Castimatidis Briefing Book

8/8/2019 Castimatidis Briefing Book

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BRIEFING BOOK

Data Information Knowledge WISDOM

JOHN CATSIMATIDISis the chairman, owner and CEO of the Red Apple Group, which owns hundreds

of millions worth of property, including New Yorks Gristedes grocery chain.

Location: Forbes, New York, New York

About Catsimatidis ..............................................................................

Debriefing Catsimatidis ......................................................................

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Forbeson CatsimatidisInside A Billionaire Poker Game, 12/12/08............................Americas Largest Private Companies: #100, 11/03/08.......Secrets of the Self-Made, 09/17/08........................................

Richest Americans: #215 John Catsimatidis, 09/07/08........How Self-Made Titans Got Their Starts, 06/03/08.................Buying City Hall, 03/24/08....................................................

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The Catsimatidis Interview......... 20


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ABOUT JOHN CATSIMATIDISIntelligent Investing with Steve Forbes

John Catsimatidis is the chairman, owner

and CEO of the Red Apple Group, whichowns hundreds of millions of dollarsworth of property, including New YorksGristedes grocery chain. He is alsochairman and CEO of United RefiningCompany, which owns an oil refiner andover 300 gas stations. In December of2008, a subsidiary, United RefiningEnergy (URE), went public on theAmerican Stock Exchange.

Forbes estimated his wealth at $2.1billion in 2008, ranking Catsimatidis at#215 on The 400 Richest Americans list.

Though a lifelong Democrat, Catsimatidis has public mused running as aRepublican for mayor of New York City. A devout Greek Orthodox, Catsimatidishelped raise funds for a new chapel at Camp David during former PresidentGeorge H.W. Bushs term.

Catsimatidis has his pilot's license. He ran a business, using a small fleet ofcorporate jets to shuttle gamblers from New England cities to the casinos in

Atlantic City, N.J. Catsimatidis sold the business, which ran under three differentnames, in 1990. Catsimatidis love for flying also inspired him to buy regionalairline Capitol Air, but it went bankrupt by the mid-1980s.

Catsimatidis and his family immigrated to the U.S. from Greece when he was sixmonths old. He studied at New York University but left to open his first grocerystore in 1969; he owned 10 stores debt free by the age of 24. In 1977, heinvested $5 million into Manhattan real estate; within five years, the property wasworth $100 million.

Catsimatidis and his wife, Margo, have a son and a daughter. They live in New

York City.


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DEBRIEFING CATSIMATIDISIntelligent Investing with Steve Forbes

"I'm not the same type of billionaire as Mike Bloomberg. He came from Boston; Icame from the city of Manhattan. I know these people--I know these people as

well as anybody in this city. I used to play stickball on 135th Street."

--John Catsimatidis

Interview conducted 2-25-09By David Serchuk

Forbes: What is one misplaced assumption in the business world?

John Catsimatidis: A misplaced assumption? That everything goes upforever.

I think we went through a period of overexuberance ... I looked at it and said,"This can't be that high that soon." I also looked around and said, "There are toomany rich people around. Somebody has to work." A year ago, I looked aroundand that's what I actually said.

Don't rich people work?

Presumably, unless they're sitting around thinking their hedge fund will earn them15%. I think that's a wrong assumption. Life is not that easy. You're not going tosit around and collect 15% on your money forever.

What is the greatest financial lesson you've ever learned?

That there's no free ride. You have to work at everything. You've got to make itwork.

How did you learn this?

Just from life in general. Things are not that easy, and you actually have to workat it. You try to teach it to your kids.

How's that going?

It's hard to teach. Because my kids, who are 16 and 18, were born in a country--what is the expression in the movie The Way We Were?--"a country made of icecream." They never saw bad times.

Will that change?


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nobody knows what the balance sheet of the banks looks like. The balancesheets have no transparency--this is why nobody wants to invest with money-center banks.

You made a killing in real estate in 1977. Do you see a similar buying

opportunity now?

I think there are key portions, key items you can buy in real estate. You've got tobuy quality and key areas. Location, location, location. If you buy on the ocean,or you buy on Manhattan on key avenues, yes. If you buy in Perth Amboy, N.J.,I'm not sure you're going to make a killing.

Do you have any property in Perth Amboy, N.J.?

I don't have any property there. Real estate goes up by people's desire to own.Ocean-front property. Manhattan. Europeans, South Americans, Asians want to

own it. It goes back to supply and demand. If a lot of people want to own it, priceswill go up. If nobody cares about it, the price isn't going to go anyplace.

What are your plans for mayor now? It looks like Mayor Michael Bloomberg isstaying put.

My plans for mayor are [that] we have our exploratory committee; we will waitand see what happens. The person who becomes mayor will become the lastperson standing. Now there are outstanding lawsuits against the mayor for tryingto overturn the city council and for using the city council to overturn thereferendum that the people of the city of New York voted for, for term limits. Andthey voted for it twice. To use the city council, a lower authority I look at thepeople as a higher authority.

Would you run against him?

We would look at it. I don't have a desire to run against [him]. Let's see what thecourts say. Today the state senate and state assembly progressed a bill tooverturn the city council's extension of term limits.

Is it healthy to have two billionaires battling it out for mayor?

