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In reply to the discussion: NEW ROMNEY VIDEO: In 1985, He Said Bain Would "Harvest" Companies for Profits [View all]highplainsdem
(48,956 posts)10. From that Bloomberg article, an example of how the way a company was acquired set up a disaster
for everyone except Bain:
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 companys debt swelled from $11 million in 1993 to $444 million by 1995. The $14 million in annual interest expense on this debt dwarfed the companys $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 companys debt to $270 million.
From 1993 to 1999, Bain Capital charged Ampad about $18 million in various fees. By 1999, the companys 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.
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NEW ROMNEY VIDEO: In 1985, He Said Bain Would "Harvest" Companies for Profits [View all]
kpete
Sep 2012
OP
And there were still a few regulators to spank him. Obama had Warren in place, but the GOP
freshwest
Sep 2012
#38
Bain Capital was founded with the same money that financed death squads in El Salvador
Major Nikon
Sep 2012
#5
Thank you for this video of harvesting businesses. Wow Warren Buffet acturally buys companies to
kathman-duzi
Sep 2012
#18
I wish the term "harvest" was as damning as it initially sounds, but this is the typical meaning in
highplainsdem
Sep 2012
#9
From that Bloomberg article, an example of how the way a company was acquired set up a disaster
highplainsdem
Sep 2012
#10
Quite a harvest, um I mean neutral transaction . So the firm was harvested and the investors were
kathman-duzi
Sep 2012
#19
It's not neutral. He's talking about outsourcing and laying off people. Look what happened.
yardwork
Sep 2012
#11
Again, that ISN'T what "harvest" necessarily means in private equity. It's a neutral term
highplainsdem
Sep 2012
#13
eggplant VC business model in the hands of mittens is particularly worrisome and perhaps should be
midnight
Sep 2012
#32
I agree that Romney is a vulture capitalist. I hate what Bain did. But I still think that
highplainsdem
Sep 2012
#17
They had choices. All too often they made the wrong ones, the amoral ones.
highplainsdem
Sep 2012
#29
I believe you! Using the harvest definition so broadly allows the vultures and
kathman-duzi
Sep 2012
#20
Probably not, but I think it's too easily explained as a standard term for this to be a bombshell.
highplainsdem
Sep 2012
#36