Felix the Fixer

Has Felix the Fixer done it again? No one can yet say for sure, not even Felix G. Rohatyn, the 46-year-old Austrian-born partner in the New York investment-banking firm of Lazard Freres & Co. But Rohatyn has at least got the machinery started for a complicated and inventive deal between Textron Inc. and Lockheed Aircraft Corp. that will add new luster to Lazard Freres' reputation as masters of the art of rescuing faltering corporate giants by arranging mergers, reorganizations or financial aid. Says one Rohatyn admirer in the treasurer's office of a large corporation: "If he pulls it off, it will be the investment banking deal of the decade."

Last week Rohatyn moved a step closer to bringing it off. The Lockheed and Textron boards approved a plan for Textron to buy 45% of Lockheed's stock for $85 million. The two will not merge, but Textron Chairman G. William Miller, a 49-year-old lawyer, is to become chairman of Lockheed as well, thus heading two companies that had total 1973 sales of almost $5 billion; Lockheed Chairman Daniel J. Haughton, 62, would step down to vice chairman. Other terms, some still subject to revision: major banks are being asked to convert $275 million in loans to Lockheed into preferred stock in the company and to extend $375 million in additional credit to Lockheed at an initial fire-sale interest rate of 4%. Most troublesome is the condition that airlines will have to convert options on 45 Lockheed TriStar jetliners to firm orders by Nov. 30--one that Textron stipulated must be met before it will finally go ahead with the deal.

Salvage Crew. Though Rohatyn knows better than anyone that he still faces a skyful of troubles converting these plans into actuality, he takes an artistic pleasure in having even conceived them. "It was very satisfying from an aesthetic point of view," he told TIME Correspondent John Tompkins. "The structure that we evolved is almost like a clockwork mechanism. It is not going to start until all the pieces are in place, but when it starts it is going to run very well."

Such financial legerdemain has become a specialty of Lazard and Rohatyn since the late 1960s, when Lazard Chairman Andre Meyer turned pessimistic about the future of conventional investment banking (basically, the underwriting of stock and bond issues) and decided to diversify. Lazard, the American arm of an international firm that also has offices in London and Paris, pushed into investments in oil wells, cattle herds and California vineyards, and organized a "mergers and reorganizations" group--a kind of financial salvage crew--under Rohatyn.

The section has had great success. In 1967 Lazard Partner Stanley De J. Osborne arranged the merger with McDonnell Aircraft that kept Douglas Aircraft from going under; later, Partner Howard S. Kniffin helped Boise Cascade spin off a number of enterprises in mobile homes and chemicals that were doing little for it but lose money. Meyer, still active at 75, last week headed off a threatened proxy fight at the Signal Cos. (shipping, Mack trucks, radio stations, the California Angels baseball team) by getting an Italian investment group to buy a major interest.

The chief fixer, however, is unquestionably Rohatyn, who has spent his entire 25-year professional career with Lazard. Rohatyn worked out many of the mergers that turned International Telephone & Telegraph into a behemoth conglomerate--for fees to Lazard that ranged up to $1 million--and in 1970 he headed the New York Stock Exchange crisis committee that saved scores of Big Board brokerages from going bust. His chief assets seem to be imagination in conceiving a deal and candor and patience in explaining it to the prospective partners. "You always have to divide it into the business side and the human side," he says. "If from a business view there is a real need, then you have to make a judgment whether the people are emotionally up to doing the thing" (a reference to the fact that in any merger or reorganization, a chief executive usually has to move aside for someone else).

Rohatyn has had his failures too. He was instrumental in talking Texas Centimillionaire H. Ross Perot into pumping millions into the brokerage firm of duPont Glore Forgan, an adventure that ended unhappily a few months ago when Perot's Wall Street interests, reorganized into duPont Walston Inc., went out of business. He admits that the Lazard team spends 70% of its time working out deals that never come off. But if he can firm up the Textron-Lockheed deal, he can count on being offered countless others, not all of which he will accept. A few years ago, he rejected a feeler to try to save I.O.S., Bernard Cornfeld's since-foundered mutual-fund empire. Says Rohatyn, expressing a European point of view: "A great firm is known by the business it can turn down."

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