How gratifying to see one of America's iconic business sites publish something that doesn't feature the usual knee-jerk anti-labor bias. Of course, maybe Adam Hartung inadvertently slipped this one past his editors and we'll next see his byline at the Daily Worker.
By now the story of Hostess' demise is well trod territory. It's been brought to my attention that I've been wrong to pin the blame on hedge fund shitbags. I'm not so sure. Maybe Ripplewood is going to take a haircut on this one, but apparently two bond funds hold all or most of the secured debt.
That means the sharpies who bought the debt at pennies on the dollar back around the time of the original Hostess bankruptcy are going to be sitting pretty as they get paid out in full, while thousands of pensioners will be up Shit Creek without a paddle.
Not to mention that in the course of the last eight years a clique of insiders in the executive suite rewarded themselves with outlandish raises and bonuses while demanding draconian givebacks from the workers and "managing" a venerable company into the ground.
There may be examples extant of hedge funds making a useful contribution to the society at large, but for the most part they are predators who are all too willing to destroy the common good so long as their investors and their management can make a killing.
That's why we need a 100% tax on non-productive economic activity.
Showing posts with label Ripplewood Holdings. Show all posts
Showing posts with label Ripplewood Holdings. Show all posts
Sunday, November 18, 2012
Wednesday, January 11, 2012
Hostess Brands latest victim of vulture capitalism
Hostess Brands, the maker of a whole lot of stuff that's nearly as iconically American as apple pie, filed for bankruptcy protection today.
The news stories offer the usual sad tale of this poor corporation being unable to cope with the oppressive demands of their unionized workforce, who demand the usual twentieth century dog-and-pony carnival of pensions and a living wage.
Welcome to the twenty-first century, union ingrates! Corporations are people too! Every penny of pension that goes into your pocket after a lifetime of Twinky making is a penny straight out of the pockets of that corporation.
Not only that, but it's a penny out of the pockets of the flesh-and-blood hedge-funders who have had a lock on this company since it last emerged from bankruptcy in 2009.
The prime owner of Hostess since then has been an outfit called Ripplewood Holdings. That's an outfit whose biggest shareholder is a guy named Tim Collins. Tim Collins learned his craft running the New York office of a hedge fund called Onex, whose motto is "adding value by screwing workers".
And it works! It made Onex chief Gerry Schwartz a billionaire!
Collins has a couple of other hedge fund players in on the action now. They've all lent each other money at exhorbitant interest rates to "invest" in Hostess. Once all the Twinky profits have paid off the hedge funds there's nothing left to meet the company's pension obligations. Then of course it's big headlines in the business pages about how rich pensions and plush union agreements have driven an iconic American brand into bankruptcy.
Rarely will the business pages mention that the unions took major concessions to get Hostess out of bankruptcy the last time around. But there's still a bit of meat on those bones. The hedge fund vultures will pick the carcass clean this time.
There's too much good stuff at Hostess to let it fade quietly into the sunset. These hedge fund guys know the value of a brand. Look for the union contracts to be stripped, the pension obligations shed, and the vultures to walk away with billions.
The news stories offer the usual sad tale of this poor corporation being unable to cope with the oppressive demands of their unionized workforce, who demand the usual twentieth century dog-and-pony carnival of pensions and a living wage.
Welcome to the twenty-first century, union ingrates! Corporations are people too! Every penny of pension that goes into your pocket after a lifetime of Twinky making is a penny straight out of the pockets of that corporation.
Not only that, but it's a penny out of the pockets of the flesh-and-blood hedge-funders who have had a lock on this company since it last emerged from bankruptcy in 2009.
The prime owner of Hostess since then has been an outfit called Ripplewood Holdings. That's an outfit whose biggest shareholder is a guy named Tim Collins. Tim Collins learned his craft running the New York office of a hedge fund called Onex, whose motto is "adding value by screwing workers".
And it works! It made Onex chief Gerry Schwartz a billionaire!
Collins has a couple of other hedge fund players in on the action now. They've all lent each other money at exhorbitant interest rates to "invest" in Hostess. Once all the Twinky profits have paid off the hedge funds there's nothing left to meet the company's pension obligations. Then of course it's big headlines in the business pages about how rich pensions and plush union agreements have driven an iconic American brand into bankruptcy.
Rarely will the business pages mention that the unions took major concessions to get Hostess out of bankruptcy the last time around. But there's still a bit of meat on those bones. The hedge fund vultures will pick the carcass clean this time.
There's too much good stuff at Hostess to let it fade quietly into the sunset. These hedge fund guys know the value of a brand. Look for the union contracts to be stripped, the pension obligations shed, and the vultures to walk away with billions.
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