MOHNISH PABRAI 00:00
And one of the things that happened when they took control was one of the entities that bought about $6.5 million about approximately little more than 25-27% of the 60% was a company called Diversified Retailing.
So what happened is that Warren Buffett, a guy named Sandy Gottesman is on the board of Berkshire Hathaway now and Charlie Munger formed this company called Diversified Retailing, 80% was owned by Buffett Partnership, 10% by Gottesman and 10% by the Wheeler, Munger Partnership. And they had raised $5.5 million of debt with the help of Goldman Sachs to buy retail operations and actually bought a department store in Baltimore.
And what ended up happening with the department store, they realized it was a mistake and they were very lucky about 2-3 years later to be able to sell it for what they bought for, but then they raise this debt, the debt didn’t have too many covenants and they took the $6.5 million that originally was meant to go to the department store, and they put that Blue Chip as well.
So basically, there was about $18.5 million of equity and about $5.5 million of debt that went in and it became the 60% of Blue Chip they controlled.
And Blue Chip with this $24 million they invested had well over a hundred million of float and it had another, you know, $40-50 million of equity so that a lot of assets that they got control of without spending that much money.