jamieooh
01-16-2012, 12:17 AM
Gingrich's 'Bain bomb' fizzles
The "Bain bomb" is full of wet fuses.
We've been keeping regular track of claims made about Mitt Romney's business history over at our Mitt Meter, but today's video "documentary" from the Gingrich-affiliated Winning Our Future PAC requires its own post. The ominous music, deep-voiced narrator and tales of worker woe were all to be expected. But I also thought that the video would get most of its basic facts correct (and then cover them in innuendo). I was wrong.
The video titled When Mitt Romney Came to Town discusses several Bain Capital companies that eventually went bankrupt or were shut down. What follows is a series of errors:
UniMac
UniMac was a Marianna, Fla.-based laundry equipment manufacturer that had been around for more than 50 years. A former worker is quoted in the video as saying: "They pulled everybody together and told us we were being sold to Raytheon, which in turn turned out to be Bain." The worker adds that quality control was sacrificed, saying: "I just wish they'd left us alone in the early 90s... at the end they just decided to shut the doors."
The reality, however, is that Raytheon (RTN) and Bain weren't the same thing. And Bain wasn't involved in the early 1990s. Raytheon agreed to purchase UniMac in 1994, and later merged it into a broader commercial laundry unit that also included facilities in Wisconsin and Kentucky. Raytheon then sold that unit four years later to Bain Capital for $358 million, alongside another private equity firm.
Bain would then hold onto the company until December 2004, when it sold it to a Canadian pension system's private equity division for $450 million. The Florida plant and some others would close under the Canadian firm's stewardship, not under Bain's, in October 2005. Moreover, Romney left Bain Capital in 1999, although he retained a financial interest.
The UniMac section also quotes a NY Magazine story about Romney saying that his Bain colleagues had a "high disdain" for "sloppy" American workers. It insinuates that these were Romney's Bain Capital colleagues working on UniMac, but it actually referred to Bain & Co. consultants from decades earlier.
KB Toys
"Romney and Bain bought the 80 year-old company in 2000." Again, Romney left Bain in 1999 and had no operational role thereafter. It is true that he remained an investor, but so did dozens of university endowments, private foundations and pension systems. None of them played a part in Bain's investment decisions or portfolio company management.
The video also plays a video of Romney speaking at Emory University in 2010, and suggests that he refers to the ultimate failure of KB Toys as "creative destruction." This is taken completely out of context. Romney's Emory comment was pulled from a 45-minute interview that never once mentioned KB Toys. Instead, he was discussing broader economic productivity issues.
DDI Corp.
The video discusses the DDI Corp., a printed circuit board maker that Bain first acquired (alongside several other PE firms) in 1996. It suggests that "Romney and Bain" began firing DDI employees just before taking it public, including 275 Colorado workers. Again, there is a timing problem. Those Colorado employees were let go in early 2000, after Romney left Bain. The IPO also occurred after Romney had left.
The filmmakers later acknowledge that Romney had left Bain prior to the IPO, but then use a 13D filing to "prove otherwise." Fortune has reviewed the filing, which does place Romney on the management committee of a Bain fund that controlled DDI shares. Bain has insisted, however, that Romney had no operational role at Bain after leaving -- with a source telling Fortune that Romney's departure for the Olympic Games was hasty, and that the fund management committee listing was just a legacy signatory role that involved no actual decision-making capabilities.
More importantly, DDI didn't file for bankruptcy until two years after its IPO, and two years after Bain had already sold all of its shares. The video insinuates that Bain knew the company was in trouble when it "dumped" its shares in 2001, but gives no evidence to support its claim.
--------
To be clear, none of this is to suggest that Romney and Bain didn't make some very real mistakes, or that they shouldn't be criticized for situations in which they profited from financial engineering rather than from company growth. But the Winning Our Future PAC goes beyond that, intentionally obscuring the record in a way that makes such honest discussions more difficult. And for that, Winning Our Future deserves some scorn of its own.
