Lakhota
Diamond Member
1. At the time it was purchased KB Toys was an industry leader, it was not in trouble.
2. KB Toys was a company that made money and exercised social responsibility.
3. Bain Capital 'purchased' KB for the respectable price of $ 305 million dollars on December 8, 2000.
4. Bain Capital only offered $ 18 million in cash, the rest was leaveraged debt put on the company.
5. "Sixteen months after the buyout, Bain Capital paid itself $85 million in dividends in early 2002."
6. "January 14, 2004, K·B Toys filed for Chapter 11 bankruptcy protection and closed 365 stores."
7. Three years later the rest of the 156 stores were closed down.
But there is a little more to the story. KB Stores had already gone through a tough restructuring in 1996. At that time a private equity bought the company, closed unprofitable stores, and increased profits.
So here is the objective reality of what Bain did.
Bain engineered a private equity purchase of a profitable company that had already gone through 'creative destruction' eliminating unprofitable legacy operations and saddled the company with hundreds of millions of dollars of debt. The company was not just profitable but an example of the kind of companies that demonstrate a wider social conscious for its customers and the larger community. Sixteen months after purchasing the company with only 6% cash of the value Bain takes out dividends at over 400% of their investment. Significantly this was done during the time of the attacks on 9/11 when the country as a whole was undergoing a hightened sense of patriotism, sacrifice and social duty. Less than 2 years after saddling KB Toys with massive debt and taking out astronomical dividends, K-B Toys faces Chapter 11 bankruptcy and closes 354 previously profitable stores.
Vultures take meat that is already dead and complete the final loop in the cycle of life.
Bain took a company that had already been restructured and was surging in profits and cash. There was never any interest by Bain to restructure KB Toys, that had already been done.
Bain purchased KB Toys simply to raid its cash, and they did so during a time when the rest of the country was undergoing a period of reviewing the founding principles of the country.
To call what Bain did to KB Toys as 'Vulture' Capitalism is an insult to Vultures.
They were pirates and this is why there is so much interest to change the subject and not let the real facts of Bain Capital come to the surface during the Republican Primary
More: Here are the facts about Bain and KB Toys, much worse than 'Vulture' Capitalism - Democratic Underground
KB Toys History & Company Profile