A foundation that has given more than $1 million in scholarships to Hawai'i high school seniors has filed court papers that could force the sale of Hawaiian Host Inc., the candy company that traces its corporate roots here to 1927.

The legal petition was filed by the Mamoru and Aiko Takitani Foundation, but the charity's chairman, radio personality Michael W. Perry, yesterday downplayed the possibility of a public sale of Hawaiian Host, saying that the foundation and Hawaiian Host have reached tentative agreement on a business deal assuring continued local ownership and growth of both the company and the non-profit.

The foundation and Hawaiian Host were founded by Mamoru and Aiko Takitani, a Maui couple who began their candy business in a Wailuku storefront in the 1950s and moved it to Honolulu in 1960 when they bought another kama'aina confectioner, Ellen Dye Candies. Since then, the company has grown into an internationally recognized supplier of candy and other food, with operations in Hawai'i, Japan and California.

The Takitanis, who had no children, placed all the company's stock in a personal trust and established the foundation in 1976 to support charities and educational organizations.

Company earnings and stock dividends, if any, were to be used to support the Takitanis while they were alive and then flow to the foundation, according to the legal petition.

Mamoru Takitani died in 1988 and all the Hawaiian Host stock, except for 10,000 voting shares, were then transferred to Aiko Takitani's personal trust. The voting shares remained in the couple's joint trust, which is operated by trustees selected by Hawaiian Host officers and directors.

According to the legal petition, Hawaiian Host gave the foundation $1,577,013 between 1977 and 1991.

"The company made no direct contributions to the foundation subsequent to 1991, although in recent years it has supported and paid all or a portion of the foundation's annual scholarship awards luncheon," the petition said.

In 1993, the foundation began a program of granting college scholarships to graduating seniors in every high school in the state. Most of the awards are worth $1,000 each. Since 1993, the foundation has granted $1.3 million in financial assistance to Hawai'i students attending colleges and universities around the country.

Aiko Takitani died in June 2006, and under the terms of her trust, the shares of nonvoting Hawaiian Host stock that she held were supposed to be transferred to the foundation.

They were appraised at just over $5 million — a figure discounted by more than 50 percent of their real value because they are nonvoting shares in a closely held corporation and represent a minority interest in the company, the legal petition said.

Trustees of the Aiko Takitani trust then began working on the deal in which Hawaiian Host would acquire the nonvoting shares at the appraised price.

But last year, businessman Wallace Kazama offered to buy all the shares in the company for "a price in excess of $25 million," the foundation said in the legal petition.

The holder of the 10,000 voting shares, trustees of the Mamoru and Aiko Takitani trust, rejected the offer, saying such a sale was "not consistent with the interests and objectives" of the trust, the petition said.

The foundation's petition asks the Probate Court to rule on what should be done.

"It is in the best interests of the foundation and its scholarship program that there be a joint sale of 100 percent of the company's issued and outstanding shares," the petition said.

And the foundation said the Mamoru and Aiko Takitani trust, which still controls Hawaiian Host through its retention of the voting shares of stock, should be terminated because it no longer serves a valid purpose.

"The trust does not provide for the support and maintenance of Aiko, who is deceased, and does not make contributions to the foundation," the petition said.

All the trust really does is "assure the incumbent (Hawaiian Host) management of perpetual control of the company," the foundation said.

The trustees elect the directors of Hawaiian Host and the Hawaiian Host directors decide who the trustees are, the foundation argued, calling it "a circular control arrangement" that is accountable to no one.

Maui attorney Anthony Takitani, nephew of Mamoru and Aiko Takitani, is now chairman of the board of Hawaiian Host.

He said by telephone yesterday that he hasn't seen the foundation's petition yet, but had been warned by Perry that it was going to be filed.

"I hate to go through this process, but we need some kind of clarification from the court on how to proceed," he said.

He called Hawaiian Host "a wonderful company with the best group of managers I've ever worked with."

Perry said that other outside buyers have expressed interest in acquiring Hawaiian Host but there are questions about the financial and management qualifications of those firms.

"It would probably be a terrible time to sell because the company is growing," he said.

"There are a lot of employees and it's a very viable local company with a huge, loyal following," he said.

Regardless of how the ownership tangle is unsnarled, Perry said, the foundation will be coming into a lot more money and has great plans for expanding its scholarship program.

"We're already the largest private single source of scholarships in the state," he said. "We gave out $88,000 last year."