COMPANY TOWN

* Toys: Former Paramount Communications Chief Executive Martin Davis is getting his fledging investment firm on track. He’s buying Lionel Trains, the world’s largest maker of model trains, with singer Neil Young as his partner. Davis’ Wellspring Associates did not disclose the purchase price. The seller is Detroit businessman Richard Kughn, who bought the company from General Mills Inc. in 1985. He will retain a minority interest in Lionel Trains and assume the title of chairman emeritus of the company. Young, a model-train buff, and Kughn are the founders of Liontech Inc., a Silicon Valley developer of proprietary remote control and digital sound technology for Lionel. As part of the transaction, Lionel, based in Chesterfield, Mich., will acquire full ownership of Liontech. Wellspring also in a separate deal is buying the trademarks for Lionel model and toy trains from Lionel Corp., a company that is unaffiliated with the toy train manufacturer and which is currently in bankruptcy proceedings. A spokesman for Wellspring said Lionel Corp. is bankrupt. Its shares last traded on the Nasdaq market in January of this year. Lionel Trains began making electric trains in 1900 and at one time was the world’s largest toy company. Lionel makes more than 350 products for the model railroader.