An empire builder and wave maker; Hurwitz succeeds amid controversy

BYLINE: DEE GILL; Staff

 Charles Hurwitz -- the man who's buying Continental Airlines -- has built 
empires before, but rarely has he done it without controversy.

 Maxxam, a $ 2.3 billion Houston company, is his biggest creation. It started as 
a real estate development company, but under Hurwitz, it broadened its 
operations.

 Today, the conglomerate's biggest assets are Kaiser Aluminum Corp. and Pacific 
Lumber Co

 Houston-based Kaiser, which makes aluminum and alumina, in the past has been the 
cash cow for the company and has generated little controversy. Pacific Lumber in 
Scotia, Calif., on the other hand, has been rocked with criticism since Hurwitz 
got interested in it in the mid-1980s.

 Hurwitz bought the company in a hostile takeover that's still being litigated. 
Shareholders have filed suit against Hurwitz secretly bought up stock in order to 
take over the company.

 The takeover left Maxxam with a ton of debt. Hurwitz paid for it by selling $ 
450 million worth of junk bonds. In fact, Maxxam is one of the most highly 
leveraged companies in the city.

 Under Hurwitz, Pacific Lumber doubled its harvest of old redwoods, a move that 
antagonized California environmentalists.

 Criticism of the cutting spread, and hot, emotion-charged demonstrations against 
the company are almost routine.

 Some critics say Continental will feel the effects of that controversy.

 ""No environmentalist will ever fly it again,'' said Houston activist Feller 
Goff.

 And environmentalists aren't just mad about Pacific Lumber.

 When Hurwitz's Federated Development Co. wanted to build a luxury hotel and 
later a residential development in Rancho Mirage, in Southern California, 
environmentalists feared the projects would endanger the threatened bighorn 
sheep.

 Federated managed to defuse the outcry by helping to raise money for bighorn 
research, donating land for a reserve and declining to complain when the sheep 
munch on the hotel's expensive landscaping.

 Hurwitz runs with some powerful people. Houston Mayor Bob Lanier, who regards 
Hurwitz highly, says they have been friends for 25 years or so. Former University 
of Houston Chancellor Barry Munitz used to work with Hurwitz. 

 Hurwitz started wheeling and dealing as a young man barely out of college, says 
Frank Duperier, a college friend who later worked with Hurwitz. He remembers 
Hurwitz starting his first company selling mutual funds.

 ""I was always in awe of him because he had complete confidence in himself,'' 
Duperier says.

 When the pair, who were in the Army Reserves, left for required courses at the 
University of Texas, Hurwitz remained busy with his business deals.

 ""Charlie was a walking Southwestern Bell telephone,'' said Duperier, adding the 
sergeant used to tease him about his phone bill.

 During the 1980s, he had a 24 percent interest in United Financial Group. United 
Savings Association, its main asset, failed in 1988 and was sold by regulators.

 Hurwitz acquired and sold several companies, including McCullough Oil Co. and 
Simplicity Pattern Co

 Hurwitz once owned an insurance company called Summit Insurance that failed in 
the late 1970s. The superintendent of Insurance of New York sued him, accusing 
him of fraud and breach of fiduciary duties. The case was settled out of court.

 The Security and Exchange Commission also sued Hurwitz and 42 others involved 
with Summit Group. The commission accused them of violating securities law by 
buying several stocks that allegedly were fraudulently manipulated by others.

 Hurwitz signed a settlement but maintained his innocence.

 .
Hurwitz at a glance:

 Born: Kilgore, Texas.

 Age: 52.

 Education: Earned bachelor of arts degree from University of Oklahoma in 1962.

 Career: Began as securities analyst and portfolio manager.

 Started own investment advisory firm. Purchased Federated Development Co. in 
1973. McCulloch Oil was acquired in 1978 and Simplicity Pattern in 1982. Maxxam 
Aluminum in 1988.

 Personal wealth: Ranked 27th on the Chronicle's list of Houston's highest-paid 
executives of publicly owned firms in 1991 with a compensation package worth $ 
848,326. He ranked No. 1. in 1989, receiving salary and bonuses totaling $ 7.4 
million.

 Political ties: A major supporter of Mayor Bob Lanier, Hurwitz was part of a 
group of 15 city businessmen who urged the present mayor to challenge incumbent 
Kathy Whitmire in 1991.

 Maxxam under Hurwitz: 

 Key dates in the history of Houston-based Maxxam Inc.

 1982: Financier Charles E. Hurwitz acquires Simplicity Pattern Co. for $ 48 
million and changes name to Maxxam Group. He sells pattern business, concentrates 
on real estate.

 1985: Hurwitz group buys Pacific Lumber Co. for $ 832 million; overfunded 
pension plan exchanged for annuity.

 1988: KaiserTech, the parent of Kaiser Aluminum, agrees to be acquired by Maxxam 
for $ 843 million.

 September 1990: Maxxam moves its headquarters from Los Angeles to Houston. 
Environmentalists concerned about logging practices of Pacific Lumber protest at 
new corporate offices.

 April 1991: California regulators take over Executive Life Insurance Co., which 
was chosen by Maxxam to underwrite the pensions of its Pacific Lumber subsidiary. 
Maxxam agrees to guarantee pension payments.

 May 1991: Maxxam goes ahead with plans announced earlier to sell a stake in 
Kaiser Aluminum, with shares to be publicly traded on the New York Stock 
Exchange.

 June 1992: Hurwitz is identified as one of four parties interested in purchasing 
Houston-based Continental Airlines. The others identified as studying the 
airlines' books are Fort Worth's Bass brothers, British Airways and Air Canada, 
whose CEO, Hollis Harris, formerly ran Continental.

 July 9, 1992: Charles Hurwitz's bid of $ 350 million for a controlling interest 
in Continental Airlines Holdings is accepted.


The Houston Chronicle
July 10, 1992, Friday, 2 STAR Edition
SECTION: BUSINESS; Pg. 1