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partnership agreements, so I asked him to start looking at all our options.
We still weren't sure we could take the company public. Meanwhile, money
was getting tight, and some of our creditors were pressuring us. I flew to Dallas
and tried to borrow some more from Republic Bank, whose officers were getting
nervous about what they'd already loaned us. They made it clear we had all of
their money we were likely to see, and that ended our relationship. By then,
Jimmy Jones had moved to a bank in New Orleans, First Commerce, so I flew
down there from Dallas to see if he could help us. Jimmy came up with a $1.5
million loan, which helped us out in the short term, but it really wasn't the
answer to our long-term problem.
For various reasons, including taxes, Rob recommended restructuring our
debt, consolidating it into one big loan for the company. Ron Mayer and I had
heard that the Prudential was making loans to a lot of small retail chains, so we
made an appointment with one of their loan officers and flew to New York. By
now we really needed the money, pure and simple. I went to Prudential. I had
my predictions all spelled out on my yellow legal pad, and I was sure they were
going to loan us the money. I went through my five-year plan—my sales, profits,
number of stores—and talked about our strategy of going to the small towns
where there was no competition and told the loan officer how much business we
thought there was out there waiting to be plucked. He didn't buy it at all, told us
he didn't think a company like the Prudential could afford to gamble with us. I
saved those projections for a long time, and they were all exceeded by 15 to 20
percent in the years to come.
Somehow we had a contact at another insurance company, Mass Mutual, so
we went to see them. They agreed to lend us a million dollars, and, in turn, we
agreed to give them our right arm and our left leg. We didn't just pay interest, we
had to give them all sorts of stock options in case we did go public. By now they
had us over a barrel. I had no choice: we had to have the money. When we went
public they made millions and millions on that deal.
By then, I was tired of owing money to people I knew, and I was even more
tired of begging money from strangers. I made up my mind for sure that we
were going to take Wal-Mart to the stock market. I let Mike Smith and Jack
Stephens know we wanted to go ahead with the idea, but I also let them know
they were going to have to compete for our business, just like I've always made
everybody else compete for business with us. Also, I let them know I didn't feel
comfortable going with a Little Rock firm; I thought we needed a Wall Street
underwriter. Maybe that was right, and maybe it wasn't. I know Mike and Jack
didn't feel too good about it. But I went running off to New York to see what I
could find out.
MIKE SMITH:
"Obviously, we wanted to handle the whole offering, but Sam was always one
to shop around. Here's what happened the way I remember it: Sam was up in
New York on a buying trip, and he decided to go down to Wall Street and hear
what some of those guys had to say, just cold calling—right off the street. He
knew that White, Weld had taken public a retail chain called Pamida up in
Omaha, so he went to visit them. He introduced himself to the receptionist as
Sam Walton of Wal-Mart stores—like he always does—and said, 'I want to talk to
somebody about taking my company public' She said, 'Oh really, where are you
from?' And when he told her Bentonville, Arkansas, she said, 'Well, we have a
Mr. Remmel here, and he's from Arkansas. Perhaps he could help you.' And she
introduced him to Buck Remmel, who was from Little Rock."
I don't really remember how I met Buck, but Mike might have it right. I
remember introducing myself to him and saying something like, "What are the
chances that you folks would be interested in backing us on this offering?" Well,
he said he would look at it, and, sure enough, they decided they were interested.
I still think that's one reason the offer was so successful, because at the time
White, Weld was one of the leading institutional investment banking firms. Not
everyone around here agrees with me, but I'm sticking to my opinion.
MIKE SMITH:
"Sam decided—correctly at the time—that White, Weld knew more about
public offerings than we did, so he let them have the business. But he told them,
'I hope you'll include the folks at Stephens, because they're good friends, and
they're good people.' White, Weld asked us if we wanted to take a third of the
deal to their two-thirds. I talked it over with Jack, and he asked me what I
thought of the company. I said I thought we ought to do it. And we did. Later on,
in other offerings, we got a fifty-fifty piece of the deal along with White, Weld."
So Rob started to work on the plan, which was to consolidate all these
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