I don't know. I grew up on the poor side of New York at 135th Street. I dobusiness in the Bronx, Manhattan and Brooklyn. I'm a neighborhood kid. Maybethe value of my real estate is higher, but I'm still the same neighborhood kid I wasaround 20 years ago. I'm not the same type of billionaire as Mike Bloomberg. Hecame from Boston; I came from the city of Manhattan. I know these people. Iknow these people as well as anybody in this city. I used to play stickball on135th street.


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What was that neighborhood called?

It was the Upper West Side. A little above Morningside Heights.

I ask because about 100 years ago, the area on the West Side above 90th Street

had been called Harlem. But now it's not.

Columbia University cleaned that area out.

How much of your success was luck vs. skill and hard work?

While in my late teens and in my 20s, I worked seven days a week, 20 hours aday. I worked my tail off. But you need a little bit of luck too.

What was some luck you received?

That the city got better [after] the 1970s and early 1980s. I remember in the '70sthe city was a tough place to live. It became better when Rudy Giuliani becamemayor. There were safer streets. I talk to him.

How's he doing?

He's sitting around wondering what his next move will be ... I went to [high schoolat] Brooklyn Tech. I remember DeKalb Avenue was one tough neighborhood. It'sa lot better now.


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FORBESON CATSIMATIDISIntelligent Investing with Steve Forbes

America's Richest PeopleInside A Billionaire Poker GameMatthew Miller 12.12.08, 5:30 PM ET

As the markets plummeted this fall, pharmaceuticals billionaire Stewart Rahr firedoff an e-mail to a reporter. "Make sure these guys pay in cash," he wrote. "It'sbrutal out there. Only sellers, no buyers. It's a global catastrophe. No one isinvesting in anything. Yesterday I received two calls to buy new airplanes. A G4and a G5. Wild."

A few days later, at the end of a week that saw the Dow drop 18%--its largestone-week percentage plunge in history--Rahr joined three fellow billionaires inManhattan, aboard the Highlander, the Forbes family yacht, to play poker forcharity. The event had been scheduled months in advance, and the timing couldnot have been worse. Several other members of the Forbes list of the 400 richestAmericans had committed to the game, only to cancel at the last minute due to"scheduling conflicts."

Those who did show up--Rahr, software maven Tom Siebel, oil and real estatemagnate John Catsimatidis and former casino mogul Phil Ruffin--were visiblydisturbed by the financial chaos, each straining to make light of how much money

they had lost.

Video: Ruffin And Friends: Billionaires' Poker

In Pictures: Inside A Billionaire Poker Game

In late August, when net worth estimates of The Forbes 400 were locked in, thefour plutocrats had a collective net worth of $8.1 billion. That figure had likelydropped a few billion dollars by the night of the poker game, as the falteringmarkets drastically drove down portfolio balances and private-companyvaluations.

The game was No Limit Texas Hold 'Em. Each man bought $25,000 in chips tostart, and had the option to buy as many as he wanted--in $25,000 increments--throughout the evening. The winner would have the privilege of designatingwhich charity the entire pot would be donated to.

Three of the four billionaires--Catsimatidis, Rahr and Ruffin--played in the firstForbes 400 charity poker game in the summer of 2007, with Ruffin winning


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decisively. (See "High Stakes.") Would Catsimatidis and Rahr play aggressivelyto try to take the title from Ruffin? Or would Ruffin swiftly squash the pokernovices once again?

Before the cards hit the felt, Rahr--who spends his days running generic-drug

distributor Kinray in Queens, N.Y., and his nights giving away his fortune atcharity events amid celebrity and fashion model friends--asked his opponents toraise the initial stakes to $50,000 from $25,000. "The charities need us," hepleaded. Some agreed, but the group ultimately decided it would be moreexciting to start low, be aggressive and buy more chips.

Rahr chided Ruffin. "I'm coming after you, Phil. You creamed us all last year, butthis year I'm doing whatever it takes to win." As in the first Forbes 400 pokergame, Rahr came to play the role of Joker, lacing the evening with his colorfulcommentary.

Ruffin won the first hand. Sitting behind the gambling man, who sold the NewFrontier casino in Las Vegas to real estate developer El Ad for $1.2 billion lastyear, was Oleksandra Nikolayenco, his bride. Ruffin, 73, married the former MissUkraine at Donald Trump's Mar-a-Lago Club in Palm Beach, Fla., in January.The Donald was his best man.

After winning the second hand, Rahr turned to the dealer: "Do I have to sit herefor every hand or can I get up and walk around?"

"Stay for a while," the dealer replied. "You can't buy more chips until you lose theones in front of you." Rahr began typing a text message as the next hand wasdealt.

Siebel, 56, who sold software outfit Siebel Systems to rival Larry Ellison's Oraclefor $5.9 billion in 2005, quietly folded the first four hands. Rahr teased him for notgetting in on the action. Siebel coyly admitted he'd never played poker, and thathe'd read a book on strategy on the flight to New York.

On the fifth hand, Siebel made his move. Everyone received their cards andponied up the $2,000 needed to stay in the hand. Each man bet timidly until thefinal card was shown. Catsimatidis and Ruffin folded. Siebel confidently pushed$15,000 in chips to the middle of the table. Rahr folded. Siebel had "bought thepot," because no one--including him--had shown his cards.

In the next hand, Siebel repeated his strategy, waiting until the last communitycard was revealed before placing a hefty bet. Everyone rolled their eyes andthrew their cards into the center of the table. "The nerve of him reading thatbook," Rahr ribbed.


