Simon Heads Group Offering to Buy Large Hawaiian S

A holding company backed by former Treasury Secretary William E. Simon, among others, and headed by former Federal Reserve Board Vice Chairman Preston Martin plans to take over Honolulu Federal Savings & Loan Assn., Hawaii’s largest S&L.;

The proposed acquisition by H. F. Holdings, announced Monday, will result in a capital infusion of $50 million to $60 million, said Gerald L. Parsky, a principal in H. F. Holdings and a partner in the Los Angeles law firm of Gibson, Dunn & Crutcher. Of the total capital infusion, $20 million will be an equity investment and the rest will be raised by issuing subordinated debt.

Besides Simon and Parsky, who served under Simon as an assistant Treasury secretary, the other principals in the firm are Roy Doumani, chairman and president of World Trade Bank in Beverly Hills, and Larry B. Thrall, owner of Overseas Asset Management Co., a Los Angeles firm involved in real estate acquisition and financing.

Martin will serve as chairman and chief executive of H. F. Holdings, which will be based in San Francisco. Martin, who resigned in March as Fed vice chairman, previously was chairman of the Federal Home Loan Bank Board and the California Savings and Loan Commission.

H. F. Holdings is looking at other possible acquisitions of S&Ls;, a commercial bank and financial services firms, Parsky said, adding that Simon, who leads the holding company’s investors, “is very anxious to be in the financial services” field.

In recent weeks, Simon has been mentioned by investment banking sources as a possible successor to BankAmerica’s embattled president, Samuel H. Armacost, if the bank’s board decides to replace him. In an interview last week, Simon said he had received no overtures from BankAmerica, though he added: “I’ve never been one to duck a challenge.”

Parsky said Monday that the principals of the new venture have not discussed the possibility of making a bid for ailing BankAmerica. “We wouldn’t consider making any hostile offers,” Parsky added.

Simon’s name came up in connection with BankAmerica because some investment bankers who are close to the company have said it needs a “world class” businessman in control to restore investor confidence and raise needed equity capital on favorable terms.

The Federal Home Loan Bank Board recently approved the conversion of HonFed to a stock association from a mutual association, which is owned by depositors. The conversion does not require approval of depositors because it was done under regulatory authority, said a spokeswoman for the Federal Home Loan Bank of Seattle, which regulates HonFed.

The acquisition by H. F. Holdings is expected to close in 30 to 45 days, Parsky said. HonFed is profitable but has had some real estate loan problems in recent years, Parsky said. The S&L; has assets of nearly $1.7 billion.

“One of the reasons that HonFed was attractive to us was although there were some problem real estate loans, we didn’t see it as dominating the institution,” Parsky said.

HonFed’s two top officers, W. Mendel Borthwick, chairman, and Kenneth Fujinaka, chief executive, are expected to remain with the company.

Times staff writer Victor F. Zonana contributed to this story.