Q. Name two healthy companies that Bain Capital took over and gutted
Just two. Signed, Jeff.
Bain Capital acquired this 100+ year old company in 1993, received $36 million in dividend payments after they had the company issue $125 million in bonds, bonds the company would ultimately have to buy back. Bain merged the company with other steel mills and formed GST Steel. By 2001, the company debt had reached $500 million and they filed for bankruptcy. 750 employees were laid off and the federal government (the taxpayers) had to bail out the pension fund to the tune of $44 million.
Final Score – Bain gets $36 million, taxpayers pay $44 million, 750 jobs lost.
AMERICAN PAD AND PAPER (AMPAD)
A successful company that was purchased from the Mead Corporation in 1992 by Bain Capital. The company promptly consolidated 13 manufacturing facilities into 6. Beginning in 1994, AMPAD/Bain Capital began buying up other companies, starting with SCM in 1994, and ending with Shade/Allied Inc. in 1997. In 1999, the company filed for bankruptcy, laid off 1,500 employees and ultimately sold the assets to Crescent Capital Investments in 2003.
Final Score – Bain Capital – Approx $100 million, 1,500 jobs lost
In 1997, Behring Diagnostics merged with a company called Dade International, which was a group of investors, led by Bain Capital. Bain had acquired Baxter International’s diagnostic unit for $440 million. This new merged company became the largest company devoted to diagnostics, with annual sales of over $500 million.
During this period, however, Dade/Behring was piling up debt, ultimately resulting in filing for bankruptcy in 2002, laying off 1,700 American workers. The company reorganized and rebounded, but the jobs never did, at least not here in the United States. Dade Behring employs over 6,000 people worldwide.
Final Score – Bain Capital – Approx $240 million in profit, 1,700 jobs lost.
In the 1980’s Bain Capital and Mitt Romney partnered with junk bond king Michael Milken, deemed by many as the “real” Gordon Gecko, the ruthless character from the movie Wall Street, and Milken’s company Drexel Burnham Lambert to form the retail chain Stage Stores, based in Houston, TX.
Milken and his company were under federal investigation at the time for their trading practices, but that didn’t bother Romney or Bain, who were both looking for a major payoff. Stage was created by acquiring hundreds of small retailers and combining the operations.
By 1997, Bain had sold all of its shares in Stage, pocketing $175 million in profit. In 2000, with approximately $445 million in long term debt accrued, Stage filed for bankruptcy and began closing stores and consolidating operations.
Final Score – Bain Capital – $175 million in profit, 5,000 jobs lost