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Catsimatidis, 60, was becoming frustrated. "You are giving me the [crummiest]cards," he complained. The gregarious grocer was having a bad week. His plansto run for mayor of New York were upended by fellow billionaire MichaelBloomberg, who announced he'd try to hang on to the job for a third term. Theson of Greek immigrants, Catsimatidis originally built his fortune on New York

City food stores and real estate, then moved on to oil refining.

On the 10th hand, Catsimatidis got the cards he was looking for. After the flop,he had three hearts--one in his hand, two in the community pool. Hoping for aflush, the fourth-best hand a player can get in poker, Catsimatidis matchedRahr's $10,000 bets all the way to the river. The final card was dealt; there werefour hearts on the table. Rahr announced he was going all in with $30,000.Catsimatidis had a flush. Rahr probably held one as well. Or was he bluffing?

Catsimatidis called Rahr's bet, pushing all his chips into the pot and revealing anEight of Hearts. The small group of guests surrounding the table, including

Catsimatidis' wife, daughter and son, purred oohs and ahhs. Rahr had fallenunusually silent, and waited until he had everyone's attention. Then he flipped hiscards. "Ace of Hearts!" Rahr yelled--he had the higher flush. Catsimatidis was thefirst man to run out of chips. The grocer quickly bought $25,000 more and keptplaying.

During the 12th hand, a distracted Rahr was typing a text message when anagitated Ruffin asked: "Hey, Mr. Phone, are you in?"

"I remember when I couldn't even afford a phone," Rahr shot back. "Don't makefun of me for being on the phone." They were the only two players left in thehand. The dealer announced the turn--a four of clubs--and Ruffin bet $20,000.

Rahr had three options: call Ruffin's bet, raise him or fold. The room was tightwith tension as Rahr mulled his options. Then his phone rang. The ringtone: thechorus from Alicia Keys' No One. The room shook with laughter as Rahrsheepishly folded.

Later, a few of Rahr's famous friends showed up. Baywatch actress andPlayboy's 2001 Playmate of the Year Brande Roderick was in the middle of acharity challenge as a contestant on Donald Trump's Celebrity Apprentice TVshow. She stopped by the yacht to pick up a $50,000 check from Rahr.

Tagging along with Roderick was Rahr's secret weapon: "Gentlemen, say helloto Annie Duke," he said. The three billionaires smiled, said hello and returned totheir cards. None seemed to realize Duke was a professional poker player andthe winner of the 2004 World Series of Poker Tournament of Champions, forwhich she took home a $2 million prize. "Dukie, you gotta sit down here and playa few hands for me," Rahr said. "All these guys inherited their money. I'm theonly one who worked for my fortune."


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The Joker's comment drew icy stares from his opponents. They were all self-made billionaires--and were quick to show their disgust that he might suggestotherwise. Then Rahr waxed sincere: "For the record, every one of us started offwith zero."

Duke sat down in Rahr's chair while he went to the bar. He had just bought afresh stack of chips, and she started shuffling them in one hand.

In the first hour, Catsimatidis had claimed victory only once. Then he asked his15-year-old son John Jr. to sit next to him and lend advice. It worked: He woneight of the next 10 hands.

"Dukie, how am I doing?" asked Rahr, holding a fresh cocktail.

"You're very unlucky," she said dryly, having won just a single pot for her friend.

Siebel was already out of the game, and Rahr followed minutes later. (The nextmorning, he jetted to Las Vegas to play in a charity golf game organized byJustin Timberlake.)

In the final hand, Catsimatidis took Ruffin all in before seeing the flop. A momentlater, Ruffin won with a pair of kings. The total raised in two hours: $200,000.Ruffin donated the money to the American Diabetes Association.

After shaking hands with several well-wishers, the two-time Forbes poker champpulled a reporter aside: "Bring better players next year," Ruffin said. "I want realcompetition."

Next year's game will be held in September at a gala in Manhattan. All theworld's billionaires are invited.

-- Additional reporting by Duncan Greenberg, Steven Bertoni and BenjaminKlauder.


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America's Largest Private Companies#100 Red Apple Group11.03.08, 6:00 PM ET

Red Apple Group ranked #87 in 2007.

Industry: Oil & Gas Refining & Marketing (oil refiner, supermarkets, real estate)

823 Eleventh AvenueNew York NY 10019Phone: 212-956-5803Fax: 212-247-4509

http://www.urc.com

CEO: John A Catsimatidis , 58BS New York University

CFO: Mark Kassner

2007REVENUES REVENUECHANGE % EMPLOYEES FISCAL YEAR END$3.95 bile 8.9 7,800 Aug

John A. Catsimatidis managed his cousin's grocery store while attending NewYork University, and in 1971 bought a small grocery store on Manhattan's UpperWest Side and named it Red Apple. This one store became the cornerstone ofCatsimatidis' empire. He now owns 100% of Gristede's Supermarkets and all theother divisions making up the Red Apple Group. Subsidiary United Refining,which processes 70,000 barrels of oil a day, distributes fuel to its Country Fair,Red Apple Food Marts, and Kwik Fill gas stations and convenience stores in NewYork, Pennsylvania and Ohio. The Red Apple Group also has real estateholdings in New York, New Jersey and Florida; an aircraft leasing business; andpublishes the Hellenic Times newspaper.

