Dallas firm pays itself $800 million as struggling grocery chain nears default

[TexasTowelie]

Shed no tears for Lone Star Funds, the Dallas private equity firm that invested about $150 million in a buyout of the Bi-Lo grocery chain in 2005.

By some accounts, Bi-Lo is close to default, putting in jeopardy about $1 billion of debt and 50,000 jobs at Winn-Dixie, Harveys, Fresco y Mas and its namesake stores. But Lone Star has already come out ahead, even after committing more capital. The firm has paid itself at least $800 million since 2012, regulatory filings show, and collected still more in management fees.

Led by chairman and founder John Grayken, Lone Star has followed the private equity business model: Borrow money to buy a company and load it with debt. Use the debt to pay yourself and -- with interest rates at rock bottom -- issue more debt and pay yourself more.

From the start of 2013, private equity owners have taken $100 billion in debt-funded payouts, according to data compiled by LCD, a unit of S&P Global Market Intelligence. During the same period, private-equity-owned companies defaulted on $49.2 billion worth of loans, the data show.

Read more: https://www.dallasnews.com/business/food-industry/2017/11/10/dallas-firm-pays-800-million-struggling-grocery-chain-nears-default

[Angry Dragon]

1. Steal, lie, fraud, cheat-----make yourself rich

[underpants]

2. My first actual real job was bagging groceries at a Winn-Dixie

These guys are following the playbook to a t.

[unc70]

3. The Carl Icahn model

I hope they get him on insider trading while advising Trump.

Lots of others follow this model including Romney.

[Blue_Tires]

7. +1

[Wellstone ruled]

4. We have seen this before.

Hedge Funds buy into Grocery Suppliers and Grocery Wholesalers. Very profitable and fantastic Management only to be loaded with debt and Bankrupt the Company. Sorry to say,been down this road twice,both times by Hedge Funds from Texas.

[gratuitous]

5. Phew!

The stores are going out of business, thousands will lose their jobs, any pension money is probably already gone, but the wealthy vultures got their money, so it's all good. President Trump will probably give John Grayken and his pals a medal or something.

[Ilsa]

6. Stick the banks with the debt, if they go belly-up,

then the taxpayers are stuck with the debt thru the FDIC.