When Dumas M. Simeus left TLC Beatrice in 1992 he was president and Chief Operating Officer of the largest black-owned company in the country, with annual sales of $2.1 billion. So what does he do for an encore? How about purchasing his own food manufacturing company.
With annual sales pegged at more than $100 million, Simeus Foods International, which is based in the Dallas-Fort Worth area, would become the second largest black-owned food maker in the country, behind TLC Beatrice International (No. 1 on the BE INDUSTRIAL/SERVICE 100 list). Simeus went the joint-venture route, teaming with Dallas-based MESBIC Ventures Holding Co. to finance the $55 million purchase of Portion-Trol Foods from Flagstar, the holding company and one of the nation’s largest restaurant companies.
“The deal was financed with a combination of equity and debt,” says Donald R. Lawhorne, MESBIC Ventures Holding Co. president and CEO. “That’s $39 million in permanent long-term debt and the balance is in equity,” he notes. Simeus owns 100% of the stock of the new company.
Simeus wouldn’t discuss its specific terms, but as part of the deal, MESBIC can purchase up to 65% of the stock if the company goes public. Simeus, however, is adamant he won’t pursue that option unless he buys out MESBIC’s option rights. “To fund a deal this size you need private equity, and there’s no better way to do it. You just have to make sure it’s a great marriage between the venture capitalist and the entrepreneur,” he says.
Portion-Trol operates a food processing plant that prepares food products for its primary client, Flagstar, which owns Denny’s, Hardee’s, Quincy’s Family Steakhouse and El Pollo Loco restaurants. Flagstar has now agreed to purchase $500 million worth of food from Simeus over the next five years.