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Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Stone"

finebead

finebead

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Seems Romney was not creating jobs, this is American industry at its worst.

Take a typical Bain transaction involving an Indiana-based company called American Pad and Paper. Bain bought Ampad in 1992 for just $5 million, financing the rest of the deal with borrowed cash. Within three years, Ampad was paying $60 million in annual debt payments, plus an additional $7 million in management fees. A year later, Bain led Ampad to go public, cashed out about $50 million in stock for itself and its investors, charged the firm $2 million for arranging the IPO and pocketed another $5 million in "management" fees. Ampad wound up going bankrupt, and hundreds of workers lost their jobs, but Bain and Romney weren't crying: They'd made more than $100 million on a $5 million investment.
Click to expand...

Read more: Greed and Debt: The True Story of Mitt Romney and Bain Capital | Politics News | Rolling Stone
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

When Ampad went public, who bought the stock?
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

Clearly I must be missing something.

"Since its inception in 1992, the new company has seen net sales grow at nearly a 53 percent compound annual rate through 1996, increasing from $8.8 million in 1992 to $200.5 million in 1996."

Read more: American Pad & Paper Company: Information from Answers.com

Sounds like a good run.......up and until everyone starting taking notes on those darn cheap laptops. How is this Bain Capital's fault?
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

Okay. Tell me about Staples. Dominoes. AMC. Brookstone. Burger King. Clear Channel. Guitar Center. Sports Authority. Toys R Us. The Weather Channel.

If we're going to discuss the "true" story of Bain Capital then let's be truthful, shall we?
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

Samhain said:
Clearly I must be missing something.

"Since its inception in 1992, the new company has seen net sales grow at nearly a 53 percent compound annual rate through 1996, increasing from $8.8 million in 1992 to $200.5 million in 1996."

Read more: American Pad & Paper Company: Information from Answers.com

Sounds like a good run.......up and until everyone starting taking notes on those darn cheap laptops. How is this Bain Capital's fault?
Click to expand...

Ampad was paying $60 million in annual debt payments, plus an additional $7 million in management fees to BAIN.

This was debt added by Romney's firm. Let me break it down... Romney buys up enough stock to seize control of company using borrowed funds, then saddles the company with that debt, ie, little risk to Romney aside from his small cash down payment, $5million, or 12%. Then they sell off assets, pay out cash dividends to themselves, and leave a debt ridden shell of a company. Then they take company public, and leave the suckers holding the debt, while they skate away with more cash. Eventually, the company which had been VERY viable before Bain, ends up in bankruptcy. Oh, and Bain charged the company $9 million for this "service".

If you borrowed money and then walked away with the cash, they would throw you in jail... but on Wall Street, it's just a day at the office.
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

tessaesque said:
Okay. Tell me about Staples. Dominoes. AMC. Brookstone. Burger King. Clear Channel. Guitar Center. Sports Authority. Toys R Us. The Weather Channel.

If we're going to discuss the "true" story of Bain Capital then let's be truthful, shall we?
Click to expand...

Perhaps you should try READING the article?

In Romney's version of the tale, Bain Capital – which evolved into what is today known as a private equity firm – specialized in turning around moribund companies (Romney even wrote a book called Turnaround that complements his other nauseatingly self-complimentary book, No Apology) and helped create the Staples office-supply chain. On the campaign trail, Romney relentlessly trades on his own self-perpetuated reputation as a kind of altruistic rescuer of failing enterprises, never missing an opportunity to use the word "help" or "helped" in his description of what he and Bain did for companies. He might, for instance, describe himself as having been "deeply involved in helping other businesses" or say he "helped create tens of thousands of jobs."

