TLC’s Final Act

For a decade this billion-dollar behemoth was among the most successful leveraged buyouts. Its curtain call serves as a model for black wealth creation.

of roughly $115 million. The company used proceeds from the sale to structure a $175 million cash tender offer for its 11.5% senior secured notes. By December 1997, Lewis had paid down all of the company’s corporate debt and TLC had $200 million in its corporate coffers.

The transaction caused TLC’s gross sales to drop from $2.2 billion in 1996 to $1.4 billion in 1997-which still enabled it to hold on to its No. 1 spot. The company then slid to the No. 3 position on the be industrial/service 100 list when gross sales fell to $322 million in 1998. Today, Mel Farr Automotive Group is the nation’s largest black-owned company with $596.6 million in gross sales, while Philadelphia Coca Cola Bottling Co., run by deal maker J. Bruce Llewellyn, became the top company on the 1999 be industrial/service 100 list with $389 million in gross sales.

Initially, Lewis intended to operate the slimmed down version of TLC, which controlled a snack company in Dublin, Ireland; ice cream manufacturers in Spain and the Canary Islands; and beverage operations in the Netherlands, Belgium, France and Thailand. But in April 1998, when she met with her management team and investment bankers, she decided to sell the entire company. “We thought that it was time to let these shareholders out,” says Lewis “Most leveraged buyouts last three to six years. Our LBO was almost 11 years old.”

Lewis considered buying out the existing shareholders, but decided not to engage in such negotiations. At the time TLC completed its sale of the French Food business, it settled a three-year lawsuit with Carlton Investments, the company’s largest minority shareholder group, which was composed of former executives from Drexel Burnham. (The company realized a $15 million gain from the settlement.) Carlton had contested a five-year, $22.1 million compensation package paid to Reginald Lewis prior to his death.

Glover puts the move to sell in succinct terms. “We shared Reginald Lewis’ philosophy of partnerships-‘In together, out together,'” he says.

At first, Loida Lewis sought out a wide array of investors, including African American entrepreneurs (“strategic people in the business whom I consider[ed] friends”), to consume the food company whole. But after some time in negotiations, she found that TLC was more tasty to offshore buyers in slices. She, however, scoffs at the notion that TLC was auctioned because her 26-year-old daughter, Leslie, was not interested in managing the business, as was reported in several business publications. “From the start, we saw the business as a vehicle for wealth creation for Leslie and Christina,” she maintains. “We didn’t start the business for them to eventually take it over. Leslie became involved because we wanted her to see how our business was run.”

By late May, Lewis began the process of selling the remaining pieces after TLC’s board approved a plan of liquidation. First, TLC agreed to sell its 65% stake in its ice cream operations in mainland Spain and the Canary Islands to Iberian Beverage Group, producer of some of Europe’s leading soft

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