Posted on 01/14/2012 2:24:16 AM PST by Laissez-faire capitalist
... Under Romney's leadership Bain bought majority control of World Wide Grinding Systems in 1993. It put up $8 million of the $75 million purchase price and borrowed $125 million by issuing bonds. Bain immediately sent investors $36 million in dividend checks...
A steel business is capital-intensive and sensitive to economic conditions. That's why it needs to conserve money for the lean years. When the economy did go south, so did GS Technologies. GS Technologies went bankrupt in 2001, the plant closed and 750 workers lost their jobs.
Bain skipped out on a previous agreement to provide severance pay and health benefits coverage if that happened. The workers saw their pensions slashed by up to $400/month. But Bain walked away from the smoking ruins $12 million richer, not including $4.5 million in consulting fees.
And it had tapped government as well. The company had extracted $3 million in tax savings from Kansas City... The Federal Pension Benefits Guarantee Corp bailed out the company's underfunded pension plan to the tune of $44 million [taxpayer-funded]
...
(Excerpt) Read more at sunjournal.com ...
All the idiots on this thread defending Bain Capital as a “capitalist”, might as well be shilling for Solyndra, too.
All the idiots on this thread defending Bain Capital as “capitalist”, might as well be shilling for Solyndra, too.
“These are no more attacks on capitalism that attacks on abortion are attacks on the practice of medicine.”
Megabump. Bain’s tactics were not capitalistic.
Please, don’t bring facts into the discussion.
I’m past the stage about arguing if the ad is fair or not. Newt took big hits on ads that were plainly false.
What is important to me, is that nationally Romeny will be taking a hit on this, and also locally. Maybe the big rollers down in Florida might not buy into it totally, but just the same the ad is working and it’s getting Newt back in the game....
That’s the goal, to defeat Romney then Obama.
Gingrich screwed the pooch on this one (still thinking about voting for him), just admit it and move on. You really don’t know the difference between the Government using tax dollars to support a selective green industries with no possible chance of success and venture capital?
When investors profit as a result of tax dollars or unpaid debt, it is not free-enterprise. It is manipulation of the system, which results in the collapse of the system. No way should investors receive a dime of money until creditors are paid, nor should they receive money if tax dollars are used to pay creditors (pensions). Under this system of ‘capitalism’ losses are unfairly transferred to some, while others profit. To be FREE-enterprise, all must fairly incur losses and all must fairly receive gains. Again, fair does not mean ‘equal’
What I don't understand is why these companies get their tax abatement's so everyone else gets to pay for the roads to get there goods to market, always get paid first when things go south.
Why aren't the pensions covered first so the rest of us aren't stuck with the bill.
I would guess the rest of us aren't giving enough to the ones who make the rules. Nothing more than corporate welfare
They provided the capital for Staples, Sports Authority, Bright Horizons, Domino’s Pizza, Dade International, Steel Dynamics (Oh no! They saved the third largest steel manufacturer), Gartner Inc. (over 100,000 jobs total) All these companies are much stronger (survived) because of Bain.
Launched as a start-up at a time when many American steel mills were foundering, Steel Dynamics is the fifth-largest producer of carbon steel products in the country, generating $6.3 billion in revenue in 2010.Here's a video about this for those too lazy to read.
Government support was a key ingredient to getting it off the ground.
When local officials in DeKalb County learned that three veteran steel mill executives were starting the company in 1993 and looking for a home for their new mini-mill, they pulled out all the stops. "These people don't just drive by and choose accidentally to be your neighbor," said Jack Bercaw, a Butler businessman who was co-chairman of the recruitment drive.
The county promised $23.4 million in property tax abatements and tax increment finance bonds, as well as a new income tax to generate economic development funds. The latter was required by the state, which shelled out another $13.6 million in tax credits, energy grants, workforce training and funds for roads.
A new quarter-percent tax on DeKalb County residents financed infrastructure improvements such as roads and railroad exchanges that benefited Steel Dynamics, Bercaw said. The county also created a new redevelopment commission and redevelopment authority to oversee the activity.
Steel Dynamics executives did not respond to requests for comment. But in a 1994 interview with a trade journal, then-Chief Executive Keith Busse said the $4.4 million the company initially received in state tax credits, in particular, helped persuade Steel Dynamics to locate in Indiana. Busse told a business panel that same year, however, that he was opposed to the new income tax levied by DeKalb County, according to the Fort Wayne Journal Gazette.
David Stickler, an investor and advisor specializing in the steel industry who engineered the original financing package that launched Steel Dynamics, said the $37 million in grants and subsidies was not only a financial boost, but also helped persuade larger lenders to sign on. "What I've found is that the senior lending banks, especially lenders from overseas, take great comfort in the fact that the local and state government entities are showing a willingness to partner on the project," Stickler said.
