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Buyout-Backed Busts: Bi-Lo/Bruno’s Supermarkets

#10. Bi-Lo/Bruno’s Supermarkets

Lone Star Funds purchased the grocery companies in 2004 for $660 million. The firm contributed an undisclosed amount of equity from Lone Star Fund V LP.

What Went Wrong?
After purchasing the two companies from Ahold, Lone Star separated them. Bruno’s, which had already been through the bankruptcy courts back in 2000, went down first. The company cited increased competition, tight credit markets and a decline in consumer spending as its reasons for failure. The firm also struggled with un-resolvable union issues. Lone Star tried to sell Bi-Lo in 2007 but didn’t receive sufficient interest. The company wasn’t able to make payments on a $260 million term loan. Bruno’s filed on February 5, Bi-Lo filed on March 23.

The Aftermath
Lone Star continues to operate Bi-Lo with the help of a $100 million DIP loan from GE Capital. Bruno’s was sold in pieces.