Lone Star Funds
Encyclopedia
Lone Star Funds is a worldwide private equity
firm based in Dallas, Texas
, that specializes in purchasing distressed companies and assets, often well-known consumer brands that have seen better times or gone through financial difficulties due to leveraged buy-outs. It also purchases under-performing and non-performing loan
s from banks; recently, the company has been active in Germany
in purchasing such loans.
Lone Star has affiliate offices in London
, Tokyo
, Dublin, Brussels
, Luxembourg
, and Frankfurt
. Its general partner is a Bermuda
-based entity headquartered in Hamilton
.
John Grayken is the company's founder and chairman.
), which collapsed in 1999 and was then granted 760 billion yen from the Japanese government. However, the profit was transferred to a fund based in Bermuda
via an Irish corporation, allegedly a shell
, which barred the Japanese government from directly collecting taxes.
The company did not report the profit, but the Tokyo Regional Taxation Bureau recognized the case, corrected Lone Star's books by about 14 billion yen for years 2002 and 2003, and adjusted the company's corporate tax by 5 billion yen, including additional tax. However, the company has not yet paid the tax and, because it owns no domestic assets, the government has not yet been able to seize its property.
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
firm based in Dallas, Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
, that specializes in purchasing distressed companies and assets, often well-known consumer brands that have seen better times or gone through financial difficulties due to leveraged buy-outs. It also purchases under-performing and non-performing loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
s from banks; recently, the company has been active in Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
in purchasing such loans.
Lone Star has affiliate offices in London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
, Tokyo
Tokyo
, ; officially , is one of the 47 prefectures of Japan. Tokyo is the capital of Japan, the center of the Greater Tokyo Area, and the largest metropolitan area of Japan. It is the seat of the Japanese government and the Imperial Palace, and the home of the Japanese Imperial Family...
, Dublin, Brussels
Brussels
Brussels , officially the Brussels Region or Brussels-Capital Region , is the capital of Belgium and the de facto capital of the European Union...
, Luxembourg
Luxembourg
Luxembourg , officially the Grand Duchy of Luxembourg , is a landlocked country in western Europe, bordered by Belgium, France, and Germany. It has two principal regions: the Oesling in the North as part of the Ardennes massif, and the Gutland in the south...
, and Frankfurt
Frankfurt
Frankfurt am Main , commonly known simply as Frankfurt, is the largest city in the German state of Hesse and the fifth-largest city in Germany, with a 2010 population of 688,249. The urban area had an estimated population of 2,300,000 in 2010...
. Its general partner is a Bermuda
Bermuda
Bermuda is a British overseas territory in the North Atlantic Ocean. Located off the east coast of the United States, its nearest landmass is Cape Hatteras, North Carolina, about to the west-northwest. It is about south of Halifax, Nova Scotia, Canada, and northeast of Miami, Florida...
-based entity headquartered in Hamilton
Hamilton, Bermuda
Hamilton is the capital of the British Overseas Territory of Bermuda. It is the territory's financial centre and a major port and tourist destination.-Geography:...
.
John Grayken is the company's founder and chairman.
Funds
- Lone Star Fund VII (Q3 2011): $4.63bn
- Lone Star Real Estate Fund II (Q2 2011): $5.5bn
- Lone Star Fund VI (2008): $7.5bn
- Lone Star Real Estate Fund I (2008): $2.4bn
- Lone Star Fund V (2004): $5bn
- Lone Star Fund IV (2002): $4.2bn
- Lone Star Fund III (2000): $2.3bn
- Lone Star Fund II (1999): $1.2bn
- Lone Star Opportunity Fund (1997): $396mn
- Brazos Fund (1995): $250mn
Holdings
- Tokyo Star BankTokyo Star Bankis a Japanese bank established on June 11, 2001 out of the reorganization of then bankrupt Tokyo Sowa Bank by Lone Star Funds....
, acquired 2001 - Korea Exchange BankKorea Exchange BankKorea Exchange Bank is a specialized foreign exchange bank in South Korea. It is headquartered in Seoul, and was established in 1967.Korea Exchange Bank is the fifth largest bank in South Korea measured in assets and the largest foreign exchange bank in South Korea, providing the largest range of...