Brands: Country Fair, Gristedes, Red Apple Food Mart, Red Apple Kwik Fill


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Secrets Of The Self-MadeJohn Catsimatidis09.17.08, 6:00 PM ET

Net Worth: $2.1 billion

Age: 60

Source of Wealth: Oil, real estate, supermarkets

1. What is the difference between a millionaire and a billionaire (besides thethree extra zeros)?You get used to thinking on a larger scale.

2. Is sleep overrated?Yes.

3. As you became wealthy, what relationships did you leave behind?I'm still in touch with all the people I grew up with and [who] helped me get mystart in business.

4. What event will touch off the next economic crisis?Another terrorist attack.

5. What's the bigger turn-on: the chase or the kill?The chase.

6. Whom do you turn to for advice?My oldest friends.

7. Your house is on fire. You can save one thing besides your family. What doyou grab on your way out the door?Pets and family photos.

8. Is writing checks to charity effective philanthropy?Yes, if you choose carefully and do the due diligence on the charity. It drawsattention to the cause.

9. What is the best bar on the planet?Any bar in New York.

10. The estate tax: yes or no?No, it's redundant.

11. How much cash do you usually carry in your wallet?$500.


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12. You can be James Bond or Michael Jordan for an evening. Who do youchoose?James Bond.

13. Where do most of your deals go down (restaurants, golf courses, poker table,cellphone)?Restaurants.

14. How do you spot a liar?Facial expressions.

15. You can have a front-row seat to any event in history. Where is your timemachine taking you?I would go into the future.

16. What are the first and last questions you ask in any job interview?What do you like to do? What do you hate to do?

17. What's the coolest number in your cellphone?My kids' cell numbers.

18. What is the future of the U.S. dollar?The dollar will always be king.

19. Will the government be cutting Social Security checks in 20 years?If our elected officials have the courage to do the right thing.

20. You have $100,000 to invest. What do you do with it?Energy.

John Catsimatidis on the Forbes 400 Richest List


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The 400 Richest Americans#215 John Catsimatidis09.17.08, 6:00 PM ET

NET WORTH $2.1 billionSOURCE Energy, Self madeAGE 60MARITAL STATUS Married, 2 children, 1 divorceHOMETOWN New York, NY, United StatesEDUCATION New York University, Drop Out

Family emigrated from Greece when he was 6 months old; family settled inHarlem, dad became a busboy. Worked as a grocery store clerk while attendingNYU; dropped out for ownership opportunity in the store. Opened first grocery

store at 100th and Broadway 1969; owned 10 stores by age 24, made $25 milliona year in revenue. Plowed $5 million into Manhattan real estate 1977; propertyworth $100 million 5 years later. Today his Red Apple Group owns hundreds ofmillions' worth of property; New York's Gristedes grocery chain. Stumbled uponChapter 11 proceedings of United Refining Company; purchased oil refiner'sstock for $7.5 million. Today firm owns 372 gas stations, Pennsylvania refinery.Hoping to "steal a refinery" from oil firms looking to shed assets; created blank-check company United Refining Energy in December, raised $450 million inpublic offering. Plans to become New York's second billionaire mayor: "I need toimprove my public speaking, I need to know all of the problems voters are facing,and I need to lose 30 pounds to look better on television."


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EntrepreneursHow Self-Made Titans Got Their StartsMelanie Lindner, 06.03.08, 6:45 PM ET

Capital is a constraint for many would-be entrepreneurs--or is it?

Scan the Forbes list of the world's richest people and you'll come across mogulsfrom startlingly humble origins. How did they get their impressive empires off theground? Sweat, savings, schmoozing, creativity and a dab or two of goodfortune.

To be fair, the lucky few "born on third base" probably have a better shot atstardom than those without a safety net. According to a 2002 U.S. CensusBureau survey representing some 16 million business owners, a whopping 55%were initially funded by personal and family capital. Just 11.4% snagged bankloans and 8.8% got going on personal and business credit cards; much of the

remainder lived on government loans and outside investors.

Some world-beating entrepreneurs--like John Catsimatidis, owner of the RedApple Group and aspiring mayor of New York City--scared up capital by gettingto know the right people.

The son of a busboy, Catsimatidis entered the grocery industry in the summer of1966, just after graduating from high school. Befriending the owner of aManhattan superette, he started taking on more responsibilities. Four years later,the owner offered him a 50% stake in one of his stores, to be acquired over 10months at a rate of $1,000 per month.

Within a few months, the store's sales doubled, and Catsimatidis was earning aprofit of $500 per week (not bad for a 20-year-old back then). After dropping outof New York University just eight credits shy of a degree, he launched his owngrocery chain, the Red Apple Group. Lacking working capital for inventory,Catsimatidis charmed vendors to let him buy on credit, something he says "wouldnever happen today." By the age of 25, he owned 10 stores--debt-free--netting acombined $1 million on $25 million in sales. Today the Red Apple empireincludes Gristede's, Sloan's and Red Apple.

While Catsimatidis struck out on his own early, others, like Sandy Weill, savedtheir pennies before taking the plunge. Born in Brooklyn, N.Y., to Polishimmigrants in 1933, Weill graduated from Cornell on scholarship before workingas a runner for Bear Stearns and nabbing his stockbrokers' license at night.

A few years later, in 1960, he and three friends pooled their savings--anestimated $200,000--and opened their own brokerage firm, called Carter Berlindand Weill. Two decades of acquisitions later, their Travelers Group was the


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industry's second-largest brokerage, trailing only Merrill Lynch. In 1998, TravelersGroup merged with Citicorp to make what is now known as Citigroup.

