Sunday, January 27, 2008
Portrait of a corporate bust-out crew
Bain Capital, source of Mittens success and wealth and bane of so many companies it bought.
In many cases, such as Staples Inc., the Framingham retailer, and Steel Dynamics Inc., an Indiana steelmaker, the companies expanded and added thousands of jobs. In other cases, such as Ampad and GS Industries, another steelmaker, Bain-controlled companies shuttered plants, slashed hundreds of jobs, and landed in bankruptcy.The mob would have torched the plant for the insurance.
But in almost all cases Bain Capital made money. In fact, the firm earned substantially more from Ampad than Staples. Staples returned about $13 million on a $2 million investment; Ampad yielded more than $100 million on $5 million, according to reports to investors...
...Ampad, too, became squeezed between onerous debt that had financed acquisitions and falling prices for its office-supply products. Its biggest customers - including Staples - used their buying power and access to Asian suppliers to demand lower prices from Ampad.
Romney sat on Staples's board of directors at this time.
Creditors forced Ampad into bankruptcy in early 2000, and hundreds of workers lost jobs during Ampad's decline. Bain Capital and its investors, however, had already taken more than $100 million out of the company, in debt-financed dividends, management fees, and proceeds from selling shares on public stock exchanges.
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