Exactly. Low life rape and burn business practices are not traditional US business practice or at least it was not condoned until the leftists started their reign of progressive terror. But the left would love for everyone to paint a disgusting picture of the entire business community and the huge part of the Republican party that makes up business.
The Romneys are old Detroit leftists and they left Detroit in ruins, Mitt proceeded to Massachusetts and enacted Romneycare on the masses. Romney is a parasite on the taxpayers and treats average Americans as suckers, not customers or employees and loves nanny state mandates...that is what we call a limousine liberal around here..not a conservative.
Yes Virginia, there are rotten apples in the barrel....
This is NOT capitalism folks, this is sleaze and just barely legal. The people who do this are reprehensable. They want to do that in private business, it's up to them, but I do NOT want one of them to be president of this country.
There is no thinking person in America that thinks Union Pension plans are reasonable and fairly negotiated. Union pension plans are bankrupting whole states as well as companies. Most of the pension plans are forced on companies because they must have unions under state / federal laws and if the companies do not agree to a business killing plan a strike will bankrupt their company immediately. They negotiate outlandish and unsustainable pensions with a gun held to their heads.
Attacks on capitalism? YOU think this is capitalism?
Sounds like these are on the venture capital side of Bain -- about which there has been no criticism. You list only one that sounds clearly like a private equity turnaround.
Sort of unrelated question: it sounds in a number of accounts as if Bain took over, in whole or in part, a company and then hired or got itself as a consultant. I guess it's perfectly legal (whether it should be or not is another question), but it does seem to guarantee that, whether the company succeeds or fails, Bain will come out on top.
So you are telling me that this wasn’t just the practice under Romney? You are telling me this is the standard practice of Bain?
I agree. Some folks here are so obsessed with attacking Romney they’d knock down their own momma to spit on Romney.
Clearly, many of them have no idea what venture capitalists do or why they are beneficial in a free enterprise system. Apparently, they favor some type of REGULATIONS to restrict buyouts or outside capital, the loss of jobs resulting from scrapping or relocating unprofitable parts of a business, or the complete scrapping or relocating of a business & its assets, BY ITS OWNERS.
Apparently, attacking Romney trumps even private property.
And you have no idea what venture capital is. Hahaha.
“Mitt Romney is a “job cremator””
“Mitt Romney has claimed that while at Bain Capital and Bain & Co. between 1984 and 1999 he helped create 100,000 net new jobs yet in his 1994 attempt to unseat Ted Kennedy he claimed 10,000 net new jobs. Since Romney retired from Bain in 1999, it’s plausible that the other 90,000 happened between 1994 and 1999, though it’s highly unlikely. It appears Romney is adding up all the jobs “now” at the few companies that later thrived.
National Review, a leading conservative publication, has claimed that Mitt Romney’s firm “never asked for a bailout” but there is abundant evidence that isn’t true. In October 1993, Bain Capital became majority shareholder of a steel company called Worldwide Grinding Systems, later renamed GS Technologies. Eight years later the mill was padlocked and 750 people lost their jobs. Workers were denied the severance pay and health insurance they were promised, and their pension benefits were cut by as much as $400 a month.
The federal Pension Benefits Guarantee Corp., which insures company retirement plans, had to pony up $44 million to bail out the company’s underfunded pension plan. Nevertheless, Bain profited on the deal, receiving $12 million on its $8 million initial investment and at least $4.5 million in consulting fees. In all, Bain Capital more than doubled its investment.
Bain made its profit after taking control of the company by piling on more and more debt. The amount totaled $378 million by 1995. The new company also issued $125 million in bonds. Bain put inexperienced managers in place and spurned a generous buyout offer from a competitor. All these moves guaranteed that the company would fail.
Four of the 10 companies that made Bain the most money under Romney went bankrupt. The Wall Street Journal looked at 77 businesses Bain invested in under Romney’s leadership and found that 22% went bankrupt or closed their doors within eight years. Romney generated fantastic returns for himself and investors, with $2.5 billion in profits. About 70% of that came from just 10 deals and four of those companies wound up going bankrupt. The buyout firm delivered an average annual return on investment of 88 percent between its founding in 1984 and when Romney left in 1999.”
Sounds like Romney can use debt and bankruptcy as well as O’Bummer!
No “humanity clause” can suspend economic reality. In fact, the exact goal that Marx, Lenin, Stalin, Mao and Pol Pot were trying to achieve was to suspend all laws and principles in order that their societies produced the perfect Socialist Man. The resulting hell on earth was an attempt to effect the ultimate “humanity clause”, a kind of secular salvation of humanity.
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