Private equity pulls this shit all the time.
1. Red Lobster was acquired by private equity Golden Gate from Darden over a decade ago, then later sold controlling stake to Thai Union (I don't know what you would call this company, owns Chicken of the Sea, etc)
2. Golden Gate had Red Lobster sell their buildings and sign long lease contracts at above market rate.
I have seen this happen a lot in business. This is a way to get an injection of capital, but adds a huge expense over time. Further, the restaurant is at the mercy of the landlord due to the existing buildout, etc.
Hospitals did this BS and it is killing those businesses.
So then Thai Union sells their shrimp through Red Lobster as the exclusive seafood supplier, basically robbing Red Lobster to help the "parent" company.
As a result, Red Lobster adds a shit load of debt at high interest, now it can't pay that debt payments, now its bankrupt, people are fired, etc.
This is the kind of stuff the Mob used to be accused of. But in all honesty, it is incredibly common in Private Equity. See what Apollo does all the time.
1. Red Lobster was acquired by private equity Golden Gate from Darden over a decade ago, then later sold controlling stake to Thai Union (I don't know what you would call this company, owns Chicken of the Sea, etc)
2. Golden Gate had Red Lobster sell their buildings and sign long lease contracts at above market rate.
I have seen this happen a lot in business. This is a way to get an injection of capital, but adds a huge expense over time. Further, the restaurant is at the mercy of the landlord due to the existing buildout, etc.
Hospitals did this BS and it is killing those businesses.
So then Thai Union sells their shrimp through Red Lobster as the exclusive seafood supplier, basically robbing Red Lobster to help the "parent" company.
As a result, Red Lobster adds a shit load of debt at high interest, now it can't pay that debt payments, now its bankrupt, people are fired, etc.
This is the kind of stuff the Mob used to be accused of. But in all honesty, it is incredibly common in Private Equity. See what Apollo does all the time.
