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Miller Has Saved Other Companies With AM-Campeau-Impact, Bjt

January 16, 1990

WASHINGTON (AP) _ When G. William Miller’s personal assistant asked if he were as excited about his latest executive challenge as he was, say, when he became Federal Reserve chairman or secretary of the treasury, he was left speechless.

But not mute. ″He just giggled,″ said Lisa Astudillo.

Miller, 64, was named chairman and chief executive officer Tuesday of Campeau Corp.’s U.S. subsidiary. His appointment came a day after the retailing giant, owner of 258 department stores including Bloomingdale’s and Jordan Marsh, had filed for bankruptcy protection.

In Miller, the American chain-store operation, handed operating independence from its Toronto-based parent just a week earlier, has turned to a man viewed as a savior by other once-failing companies, including Chrysler Corp.

But Miller doesn’t lack for critics, especially from his days at the Fed and then as Jimmy Carter’s treasury secretary.

At Treasury, Miller oversaw the government bailout which brought Chrysler back from the brink. As a merchant banker later, he has revived companies large and small, earning millions, often in the form of stock which has increased dramatically in value.

Unlike an investment bank or a commercial bank, a merchant bank takes a long-term stake in the companies it is advising. Miller formed one, G. William Miller & Co., after leaving Carter’s cabinet.

″I’d like to move from being quarterback, so to speak, to being coach,″ he said.

He has close ties to the wealthy Ojjeh family, headed by Syrian-born Akram Ojjeh, and other Middle East investors, for whom he has engineered several acquisitions.

Several years ago, creditors were about to pull the plug on steel-oriented Korf Industries, of Charlotte, N.C., when the company approached Miller for help. He launched a restructuring program that included the sale of steel mills and replacement of debt by stock. The firm now is principally owned by Kuwaiti interests.

At the time, he compared the rescue of Korf - which he renamed Georgetown Industries - to his role at Treasury during the Chrysler crisis: ″Sell off assets to raise cash, work with lenders to pay off debt, reduce debt, convert debt to equity ... We end up with a company that has a sturdy balance sheet.″ In the Korf-Georgetown case, Miller reduced debt from $265 million to $40 million in just two years.

Miller could not be reached for an interview Tuesday over his ideas for Campeau (U.S.) Inc., which will be renamed Federated Stores Inc. Ms. Astudillo, his assistant, would say only that he was ″travelling.″

The U.S. subsidiary was created when Canadian real estate entrepreneur Robert Campeau gambled $10 billion, most of it in borrowed money, on the purchase of Allied Stores Corp. and Federated Department Stores, Inc. in 1986 and 1988.

The court filing Monday for protection from creditors under the federal bankruptcy laws reflected Campeau’s inability to pay off debts totalling $8 billion.

Miller, a former chairman of Textron, Inc., has long been a director of Federated, and remained a director of the new unit created by Campeau, even though he had resisted the takeover.

During that battle, he assailed the acquisitions trend of the decade, saying ″The largest company gets thrown in turmoil and employees suffer.″

Yet, he has never been ready to call for government intervention, either to halt takeovers or give takeover targets more defenses. And during his pre- Carter days at Textron, the conglomerate whose products range from zippers to helicopters, he certainly wasn’t shy himself on the acquisitions front.

″The highest duty of a director under today’s rules,″ he told Industry Week in late 1988, ″is to achieve the maximum price for shareholders. You just do your best to make sure the enterprise prospers and that, when the battle reaches its end, the resources of the company are not so strapped that the competitive nature of the company is lessened.″

Born March 9, 1925, in Sapulpa, Okla., Miller grew up in Borger, Texas, studied marine engineering at the Coast Guard Academy and served from 1945 to 1949 as a Coast Guard officer in the Far East and on the West Coast. He received a law degree from the University of California at Berkeley in 1952, and joined a law firm in New York City, where one of his first assignments was to help Royal Little, the founder of Textron, Inc., make an acquisition.

Little was so impressed with the young lawyer that he asked Miller to join Textron for a one-year trial. Four years later, at age 35, Miller became president of the company. In 1974 he was made chairman, a post he held until Carter named him chairman of the Federal Reserve Board in 1978. A little over a year later, Carter made him treasury secretary.

As the inflation fires burned in those years, Miller practiced a monetary policy of ″gradualism″ and, like Carter himself, preached the virtues of measuring ″real″ rather than nominal interest rates.

His argument was simple: It’s the difference between the rate of inflation and the rate of interest that counts. By that argument, for example, a 17 percent loan, measured against 14 percent hefty wage and price increases, is preferable for the borrower to a 9 percent loan in a period of 3 percent inflation. The markets, however, didn’t buy it.

According to Michael K. Evans, president of Evans Economics Inc. in Washington, Miller’s acceleration of money-supply growth in 1979 ″exacerbated the inflationary pressures, cost both him and his boss their jobs, and eventually sent the economy into the most severe tailspin since the 1930s.″

Since leaving the government, Miller generally has shunned the limelight, though he continues to serve a wide variety of civic organizations, including the Wolf Trap Foundation for the Performing Arts and the Washington Opera. For decades, he has been active in minority affairs, and is crediting with helping move more women into the nation’s boardrooms. At Textron, he named not one, but two women to the board at once. One of them, Barbara Scott Preiskel, recalls him explaining that he timed it that way ″so neither of us would think we were tokens.″

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