The "Bain bomb" is full of wet fuses.
We've been keeping regular track of claims made about Mitt Romney's business history over at our Mitt Meter, but today's video "documentary" from the Gingrich-affiliated Winning Our Future PAC requires its own post. The ominous music, deep-voiced narrator and tales of worker woe were all to be expected. But I also thought that the video would get most of its basic facts correct (and then cover them in innuendo). I was wrong.
The video titled When Mitt Romney Came to Town discusses several Bain Capital companies that eventually went bankrupt or were shut down. What follows is a series of errors:
UniMac
UniMac was a Marianna, Fla.-based laundry equipment manufacturer that had been around for more than 50 years. A former worker is quoted in the video as saying: "They pulled everybody together and told us we were being sold to Raytheon, which in turn turned out to be Bain." The worker adds that quality control was sacrificed, saying: "I just wish they'd left us alone in the early 90s... at the end they just decided to shut the doors."
The reality, however, is that Raytheon (RTN) and Bain weren't the same thing. And Bain wasn't involved in the early 1990s. Raytheon agreed to purchase UniMac in 1994, and later merged it into a broader commercial laundry unit that also included facilities in Wisconsin and Kentucky. Raytheon then sold that unit four years later to Bain Capital for $358 million, alongside another private equity firm.
Bain would then hold onto the company until December 2004, when it sold it to a Canadian pension system's private equity division for $450 million. The Florida plant and some others would close under the Canadian firm's stewardship, not under Bain's, in October 2005. Moreover, Romney left Bain Capital in 1999, although he retained a financial interest.
The UniMac section also quotes a NY Magazine story about Romney saying that his Bain colleagues had a "high disdain" for "sloppy" American workers. It insinuates that these were Romney's Bain Capital colleagues working on UniMac, but it actually referred to Bain & Co. consultants from decades earlier.
KB Toys
"Romney and Bain bought the 80 year-old company in 2000." Again, Romney left Bain in 1999 and had no operational role thereafter. It is true that he remained an investor, but so did dozens of university endowments, private foundations and pension systems. None of them played a part in Bain's investment decisions or portfolio company management.
The video also plays a video of Romney speaking at Emory University in 2010, and suggests that he refers to the ultimate failure of KB Toys as "creative destruction." This is taken completely out of context. Romney's Emory comment was pulled from a 45-minute interview that never once mentioned KB Toys. Instead, he was discussing broader economic productivity issues.
DDI Corp.
The video discusses the DDI Corp., a printed circuit board maker that Bain first acquired (alongside several other PE firms) in 1996. It suggests that "Romney and Bain" began firing DDI employees just before taking it public, including 275 Colorado workers. Again, there is a timing problem. Those Colorado employees were let go in early 2000, after Romney left Bain. The IPO also occurred after Romney had left.
The filmmakers later acknowledge that Romney had left Bain prior to the IPO, but then use a 13D filing to "prove otherwise." Fortune has reviewed the filing, which does place Romney on the management committee of a Bain fund that controlled DDI shares. Bain has insisted, however, that Romney had no operational role at Bain after leaving -- with a source telling Fortune that Romney's departure for the Olympic Games was hasty, and that the fund management committee listing was just a legacy signatory role that involved no actual decision-making capabilities.
More importantly, DDI didn't file for bankruptcy until two years after its IPO, and two years after Bain had already sold all of its shares. The video insinuates that Bain knew the company was in trouble when it "dumped" its shares in 2001, but gives no evidence to support its claim.
--------
To be clear, none of this is to suggest that Romney and Bain didn't make some very real mistakes, or that they shouldn't be criticized for situations in which they profited from financial engineering rather than from company growth. But the Winning Our Future PAC goes beyond that, intentionally obscuring the record in a way that makes such honest discussions more difficult. And for that, Winning Our Future deserves some scorn of its own.