Several days after Lynn Tilton learned that she had lost out on a multibillion-dollar defense contract, she woke up in the midst of an epiphany.
“I’m going to stand up to the U.S. government,” she remembered thinking, “and stand up to the U.S. Army and call foul.”
Ms. Tilton, a 46-year-old vision of cleavage and diamonds, is the iconoclastic and controversial matriarch of a $5 billion Wall Street firm, Patriarch Partners, that buys distressed companies and attempts to resolve their debts.
She’d worked for over a year on the defense contract, which might have changed the game entirely for one of her holdings, MD Helicopters Inc., where she held the title of acting C.E.O. when the bid was lost.
On July 17, she filed a formal protest against the U.S. Army’s selection of EADS, the Airbus parent company and an industry leader, citing the Army’s “capricious” pricing analysis and claiming that her bid’s real value was distorted by at least $500 million.
The protest also finds fault with the Army’s rating of the EADS bid as low-risk, given the company’s plans to move manufacturing operations from Europe to Mississippi, and the recent financial difficulties at the company following the ouster of co–chief executives Noël Forgeard and Gustav Humbert in early July.
(On Sept. 4, Airbus dismissed its respected chief operating officer, Charles Champion. Then, last week, EADS issued a $6.1 billion profits warning as shares in EADS continued to plummet. Thomas Enders, EADS co–chief executive, hinted to The Financial Times that the whole group could be in danger. A few days later, Airbus chief executive Christian Streiff resigned.)
The protest refers to a class-action suit against EADS reported in The Times of London, which alleges that up to 150 executives at EADS have been involved in insider trading.
Ms. Tilton speaks of the deal with the moral rectitude of a Sept. 11 widow or P.B.A. wife. But she is not married.
She gravitates, she said, toward troubled companies “that serve those who serve us”—fire-rescue supply companies and military contractors. In addition to helicopters, Ms. Tilton’s company makes airplanes, fire trucks, fireboats, ambulances, garbage trucks, auto parts, aerospace parts and bicycles.
“I think I am the only … senior woman in the helicopter industry right now,” she said, seated before a sunny wall of living-room windows overlooking a brand-new swimming pool and a dock jutting out into the Navesink River on land that she bought near Rumson, N.J., after 9/11.
But her interest in service has more than a tincture of the battle of the sexes for Ms. Tilton.
“I have all the boys’ toys,” she said. “I can be every man’s fantasy.”
High up on the two-story walls were painted seven women of justice, copied from Italian frescoes: godliness, piety, science, strength, counsel, intellect and sapienza (wisdom).
In an hour, she’d be driven to a 2 p.m. investor meeting in midtown Manhattan, and then to her offices on Wall Street, by her handsome, young security detail. (He moved here from Iraq a few weeks ago.)
“How do you beat men?” she asked rhetorically. “You have all their toys. He who dies with the most toys wins.”
She’s a woman operating at the highest level in the male-dominated sphere of “boys’ toys,” and within another male-dominated sphere—finance. And in the world of girls’ toys, too: She embraces stiletto heels (her newly arrived pair looked six inches), revealing décolletage and lots of leather.
But both ultimately have reference to her position in a man’s game.
“I always show cleavage,” she said flirtatiously. “You’ve got to give men what they want. And I’m trying to keep their eyes in my eyes. So at least they’re up here,” she added, gesturing in the general area of her eyes and breasts. “I hate when people don’t make eye contact. I can’t shift them the way I need them if they’re not looking in my eyes.
“I’m not trying to seduce men to get them into my bed,” she said. “But am I trying to seduce men and mesmerize them as I move my cause forward? Yeah.”
A self-described golden girl in her youth, Ms. Tilton excelled at Yale and played the national tennis circuit.
“Things came easy, and I had that great confidence,” she said. “And then I got smacked around.”
Ms. Tilton’s father died when she was a sophomore in college, a tragedy that started a difficult chain of events. She married at the age of 20 and got divorced shortly thereafter, but not before having a daughter whom she would end up raising by herself while working at Morgan Stanley, Merrill Lynch and Goldman Sachs. “My daughter grew up on my office floor,” she said. “I mean literally.”
At this point in her life, Ms. Tilton said that being a woman works to her advantage. Her pink suede outfit and her pink suede cowboy hat leave a lasting impression.
“People actually care what I look like, which gets tough as you’re pushing 50,” she said. “I only aged a lot in the last five years—since I started this business.”
But when she was younger, she wasn’t making the rules. “It was hard being an attractive woman on Wall Street. If someone asked you out and you said no, then they were pissed—and if you said yes, then you were sleeping your way up the ladder,” she said.