The reality is that toward the middle of his career at Bain, Romney made a fateful strategic decision: He moved away from creating companies like Staples through venture capital schemes, and toward a business model that involved borrowing huge sums of money to take over existing firms, then extracting value from them by force. He decided, as he later put it, that "there's a lot greater risk in a startup than there is in acquiring an existing company." In the Eighties, when Romney made this move, this form of financial piracy became known as a leveraged buyout, and it achieved iconic status thanks to Gordon Gekko in Wall Street. Gekko's business strategy was essentially identical to the Romney–Bain model, only Gekko called himself a "liberator" of companies instead of a "helper."

Read more: Greed and Debt: The True Story of Mitt Romney and Bain Capital | Politics News | Rolling Stone
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

avusbluem5 said:
Ampad was paying $60 million in annual debt payments, plus an additional $7 million in management fees to BAIN.

This was debt added by Romney's firm. Let me break it down... Romney buys up enough stock to seize control of company using borrowed funds, then saddles the company with that debt, ie, little risk to Romney aside from his small cash down payment, $5million, or 12%. Then they sell off assets, pay out cash dividends to themselves, and leave a debt ridden shell of a company. Then they take company public, and leave the suckers holding the debt, while they skate away with more cash. Eventually, the company which had been VERY viable before Bain, ends up in bankruptcy. Oh, and Bain charged the company $9 million for this "service".

If you borrowed money and then walked away with the cash, they would throw you in jail... but on Wall Street, it's just a day at the office.
Click to expand...

So Bain had nothing to do with increasing the companies revenue stream by 25 times in 4 years? And if they were paying 67 million a year in expenditures related to management and debt service, why would anyone even buy the stock of the company when it went public? Your story isn't really adding up.

Also, if they were such a "very reliable" company before Bain came in, then why did Mead sell them in the first place?

And why, do think, would a notepad paper company, need to file for reorganization in 1999?
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

avusbluem5 said:
Ampad was paying $60 million in annual debt payments, plus an additional $7 million in management fees to BAIN.

This was debt added by Romney's firm. Let me break it down... Romney buys up enough stock to seize control of company using borrowed funds, then saddles the company with that debt, ie, little risk to Romney aside from his small cash down payment, $5million, or 12%. Then they sell off assets, pay out cash dividends to themselves, and leave a debt ridden shell of a company. Then they take company public, and leave the suckers holding the debt, while they skate away with more cash. Eventually, the company which had been VERY viable before Bain, ends up in bankruptcy. Oh, and Bain charged the company $9 million for this "service".

If you borrowed money and then walked away with the cash, they would throw you in jail... but on Wall Street, it's just a day at the office.
Click to expand...

Upon its formation, American Pad & Paper consolidated its 13 manufacturing and distribution facilities into six in 21 locations in the United States. It maintained more than 3.7 million square feet of production and warehouse facilities in California, Colorado, Georgia, Illinois, Massachusetts, Mississippi, New Jersey, New York, Ohio, Pennsylvania, Tennessee, Texas, Washington, and Wisconsin. This network of strategically located manufacturing and distribution centers provided the company with the means for rapid and efficient order fulfillment and advanced EDI capabilities for executing automated transactions.
Click to expand...

Wait. Isn't that improvement? ^^^^^

These paper purchasing and distribution advantages--in addition to modern, efficient manufacturing technology and a high-quality work force--allowed American Pad & Paper to achieve low-cost operations. From 1992 to 1996, for example, the company's fixed marketing costs decreased from 7.4 percent to 5 percent of its net sales. Similarly, American Pad & Paper's selling, general, and administrative expenses fell from 10 percent to 8.2 percent of net sales during the same time period.
Click to expand...

Oh look, more improvement ^^^^

In July 1994, American Pad & Paper acquired SCM, a hanging folder and writing products company. Though this acquisition brought increased potential to the company, it also brought some strife. When American Pad & Paper attempted to bring work rules and costs at the newly acquired plant in Indiana in line with market labor agreements, workers there balked. In September, plant employees initiated a strike, resulting in American Pad & Paper's closing of the Indiana plant in February 1995. By the following July, all machinery and equipment moved from the plant to another production facility.
Click to expand...

