Why Romney Lost South Carolina: His Past At Bain Capital

Ignoring for the moment the issue of voter fraud, I want to explain why Romney lost South Carolina: the documentory "When Mitt Romney Came to Town" released by Newt Gingrich's "Super PAC".  It is an utterly devastating depiction of Romney’s past.

(This documentary is not a criticism of capitalism.  What Romney and Bain were doing wasn’t capitalism.  It was unprosecuted fraud.)

When Mitt Romney Came To Town — Full, complete version


Below is an example of what Romney and Bain were involved in.

The facts about Bain and KB Toys, much worse than 'Vulture' Capitalism

Democratic Underground reports that here are the facts about Bain and KB Toys, much worse than 'Vulture' Capitalism.

Here are the facts about Bain and KB Toys, much worse than 'Vulture' Capitalism

There is good private equity and there is bad private equity firms.

Here are the facts about KB Toys.

1. At the time it was purchased KB Toys was an industry leader, it was not in trouble.

http://www.fundinguniverse.com/company-histories/KB-Toys-Company-History.html

In 1999, KBkids.com received top points from an e-commerce market research firm, the Gomez Advisors, in the categories of customer confidence, overall cost, and bargain shopping. Softletter named the site one of the 'Ten Best Online Software Stores of 1999' in its October 15th issue. Even the Wall Street Journal dubbed the site the 'best overall' online toy retailer. In a little more than four months online, KBkids.com increased its business more than 400 percent and twice ranked among the five biggest gainers on the NextCard eCommerce Movers index.

It seemed nothing could stop KB Toys from challenging its rivals in the toy industry. Operating profit for 1999 was up 51 percent from 1998. The company, seeking to capitalize on its growth, decided to hold an initial public offering in the spring of 2000, then postponed trading due to unfavorable market conditions. Notwithstanding this delay, KB was more focused than ever on fine-tuning its position in the very fashion-forward toy industry. With relatively small stores and a knack for innovation and creativity in marketing, KB was ready as ever to make quick adjustments to changing customer and merchandise trends.

2. KB Toys was a company that made money and exercised social responsibility

After a 13 year old boy in NYC was shot and killed while holding a realistic toy gun (not from KB Toys)
KB Toys destroyed 300,000 toys in inventory and never again carried realistic toy guns. They also gave toys for guns.

The company also participated in New York's 'Goods for Guns' program, which offered gift certificates to people who surrendered real firearms. Although Ann Iverson left as chairman in 1994, her policy of not selling look-alike guns was continued by her successor, Alan Fine, who had been senior vice-president before becoming president and CEO.


3. Bain Capital 'purchased' KB for the respectable price of $ 305 million dollars on December 8, 2000.

http://en.wikipedia.org/wiki/KB_Toys

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 latter 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.

My reaction:  The key points to take away from this are:

1)  Newt Gingrich didn’t win South Carolina.  Romney lost (crushed by his past).

2)  Romney’s now public experience at Bain makes him unelectable.  If Romney was the nominee, Obama would have a field day with this stuff come November.  Romney would get crushed.

3)  This drastically improves Ron Paul’s chances of being the republican nominee.  Take Virginia, where only Ron Paul and Mitt Romney are on the ballot.  How do you think Romney will fair in a one-on-one match against Paul as the video above spreads through the American electorate?


Conclusion:  With Mitt Romney taking this devastating hit, killing Ron Paul’s candidacy became infinitely more complicated, if not impossible.

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One Response to Why Romney Lost South Carolina: His Past At Bain Capital

  1. alwie says:

    come on Eric.. where are you? say something.... :D

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