Bought failing companies to loot their failure ?
Actually... Yes.
When you can take a loan out via the company, to pay yourself, and then have the company go under but to no hit to you... Yes. The companies that they closed, they didn't lose money on. The company did... But they didn't.
Think of it kind of like the 401k managing assholes. They got payed... Even though everyone else got fucked.
You know, I'll never understand why the right can't wrap their heads around this concept:
Dunkin' Brands Swimming in Debt - TheStreet
Dunkin' Brands Swimming in Debt
Debra Borchardt
07/26/11 - 03:36 PM EDT
NEW YORK (TheStreet) -- On the positive side of the ledger, Dunkin' Donuts holds the No. 1 position in servings for hot coffee, iced coffee and donuts. The negative? The company is also weighed down with a crippling amount of debt.
The heavy leverage stems from the $2.4 billion buyout of the purveyor of coffee and donuts by a private equity consortium consisting of Bain Capital, Carlyle Group and Thomas H. Lee Partners back in 2006.
Now the parent company of the chain, Dunkin' Brands(DNKN), which also owns the Baskin-Robbins ice cream chain, is looking to raise nearly $400 million in an initial public offering expected to price later Tuesday with the shares seen selling in a range of $16-$18 each. The offering is reportedly heavily subscribed and could very likely price above range at $20 per share.
Part of the strong interest is because of brand recognition. Aside from coffee, Dunkin' Donuts is also the No. 2 seller of breakfast sandwiches, and Baskin-Robbins is No. 1 for servings of hard ice cream. Investors like to buy stock in companies they are familiar with.
Unfortunately, there should be some concern about the debt load, which stood at $1.87 billion as of March 26, according to the company's original S-1 filing on May 24. The service on that debt load is putting major pressure on the business model. In 2010, 58% of operating earnings went to interest payments. In the latest March 2011 quarter those payments have climbed to 75%.
While some of the offering proceeds will go to pay down debt, it won't be enough. This doesn't leave much money left over for growth.
On top of that, the private equity owners have already paid themselves $500 million ahead of the offering. While this isn't uncommon, it's still pushed the book value of Dunkin' Brands shares into negative territory.
Francis Gaskins, the president of the IPO Desktop, says the proposed valuation also looks pricey with the estimated range putting the stock in line with McDonald's(MCD) on a price-to-earnings ratio basis.
"I'd rather own McDonald's than Dunkin'," Gaskins says.
This is the first of several food related companies going public, so it's difficult to gauge the expected performance. Teavana and Chefs Wholesale are also scheduled for offerings during the week.
The quick service sector has performed well this past year with Starbucks (SBUX) up 60% and McDonald's up 24% for the past year. Both companies are aggressively pursuing the coffee crowd.
Dunkin' plans to offer Keurig K-cups to stay on trend, but that is a relatively new development and there's no track record for this initiative yet. Dunkin' also offers Coolatta frozen drinks, a category that's been a big hit at McDonald's.
--Written by Debra Borchardt in New York.
This is what they do.
Again, this is what they do. They take over a company, leverage it down to the doorknobs, pay themselves back then legitimately try to turn a profit with the brand. But it is ALWAYS a "Heads I win, Tails you Lose" proposition; they never take a bath unless they can't arrange for the bank to loan them money against the company's assets. That is arranged well in advance.
If the right were to call Bain and ask them, they would say, "Yes, that sounds right." about the story above. There is nothing illegal about it. Arguably there is nothing immoral. It just has messy consequences.
The message in the ad, in case it has been forgotten, is that Romney doesn't know (or care) about those consequences. Most CEO's don't know and a whole lot of them do not care. It's not in their employer's interest to care.
Again, not illegal; arguably not immoral. Just messy.
As you may have read in the article, it is about the stock roll-out. The Stock is currently a "sell" rec from Schwab. Motley Fool posits the following:
With this in mind, it should be no surprise that most publically traded portfolio companies have significantly more debt relative to size than their competitors do. The experiences of Dunkin' Brands (Nasdaq: DNKN ) , Domino's Pizza (NYSE: DPZ ) , and Burger King (NYSE: BKW ) serve as representative examples, each of which continues to suffer from the one-time affections of private equity firms like Kohlberg Kravis Roberts, Blackstone Group (NYSE: BX ) , or American Capital (Nasdaq: ACAS ) . As you can see in the table below, all of these companies have significantly more debt on their balance sheets than equity. And when you exclude intangible assets, all three have negative book values in excess of $1.4 billion.
Negative Book Values!
The argument about if Bain benefits companies is an open question. They have successes. The "successes" may or may not come at the expense of the workers of those companies. The argument some have that, "They should just be happy they still have jobs" is something to consider; it is better to make $8 than $0.
What isn't an open question is this; Bain always benefits itself first. Always. No exceptions.