Deal Provides Food For Thought

Former TLC Beatrice president goes joint ventureroute to purchase manufacturing company

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.