Romney Bain and GS Technologies

Andrew Sullivan writes something interesting.* No not that Andrew Sullivan, this Andrew Sullivan at Reuters. Fairly excerpted, I think.

in October 1993, Bain Capital, co-founded by Mitt Romney, became majority shareholder in a steel mill that had been operating since 1888.

It was a gamble. The old mill, renamed GS Technologies,

a federal government insurance agency had to pony up $44 million to bail out the company’s underfunded pension plan. Nevertheless, Bain profited on the deal, receiving $12 million on its $8 million initial investment and at least $4.5 million in consulting fees.

Nevertheless, Bain and its partners decided to buy the mill for $75 million. Bain put up about $8 million to gain majority control of the company, renamed GS Technologies Inc. GE Capital, former Armco executives and Leggett & Platt, a major customer for the mill’s wire rods, chipped in the rest of the equity.


Bain got its money back quickly. The new company issued $125 million in bonds and paid Bain a $36.1 million dividend in 1994.

“What ?!$” you ask. Bain put in $ 8 million and took out $ 36.1 million one year later ? If that isn’t looting what is ?

Bain managed to lose $16.5 million of the money buying another steel mil,l hence the safe calculation of “at least $12 million” which means the 8 million back plus $12 million more plus the $4.5 million in fees. Note the similarity between the amount of money Bain made and the $44 million bailout.

And think of the fools who allowed Bain to control the firm after putting up 11.67% of the money ? I sure would like to play poker with them.

** with co author Greg Roumeliotis