Simmons Bedding Company, the place that built Simmons mattresses for 133 years, will file for bankruptcy, according to a New York Times story in today’s Globe.
The company was raped for twenty years by financial sociopaths.
Here’s the guts of the story:
Simmons says it will soon file for bankruptcy protection, as part of an agreement by its current owners to sell the company – the seventh time it has been sold in a little more than two decades – all after being owned for short periods by a parade of private equity firms, which try to buy undervalued companies, mostly with borrowed money.
For many of the company’s investors, the sale will be a disaster. Bbondholders [sic] stand to lose more than $575 million. The company’s downfall has also devastated employees like Noble Rogers, who worked for 22 years at Simmons. He is one of 1,000 employees – more than one-quarter of the workforce – laid off last year.
But Thomas H. Lee Partners, of Boston, has escaped unscathed. The investment firm, which bought Simmons in 2003, has pocketed around $77 million in profit, even as the company’s fortunes have declined. THL collected hundreds of millions of dollars from the company in the form of special dividends. It also paid itself millions more in fees, first for buying the company, then for helping to run it. Last year, the firm even gave itself a small raise.
Wall Street investment banks also cashed in. They collected millions for helping to arrange the takeovers and for selling the bonds that made those deals possible. All told, the various private equity owners have made around $750 million in profits from Simmons over the years.
How so many people could make so much money on a company that has been driven into bankruptcy is a tale of these financial times. Every step along the way, the buyers put Simmons deeper into debt. The financiers borrowed more and more money to pay ever higher prices for the company, enabling each previous owner to cash out profitably.
But the load weighed down an otherwise healthy company. Today, Simmons owes $1.3 billion, compared with just $164 million in 1991, when it began to become a Wall Street version of “Flip This House.’’
The people who did this are people who build nothing, who create nothing, who do nothing for the people of the country, who do nothing for civilization, who’s sole moral rule is ‘More for me!’
They’re the new Mafia. Buy a business, strip it of cash, bury it in debt, and sell it to the next Mafioso who can con a greedy banker into investing. When the thugs got caught skimming the casinos in Vegas, they got arrested and jailed. These guys destroying companies get praised and get rich.
They do it with no qualms, no concerns for anyone or anything but filling their own bank accounts.
Executives at THL counter that Simmons was the victim of hard economic times, not mismanagement or too much debt. They point to Simmons’ 40 percent growth in sales and 26 percent climb in operating income from 2003 through 2007, as well as 13 consecutive quarters of market share gains against competitors through March 2009.
Simmons’ woes, said Scott A. Schoen, a co-president of the firm who sat on Simmons board, are entirely caused by the “unprecedented and unforeseeable’’ downturn that has shaken the entire bedding industry.
None of these people would admit that burying a company under so much debt that it could not withstand even a minor tic in the economy, much less a major downturn, none of them would ever admit that their actions had anything to do with the collapse of the company, would they?
These people are the scum of the earth, to borrow a phrase. A rational society would put them behind bars instead of making their actions legal. But in America they are touted as financial geniuses.
Let’s call them what they are. Parasites. Thieves. Amoral beings that suck the life out of an economy, destroying companies, jobs, productivity, lives, the fabric of society itself, and in return produce nothing, give nothing, build nothing.
They should be scorned and shamed and hounded into the streets and gutters of the cities and the civilization they are destroying.