Private Equity Can Still Get Rich From A Struggling Supermarket
by Eliza Ronalds-Hannon, Bloomberg
Posted: 2017-11-15 15:29:06 EST

Shed no tears for Lone Star Funds, the 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.

To read the rest of the story, please go to: Bloomberg

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