$5-Billion Federal Bailout for 5 Texas S&Ls; Held Near

Federal regulators are close to arranging a $5-billion rescue of five hard-hit Texas savings and loans, industry sources said late Tuesday. If the deal goes through, it would be the second-costliest bailout ever by U.S. thrift regulators.

Negotiating to acquire the thrifts with the federal assistance is the investment group MacAndrews & Forbes Holding. It is headed by Ronald O. Perelman, a takeover specialist well-known on Wall Street who also is chairman of Revlon Inc., the cosmetics company.

A spokesman for the Federal Home Loan Bank Board, Karl Hoyle, confirmed that the latest rescue attempt was under way but emphasized that it is not yet complete.

“It’s premature to assume this deal will close,” he said.

The proposed transaction would be one of several in a last-minute spree of deals scheduled this week under a massive effort devised by federal thrift regulators to deal with the current savings-and-loan crisis in Texas, Oklahoma and Louisiana. Many institutions in these states have been hurt by loans to the Southwest’s depressed real estate industries.

In Texas alone, 70 insolvent thrifts to date have been merged into 12 packaged under the regulators’ efforts.

Regulators and purchasers are racing to finish their business by midnight Saturday, when tax benefits that lower the costs of the purchases are reduced.

Under the proposed $5-billion bailout, MacAndrews & Forbes would contribute $315 million of its own funds to bolster the five institutions, which have assets of $12.2 billion. The $5 billion in federal assistance, which would be doled out over 10 years, is the estimated cost to the government of restoring the institutions’ financial health. Ordinarily in such transactions, the government is not reimbursed for such assistance.

Troubled Institutions

The deal would effectively relieve the government from responsibility for some of the most troubled Texas institutions, including two Dallas-based institutions: the First Texas Savings Assn., with $3.2 billion in assets, and Montfort Federal Savings & Loan Assn., with $1.8 billion. Also, two Houston-based thrifts: the Gibraltar Savings Assn., with $6.3 billion in assets, and the Home Savings & Loan Assn., with $568 million, along with the Killeen Savings & Loan Assn., with $256 million.

The proposed S&L; bailout would appear to be the second-biggest ever. The largest appears to be a transaction disclosed in August that is expected to cost $5.5 billion. It provided for the Federal Home Loan Bank Board’s takeover of Sunbelt Savings Assn. of Texas and seven other financial institutions with assets totaling almost $7 billion.

In another major bailout, regulators are expected to announce today the completion of the sale of Stockton, Calif.-based American Savings & Loan--the nation’s biggest S&L--to; Texas billionaire Robert M. Bass. That deal is expected to cost the Federal Savings & Loan Insurance Corp. well in excess of $1 billion.

Reputation as Raider

Perelman, head of the investment group in the Texas bailout, has a reputation as a corporate raider. He launched two unsuccessful efforts to buy Gillette Co. in the last two years, and in September agreed to sell Technicolor Holdings to Carlton Communications PLC for $780 million. MacAndrews & Forbes’ holdings include a 41% stake in the Andrews Group, a Burbank-based video company.

While Perelman is believed to have no previous experience in the savings and loan business, his bidding group includes Texas financiers who would operate the institutions. They include Dallas banker Gerald J. Ford, chairman of the Ford Bank Group in Dallas and chief executive of United New Mexico Financial Corp., which controls an array of banks with assets totaling more than $2 billion.

Edges Out Ford

Sources disclosed two weeks ago that Perelman’s group had edged out other bidders, including the Ford Motor Co. subsidiary, First Nationwide Financial Corp., interested in buying the five Texas S&Ls.; The major news to come out of the negotiations Tuesday was the massive amount of assistance the government apparently is ready to provide.