LBOS: Let's Bail Out

If the economy goes south, debt-heavy buyouts could go under

Like the giant truck-trailers that carry its name across U.S. highways, Fruehauf Corp. was once an American institution. But to escape a corporate raider, Fruehauf in 1986 went private in a leveraged buyout that sent the company into a skid from which it never recovered. After borrowing $1.5 billion to repurchase its stock from shareholders, the Detroit company frantically sold one division after another to lighten its debt burden. To no avail: when it completes the sale of a subsidiary that makes wheels and brakes later this summer, Fruehauf, which had 1986 revenues of $2.7 billion and ranked among the 150...

Want the full story?

Subscribe Now

Subscribe
Subscribe

Get TIME the way you want it

  • One Week Digital Pass — $4.99
  • Monthly Pay-As-You-Go DIGITAL ACCESS$2.99
  • One Year ALL ACCESSJust $30!   Best Deal!
    Print Magazine + Digital Edition + Subscriber-only Content on TIME.com

Learn more about the benefits of being a TIME subscriber

If you are already a subscriber sign up — registration is free!