THE NEW MILKEN : The deposed king of junk bonds still practices the art of the deal.

Michael Milken may be gone from Drexel Burnham Lambert Inc., but his deal-making days aren’t done.

On the eighth floor of the United Artists building on North Roxbury Drive in Beverly Hills, just a couple of blocks from his old perch on Drexel’s junk bond trading desk, carpets have been laid, wallpaper is up and furniture delivered. Milken’s new company, International Capital Access Group, is open for business. Despite the racketeering and securities fraud indictment hanging over him and his forced resignation from Drexel in June, Milken hasn’t retreated to the sidelines.

When Drexel’s former junk bond chief announced plans for the firm, he said it would help members of minority groups and unions raise the capital to own companies. And, four months after it was founded, ICAG appears to be doing just that.

But the new firm is also gearing up for a considerable amount of potentially more profitable business. Since leaving Drexel, Milken has had talks with many of his old firm’s clients, according to a senior Drexel executive. And in a long interview in ICAG’s offices, Milken confirmed that a significant part of ICAG’s business will be with ordinary companies.

It may make direct investments in companies. And it is working on finding new capital for successful companies and refinancing firms that are in trouble. In exchange for Milken’s brainpower and contacts in arranging refinancing, ICAG expects to receive an ownership stake in most of the companies that it helps.

“What we’re doing here is pretty much what we were doing before (at Drexel),” in the sense that his focus is on finding ways for companies to raise capital, Milken says, although he no longer trades or underwrites securities.

Milken, however, protests any suggestion that the firm’s main purpose is to make money. All of its activities, he says, fall under the category of “helping people.” He refuses to discuss ICAG’s fees or even confirm that he expects the company to be profitable. “Financial reporters have this preoccupation with money,” he says. “We’re focused on creating value. Wealth is a byproduct.” Several times during the interview, the man who earned $550 million in one year at Drexel, and is estimated to be worth well over $1 billion, complained that “people are so hung up on money.”

At Drexel, Milken essentially created the market for high-yield, high-risk junk bonds, and he revolutionized the way that capital was raised for medium-sized U.S. companies. He also turned junk bonds into a potent tool in corporate takeovers and leveraged buyouts.

Now, Milken seems determined to prove that the government’s case against him will not stop him from carrying out his ideas. An ordinary person might be overwhelmed by the chore of preparing a legal defense against a 98-count felony indictment. But Stephen Weinroth, a longtime Drexel official now on leave, says: “Mike has an energy level that makes a nuclear plant look pathetic.”

In the short time since ICAG was formed, it already has purchased $2.5 million worth of barges and other equipment to lease to Unimar International Inc., a Seattle-based shipbuilder and tugboat company that was bought out by its unionized employees with Drexel’s help in 1987. Milken says ICAG plans to do this for other employee-owned companies as well, since many of them have trouble raising the money to buy equipment outright.

Among activities involving minorities, Milken has put groups of minority businessmen in contact with potential backers. And Bill Tatum, publisher of New York’s black newspaper, the Amsterdam News, says he met with Milken about backing for a bid on a major general-circulation newspaper, perhaps the troubled Daily News. Milken says that helping unions and members of minority groups, and devising ways to help indebted countries, such as Mexico, will make up more than half of ICAG’s business.

In addition to these areas, Milken already is doing a considerable amount of mainstream business. He says he has agreed to help recapitalize an entertainment and publishing concern, which he won’t identify. He is working on bailing out Weintraub Entertainment Group, a Los Angeles company that was straining under its junk bond debt after a string of unsuccessful movies. He is helping to arrange financing for a Los Angeles chain of car dealerships. And he says that enough progress has been made on some deals that they may soon be announced publicly.

Milken says that, in all, he has been approached by several hundred companies. Of these, ICAG is doing work on behalf of about 30. He says that 12 of these already are at the point where a transaction has occurred or is about to.