Old fashioned bartering helped put Kirk Kerkorian, farmer's son and future WallStreet titan, on the map. In the late 1930s, Kerkorian offered to look after famous

female aviator Pancho Barnes' cattle in return for flying lessons. During WorldWar II, he took a job with the Royal Air Force transporting planes from theirCanadian factory to England at $1,000 per month--an especially treacherous

journey as the planes weren't designed to withstand the long trip or the harshweather over the North Atlantic.

With savings from his wartime job, Kerkorian purchased Trans InternationalAirlines for $60,000 in 1947. (It is unclear as to whether he needed additionalfinancing.) He later sold it to Transamerica for $104 million in stock, used to fuelfurther investments. His private investment firm, Tracinda, now owns 53% ofMGM Mirage.

Sometimes sheer talent and persistence is enough. As a single mother onwelfare in Scotland, J.K. Rowling began writing the first Harry Potter novel inEdinburgh cafs whenever she could get her infant daughter to sleep. After beingrejected by 12 publishing houses, Bloomsbury, a small publisher in London,offered an advance of 1,500 pounds (about $2,400)--even while one its editors,Barry Cunningham, advised Rowling to get a day job.

Good thing she didn't listen: The following year, U.S. publishing rights to the firstPotter book sold for $105,000. Rowling has since moved nearly 400 millioncopies worldwide, and is the only author on our list.


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The World's Richest PeopleBuying City HallMatthew Miller 03.24.08, 12:00 AM ET

John Catsimatidis built a fortune in supermarkets, real estate and oil. Now he

wants to become the next billionaire mayor of New York City.On a recent dreary morning in Manhattan John A. Catsimatidis was gobbling abreakfast of egg whites, spinach and toast at Midtown's Harry Cipriani, a jointthat gets its prestige from its prices rather than from its cuisine. Between bitesthe grocery magnate rattled off a few things he wants to accomplish this year: "Ineed to improve my public speaking, I need to know all of the problems votersare facing, and I need to lose 30 pounds to look better on television."Catsimatidis ("cat-si-ma-TEE-dees") wants to succeed Michael Bloomberg andbecome New York City's second billionaire mayor.

Why? The chairman of Red Apple Group--a holding company for the Gristedes

supermarket chain, commercial real estate, an oil refinery and gas stations--doesn't have a snappy answer. "I don't want New York to turn into downtownDetroit," he says. "If we lose our middle class by allowing New York to be a placewhere only the rich and the poor live, it will be a disaster." He has built up his$2.1 billion net worth through dumb luck and shrewdness, and he says he'swilling to spend perhaps $100 million of it to win the office, $15 million more thanBloomberg spent to win reelection in 2005. The primaries are a year and a halfaway.

Catsimatidis has no press secretary and one political adviser; that's about tochange. The newspapers have given him a little play, most of it dismissive. Theonly public position he's held: president of the Manhattan Council for the BoyScouts of America. Then there's the flip-flopping. A supporter of Reagan "who fellin love with Bill Clinton," Catsimatidis, a lifelong Democrat, says he will run as aRepublican candidate. He is an admirer of Bloomberg, an Independent with asocialist streak.

Does the grocer stand a chance? "There is nothing unique about him, except thathe is rich," says Mitchell Moss, professor of urban policy at New York Universityand a onetime adviser to Bloomberg. "He won't be able to turn owning oil andsupermarkets into votes."

Born on the island of Nissyros, Greece, Catsimatidis, 59, settled in uptownManhattan as an infant. His father, who 'd been a lighthouse operator, foundwork as a busboy. John attended high school at Brooklyn Tech and received acongressional nomination to West Point. But instead of becoming a cadet, hestudied engineering at NYU. During his senior year a friend convincedCatsimatidis to become his partner in a fledgling family supermarket. For hisshare Catsimatidis agreed to work off $10,000 at $1,000 a month once they wereprofitable and to forfeit his stake if he missed a payment. They cleaned up the


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store and were quickly generating $1,000 a week in profit. Catsimatidis soonwent it alone, opening his first Red Apple grocery store in 1971. He neverborrowed from banks.

By the time he was 25 Catsimatidis owned ten stores debt free and was grossing

$25 million a year. In 1977, when everyone in New York was selling real estate,he bought up $5 million in Manhattan property. (Five years later, he says, theinvestment was worth $100 million.) "A total accident," he says. "I wasn't smart, I

just needed a place to put all the money I was making with the supermarkets."

Approaching 30, Catsimatidis got his pilot's license, then bought his first plane, aCessna 206. His obsession with flying led to a new investment: the airlinebusiness. When gambling was legalized in Atlantic City in the late 1970s,Catsimatidis noticed that the big customers from New York City were arriving vialimo; fellow gamblers from Connecticut and Massachusetts tended to stay putbecause of the long drive. Sensing opportunity, Catsimatidis built a small fleet of

corporate jets to shuttle players from New England, a business that grew to 40planes flying executives around the East Coast. He ran this business under threedifferent names until 1990 and eventually sold out to Richard Santulli, who wenton to create NetJets.

Then he overreached. In 1984 Catsimatidis bought regional airline Capitol Air,which operated half of what is now the British Airways terminal at JFK Airport.Capitol soon went bankrupt. "Airlines are a pricey business," he says. "I wasreally in it for the love of flying."

