Beverly Hills S&L;, Rey Settle Suit

Swiss financier Werner K. Rey has settled out of court a lawsuit filed against him last year by Beverly Hills Savings & Loan, his spokesman said Friday.

Aloys Hirzel said the lawsuit sought $15 million in damages in connection with a mortgage transaction that Rey made with the savings and loan’s predecessor, Beverly Hills Savings & Loan Assn., which the Federal Savings and Loan Insurance Corp. declared insolvent and took over.

The thrift was reconstituted as a federally chartered mutual association under new management.

Hirzel said Rey had concluded a transaction with the old thrift just before it was taken over by the federal agency on April 23, 1985.

In the settlement, Rey retains the real estate and may repay the mortgage on more favorable terms, according to Hirzel.

Debentures Used as Security

Hirzel said the real estate is worth more than the original $10 million in debentures put up as security, but he said he didn’t know the properties’ total market value.

In the transaction, Rey had obtained a mortgage to finance the purchase of several real estate properties owned by the old thrift, including apartment houses and business complexes in three states. He partly secured the mortgage with $10 million of convertible subordinated debentures in the old Beverly Hills Savings. He retained another $10 million in convertible subordinated debentures, plus a 9.6% interest in the thrift.

The new Beverly Hills Federal Savings alleged in its suit, filed in U.S. District Court in Los Angeles, that the debentures used as security were “substantially worthless.”