Oh no! A normal part of the business process didn't go well. And looks like it wasn't a Bain decision that caused the trouble. ^^^

Summary: Please tell me where you're getting the absolute nonsense you're posting, 'cause the facts don't support your asinine argument.
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

avusbluem5 said:
Perhaps you should try READING the article?

In Romney's version of the tale, Bain Capital – which evolved into what is today known as a private equity firm – specialized in turning around moribund companies (Romney even wrote a book called Turnaround that complements his other nauseatingly self-complimentary book, No Apology) and helped create the Staples office-supply chain. On the campaign trail, Romney relentlessly trades on his own self-perpetuated reputation as a kind of altruistic rescuer of failing enterprises, never missing an opportunity to use the word "help" or "helped" in his description of what he and Bain did for companies. He might, for instance, describe himself as having been "deeply involved in helping other businesses" or say he "helped create tens of thousands of jobs."

The reality is that toward the middle of his career at Bain, Romney made a fateful strategic decision: He moved away from creating companies like Staples through venture capital schemes, and toward a business model that involved borrowing huge sums of money to take over existing firms, then extracting value from them by force. He decided, as he later put it, that "there's a lot greater risk in a startup than there is in acquiring an existing company." In the Eighties, when Romney made this move, this form of financial piracy became known as a leveraged buyout, and it achieved iconic status thanks to Gordon Gekko in Wall Street. Gekko's business strategy was essentially identical to the Romney–Bain model, only Gekko called himself a "liberator" of companies instead of a "helper."

Read more: Greed and Debt: The True Story of Mitt Romney and Bain Capital | Politics News | Rolling Stone
Click to expand...

None of that detracts from my point. And what your post implies is that none of the advancements brought about by Bain Capital matter. The only "truth", based on what you seem to be saying, is that Bain is an asshole company.

If you don't want to address facts and truths that's fine. But thread titles that discuss "truth" and contain OPs with very little actual truth...well that's just sad.
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

Samhain said:
So Bain had nothing to do with increasing the companies revenue stream by 25 times in 4 years? And if they were paying 67 million a year in expenditures related to management and debt service, why would anyone even buy the stock of the company when it went public? Your story isn't really adding up.

Also, if they were such a "very reliable" company before Bain came in, then why did Mead sell them in the first place?

And why, do think, would a notepad paper company, need to file for reorganization in 1999?
Click to expand...
You are missing something, they raised the revenue by acquiring companies, and they increased Ampad's DEBT to a level that they could not pay the interest with cash flow from the acquisitions. That's how they killed Ampad, but not until after they got $100 million out after they put in $5 million. Bain wins, everyone else loses, Ampad bankrupted. Class action suit filed against Bain for misleading shareholders in the IPO statements.

In 1992, Bain Capital bought American Pad & Paper by financing 87 percent of the purchase price. In the next three years, Ampad borrowed to make acquisitions, repay existing debt and pay Bain Capital and its investors $60 million in dividends.

As a result, the company’s debt swelled from $11 million in 1993 to $444 million by 1995. The $14 million in annual interest expense on this debt dwarfed the company’s $4.7 million operating cash flow. The proceeds of an initial public offering in July 1996 were used to pay Bain Capital $48 million for part of its stake and to reduce the company’s debt to $270 million.

From 1993 to 1999, Bain Capital charged Ampad about $18 million in various fees. By 1999, the company’s debt was back up to $400 million. Unable to pay the interest costs and drained of cash paid to Bain Capital in fees and dividends, Ampad filed for bankruptcy the following year. Senior secured lenders got less than 50 cents on the dollar, unsecured lenders received two- tenths of a cent on the dollar, and several hundred jobs were lost. Bain Capital had reaped capital gains of $107 million on its $5.1 million investment.
Click to expand...
Romney
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

finebead said:
You are missing something, they raised the revenue by acquiring companies, and they increased Ampad's DEBT to a level that they could not pay the interest with cash flow from the acquisitions. That's how they killed Ampad, but not until after they got $100 million out after they put in $5 million. Bain wins, everyone else loses, Ampad bankrupted. Class action suit filed against Bain for misleading shareholders in the IPO statements.


