I have told you that Bain would be our undoing in a general election. But whenever someone questions Bain, they are accused of being anti-capitalist.
Wishing it away will not make it go away, as an article in The Boston Globe about Domino’s Pizza shows, Domino’s Delivered For Bain: Romney’s Bain made big profit from the pizza chain, but left it saddled with debt.
Domino’s Pizza frequently is cited as a Romney and Bain success story. And for Romney and Bain it was, but it’s not as represented.
Per The Globe, Domino’s was a thriving business when Bain acquired it. Bain did not start it and it was not in need of a turn around, but now it is saddled with huge debt used to pay Bain:
Domino’s was not in need of rescue, nor was it a classic turnaround case for Bain. But it was still a bonanza for the Boston leveraged buyout firm, which makes money by buying and selling businesses. Bain reaped a 500 percent return on its investment in the nation’s largest pizza delivery chain over 12 years.
Domino’s grew its revenues and earnings under Bain, but its debt also surged to $1.5 billion, leaving the chain with a higher debt ratio than most of its rivals, and interest payments that eat up half its profit each year….
To buy Domino’s, Bain put up a third of the money in cash and borrowed the rest. It took money out in several chunks including: a 2003 refinancing of the company’s debt, a 2004 initial public stock offering, and an $897 million “monster dividend’’ paid to Bain and other investors in 2007. In each instance, the company borrowed money or refinanced old debt to make the payouts.
Is Bain’s Domino’s story of running up debt one we want to run on in November? If polling is correct, it looks like we will be.