstmann Little had average returns of 50 percent in its first two decades.
Teddy would not use junk bonds. That was, he would say, "funny money. It's wampum." Over lunch, he would try to explain it to me. He was famous for coining the phrase "barbarians at the gate," which served as the title for Bryan Burrough and John Helyar's best-seller about the $25 billion deal for RJR Nabisco, which Forstmann bid for but lost to Kohlberg Kravis Roberts.
He had an eye for "the deal" but also was extremely well read, a great athlete and civilized. He also was a conservative. He donated millions to the Republican Party, though his real interest was in education and the young. He teamed up with John T. Walton, son of Wal-Mart founder Sam Walton, and donated millions to the Children's Scholarship Fund. He was an advocate of voucher programs and charter schools.
There was a comic side to him. He created a rivalry with Henry Kravis from the battle for RJR Nabisco. He prided himself on using subordinated debt. KKR used junk debt. He lost, but in the Burrough-Helyar book, the authors testify that Teddy "fervently believed junk bonds had perverted not only the LBO industry but Wall Street itself." "Almost alone," the authors write, "among major acquirers, Forstmann Little refused to use" junk. With Mr. Kravis, it led to many amusing altercations. Teddy moved into a home on Long Island, and darn if it wasn't along the same beach where Mr. Kravis had a home. I remember how he competed to get to the heliport before Mr. Kravis. These are the things billionaires fight over.
There were more serious adventures. In the early fall of 1992, he called and asked if I could rouse some writers to go with him to the former Yugoslavia to cover the plight of refugees. We hopped over to London in his Gulfstream, picked up the distinguished young historian Andrew Roberts and flew on to Zagreb, the capital of Croatia. There we were greeted by the mayor as though we were visiting dignitaries. You will forgive me if I expected armored cars to transport us through the war zone the next morning to Mostar, an embattled city in Bosnia-Herzegovina. Alas, our armored caravan consisted of one beat-up Volkswagen Golf sedan with a driver. Teddy was undeterred. The scenes along the Adriatic coast were spectacular, but the countryside was becoming increasingly ominous. Worse, we three were beginning to sweat profusely in the back of the non-air-conditioned Golf, and soon we were hopelessly lost. Our guide, a Croatian tennis-star friend of Teddy's, seemed anxious, as well he should have been, having not been back to Croatia in years.
Finally, amid the burned-out buildings of a remote town, we found the cops, or rather they found us. Now, in my opinion, we were prisoners. We were kept incommunicado for hours in that wretched town, and Teddy was growing irritable - not an auspicious sign. At long last, something happened. I never figured out what it was, but Teddy exerted his fiery personality, and we were off to Mostar with proper directions. At Mostar, we were shelled by the Serbs in the hills and feted by the locals - not good for the digestion. Teddy was unconcerned. He wanted to visit the refugee camps. We did for a day, driving by freshly dug graves, which Mr. Roberts and I found disconcerting. Shortly thereafter, they would be filled.
When Teddy got to one camp where all the children seemed to be down with colds and the flu, he was distressed. How could such conditions exist in civilized Europe? He pledged a few million dollars to rebuild the camp with proper sanitation. Just before leaving, he spotted a very fetching young lady and gave her his coat. He figured she would need it in the winter. If there was a pretty woman present, Teddy would spot her. He was fun in a good cause or a great deal. There was no one else like him.
R. Emmett Tyrrell Jr. is founder and editor-in-chief of the American Spectator and an adjunct scholar at the Hudson Institute. He is author of "After the Hangover: The Conservatives' Road to Recovery" (Thomas Nelson, 2010).
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