According to her, the Army is sadly neglecting its duty to support American industry in selecting EADS for the Light Utility Helicopter contract.
Of course, the competition isn’t buying it.
EADS North America vice president of communications and public relations Guy Hicks said that his company would create American jobs, too. “We’re building a new center for helicopter excellence,” he said. “This is win-win for the U.S.” According to Mr. Hicks, the subsidiary, EADS North America Defense Company (ostensibly shielded by a firewall from the parent’s activities), plans to expand in Mississippi. But Ms. Tilton doubted that the company could move manufacturing (i.e., jobs) here in a timely manner. Whereas in MD Helicopters’ hands, she explained, a substantial contract like this would strictly benefit American workers.
“We’ve saved over 100,000 jobs in this country over the last five years,” Ms. Tilton said, “and we’ve saved hundreds of companies from liquidation. That’s really Patriarch’s calling—to take what other people would discard and use our expertise and our capital to rebuild value.”
Last December, Ms. Tilton acquired American LaFrance, a company that produces emergency vehicles, from DaimlerChrysler. John Stevenson, the American LaFrance chief executive, recalled being so impressed that he chose to work for Ms. Tilton instead of staying with his tenured position at DaimlerChrysler.
“We would not be here today without Lynn Tilton,” he said. “DaimlerChrysler was prepared to shut it down—the 1,200 jobs and the growth of the company. It’s a testament to her courage and dedication.”
Ms. Tilton is at pains to separate herself from the mercenaries in the distressed-investment world.
“Wall Street hides behind the veil of fiduciary responsibility,” she said, “which means: ‘I have no accountability or responsibility for whether someone still works or someone’s life is better, because in the end I’ve made the promise to my investors that I’m going to do the right thing for them financially.’ Well, you know what? I call bullshit on that. Because the reality is, you can do the right thing and also make money.”
Stephen Gray, the founder and managing principal of TRG, a management and financial consultant to troubled businesses, has worked with Ms. Tilton over the last six years. “I think that she is more likely to give U.S. companies, with their employment base, the benefit of the doubt,” he said, “to see if they can create value without shutting them down and moving them overseas.
“Other people would say the only way they would do this deal is if you ship it overseas,” Mr. Gray continued. “Lynn is a risk-taker … and she gets substantial returns. I’m not aware of her doing deals purely for the purpose of protecting jobs. That’s an ancillary result.”
And in MD Helicopters, at least, she seems to have faithful alumni.
“I firmly believe she’ll appear on the cover of Forbes or Fortune one day,” said Randy Kesterson, the former chief operating officer of MD Helicopters.
More than one person who has had business dealings with Ms. Tilton referred to her as ruthless, or implied as much.
Her defenders rise to the challenge quickly.
“These are tough deals; the value is less than the debt,” Mr. Gray said. “The losers are going to see it as ruthlessness.”
But at the end of the day, he added, even the losers tend to fare better with Ms. Tilton at the helm.
“There are a number of companies that would have been liquidated if not for Lynn,” he said. If that were to happen, “the losers are still going to lose, and they’ll probably lose more. And the company would have been trashed—the employees, the suppliers … the whole fabric of the institution.”
For her part, Ms. Tilton refers to Carlos Castaneda’s four essential characteristics of the warrior: cunning, sweetness, patience and ruthlessness.
If she finds herself tagged with the last of those, she has a ready answer: “It’s really just being able to step over someone or something you care about to achieve a goal for the greater good. It’s not carrying someone on your back who will ultimately keep you behind.”
But is she kind? Mr. Gray paused before answering. “I don’t think you can be kind in the game that she plays,” he said. “That’s an oxymoron. On a personal level, she’s gracious—very personable. There are people I know who would support her in a big way. I know people who would tell you she’s the devil incarnate …. She doesn’t suffer fools.”
Given the nature of her work, her streak of Robert Bly–style mysticism comes as a surprise.
And then: “I come from a line of prophets. I’m 11 generations removed from the great Kabbalistic scholar, the Baal Shem Tov …. My job is to make men better men.”
Through distressed buyouts!
But some get to indulge their spiritualistic tendencies on the international stage. Such was the case during her visit to the embattled King of Jordan.
“He was like, ‘What’s this all about for you?’ And I said, ‘My job is just to make men better men, and you’re no different.’”
With the advent of MD Helicopters’ bid, Ms. Tilton said, her days of keeping a low profile are numbered. “Not many people build $5 billion companies without anyone knowing their name. I was like a ninja under the radar screen—just running, running, running.”