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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsMitt Romney's Bain Capital 'earned' $342 million by bankrupting a company and firing 850 Floridians
Mitt Romney's Bain Capital 'earned' $342 million by bankrupting a company and firing 850 Floridians
by Jed Lewison
Via McKay Coppins, you can add The Miami Herald to the list of people and organizations who Mitt Romney says are attacking free enterprise. That's because today's edition takes a look at how Bain Capital "earned" $342 million from investing $30 million in the acquisition of medical technology firm named Dade International. Despite profiting by hundreds of millions of dollars from the deal, Romney's company led Dade to bankruptcy, laying off thousands of workers throughout the countryincluding 850 in Miami alone.
The Herald's story focuses on the impacts of Bain's business practices on Florida, but it's worth going back to this The New York Times article from November. According to The Times, Bain led a group of investors who acquired the company for $450 million in 1994. Bain's share of the price tag: $30 million. Then:
In addition to the $242 million, Bain took $100 million in management fees for running the company. But despite their $342 million payday, Bain led Dade directly into bankruptcy:
Bain ultimately relinquished its ownership claim, but it had already taken $342 million out of company, an 11-fold return on its $30 million investment in less than eight years. Fortunately, the bankruptcy didn't destroy the company, which emerged from bankruptcy and has prospered since Bain gave up its ownership stake. But even though Dade is now a successful company, its success comes despite Bain Capitalnot because of it.
- more -
http://www.dailykos.com/story/2012/01/23/1057689/-Mitt-Romneys-Bain-Capital-earned-
by Jed Lewison
Via McKay Coppins, you can add The Miami Herald to the list of people and organizations who Mitt Romney says are attacking free enterprise. That's because today's edition takes a look at how Bain Capital "earned" $342 million from investing $30 million in the acquisition of medical technology firm named Dade International. Despite profiting by hundreds of millions of dollars from the deal, Romney's company led Dade to bankruptcy, laying off thousands of workers throughout the countryincluding 850 in Miami alone.
The Herald's story focuses on the impacts of Bain's business practices on Florida, but it's worth going back to this The New York Times article from November. According to The Times, Bain led a group of investors who acquired the company for $450 million in 1994. Bain's share of the price tag: $30 million. Then:
By 1998, Mr. Romney and his restless colleagues at Bain began looking for a way to cash out of the firms investment in Dade.
A hefty offer arrived. Kohlberg Kravis Roberts & Company, a rival buyout firm, proposed buying Dade Behring for $1.9 billion, according to documents filed in the bankruptcy case. But Bain executives rejected it, disappointed by the price, the documents indicate.
Bain settled on a common tactic in private equity: In April 1999, it pushed Dade to borrow hundreds of millions of dollars to buy half of Bains shares in the company and half of those of its investment partners.
Bain pocketed the $242 million. Goldman received $121 million. Top Dade executives got $55 million, records show. The total payout to shareholders reached $420 million nearly as much as the purchase price for Dade.
A hefty offer arrived. Kohlberg Kravis Roberts & Company, a rival buyout firm, proposed buying Dade Behring for $1.9 billion, according to documents filed in the bankruptcy case. But Bain executives rejected it, disappointed by the price, the documents indicate.
Bain settled on a common tactic in private equity: In April 1999, it pushed Dade to borrow hundreds of millions of dollars to buy half of Bains shares in the company and half of those of its investment partners.
Bain pocketed the $242 million. Goldman received $121 million. Top Dade executives got $55 million, records show. The total payout to shareholders reached $420 million nearly as much as the purchase price for Dade.
In addition to the $242 million, Bain took $100 million in management fees for running the company. But despite their $342 million payday, Bain led Dade directly into bankruptcy:
The strategy of sharply increasing Dades debt alarmed several executives. Mr. Garrett, the former chief executive of Dade who stood to gain from the transaction, said he had argued unsuccessfully against it.
It was too aggressive, Mr. Garrett said. It was done right up to the limit of what the company could borrow.
With the amount of money that Dade owed to creditors and vendors at nearly $2 billion, some executives worried that the company would have little maneuvering room if its financial situation suddenly deteriorated.
Soon enough, it did. Interest rates rose, increasing Dades debt payments. The value of the euro, then a new currency, slid, reducing Dades European revenue. And a new distribution center had unexpected delays.
Creditors, unsettled by deteriorating finances and high debts, began to pounce. More layoffs followed. And in August of 2002, Dade filed for bankruptcy protection.
It was too aggressive, Mr. Garrett said. It was done right up to the limit of what the company could borrow.
With the amount of money that Dade owed to creditors and vendors at nearly $2 billion, some executives worried that the company would have little maneuvering room if its financial situation suddenly deteriorated.
Soon enough, it did. Interest rates rose, increasing Dades debt payments. The value of the euro, then a new currency, slid, reducing Dades European revenue. And a new distribution center had unexpected delays.
Creditors, unsettled by deteriorating finances and high debts, began to pounce. More layoffs followed. And in August of 2002, Dade filed for bankruptcy protection.
Bain ultimately relinquished its ownership claim, but it had already taken $342 million out of company, an 11-fold return on its $30 million investment in less than eight years. Fortunately, the bankruptcy didn't destroy the company, which emerged from bankruptcy and has prospered since Bain gave up its ownership stake. But even though Dade is now a successful company, its success comes despite Bain Capitalnot because of it.
- more -
http://www.dailykos.com/story/2012/01/23/1057689/-Mitt-Romneys-Bain-Capital-earned-
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Mitt Romney's Bain Capital 'earned' $342 million by bankrupting a company and firing 850 Floridians (Original Post)
ProSense
Jan 2012
OP
JDPriestly
(57,936 posts)1. Romney likes to borrow money.
Oddly enough, he is not fiscally conservative enough for me.
Romney is a no way as far as I am concerned. A big spendthrift and an even bigger borrower.
Initech
(100,043 posts)2. Colbert is right - Romney is a serial killer (of jobs).
JI7
(89,241 posts)3. those 850 floridians are jealous of Romney's Success
ProSense
(116,464 posts)4. Per Mitt! n/t
russspeakeasy
(6,539 posts)5. Make that 851.
RockaFowler
(7,429 posts)6. He thinks what he did was a good thing
This guy is delusional. He was and is a corporate raider. Can you imagine what he would do to this country???
I'm really scared to even think of it
Scurrilous
(38,687 posts)7. Sickening.
K & R