Founder of investment banking boutique sees opportunity to profit from S&L mess.

Founder of investment banking boutique sees opportunity to profit from S&L mess

The swelling portfolio of debt held by the Resolution Trust Corp. (RTC) should cheer Jon Moldasky, one of three founders of an investment banking boutique named Meritus, based in Hollywood.

That is because the government agency charged with disposing of the assets once held by troubled savings and loan associations presents a golden opportunity to the fledgling firm specializing in the evaluation of debt.

"We have developed a database system which enables us to quickly analyze and rate different kinds of debt on a fundamental basis," Moldasky says.

As an example, he cites a $2 million bridge loan to a paint company based in Gardena.

"We determine what the loan is worth based on similar debt and similar collateral being traded in the marketplace. Someone will pay you 98 cents on the dollar for the loan, but we find the cash flow and loan-to-value is stronger than the current market and the pay schedule a little weaker, so the current value of the loan to you is 101 cents on the dollar. In this case it would be better to hold the debt."

The value of such a service to buyers of RTC-held assets is not lost on Meritus and several other players such as Houlihan Lokey Howard & Zukin Inc., a Century City-based valuation firm.

Meritus was close to clinching the business of Imperial Savings Bank before the San Diego-based S&L was taken over by the RTC, but in the process Meritus won some recognition from the RTC, according to Moldasky.

Paying clients since Meritus was formed in 1988 include VMS Realty Partners, Dean Witter Reynolds and PruBache Capital.

In its first full year of operation the partnership had $200,000 of revenues. It projects $585,000 of revenues this year. "We are well on the mark, with $90,000 of revenues this year already," Moldasky says.

Trumpet player Moldasky went to Indiana University to study music but ended up with an undergraduate degree in accounting and graduate degree in public administration.

He left his native Midwest to come to Los Angeles in the hopes of breaking into the business side of the entertainment industry, but eventually switched to real estate.

"I soon realized that I did not have much tolerance for the `affected' people in the industry," he says.

After spending four years at the Beverly Hills-based accounting firm, Nanas, Stern & Biers, Moldasky joined the investment bank, Harmet Associates, a boutique based in Encino specializing in mortgage banking and real estate.

While at Harmet Moldasky worked on the public offering of Commonwealth Mortgage Limited Partnership, which he said was the first master limited partnership for mortgage banking. Commonwealth is currently traded on the New York Stock Exchange.