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Boesky Free to Continue Northview Work : But Role of Ex-Chairman in Arbitrage Dealings Remains Clouded

November 25, 1986|GREG JOHNSON | Times Staff Writer

SAN DIEGO — Ivan F. Boesky's resignation last week as chairman of Northview Corp. doesn't mean that the troubled stock speculator must immediately sever his ties with the San Diego-based hotel and investment company.

On the contrary, Boesky could continue directing Northview's investment activities through April, 1988, according to a Securities and Exchange Commission agreement that allows Boesky to wind down various investment activities that he initiated for several companies, including Northview.

Besides serving as Northview's chairman, Boesky handled the company's merchant banking and merger arbitrage business through his New York-based IFB Management Corp. on a contract expiring Sept. 15, 1988.

According to the SEC, some of Boesky's illegal trading may have been "conducted on behalf" of Northview. However, Northview has "been advised that the SEC does not intend to take any action" against the company, Victor O. Tufford, Northview's general counsel, said.

Northview is "unsure" of what Boesky's continuing role will be in the arbitrage dealings that have become increasingly important for Northview in the last two years, Tufford said.

Although the company has identified itself primarily as the operator of 45 hotels, hotel-related activity generated $5.9 million in income in 1985, while investment activities generated $10 million.

On Monday, however, Northview reported that investment activity generated a $1.8-million loss for the third quarter ended Sept. 30, compared to a $301,000 net gain a year ago. The company also reported a $4.8-million charge to help cover $5.9 million in "unrealized losses" generated by its investment activity.

Northview's investment losses could mount even further, depending on how remaining Boesky-arranged investments perform, according to Irving Katz, director of research for San Diego Securities.

"We just don't know what's happening" to those investments, said Katz, explaining

that Boesky "may have wound them all down. Hopefully, he won't lose so much money between now and (1988) that he wipes Northview out."

Northview's hotel operations could push the company's value to about $20 per share if it were liquidated, but "the dark cloud is the risk arbitrage," Katz said, adding that the stock has been trading about $11 per share.

To finance its arbitrage activities, Northview has arranged nearly $100 million in long-term debt that called for nearly $11 million in interest payments during the first nine months of the year.

"That's a substantial amount to be paying," Katz said.

On Monday, Northview also announced that it had terminated an August, 1985, agreement to acquire all of the stock of Inter-County Savings Bank, a Westchester County, N.Y., thrift. That aborted acquisition attempt cost $550,000.

Northview's stock closed up one-quarter for the week, and just 2,200 shares traded Monday.

That light trading could pose a problem for the SEC, which probably will sell the 193,000 shares of Northview stock it received as part of its settlement with Boesky.

Boesky and his wife, Seema, controlled Northview through a 53% interest in the Beverly Hills Hotel Corp., which owned 55% of Northview Corp.'s common stock and all of its preferred stock.

Beverly Hills Hotel Corp. is scheduled to sell the landmark Beverly Hills Hotel for more than $100 million this morning.

However, the hotel company is not selling its interest in Northview, and it is unclear whether Boesky and his wife still retain control over their Northview shares.

"I don't now what Boesky's (shareholder) reposition is," Tufford said Monday.

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