Romney's Bain made millions as S.C. steelmaker went bankrupt

[FreakinDJ]

David Wren | Myrtle Beach Sun News

MYRTLE BEACH, S.C. — Boston-based Bain Capital LLC more than doubled its money on GS Industries Inc. — the former parent company of Georgetown Steel — under Mitt Romney's leadership in the 1990s, even as the steel manufacturer went on to cut more than 1,750 jobs, shuttered a division that had been around for 100 years and eventually sank into bankruptcy.

Bain Capital spent $24.5 million to acquire GS Industries in 1993, according to an investment prospectus for the company that was obtained by the Los Angeles Times and reviewed by McClatchy Newspapers. By the end of that decade, Bain Capital estimated its partners had made $58.4 million off its investment in GS Industries, according to the prospectus.

Bain Capital's partners also earned multimillion-dollar dividends from GS Industries and annual management fees of about $900,000. But by the time GS Industries filed for bankruptcy protection in 2001, it owed $553.9 million in debts against assets valued at $395.2 million.

Romney - who founded Bain Capital, one of the earliest leveraged-buyout firms, in 1984 - was in charge of the firm for most of the time it owned GS Industries. Romney left Bain Capital in 1999, two years before the bankruptcy, to run the organizing committee for the Winter Olympics in Salt Lake City, Utah.

Read more here: http://www.mcclatchydc.com/2012/01/14/135889/romneys-bain-made-millions-as.html#storylink=cpy

[Kingofalldems]

1. Kick and Rec

[rfranklin]

2. sounds like a mafia bust-out...buy a legitimate business, screw the creditors, run with the money...

leaving everyone else holding the bag.

[FreakinDJ]

5. Thats how we see it

Legal theft

[Amonester]

7. Same 'pattern' set to repeat... but this time...

for the US of A (inc).

Predator one decade, predator for life.

[wordpix]

30. but Nicki Haley says, "(Romney) fixed broken businesses"

and she wants the repukes to leave Mittens Romney alone!

[HopeHoops]

3. How "American" of him.

[phasma ex machina]

4. Hell hath no fury as Newt's ego scorned!

[Moostache]

6. Romney and the rest of the vampire capitalists are scum...

This kind of naked THEFT is what makes Romney and Bain and everyone who defends them utterly disgusting.

It is NOT making a profit that is an issue...
It is NOT investments that are an issue...
It is NOT "anti-capitalism" to point out that predatory earning strains the credulity of one's professed "deep religious convictions"...

The major problem is found in the details - Bain "made" money by stealing it from the company as "expenses" in the form of charges and fees for their "leadership" and after "buying" the company for $24.5 M (which was REALLY just buying the debt that passed for control of the company), they began the process of looting money from it by cutting jobs.

Now, if the cutting of the jobs was actually used as a method to truly save the jobs of other employees, then it would be an honorable way to make a living. If the business being "bought" was being used as anything other than a legalized ATM for upper-class theft of assets, then it would not be problematic in the least. BUT...when the same article details that the company, which was "bought" for $24.5M found itself in debt to the tune of $553.9 M AND in possession of $395.2M in assets, well I shouldn't have to paint the rest of the picture to point out why that is so wrong on so many levels...but I will try anyway!

WHY is it possible to "BUY" a company with $395.2M in assets for $24.5M?
Is it not offensive to anyone that the "rules" allow people to essentially help themselves to the assets of the company at the rate of $0.01 per $1.00? Then, when the business is liquidated, that money is not turned over to the workers who actually MADE the goods and services of the company being sacrificed for "profits"....no, that money is claimed as "hard-earned profits" for the investor class criminals like Bain and its asshat progenitors like Romney and his cabal of criminal pals. There is no issue with coming in and attempting top restructure and save a business or turn it around...but the "profit" available to the investors should be rightfully limited to the NET, NOT THE GROSS assets of the company and then only after the majority of the money is returned to those who had the most skin in the game of actually MAKING or SELLING something.

The mere act of having capital available to satisfy debt claims against a company is NOT a sufficient reason to have 100% claim to the assets and dollar value of said company...it may be 100% legal, but it is also 100% of the problem with our current system. This line of thinking - valuing capital over labor at every turn - is part and parcel of the rot that is taking down capitalism by the head. Make no mistake, "capitalism" at least in its current form is a zombie that is already dead but still walking around smelling up the room.

Additionally, even if you want to grant ownership rights over the entire enterprise for pennies on the dollar, when the whole thing is liquidated, WHY exactly do the investors deserve to get windfall profits from bankrupting the whole thing?
If you actually convert a failing business into one that makes money, then by all rights you (and your investors and buddies and pals) are entitled to an equitable share of the REAL PROFITS - ie. the money MADE by the company. What you have no moral claim to is a disproportionate share of the ILLUSORY PROFITS that can be stolen by charging fees for services that do nothing to actually save a struggling business.

