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TLC Beatrice to Liquidate

By Peter Alan Harper

NEW YORK (AP) -- TLC Beatrice International Holdings Inc., once the nation's largest black-owned company, is being liquidated as part of an evolving strategy begun following the death of its founder Reginald Lewis six years ago.

The liquidation plan, announced Thursday along with the sale of its Spanish soft drink division, is expected to return a healthy profit for investors and the Lewis family, the company said.

That's in line with the long-term goal to generate shareholder wealth that Lewis set when he bought the company in 1987 in a $985 million leveraged buyout, said his widow Loida Nicolas Lewis -- now the company's chairman.

"Mr. Lewis built the rocket ship," she said. "He and I knew where he wanted to take it. That's basically what happened."

Lewis died of brain cancer in 1993 at age 50. Mrs. Lewis said that, while she had not originally intended to liquidate the company, a detailed examination of its growth potential convinced management that was the best course.

Throughout its short life, TLC Beatrice has been hailed as a success story.

In 1987, when TLC Beatrice reported revenue of $1.8 billion, it became the first black-owned company to have more than $1 billion in annual sales. The company then began its reign at the top of Black Enterprise magazine's annual list of the country's 100 biggest black-owned companies.

TLC Beatrice, which was closely held by the Lewis family and associates, hit its peak in 1996 when it had $2.23 billion in revenue.

Other companies weren't even close. In 1996, for example, Johnson Publishing Co. of Chicago ranked second on the BE 100 list with $325.7 million in sales. Philadelphia Coca-Cola Bottling Co. ranked third with $325 million in sales.

"This is a model that we will continue to follow," said Earl Graves, the publisher of Black Enterprise magazine. Graves employed Lewis, an attorney, to represent him when he bought radio stations in the early 1980s.

Lewis epitomized a break from traditional investment patterns among blacks in which entrepreneurs might own one or two companies for life.

"As black entrepreneurs acquire new businesses and develop strategic alliances, they will in many instances, as evidenced by Reginald Lewis, sell their companies, realize capital gains and use the process to capitalize on new business opportunities," Graves said.

Following Lewis' death, his company went through a period of management and shareholder turmoil, with Mrs. Lewis finally taking over a year later.

"When I assumed office, I did not know what course to take," Mrs. Lewis said in an interview. She considered several strategies, including an initial public offering and further acquisitions in order to enhance shareholder wealth.

"We knew the end goal, but going there is not always evident," she said. "Initially, there was no thought of selling all of the company."
The TLC Beatrice saga began in working class Baltimore where Lewis was a standout athlete whose bright future ended in a knee injury. He was invited to enter Harvard Law School without making an application after he impressed school officials.

Lewis wound up on Wall Street engaged in mergers and acquisitions.
In 1984, he caught his first big wave. He bought the McCall Pattern Co., a supplier of sewing instructions, retooled it and sold it in 1987 at a 90-to-1 return on investment.

While the McCall sale impressed many on Wall Street, it was his move that December that took him over the top.

In a leveraged buyout partly funded by junk bond financier Michael Milken, Lewis used his TLC Group to take over a part of Beatrice International. Lewis sold off some of the food company's subsidiaries and grew what was left into TLC Beatrice, a food processing and distribution company based in the United States but whose operations were mainly in Europe.

In 1992, Forbes magazine listed Lewis among the 400 richest Americans with a net worth estimated at $400 million and TLC Beatrice as the 74th largest privately- held company in the United States.

Before his death, Lewis set a plan in motion to install a brother, Jean Fugett Jr., as the new chairman. Fugett was ousted a year later and Mrs. Lewis took over.

At the time, the company was embroiled in a fight with Lewis' business partners at Milken's Drexel Burnham Lambert, who claimed Lewis was overcompensated and demanded tens of millions from his estate.

Mrs. Lewis smoothed the waters, settling a lawsuit with the former Drexel employees.

She started selling subsidiaries. Following the largest sales over the past two years, the company dropped to the fourth greatest revenue generator on the Black Enterprise listings. In 1998, the company had revenues of $322 million.

A few parts of the company remain to be sold. Those sales are expected by summer.

After that?

Mrs. Lewis won't talk about her plans although she said she wants to remain in business.

c Copyright 1999 The Associated Press
Posted 6-1-99
All rights reserved.

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