Did Riklis Play It Straight?

Swashbuckling financier Meshulam Riklis is often down but rarely out. Two years ago, he got booted from ailing E-II Holdings Inc. amid charges that he was milking the company. But Riklis is still a player in a nasty battle for control of E-II, which last summer filed for bankruptcy. The company's holdings include Samsonite luggage, Culligan water purification systems, and Botany 500 men's suits. The fight, spearheaded by raider-vulture investor Carl C. Icahn, illustrates how 1990s dealmeisters are often finding the best pickings in corporate junk heaps.

E-II's dissident creditors forced Riklis out in late 1990. Riklis, though, was able to install his longtime pal, Steven J. Green, as chief executive. Then, in early 1992, Icahn bought almost one-third the junior debt on the cheap and promptly became the dissidents' ringleader. Icahn blocked Green's bid to restructure E-II out of court and pushed it into bankruptcy, where as a creditor he has more clout. Now, Icahn is trying to take control of E-II by painting Green as a Riklis front, a charge that Green denies. The entire matter is expected to come to a head in April when creditors vote on Green's scheme to take E-II out of Chapter 11. This would leave Green as CEO and install another large bondholder as majority shareholder: former Drexel Burnham Lambert Inc. investment banker Leon D. Black, who is Icahn's nemesis and Green's ally. By sowing doubts about Green and offering creditors 14% to 25% more cash for their bonds, Icahn hopes to defeat the Green plan, then push through his own (table).