, acquired 2003 - B-Line, LLC, acquired 2006; Lone Star acquired from the founder and another private equity firm.
- Lone Star Steakhouse, acquired in December 2006.
- BI-LOBI-LO (United States)BI-LO is a supermarket chain headquartered in Mauldin, South Carolina. As of May 2010, BI-LO operates 207 supermarkets in South Carolina, North Carolina, Georgia, and Tennessee. The company employs approximately 17,000 people. Supermarket News ranked BI-LO No...
, acquired in 2004 from Royal Ahold , filed for bankruptcy protection in March 2009. - Shoney's RestaurantsShoney'sShoney’s is a privately held restaurant chain that operates primarily in the Southeast, Midwest and Mid-Atlantic states and is headquartered in Nashville, Tennessee. It is named after Alex Schoenbaum, who was the owner of the original chain of Big Boy restaurants in the southeastern United States...
, acquired in 2002 and sold to a similar investment firm on January 1, 2007 - Sullivan's Steakhouse
- Del Frisco's Steak House
- Texas Land & Cattle Steak House
- Allgemeine Hypothekenbank Rheinboden AG (AHBR) of Frankfurt (Germany) acquired from the GermanGermanyGermany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
trade unionTrade unionA trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
federation in 2005 and since renamed Corealcredit - Solare Hotels and Resorts of Japan. Lone Star purchased the company from the bankrupt Chisun Company in 2002. In November 2007, Lone Star announced they would sell Solare..
- Kukdong Engineering & Construction Co., Ltd., acquired in June 2007.
- STARLease Co., Ltd., acquired in June 2007.
- IKB Deutsche IndustriebankIKB Deutsche IndustriebankIKB Deutsche Industriebank is a bank based in Düsseldorf, Germany.It is specialized in lending to small and medium-sized companies.In August 2007, it had to be bailed out due to bad losses in the subprime market meltdown....
, acquired in September 2008 - Accredited Home Lenders Holding Co., acquired in October 2007. Filed for bankruptcy protection in May 2009.
- Collateralized Debt Obligations from Merrill LynchMerrill LynchMerrill Lynch is the wealth management division of Bank of America. With over 15,000 financial advisors and $2.2 trillion in client assets it is the world's largest brokerage. Formerly known as Merrill Lynch & Co., Inc., prior to 2009 the firm was publicly owned and traded on the New York...
, acquired July 2008, paid 22% of face value for these CDOs, or $6.7 billion for assets with a face value of $30.6 billion. - On July 1, 2008, CIT Group announced that it will be selling its home lending division to Lone Star Funds for $1.5 billion in cash including the assumption of $4.4 billion in debt.
Tokyo Star Bank
Lone Star gained profit by collecting non-performing loans handed over from the former Tokyo Sowa Bank (now Tokyo Star BankTokyo Star Bank
is a Japanese bank established on June 11, 2001 out of the reorganization of then bankrupt Tokyo Sowa Bank by Lone Star Funds....
), which collapsed in 1999 and was then granted 760 billion yen from the Japanese government. However, the profit was transferred to a fund based in Bermuda
Bermuda
Bermuda is a British overseas territory in the North Atlantic Ocean. Located off the east coast of the United States, its nearest landmass is Cape Hatteras, North Carolina, about to the west-northwest. It is about south of Halifax, Nova Scotia, Canada, and northeast of Miami, Florida...
via an Irish corporation, allegedly a shell
Shell (corporation)
A shell corporation is a company which serves as a vehicle for business transactions without itself having any significant assets or operations. Shell corporations are not in themselves illegal and have legitimate business purposes. However, they are a main component of the underground economy,...
, which barred the Japanese government from directly collecting taxes.
The company did not report the profit, but the Tokyo Regional Taxation Bureau recognized the case, corrected Lone Star's books by about 14 billion yen for years 2002 and 2003, and adjusted the company's corporate tax by 5 billion yen, including additional tax. However, the company has not yet paid the tax and, because it owns no domestic assets, the government has not yet been able to seize its property.