Here's the tale of one of private equity's little harlot shops, the 133-year-old Simmons mattress company, makers of the famous Beautyrest pocketed coil system.
They've been bounced from PE outfit to PE outfit for near on 25 years now, only in the end to pitch over into bankruptcy. Here's the NYT version of the sordid final sprint into default, but for those like Father Smiff allergic to straight biz-news, here's the final act in short:
2003: The last private equity outfit, THL, bought Simmons from the prior private equity outfit for, in round dollars, $1.1 billion -- 330 million of its own hard cash plus the lovely leverage of another $750 million in bonds serviceable by the mattress company's prospective revenues.
2004: New owners issue another $140 million in bonds on behalf of their recently aquired prize company.
2005-2006: Business booms at ye old bedding shop.
2007: My, my, yet another issue of bonds, this one for 300 million. Simmons now has $1.2 billion in bond debt. That's a lot of mattresses.
Now of course the $440 million in interim bond proceeds mostly wasn't used to build company capacity, but to pay a cash-out in two dividend hunks to the privateers upstairs at THL.
By the end of '07, the buckos are fully "cashed out" plus $45 million to the good.
2008: The market for mattresses begins to slide. The debt load proves too much. Bond payments are "suspended".
2009: Bankruptcy is declared.
Post mortem: okay not a killer bottom-line entry.for THL -- not like THL's star turn, buying Snapple for $130 million and selling it for $1.2 billion a couple years later -- but hey, not all strikes can be mother lodes, and even the Snapple caper was a mere sideshow by AIG standards -- right?
Lots of this paper shuffle stuff is done, well, just for the sport of it. After all, most of these buckos are already holden so considerable already -- why bother about any particular deal's bottom lines? Small potato stuff like Simmns isn't noticeably moving the dial one way or the other anyway.
It's about local conditions, novelty, and playing through no matter what -- like a good round of golf at an unfamiliar course.
Oh and by the way --
"From 2003 to 2007, 188 companies controlled by private equity firms issued more than $75 billion in debt... to pay dividends to the buyout firms."Peanuts! We gotta see trillions now, before we call the cops.
Comments (16)
Who buys these bonds? Wall Street repackagers?
Posted by Michael Dawson | October 15, 2009 4:39 PM
Posted on October 15, 2009 16:39
Were they junk, I mean, high yield bonds? Guess it dosen't matter, they're out house wall paper now.
Posted by Son of Uncle Sam | October 16, 2009 6:24 AM
Posted on October 16, 2009 06:24
probably a bit dear to use as outhouse wall paper
the proceeds from selling whatever assets remain goes to the bondholders
Posted by bob | October 16, 2009 11:52 AM
Posted on October 16, 2009 11:52
md and son of the prophet samuel
your both right
who stuck??
lets hope a lot of widows and orphans
speaking of which
i think my sainted miser of a mother
wasn't one..
she got enough right on her nose
with some serious ' can't miss '
GM bonds
ahh the coils and toils of the petty rentier
once they step outside the mutual fund
fenced play yard
their broker becometh
a player most foul
a cursed figure
like an actor's agent
Posted by op | October 16, 2009 11:56 AM
Posted on October 16, 2009 11:56
op, have you seen The Mayfair Set by Adam Curtis?
Posted by bob | October 16, 2009 1:39 PM
Posted on October 16, 2009 13:39
no i haven't bob
but sounds delightful
i'm a great fan of bold measures
audacity is the elixir of life
especially by pious scoundrels
so swashbuckling
even by the mortal class enemy
always brings a grin
to yee ole pie hole
Posted by op | October 16, 2009 2:35 PM
Posted on October 16, 2009 14:35
it's available for free download here, on an ultra fast server:
http://www.archive.org/details/AdamCurtis_TheMayfairSet
watch it. trust me, it will be your favorite documentary
Posted by bob | October 16, 2009 7:01 PM
Posted on October 16, 2009 19:01
my multi mouse wheels
of a pc
caved in trying to down load this
treat bob...
i've forgiven her of course
i'm nothing if not fair
but she must discover
and present to me
same sexual kiddy porn
of great worth
and
for a month as... penance
or else she becomes the triune property
of my three decidely undexterous
nincumpooches
Posted by op | October 17, 2009 11:29 AM
Posted on October 17, 2009 11:29
pfft.. what a lame excuse
Posted by bob | October 17, 2009 3:00 PM
Posted on October 17, 2009 15:00
philologists' corner:
recently brought to my attention
by a young comrade :
famous line:
'The tradition of all the dead generations weighs like a nightmare on the brain of the living.' Karl Marx, 1852.
should read
'The tradition of all the dead generations weighs like an alp on the brain of the living.' Karl Marx, 1852.
note the deep change of signifigance
an alp vs a nightmare
one all to massively real
the other horrorific but only imagined
one can awake from a nightmare
and shake it off
but comrades
what does one do to dig out
from under an alp ??
Posted by op | October 17, 2009 3:13 PM
Posted on October 17, 2009 15:13
I fear your young comrade needs to brush up his German, Owen. The German word is inded 'Alp', but it doesn't mean alp-like-a-mountain in German; it means "nightmare" as well as "goblin", or "incubus" (which latter is similar to the original meaning of "nightmare" in English; 'Alp' is cognate with the English word "elf").
There is also a dialect word "Alp" that means a mountain meadow, and used in the plural, refers to the Alps. But that word is feminine, and what old Karl wrote is "Die Tradition aller toten Geschlechter lastet wie ein Alp auf dem Gehirne der Lebenden." The 'ein' indicates that the word is masculine and so it's gotta be the alp like a goblin or incubus, and "nightmare" is about as close as we get in English.
Posted by MJS | October 17, 2009 3:47 PM
Posted on October 17, 2009 15:47
thanx mjs
well karl was wrong
it is a mountain on our brains or in our brains
the last 157 years well establish
that its more then a nightmare
practically speaking we can't wake up from it
we have to find a way out of it
dwarfs are great tunnelers which of course elfs aren't so even that misleads
the next installment of philolgists' corner
will take up the word scheinvert
neologism or faux hegelian jape ??
Posted by op | October 17, 2009 5:06 PM
Posted on October 17, 2009 17:06
bob
the mice seemed to take offense at your pfft
and redoubled their efforts
and like the erection crew
in the woodman's
all you wanted to know about sex...
they managed by an effort worthy
of the lady panzer trap diggers of leningrad
well
i've been treated to a hunk of said documentary mini series
and it was enjoyment itself
Posted by op | October 17, 2009 5:12 PM
Posted on October 17, 2009 17:12
Don't be so hard on old Karl. 'Alp' in German is a more vivid expression than 'nightmare' in English. For us, a traffic jam is a 'nightmare'. Here's what 'Alp' means in German:
Posted by MJS | October 17, 2009 9:23 PM
Posted on October 17, 2009 21:23
thanx mjs
you as usual seal the the highest bid here
the incubus is not only
spiritually independent and substantial
when
you awake he's left a gift from himself in you
a gift far more real then whatever
you dreamed
Posted by op | October 18, 2009 8:30 AM
Posted on October 18, 2009 08:30
Exactly. The Alp is not an inanimate object, however weighty, or a mere subjective experience. It's a malign agency. If the translator had said that the tradition of all the dead generations lies like an incubus upon the living, he'd've gotten closer to the Old Man's image.
Posted by MJS | October 18, 2009 11:21 PM
Posted on October 18, 2009 23:21