MILKEN CUTS GIANT DEAL ON LAWSUITS

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, February 18, 1992                   TAG: 9202180018
SECTION: BUSINESS                    PAGE: A-5   EDITION: METRO 
SOURCE: Los Angeles Times
DATELINE:                                 LENGTH: Medium
MILKEN CUTS GIANT DEAL ON LAWSUITS
The main parties in the scores of civil lawsuits against jailed junk-bond financier Michael Milken have reached a tentative agreement to settle all of the suits for a financial package worth at least $1.3 billion.
The mammoth settlement, reported Monday by the Los Angeles Times, still must be approved by some of the many other parties in the litigation. It would bring to a close a major chapter in the financial history of the 1980s, which saw the spectacular rise of junk-bond financing and then the fall of its leading proponents - along with many of the companies whose takeovers were financed with the high-yield, high-risk bonds.
One source, speaking on condition of anonymity, said a settlement was near but not all the details had been worked out.
"It's not a done deal," the source said. "They reached a general agreement, but there was still work to be done."
Sources close to the negotiations said the tentative agreement followed a marathon session that lasted until early Saturday in Houston, where U.S. District Judge Milton Pollack of New York, who has been pushing the settlement efforts, is on vacation.
Although the sources said a number of hurdles still must be overcome, the tentative pact is strong enough that notices of a possible settlement are being sent to the bankruptcy creditors of Drexel Burnham Lambert, Milken's old company.
"They wouldn't have done that if it wasn't close to a final agreement," one source said.
One of the key cases that will be settled is Drexel's suit against Milken for his misdeeds while heading the company's junk-bond department in Beverly Hills, Calif.
The other suits involve hundreds of plaintiffs, ranging from government agencies such as the Federal Deposit Insurance Corp. to companies and investors who claim they were harmed by Milken's illegal activities. The claims total in the billions of dollars.
Milken is serving a 10-year federal prison sentence after pleading guilty to securities law violations.
If approved, the settlement would be the second major triumph in less than a year for the 85-year-old Pollack. The judge won strong praise from the legal community for taking charge of Drexel's bankruptcy case and forcing a quick agreement among creditors that is expected to let a reorganization plan go through next month.
The possible settlement involves other former senior Drexel officials who were sued along with Milken, including former top Milken aides Peter Ackerman, Warrent Trepp and Leon Black.
Of the proposed $1.3 billion package, sources said $500 million is to be paid by Milken. Another $400 million will come from money he paid into a restitution fund established under the terms of Milken's guilty plea in 1990 to six felony counts and administered by the federal Securities and Exchange Commission. The rest would be paid by the other defendants.
Drexel's suit accuses Milken of bringing about the company's downfall through illegal manipulations of the junk-bond market. The FDIC suit accuses him of hoodwinking several savings and loans into investing in junk bonds that later caused huge losses and may have led to their failure.
The Associated Press contributed to this report.

by Bhavesh Jinadra by CNB