"Under Romney's leadership, Bain [Capital] bought majority control of Worldwide Grinding Systems in 1993. It put up $8 million of the $75 million purchase price and borrowed $125 million by issuing bonds. In business since 1888, the mill was renamed GS Technologies. Bain immediately sent investors $36 million in dividend checks.
"Paying distributions with debt is not uncommon," Duke University finance professor Campbell Harvey told Reuters. "The only thing that strikes me as a bit unusual is the size of the dividend. There would be logic in them saving some cash for a downturn."
"A steel business is capital-intensive and sensitive to economic conditions. That's why it needs to conserve money for the lean years. When the economy did go south, so did GS Technologies. Its bean-counters reportedly started skimping on everything from earplugs to basic maintenance of equipment."
"GS Technologies went bankrupt in 2001, the plant closed, and 750 workers lost their jobs. Bain skipped out on a previous agreement to provide severance pay and health coverage if that happened. The workers saw their pensions slashed by up to $400 a month."
"But Bain walked away from the smoking ruins $12 million richer, not including $4.5 million in consulting fees. And it had tapped government, as well. The company had extracted $3 million in tax savings from Kansas City and partook of a federal program putting taxpayer guarantees on loans to troubled steel companies. The federal Pension Benefits Guarantee Corp. bailed out the company's underfunded pension plan to the tune of $44 million." – Seattle Times