While trying to salvage the airline in bankruptcy court, Catsimatidis stumbled onthe Chapter 11 proceedings of a fledgling oil outfit called United Refining Co.,which was selling assets just to make payroll. In 1987, for $7.5 million in cash,Catsimatidis bought all the shares and renegotiated with creditors, repaying $120million in debt over the next decade. Today United operates a refinery inPennsylvania that processes 70,000 barrels of oil a day and will generate $2.9billion in sales this year. Additionally the company owns 372 gas stations underthe names Kwik Fill, Country Fair and Keystone. In December Catsimatidiscreated a unit, United Refining Energy, and took it public on the American StockExchange, raising $450 million as a blank-check company. There's not muchfloat, and the units have barely budged from their $10 offering price. No matter. Itwas a cheap way to lever up in order to hunt for another refinery.

The bid for Gracie Mansion is Catsimatidis' biggest gamble. He is groomingseveral executives to take over Red Apple in the event of a run, since a winwould force him to give up operational control of all his businesses. It getsmessier. Catsimatidis owns a parcel of land on Myrtle Avenue in Brooklyn andplans to build on it. The condo-and-office project, close to mogul Bruce Ratner'scontroversial Atlantic Yards development, will cost $175 million to build, though


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it's proceeding piecemeal in a dicey market. If he were mayor, he'd have to steerclear of the project.

A big if. Catsimatidis says he has always been interested in politics, but got moreinvolved after meeting George H.W. Bush. During Bush's term Catsimatidis, a

devout Greek Orthodox, helped fund the construction of a new chapel at CampDavid. He later raised funds for Bill Clinton's 1996 reelection, for Hillary Clinton'sfirst run for the Senate in 2000 and for her current presidential campaign.

Last year Catsimatidis crossed party lines. He had to register as a Republican,he argues, because no pro-business candidate could ever earn the support ofthe New York Democratic Party. Fair point. First, though, he must convince theGOP he can win--against such possible luminaries as Richard Parsons, theformer Time Warner chief, and current New York City Police Commissioner RayKelly.


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THE CATSIMATIDIS INTERVIEWIntelligent Investing with Steve Forbes

[00:08] Steve: Real Jobs Growth

Welcome, I'm Steve Forbes. It's a privilege and a pleasure to introduce you toour featured guest, John Catsimatidis. John owns the Gristedes grocery chain,as well as real estate throughout the country. Hes also a big success in the fieldof energy and well ask him if hes going to run for mayor of New York City.

My conversation with John Catsimatidis follows, but first -- President Obamasays he wants to create jobs, but is it all just talk?

Signing the Lilly Ledbetter Fair Pay Act into law is not the way to get Americanbusinesses hiring again. The law allows workers to sue employers for allegedpay discrimination based on gender or race 20 years after they leave a company.

This opens the floodgates to frivolous suits over supposed wrongs committedmany years ago, even if memories have grown cold and some of the parties aredead.

Opening old wounds, both real and perceived, is not the way to get businessesmoving forward again.

Take the Ledbetter case itself. Only after leaving Goodyear Tire & Rubber in1998 and collecting a pension did Ledbetter claim that her supervisor was guiltyof gender discrimination, going back to the early 1980s.

Ledbetter initially won a big jury award, but appeals from both sides took thecase to the highest court. The Supreme Court finally ruled that the then-existingstatute of limitations actually meant what it said.

The new law will hinder jobs creation in every sector except the Plaintiff's Bar.Lawyers are drooling over this while employers now have to worry about lawsuitsfrom decades past.

And in a moment, my interview with John Catsimatidis.

[01:53] Real Estate Then

STEVE FORBES: John, good to be with you.

JOHN CATSIMATIDIS: Well, thank you.


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STEVE FORBES: We're glad to have you here. Now you were a pioneer,among other things, in the grocery business. Now, you also have been veryinvolved in real estate. So how, John, did you get in the real estate business?

JOHN CATSIMATIDIS: Well, I started in the supermarket business in the early

'70s. And by '75, '76, I realized you don't have a business unless you own thereal estate. Your lease comes up, and, in New York City especially, thelandlords would say, "Well, we'll double your rent or get out." So no matter howhard you worked to develop your business--

STEVE FORBES: Is that why supermarkets are disappearing in New York now?

JOHN CATSIMATIDIS: Yes. Because the real estate exceeds the value of thestore. And I realized that unless you own the bricks, you can't make the rules.And in 1977, the real estate market in Manhattan was the worst ever. You know,the world was coming to an end. But I was a young kid. How old was I? I was in

my 20s. And what did I know? I didn't know any better.

STEVE FORBES: Some people may not remember, in those years, interestrates went over 20 percent.

JOHN CATSIMATIDIS: Yes. I remember that. During Jimmy Carter's age.Ronald Reagan had to straighten it out.

STEVE FORBES: Yes, he did.

JOHN CATSIMATIDIS: Yes. And I didn't know any better. And I started buyingsome Manhattan real estate. The first piece I bought was on 100th Street andBroadway, 99th Street and Broadway, from Robin Farkas, Alexander'sDepartment Stores. And Robin sold me that. They were going to build a bigAlexander's Department Stores on 96th and Broadway. And when they didn't doit, they started selling the real estate they owned in the neighborhood. And I paid$400,000 for that piece. And I had the money. And we sold it just before themarket collapsed, about two years ago, for $42 million.

