Wall Street's `junk-ies' mix takeovers and social issues
It is an odd mix: corporate takeovers and social issues. But, Michael Milken, the man who invented ``junk bonds,'' and in doing so changed the shape of American finance with a spate of corporate takeovers, is trying to raise the social consciousness of America's takeover artists and financiers.
To someone who is out of a job because of a hostile merger, Mr. Milken's effort may sound contradictory. But, last week in Beverly Hills, Calif., Milken, a senior executive with the Wall Street investment company of Drexel Burnham Lambert repeatedly warned financiers and takeover tycoons of ominous trends in education, worker training, and urban life.
``The scarce resource is people, not capital,'' says Milken, whose company raised $53 billion last year for public and private borrowers. ``The real issue is how to train and motivate them,'' he says.
Milken urged the businessmen to become activists in trying to find ways to solve the problems. ``What is the purpose of business if not to make a better life,'' he says.
At the same time, Milken is urging the business community to turn its attention to the Latin America neighbors of the United States. As he bluntly put it, ``If we have a strong Mexico, Nicaragua will be a pothole.''
To help put a framework on these two issues, Milken invited educators, union leaders, and Latin American economists and business leaders to take part in Drexel's 10th institutional research conference. Thus, teachers' union leader Albert Shanker rubbed shoulders with takeover artist Carl Icahn, and economists from Brazil, Mexico, and Chile chatted with international bankers.
In the past, Milken has always had some social message for the pin-striped crowd. This year, however, 40 percent of the larger presentations were devoted to the social issues Milken thought important.
The aim of the conference is not to talk about social issues. Rather, 64 companies made presentations to 3,500 institutional investors - many of them lenders to these same companies.
At the same time, scores of private meetings were convened with several billion dollars in potential mergers discussed. Such takeover artists as Harold Geneen, Frank Lorenzo, and Mr. Icahn roamed the halls.
Participants in the conference are generally supportive, and the social-issue presentations are well attended. ``Education is relevant to all of us,'' says Howard Marks, managing director of Trust Company of the West.
``These sessions give us an idea of what Mike [Milken] would like us to think about, and I pay attention to them since he has been ahead of his time for the last 20 years,'' says Patricia Ostrander, president of Ostrander Capital Management, based in Boston.
Milken, through the Milken Family Foundation, is also investing some of his own money in education. He is part of an experimental program in San Jose, Oakland, and Los Angeles that teaches school principals how to get parents more involved with their children.
The interest in social issues, in fact, reveals a different side of Milken. For the most part the press has focussed on Milken's enormous pay, which Business Week estimated at $23 million two years ago, and his legal difficulties.
The firm has acknowledged that the Securities and Exchange Commission and the US attorney's office in New York are investigating Milken as part of a wide-ranging look at insider trading. Milken, however, has yet to be charged with anything.