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Risking $10 million Bain money, the corporate raiders “earned” $175 million before the ultimate decline and bankruptcy leaving a trail of misery. Well, that’s greed capitalism and John McCain knew a Romney ticket would be suicidal in 2008. Bain had killed Romney once before in 1994.
Specialty Retailers, acquired in the late 1980s by Bain Capital, was the buyout firm’s most ambitious and risky deal up to that time. Mitt Romney helped arrange $300 million in junk bond financing with Michael Milken’s investment bank.
- 1988 Bain Capital invests $10 million to create Houston department store chain Specialty Retailers Inc. It borrows $300 million in junk bonds from Drexel Burnham Lambert to finance the deal.
- 1992 Bain’s first effort at an IPO for the company flops.
- 1993 Company refinances debt, distributes $80 million to Bain and other investors
- Oct. 1996 Company changes name to Stage Stores Inc., goes public at $16.50 a share.
- 1997 New CEO Carl Tooker takes over and in June buys C.R. Anthony Co., a 246-store chain, nearly doubling the size of the company. By September, Bain sells all its shares at $34.88 and leaves the board. Bain makes a $175 million profit on its investment.
- 1998 The stock keeps rising, and Bain buys back shares, as a minority investment.
- June 1, 2000 Stage files for bankruptcy protection, with $445 million in long-term debt.
- Stage Stores Inc. files bankruptcy to save company
The company’s announcement said it was negotiating a $450 million credit arrangement with Citicorp USA Inc. to refinance debt and provide additional working capital.
With the Chapter 11 filing, the company said its stock would be delisted from the New York Stock Exchange. The stock traded as high as $9.75 a share in the past year, but the final transaction was for about 15 cents a share before trading was cut off.
The filing follows a string of executive resignations that started in February with former chairman Carl Tooker. In a March Securities and Exchange Commission filing, the company outlined how it was trying to get money back from Tooker for the purchase of his home in 1997, which the company sold in 1999 at a loss of $806,556, and for a severance package for his spouse that totaled $608,317.
Below the fold, McCain’s opposition file on Romney in 2008 …
BUSINESS RECORD – Romney: “I’m basically in the Investor’s Hall of Fame” is opposition file from McCain 2008 campaign! [pdf]
Romney spent most of his business career as CEO of private equity firm Bain Capital – as of June 2007 he maintained an investor’s stake in the company.
Bain Capital has been criticized for relentless focus on bottom line at expense of workers and jobs.
Romney describes himself as a “business legend” in his campaign ads and once said of himself: “I’m basically in the investor’s Hall of Fame.”
Bain Capital and Bain & Co. employees donated at least $171,000 to Romney’s presidential campaign in Q1 2007 and gave tens of thousands more in support of his previous political activities.
Bain Capital financed 1988 buyout with junk bonds issued by Drexel Burnham – when SEC filed charges against the firm and CEO Michael Milken, Bain Capital maintained their business relationship; Romney later reminisced about “the glorious days of Drexel Burnham.”
In 2004, Bain & Co. received a multi-million dollar contract from the National Iranian Oil Company.
Romney sat on board of directors of Bain portfolio company Damon Clinical Laboratories, which in 1996 wasfined over $100 million for Medicare fraud committed during Romney’s tenure.
Bain Capital owned company named Ampad that purchased an Indiana paper plant, fired its workers and offered to bring them back at drastically reduced salary and benefits – the firings became an issue in the 1994 Senate race when workers blamed Romney for their situation and appeared in Kennedy campaign ads.
After Romney became governor, Bain Capital teamed up with Chinese appliance maker Haier Group in 2005 in effort to purchase Newton, IA-based Maytag Corp. and send jobs overseas.
At least two Bain Capital companies – Stream International and Modus Media – focused on outsourced technical support services, expanding facilities abroad while contracting operations in the United States.
Bain Capital operated steel company called GS Industries which went bankrupt in 2001 after years of labor strife, closing a plant in Kansas City and laying off over 700 workers.
- Nice coverage by James Fallows with many links – The Atlantic: On ‘Swiftboating’ Mitt Romney
"But I will not let myself be reduced to silence."