STEVE FORBES: Not bad.

JOHN CATSIMATIDIS: So that's what you call a good deal.

[03:56] Real Estate Now

STEVE FORBES: So what do you see now? Are there $400,000 piecesequivalent again out there?

JOHN CATSIMATIDIS: Not yet. Maybe in about six months. I think the marketis going to get soft. I think it goes back to the old adage. The people that are


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overleveraged are going to get hurt. And the people who are not overleveragedand they're conservative, they're going to make it through the cycle.

And it's a cycle. I would look to buy quality property in New York City if we couldbuy it at prices from ten years ago, if not less. I bought some great property on

Coney Island just last year, right on the oceanfront. And we're going to buildsome condos there when the market turns around a little bit. And my friends willbe arguing which corner apartment they want, because they're not making anymore oceanfront.

STEVE FORBES: Right. Right. And when you look at the market, one of thethings that seems to distinguish this downturn in commercial real estate is that,unlike other downturns, there doesn't seem to be a lot of excess capacity. A lotof these buildings are occupied.

JOHN CATSIMATIDIS: Like I said, if people are not leveraged and they don't

have to move because of a situation. But if people worked-- you know, I feelsorry for friends that worked at Bear Stearns, or Lehman Brothers, or AIG, or anyof those companies-- if they're forced to sell a $10 million apartment and there'svery few buyers, then you're going to have a glitch in the market; it'll drop.Especially if they borrowed $10 million on their Lehman Brothers stock at thebank. The stock is worth nothing. They still have to pay the loan on their condoor co-op. And they have to sell. That's what's going to cause a curve in themarket. And if I'm looking, I would say that over the next six months, sevenmonths, you're going to hit a low point by September. But it's going to take twoyears for the real estate market to thaw itself out and go through a cycle.

STEVE FORBES: So, in your mind, it's still too early to plunge in?

JOHN CATSIMATIDIS: I would say by year-end, by September.

[06:34] Oil Price Manipulation

STEVE FORBES: Now, in addition to groceries and real estate, you're also inthe energy business. What's going to happen with that?

JOHN CATSIMATIDIS: That's our main business. Energy business is, we havethe biggest oil refinery in western Pennsylvania. We have our own pipeline. Wehave gas stations. We bought that company, another good deal, back in 1985.And an interesting thing we do with those gas stations and our gas stations arecalled Red Apple, which was our original name, we advertise that our gasoline ismade from 100 percent North American crude oil. We have our own pipeline thatgoes into Canada that brings in our Canadian crude, and that's what we processand that's what we have at our gas stations. When everybody else's sales weredown, we were up six percent. Why? Americans like buying American versusbuying from Chavez, or buying from the Middle East. So we're doing very well


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there. And energy and energy-related products represent probably close to 90percent of our corporate sales.

STEVE FORBES: Now, we all know what's happened to the price of oil. Whatdo you see happening? Do you think this is just a temporary downturn?

JOHN CATSIMATIDIS: No. I think it's a very interesting thing. We're in themiddle of taking over a company in Tulsa, Oklahoma.

STEVE FORBES: Now, that's an interesting situation.

JOHN CATSIMATIDIS: SemGroup.

STEVE FORBES: They, SemGroup, they got in trouble because they didn't timeright on oil prices.

JOHN CATSIMATIDIS: We discovered that that was the problem of the wholecountry. What happened was that SemGroup was probably short 30 percent ofthe country's oil.

STEVE FORBES: Wow.

JOHN CATSIMATIDIS: That's a big number. So when they lost, it's like Hunt'swhen they were involved in silver. But this is in reverse. They kept shorting oilall the way up. Some forces on the other side knew they were shorting it, andthey were, what do you call it on Wall Street?

STEVE FORBES: Squeeze.

JOHN CATSIMATIDIS: Squeezing the shorts. So they were squeezing theshorts, forced the price of oil up to $147. And when they couldn't make the $500million margin goal, the market went straight down. Steve, this is a big discovery.We turned it over to the investigators on this, because it wasn't the oil companiesthat raised the price of oil.

Don't forget, when oil was $40 a barrel two years ago, the oil companies in theworld were producing 86 million barrels a day. When it went to $140, the oilcompanies were producing 86 million barrels a day. When it went back down to$40, the oil companies were producing 86 million barrels a day. It wasn't the oilcompanies. It was certain hedge funds that were playing ping pong with eachother, raising it, and squeezing this company that had the shorts. And we thinkthat some of these hedge funds were subject, they had insider information on thisguy being short, this company being short 30 percent of the market. But, youknow, maybe you'll probably read about it on the front page of The Wall StreetJournalone of these days. Or maybe the front page of the Forbes.


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STEVE FORBES: Oh, Forbeswould be better, don't you think?

JOHN CATSIMATIDIS: Yes.

STEVE FORBES: Wow.

JOHN CATSIMATIDIS: Maybe we'll give you the exclusive when we find out.

STEVE FORBES: Look forward to it.

JOHN CATSIMATIDIS: But this story has to get out, because it's probably atrillion dollar fraud on the American people.

STEVE FORBES: That's extraordinary. So what should be the price of oil, $40,$50 a barrel?