If the business is going under, then the owner who BUILT the business is entitled to sell off the existing assets to pay down debts as much as possible before closing the business, but an "investment group" of vampires looking for cash to suck up should be barred from profiting without generating results. Their "fees" and services should be payable only upon success....rewarding them with handsome profits while their stated (but imaginary) aim is an abysmal failure is WRONG.

[Rosa Luxemburg]

11. We have to get this message over to the voters

if this villain becomes the Rep pres. candidate

[wordpix]

31. info re: Bain's tax havens has barely come out

That's when the real will hit the fan

[Rosa Luxemburg]

42. the media are desperately trying to play it down

[JDPriestly]

8. K&R

So you buy a company that is profitable. You sell good assets of the company (down-sizing) and fire some of the employees and stuff the profits from the "reorganization" in your pocket putting a little in the pockets of your investors. With those profits you buy another profitable company. Once you have bought the new company, you let the first company fail. You don't invest any more in it, and you don't rehire the staff that you need to make it competitive. You don't invest in innovation or improvements. The first company you bought is either on the brink of bankruptcy or ready to be sold to some fool investor. Then, it is possible if you do it cleverly enough that, if you can't sell the company, you can take a hefty income tax deduction based on the losses from the first company. Am I wrong about this? Is this possible?

[KT2000]

10. you are right

and this is how private equity firms operate. When it is publicly held, as in shares, it is called a holding company.

They create nothing - they take the hard work of others and loot. This is what happened to our economy.

[wordpix]

29. sounds like a Ponzi scheme, kind of

In the end, some people are paid (investors) but most aren't (workers) and no one gets their money back as the Romneys of the world take all.

[thelordofhell]

9. And they stuck the government(us) with the pensions

This should be illegal

[Botany]

12. So Bain Capital not only ran the company into the ground they charged the ....

..... $900,000 per year from 1993 to 2001 in management fees too?
A nice little $7.2 million dollar cherry on top of Bain's blood money
they made from their leveraged buy out of GS industries. I wonder how
much they put the federal government on the hook for as far as
pension funds?

Starting a few days ago one could see the "push back" from the Romney's
camp, the media*, and the republicans that the stories about Bain and Romney
being "vulture capitalists" are wrong and that Romney and Bain helped
many people and companies with their actions but the bottom line is that
Bain and Romney made money by putting people out of work and shutting
shutting down companies.

* http://www.nytimes.com/2012/01/15/us/politics/attacks-on-romneys-business-background-could-actually-help-him.html?_r=1&hp
Attacks on Romney’s Business Background Could Actually Help Him

[BeyondGeography]

13. Ugh

Nauseating.

[madrchsod]

14. there were a lot of companies like bain capital during the 80`s and 90`s

these firms stripped american workers of millions jobs. they stripped local and state governments of hundreds of millions of taxes.

i worked for a steel mill that was bought out by two different companies. they took everything and with the help of our trade laws the chinese finally finished the northwestern steel & wire

[KT2000]

32. business as usual now

we tend to think that this has slowed down but in fact, more and more private equity firms and holding companies are doing the same thing now. I would guess that most of the mid-size companies we are familiar with are now owned by these firms.
Even Sears is owned by the Sears Holding Company.

[Sen. Walter Sobchak]

33. there is alot more to private equity than Bamboo Lounge scams

Private equity is a very desirable financing route for small capital intensive growing companies or startups that can't produce the immediate returns required for a successful publicly offering. We work with a couple of companies funded by private equity. One is a company who for their business has had to invest more than $100,000,000 over the last five years and only turned a profit for the first time this past summer.

They are backed almost entirely by private equity, including a public sector pension fund.

[KT2000]

37. Yes - venture capital

is a sub-category of private equity firms. That is very different.
But we cannot NOT talk about the preditory nature of private equity firms and holding companies because of a semantics issue.

A very real job of these firms is to reduce wages, move employment to China etc, use equity for future purchases, ding the company to death charging fees, and in many cases - file bankruptcy and discharge the debts of their executive wages and bonuses.

[Sen. Walter Sobchak]

39. Corporate raiders are the sub-category, and a pretty small one

Corporate raiders who pillage distressed and not so distressed companies are a world unto themselves and not a very big one.

Private equity is just that, private. Just about any privately held company of any size is engaged with this world either through financing or partial to complete ownership.

[KT2000]

40. here is a list

of the top 50 private equity firms. Look up each individual firm for the list of companies they own.
At least according to Wiki - venture capital activities are called a sub-category.
Holding companies also buy up companies. They engage in the same kind of business practices - take their cash for future purchases, fire US workers, send labor overseas, ding the company with fees that go to the holding company, file bankruptcy for some.

[Sen. Walter Sobchak]

41. I deal with this world every day

It isn't that interesting and it isn't that sinister.

[KT2000]

44. The aspect of private equity firms

and holding companies buying companies to essentially raid is indeed sinister. My SIL works for such a firm and she visits the purchased company where all the workers have been laid off because the jobs have moved to China. She puts the company on the computer system and the last employees that help her do that are then fired. Some of the companies are phased out, some are merged with others and some exist as a US business only in the computer system.
That is the real world and it is so common it is not even noticed anymore.

