So sorry to hear about your friend Lost, but everyone is right, if he's costing you money, and his job performance is getting in the way, there's nothing much that you can do.
The bottom line is that you have to do whats best for the company.
My husband went through a similar situation a year ago, we hired a great friend to work at our shop, and at first everything was great, but then we noticed that work starts at 8am, he'd show at 8:15 carrying a bag of McDonalds and expect to eat it then, he would get 6 or 7 personal calls a day at work, then that stopped and his cell phone would ring and step outside constantly to answer it, drop whatever he was working on, costing us money, he'd call an hour after he was to be at work and call in sick, and then throw a FIT when i docked him a days pay....ummm, you dont work, you dont get paid.
My husband let him go after a few other incidents that cost us money, like crashing our CNC machines, and then thinking it was funny while the machines were down and costing us big money each day they sat idle waiting to be fixed......when he was let go FINALLY, he filed a Workers Compensation claim against us, and the best news is that, we were notified, about 3 weeks ago, that they are throwing out his claim, no proof to support what he said!!
I know that our situations are totally different, but i hope in reading this, it helps you some, in that somtimes friends more then take advantage, when they know or think that nothing will be done.
Good luck.
Oh and we go through a 24 case of beer about once a month~~~