`JOHN CATSIMATIDIS: I would say between the cost of producing it and the oilcompanies a legitimate profit. It's anywhere from $45 to maybe $65, on the highside, $75. But no more than that. The price of $147 was an avarice. It's like yousaid, squeezing the shorts. And I'm convinced that if this company, SemGroup,was able to make that $500 million margin call, at $147, when it had it, the nextday, you would have seen $160 oil.

STEVE FORBES: Wow. So the hedges were just going to destroy them?

JOHN CATSIMATIDIS: They were just going to destroy them.

[11:26] Leadership Is Everything

STEVE FORBES: Wow. Well, you've had an extraordinary entrepreneurialcareer. What do you tell people today? You've had setbacks; you've had hugesuccesses. What advice do you give to somebody who wants to get in thearena?

JOHN CATSIMATIDIS: Well, you know, there's no substitute for hard work. Behonest. Maintain your friendships. And there's no substitute for hard work. Thereason I grew so fast in the supermarket business without help of the banks inthose days, was through my vendors. I convinced my vendors, the companies Iwas doing business with, if I did more business, they would do more business.

So it goes back to leadership. By convincing them to do that, they financed ourentire operation where we had ten stores by the age of 24, 25. So it's calledleadership. Leadership to make sure you lead your employees in the direction ofsuccess.


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STEVE FORBES: So, just one minute on that. Vendors usually are worriedabout getting paid.


STEVE FORBES: And if you come to them and say, "Help finance me," the firstthing they think is, "Oh, my God. I'm not going to get paid. This guy's adeadbeat. What do I do?" How did you convince them you were the real deal?

JOHN CATSIMATIDIS: I must have been a good salesman. You've got toremember, you know what I tell young people that I meet, whether it's at NYU or,what I say to them, "We're all salesmen." It depends what, you're either sellingyourself or you're selling your company. Your dad was a great salesman.

STEVE FORBES: Yes, he was.

JOHN CATSIMATIDIS: Yes. You're selling yourself, you're selling what yourcompany does, or you're selling a product. If you're not convinced, you can'tconvince others. So you have to show leadership and convince people that itcould be done.

[13:31] Mayor John?

STEVE FORBES: Now, talking about convincing, if Mike Bloomberg, forwhatever reason, does not run or can't run, depending on the shoals of politicsand the courts and Justice Department, are you going to take the plunge?

JOHN CATSIMATIDIS: Probably will take the plunge.

STEVE FORBES: Why?

JOHN CATSIMATIDIS: Why? I think, you know, I'm a New Yorker. I grew up inNew York. I spent all my life in New York. I spent my life in all the boroughs ofNew York, just about. New York is going in the right direction, and has beengoing in the right direction. I don't want to go back to yesteryear. And youremember those days, Steve, where we were scared to walk on the streets ofNew York. I want to be able to have New York continue to go in the rightdirection. And again, leadership. You've got to convince the voters that I can doa better job than the other candidates running.

STEVE FORBES: One quick thing on New York. What idea do you have tomake it more business friendly, so that more people like you can start businessesin this town?

JOHN CATSIMATIDIS: I think we have to make it more friendly. Don't forget,when I did business in New York City, and now you've got to get 40 or 50 permits


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just to open a store. And you've got to go to three or four or five agencies in thecity. We need a more, it's much better since Mike Bloomberg has been there,but we need a more business-friendly situation. And I'm going to tell you aboutone of my dreams I have for New York. I am pursuing and we started afoundation for the World's Fair of 2014; 2014 is the 50th anniversary of the '64

World's Fair.

STEVE FORBES: Right. I remember that.

JOHN CATSIMATIDIS: The 75th, me and you remember that, the 75thanniversary of the '39 World's Fair. And I've talked to Mayor Bloomberg about it,and I've talked to a lot of people. Out of every 100 people I talk to about it, 98think it's a great situation. 2014, it'll help get construction jobs in New York. It'llhelp build New York. And we'll take, when Mayor Bloomberg said to me, "Wherewould you put it, John," I said to him, "Mayor, we'll take a blighted area in the city,so when we put in new infrastructure, it'll stay there and we'll straighten out

another neighborhood."

He loved that part of it. So that our foundation is setting the fact, what should bethe theme or, now, multiple themes of the World's Fair? And we've got to get thiscompleted by this year to make 2014 viable. But I think it'll double the tourism inNew York. And it will give us all, as New Yorkers, a goal to work at.

STEVE FORBES: Well, that, I think, answers a question I wanted to ask you.What's your bold prediction for the future? I've just got it: 2014 World's Fair,New York again.


[16:43] No New Taxes

STEVE FORBES: And what do you think, looking around you, given all yourperspectives, is the biggest misplaced assumption in the country today?

JOHN CATSIMATIDIS: Oh, I don't know. We have a problem that we have tostraighten out. I think one of the wrong things that President Obama is doing, hewants to increase taxes on everybody making over $250,000. I grew up in thepoor side of town. I played stick ball on 135th Street. But I always wanted towork hard to succeed.

And if we take away working hard by saying, "No matter how much money youtake, you're going to either pay so many taxes, you're not going to be left withanything." If you take that thing out of the wage, then we're going to kill theincentive for our future entrepreneurs to work hard and to build. And our country,in the last 20 years, it's not built by General Motors; it's built by the smallbusinessman that's expanding.


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STEVE FORBES: John, thank you very much.

JOHN CATSIMATIDIS: Well, thank you for having me.

Documents

Castimatidis Briefing Book