When this happens, it guts the community, destroys families and hands over the jobs and technology to a foreign country. They are given tax benefits for doing this and the income from it is taxed at a lower rate.

[Sen. Walter Sobchak]

45. 99.999% of private equity transactions are straight equity financing

They didn't use a broader brush to paint the stripes on the flag at Cape Canaveral than you are using right now.

[KT2000]

46. to verify

your statistic, actual research needs to be done. The question is - how much damage has been done by these firms using their tax breaks to decimate the manufacturing sector of this country.

[izquierdista]

15. The failures of capitalism are all around in South Carolina

From the Clearwater metal finishing plant, to the textile mills in Graniteville and the upstate, to the steel mill in Georgetown. About the only two things thriving are the tourist resorts in Myrtle Beach and the Harbor Freight receiving facility in Dillon that brings in all those high quality 'Made in China' tools. Maybe the retired people don't notice, but there is very little to offer to people of working age.

That notwithstanding, I expect South Carolina voters to think long and hard about abortion, the Confederate flag, kicking out the Mexicans, and praying away the gay to help them make their choice.

[DinahMoeHum]

21. South Carolina workers internalized their oppression long ago. . .

. . .at least the white workers did.

I came across this article in Salon a couple of years ago; after reading it, I am extremely pessimistic about white working class folks in the Deep South being able to overcome their GOP overlords. They deliberately decided to cast their lot with the rich and powerful even though the latter look at them as little more than Kleenex to be disposed of after use.

http://www.salon.com/2010/09/07/southern_labor_history/singleton/

[XanaDUer]

36. Thanks

Thanks for the link to that article. I now feel like I have a much. better idea of "what's the matter with white Southern working people".

[Mz Pip]

16. And now

our new Oakland San Francisco Bay Bridge is being constructed with steel from China. Way to go Mitt.

[alp227]

17. NY Times frontpage: Town, Cast as Romney’s Victim, Says, ‘Huh?’

There is a problem, though. Here in Gaffney, where deeply held Christian beliefs often matter more than jobs, few remember the Holson Burnes photo album plant, let alone the devastation its closing is alleged to have caused back in 1992.

“I have been here all my life,” said Ed Elliott, who sells insurance. “I’m 59 years old, and I’ve never heard of the plant.”

That Bain’s actions carry little resonance in a community whose woes have been seized on by presidential candidates testifies to the impact of the campaigns’ opposition research and their willingness to exploit a convenient storyline. Here in Gaffney, the focus is a little embarrassing for residents who do not know what all the fuss is about.

full: http://www.nytimes.com/2012/01/14/us/politics/cast-as-romneys-victim-gaffney-sc-says-huh.html?pagewanted=all

[JDPriestly]

18. People to stupid to realize that Romney did to the jobs in the photo album

what someone else did to the jobs in the textile plants.

That someone blames the economic depression on Obama shows just how stupid they really are.

I hate to be so mean, but the people quoted in the article are stupid. There just isn't any gentle word for it.

[JI7]

23. i think a lot of people in focus groups are stupid and/or attention whores

[wordpix]

28. this is how stupid some Americans are - they don't even know their town's industry

[2Design]

19. Pretty woman - Richard Gere played this character

[progressoid]

20. So if we get him a hooker he'll see the light?

[freshwest]

22. Hopefully, the good people of S.C. will dump the GOP in 2012 for this. IDK.

[jmowreader]

25. What "good people"?

Freshwest, I lived next door to South Carolina for 15 years.

Let's do a little pretend exercise here: If Adolf Hitler and Josef Stalin were to rise from the grave, claim to have found Jesus, join the Baptist Church and run for president as Republicans, they would take South Carolina. And it wouldn't be close, either. The fact that he's now a Republican and a Christian would overrule the fact he's still Adolf Hitler.

If Romney wins the nomination, every Bible-thumper in the state of South Carolina will hold their noses and mark the straight Republican ticket, just like they've been doing ever since 1964 when Strom Thurmond joined the GOP.

[freshwest]

26. I'm old enough to know all that. You might convey your support to the people I'm referring to here:

http://www.democraticunderground.com/?com=forum&id=1076

Having grown up the South, I know all the horrors stories. The persons you mention have been on my shistlist for almost half a century. I know very well that the GOP wingnuts are hopeless. The 'good people' are the DUers there.

Peace out.

[Oconnor4Congress]

24. oy vey

i actually live in SC and know people who, at the minimum, lost a decade of their life due to Romney's style of off-shoring union busting economics... And they're still going to vote for him.

[wordpix]

27. Bain cut profit sharing from $5+/hr. to 0, but Romney & Co. made $58 million

All I can say is and hope his campaign goes up in

[handmade34]

35. hence...

http://www.colbertsuperpac.com/episodeiv-anewhope/

[SemperEadem]

38. And yet...

he's got a 21 point lead in that state. Guess they don't care about things like that in SC.

http://news.yahoo.com/romney-opens-21-point-lead-south-carolina-reuters-230825329.html

[Rosa Luxemburg]

43. they must like corrupt politicians