Romney
Click to expand...


From factcheck.org:

The Mead Corp. was struggling when it decided to sell Ampad, its commercial office-products business, to Bain in 1992. On July 2, 1992, the Associated Press reported that Mead would eliminate 1,000 jobs over two to three years to save $60 million and that it would sell Ampad to Bain for an undisclosed sum. In its 1996 SEC filing, Ampad reported that sales had grown at an annual rate of 34 percent every year since 1992 under Bain control. In 1995, the company’s net sales were $617.2 million — up from $108 million in 1991.
Click to expand...

So we're just ignoring facts that don't support stupid claims? Is that how this game works?
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

Samhain said:
So Bain had nothing to do with increasing the companies revenue stream by 25 times in 4 years? And if they were paying 67 million a year in expenditures related to management and debt service, why would anyone even buy the stock of the company when it went public? Your story isn't really adding up.

Also, if they were such a "very reliable" company before Bain came in, then why did Mead sell them in the first place?

And why, do think, would a notepad paper company, need to file for reorganization in 1999?
Click to expand...

If you had read your own article, you would know, all that growth was from the acquisition of additional companies, more leveraged buyouts. Bain did not improve operations at all. They would buy it (IPO stock), because on the surface going from $8 million to $200 million in revenue gives the appearance of solid growth, but it was an illusion.


Why did they need to file bankruptcy? Cuz they could not keep up with the debt service Bain created, and left them with, after sucking out $100 million in cash.
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

finebead said:
You are missing something, they raised the revenue by acquiring companies, and they increased Ampad's DEBT to a level that they could not pay the interest with cash flow from the acquisitions. That's how they killed Ampad, but not until after they got $100 million out after they put in $5 million. Bain wins, everyone else loses, Ampad bankrupted. Class action suit filed against Bain for misleading shareholders in the IPO statements.
Click to expand...

You don't know how much Bain put into the company. The total amount was undisclosed, and the only known factor was 5 million in cash and the rest was "financed with borrowed cash", which would be on Bain's books. To claim that Bain made 100 million on a 5 million investment is quite an exaggeration.

Additionally, Bain's control with the company ended with its IPO. So why did Ampad run up 130 million in additional debt for the 4 years after Bain relinquished control? Certainly wasn't from debt servicing.

Oh wait, maybe you should actually read their Bankruptcy filing

Since the Company's last acquisition in 1997 revenues have declined, margins have eroded, competitive pressures in the marketplace kept the Company from fully recouping increasing paper prices, and inventory levels were, for a period of time, built to an excessive level. Through the rationalization plan initiated in late 1998, three manufacturing plants were closed, inventory levels were reduced and production was better coordinated with sales. Although competitive pressures continued, price increases were initiated which, while not fully recouping prices movements in raw materials, caused amounts absorbed by the Company to be reduced
Click to expand...

So after Bain left, they kept acquiring other companies while revenues declined. My goodness, seems like the company management after the IPO screwed the pooch, and with the typical response, someone blames the predecessor. Sounds quite familiar with the current Administration. Its always someone else's fault.
 
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Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

Yes, that is how this works. Evidently the left can throw out whatever they like regardless of the level of truth and make it fact thru repetition. Kind of like Schultz claiming that Romney wrote the Republican stance on abortion. When she got called on it (in what Rush called a "random act of journalism") she just kept repeating the lie and stated that it didn't matter if it was true or not. Is this the same OP who is trying to convince us that we need to vote for Obama because Romney is going to take away all our guns and Obama hasn't yet or is that another drive by idiot?
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

It's the economy. It's the well being of the country. It's the future. It's the next generations.