Milken won’t comment on the terms on which ICAG is helping these companies, but one deal that fell through suggests that, while his aim may be to help others, he isn’t neglecting his own interests. Wolfgang Puck, the well-known chef and proprietor of the Los Angeles restaurant Spago, said he approached Milken in July about raising new financing for Puck’s frozen pizza venture, Wolfgang Puck Food Co. In an interview, Puck said he wasn’t able to come to terms with ICAG. Puck said he balked when Milken demanded a majority stake in the company.

Milken says he wasn’t directly involved in the Puck negotiations, and denies that they fell through because of the ownership issue. He says Puck’s company at the time was in financial difficulties and needed a lot of financing. (It has since obtained some financing elsewhere.) He says that the talks broke down because they involved too many lenders and stockholders who simply couldn’t come to terms on a variety of issues.

Milken’s challenge in establishing a new firm will be to overcome serious handicaps imposed by his pending criminal prosecution. ICAG cannot trade or underwrite securities. Such activities were a main part of Milken’s activities at Drexel. But they require licensing by the Securities and Exchange Commission. From a legal standpoint, Milken could apply for such licenses, since he has yet to be convicted of anything. For practical reasons, however, he has chosen not to, and so must rely on other firms to perform these services for his clients.

Asked if it bothers him that he can no longer issue new securities, Milken says, “it’s not something I’m thinking about at this time.”

Investment banking sources say that Milken, in effect, also is closed out of doing work for the gambling industry, which made up a big share of his clients at Drexel. Because he is under indictment, New Jersey and Nevada gaming authorities have indicated that they might take legal steps against casino operators who do business with him.

And though Milken’s press spokesman and personal lawyer strongly deny it, a number of potential clients are frightened of having their names publicly associated with him. In an off-the-record interview, the chief executive of a publicly traded company who was a client of Milken’s at Drexel and praises Milken effusively said that he couldn’t afford to have any formal business relationship with ICAG. He said the commercial banks with which his company does business have indicated that they might stop lending to him if he does. Some banks, he said, “have decided that Milken is not a credible person right now.”

This hasn’t stopped a flood of companies that have approached him in confidence, however. And there are still plenty of well-known executives who praise Milken publicly and wish his company success. Steven J. Ross, co-chairman of the recently merged Time Warner Inc., said: “Mike has to be one of the most brilliant financial minds of our time.” But Ross would not say if he expects to use ICAG’s services. “We have factors that we never make public about any of our business dealings,” he said, adding: “That’s not to be construed that we are or aren’t.”

In true Milken style, ICAG’s new offices are comfortable but not ostentatious. Only the firm’s name, not Milken’s, is on the door. And he refers to everyone who works there as co-workers, not employees.

The heart of the firm is a long rectangular table made up of 18 wooden desks pushed together. Complete with financial data computer screens, it looks remarkably like a trading desk. It is an environment that evidently makes Milken feel at home; his years in Drexel’s Beverly Hills office were spent at the center of the junk bond trading desk. But at this one, for the foreseeable future, no securities will be traded.

The firm currently has about 20 employees, with more expected to join soon. (Milken says he doesn’t know how many.) Among the top staff members, whom Milken calls “principals,” are Steven Fink, a former official at Pacific Asset Holdings (a partnership in which Milken holds an interest), Lorraine Spurge, formerly one of his top assistants at Drexel, and Randolph Read, former president of a merchant banking concern. Officials at the new firm say they are aren’t making overtures to lure Drexel employees to ICAG. But Milken doesn’t rule out talking to former Drexel colleagues who may, on their own, contact him about a job.

He refuses to discuss how much capital the firm has, a key measure of the potential scope of its activities. “It’s a private firm,” he says. Milken did say that all of the firm’s capital comes from himself and the principal staff members, not outsiders. “There are a number of people who have called, but we felt it would be better that we did not take in outside backers,” he said.

