Milken trust to buy into radio, food companies.

Deposed junk bond king Michael Milken, operating through a family trust, is set to inject major capital into two Southland public companies -- chicken-seller Koo Koo Roo Inc. and radio program syndicator Premiere Radio Inc. -- according to public documents and interviews with local investors and executives.

The Milken trust will end up owning a majority stake in the fast-food chain and possibly 40 percent of the radio syndicator, if all goes according to plan.

The trust, set up for the benefit of Michael Milken and brother Lowell Milken's children, is administered by lawyer Richard Sandler, a lifelong friend of the Milken family and Milken's attorney since the 1970s.

Author Connie Bruck, in her 1988 book "The Predator's Ball" on Milken and the now-defunct brokerage Drexel Burnham Lambert, called Sandler a "proxy" for Milken, an opinion shared by many in Los Angeles' brokerage community.

Apparently, neither the terms of Milken's 1990 settlement with U.S. Attorney's Office, nor a 1991 Securities and Exchange Commission order barring him for lif from the securities industry prohibits Milken from controlling public companies or joining with other investors in buyouts.

(In 1990, Milken pleaded guilty to six federal felonies, including conspiracy and securities fraud, an act seen by some as sort of a legal denouement to the leveraged buyout-junk bond crazy 1980s. Milken served a jail term at the federa prison in Lompoc.)

At Koo Koo Roo, a partnership that sources say is majority-owned by the Milken family trust, the Century City-based Archon Capital Partners L.P., has signed a letter of intent to fork over $55 million to the fast-food chain, through an "associated" entity named Casual Dining Concepts.

(A spokesman for Archon Capital Partners last week refused to confirm or deny that the Milken trust owns a majority stake in the partnership. Such informatio is not public record.)

Koo Koo Roo operates eight restaurants, offering skinless flame-broiled poultry to those on a budget and in a hurry.

The chain's management, led by President Ken Berg, has long talked about a national expansion, but to date operates only six shops in Los Angeles, one in the Taj Mahal casino in New Jersey, and one in Miami.

The Milken-chicken deal in a nutshell: Money-losing Koo Koo Roo will get $55 million from Casual Dining Concepts, in exchange for senior corporate IOUs, preferred and common stock, and warrants.

After the dust settles, Casual Dining Concepts, through the exercise of warrant at $6 a share, will end up with 51 percent of Koo Koo Roo stock.

Right now, Wall Street is betting the sky will never fall on chicken-purveyor Koo Koo Roo; the tiny chain has a market cap of $93 million, based on 12.4 million shares outstanding (totally diluted) at $7.50 a share. In its last fiscal year, Koo Koo Roo reported a loss of $2.9 million on revenues of $4.13 million, its fourth straight year of red ink.

If the Milken trust-Casual Dining Concepts deal goes through, there will be another 12.4 million or so shares issued. No shareholder approval is required.

Said one short analyst last week, "Shareholders don't seem to understand they are about to be diluted in half." (A "short" is an investor who believes a stoc is going to decrease in value.)

But others like the Koo Koo Roo stock, including Bill Scanlon, the top-seeded tennis player of the 1980s who now golfs, on occasion, with Berg of Koo Koo Roo at Riveria Country Club. Scanlon is now a stockbroker with securities firm Sutr & Co. in Century City.

"You can't eat in their restaurants and not realize that Koo Koo Roo is going t be a major force in (fast food) in the future," said Scanlon last week. "The restaurants are crowded, and now (if the Milken deal goes through) they will have the capital to expand."

Scanlon added, "Whether you call it Milken or Casual Dining Concepts or Archon, somebody with a lot of cash thinks 51 percent of Koo Koo Roo is worth $55 million. That's a market cap of $110 million."

Milken's other local venture evolved after he met four times with the managemen of Premiere Radio Networks, a Sherman Oaks-based producer of comedy, entertainment and music radio programs.

The 7-year-old company produces 18 shows, which are distributed to more than 2,000 radio stations in exchange for commercial time. Premiere Radio, in turn, sells that airtime to national advertisers such as Warner-Lambert, AT&T, Nabisc and Sears Roebuck & Co. The company posted a loss of $521,389 last year on $10. million in revenues.

Last week, Stephen Lehman, president and chief executive of Premiere Radio, sai the Milken trust will invest $15 million into Premiere Radio, and take warrants that could allow the trust to own up to 40 percent of Premiere Radio's stock.

Asked whether the trust could go to more than 40 percent, Lehman replied, "The stock is publicly traded; they can buy more if they want."

The cash infusion will allow Premiere Radio to make acquisitions and rapidly expand into new domestic and international markets, said Lehman.

Mainland China is not out of the question, and he has had one meeting with Don Altfeld, of China-U.S.A. Entertainment, a Santa Monica-based company soon to ai two hours a day on China's national radio network, confirmed Lehman.