To quote Condi Rice: "You can't lead from behind."
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

Samhain said:
You don't know how much Bain put into the company. The total amount was undisclosed, and the only known factor was 5 million in cash and the rest was "financed with borrowed cash", which would be on Bain's books. To claim that Bain made 100 million on a 5 million investment is quite an exaggeration.

Additionally, Bain's control with the company ended with its IPO. So why did Ampad run up 130 million in additional debt for the 4 years after Bain relinquished control? Certainly wasn't from debt servicing.
Click to expand...

You are naive in the ways of Wall Street... I suspect the additional $130 million was added by Bain to aquire the other companies where the "growth" in revenue actually came from.

"We were highly leveraged as a company," says Russell Gard, the guy who Bain brought in to run the company. "Like, squeaky leveraged. We were tight."

"By now, Ampad had pads and folders to put them in. Next on the list: an envelope company. Bain went back to the bank and borrowed a couple hundred million dollars. Most of the money went to buy the envelope company, but about $70 million went to pay Bain and its investors." Note: Paying yourself with borrowed money?

"Asian companies came on the scene with cheaper products. The price of pulp jumped. Ampad's revenues started to fall. And they have to keep paying interest on all that debt."

"In 2000 — four years after the IPO— Ampad declared bankruptcy. Stockholders were wiped out (including Bain, which still owned about a third of the company). Lenders got back a fraction of what they were owed."

Note: Remember, bain bought most of it's shares with debt they transferred to Ampad. They only risked $5million of their own money.

How Mitt Romney's Firm Tried
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

tech30528 said:
Yes, that is how this works. Evidently the left can throw out whatever they like regardless of the level of truth and make it fact thru repetition. Kind of like Schultz claiming that Romney wrote the Republican stance on abortion. When she got called on it (in what Rush called a "random act of journalism") she just kept repeating the lie and stated that it didn't matter if it was true or not. Is this the same OP who is trying to convince us that we need to vote for Obama because Romney is going to take away all our guns and Obama hasn't yet or is that another drive by idiot?
Click to expand...

Haha... that'd be me. I'm please to be making an impression on this board... just found it a few days ago. Thanks for the PR.
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

avusbluem5 said:
You are naive in the ways of Wall Street... I suspect the additional $130 million was added by Bain to aquire the other companies where the "growth" in revenue actually came from.
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That's comical. After Bain no longer controls the company, Bain is still responsible for the operations that added 130 million in debt to buy companies.

That doesn't even pass the smell test. Read the SEC bankruptcy filling.
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

Samhain said:
That's comical. After Bain no longer controls the company, Bain is still responsible for the operations that added 130 million in debt to buy companies.

That doesn't even pass the smell test. Read the SEC bankruptcy filling.
Click to expand...

You have trouble reading? Bain held 30% of the stock, probably a controlling interest, all the way into bankruptcy in 2000.
 
Re: Greed and Debt: The True Story of Mitt Romney and Bain Capital from "Rolling Ston

Holy crap, Taibbi just wrote one of the most devastating takedowns of a public figure I've ever read and some of you wheenies are nitpicking over the destruction of Ampad? Read the article, and if you can still vote for this vulture without losing your lunch, there is something wrong with you.

Do y'all realize what Romney would do if he ACTUALLY brought his Bain experience to bear on the US economy? His first move would be put as little of his own capital at risk as humanly possible (done). Then he would seek billionaire investors of questionable repute to finance his takeover (done). Then he would borrow immense sums of money on the target's credit card, leaving the target on the hook to pay the the interest, while extracting huge and morally unjustifiable "fees" and "dividends" for himself, while producing merely average returns for his invetors. Then he would take his carpet bag full of cash and blow town as the target crumbled under the weight of its newly-acquired debt. That is the Romney/Bain way.
 
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