But one clue to the amount of money that Milken personally is committing to the firm is how much he says ICAG is willing to invest in an individual transaction. For most types of transactions, he says, the firm stands ready to invest between $500,000 and $20 million.

Milken draws a sharp distinction between his goals and those of Bruce Wasserstein and Joseph R. Perella, formerly of First Boston Corp., who, like Milken, left a big Wall Street firm to set up shop on their own. Their new firm, Wasserstein Perella & Co., was established as a corporate takeover boutique. In contrast, Milken says, “you will not find us involved in any unfriendly transactions.”

Although Milken is credited with inventing the use of junk bonds to back hostile corporate raids, he maintains that hostile transactions have “never been a major focus of mine.” Milken adds: “There’s so much we can do to help people, I just don’t think it’s something we’re interested in.”

By “helping companies,” Milken means suggesting ways that they could improve their basic business, working out creative means of raising capital or recapitalizing to reduce interest costs, and using his vast network of contacts to put companies in touch with potential investors.

After a speech he made in September, Milken was widely quoted as suggesting that companies should now attempt to reduce their level of high-yield debt. Some analysts interpreted this as a major reversal, since Milken’s later years at Drexel were largely spent promoting leveraged buyouts financed with huge chunks of junk-bond debt. But Milken maintains that he is simply doing what he has always done, advising companies to profit from market conditions.

One service that ICAG expects to perform is finding creative ways for its customers to convert their costly high-interest debt into a combination of lower-interest debt and equity--that is, stock. Milken says his firm expects to help salvage some of the large companies that have been in the news in the last couple of months because of severe difficulties in meeting the payments on their junk debt. “There are some companies today that aren’t knocking the cover off the ball, and yes, we are willing to help,” he says. Milken declines to discuss individual companies but denies that the debt per se caused their problems.

As ICAG takes on customers, one thorny issue is its relations with current Drexel customers. When Drexel settled a massive SEC lawsuit, the firm agreed not to do business “directly or indirectly” with Milken. What this means precisely hasn’t been defined and could be a source of further SEC action. It’s not clear, for example, whether legal problems would arise if a company hired Drexel to underwrite securities according to a recapitalization plan drawn up by Milken.

Milken’s lawyers are interpreting the provision to be Drexel’s problem, not his. (A Milken adviser notes that Milken isn’t a party to the settlement with the SEC.) Still, the adviser acknowledges that “it’s something that exists, and we’re conscious of it.”

Some current Drexel clients say they wouldn’t be troubled by feelings of disloyalty if they also decided to seek help from ICAG. Oscar U. Mutz, president and chief executive of Forum Group, an Indianapolis developer of retirement communities that is a Drexel customer, says: “I don’t ask Drexel’s permission to go see Morgan Stanley (another Wall Street investment bank), and I don’t ask Drexel’s permission to go see Michael Milken or anybody else.” Mutz, however, says he hasn’t yet had occasion to do business with ICAG.

Steven Anreder, Drexel’s spokesman, says the firm hasn’t lost any clients to ICAG. And he said he doesn’t expect conflicts to develop.

Milken, who was one of the most feared competitors on Wall Street when he was at Drexel, now frequently is funneling to other firms the trading and underwriting business that he can no longer do himself. One ICAG staff member says Milken’s old competitors today are more than happy to do business with him, now that he’s no longer directly competing. “The reality is that we can generate a lot of business for people,” the staff member says.

Milken himself takes pains to downplay his former role as competitor, saying that as a former buyer and seller of securities, he always had to maintain good relationships with other firms.

One big, unanswered question is what will become of the firm if Milken is convicted and sent to prison. His trial is scheduled for March, and he faces the possibility of a lengthy sentence. He denies any wrongdoing and is vigorously fighting the charges.

Milken and staff members say they are hoping for the best and, no matter what happens, they expect ICAG to remain in business and grow. Meanwhile, Time Warner’s Ross says: “He’s got such a brilliant mind that I think he could do 10 things at one time and still prepare for what he’s about to undergo.”