With American Pad & Paper (Ampad), Mitt Romney and his partners took a small but successful paper products business and merged it with other companies in the industry, piling up debt as they went. Ultimately, the company was unable to keep up with the interest payments on its debt and was forced into bankruptcy, but not before Romney and his partners were able to squeeze out more than $100 million for themselves.
Romney Economics: Ampad
Bain initial investment: $5 million
Bain profits: $100 million
Jobs lost: 1,500
1992Mitt Romney and his investors purchase Ampad from Mead Corporation. They put in $5 million of their own money, and Ampad takes on $35 million in debt to pay for the rest of the purchase.
“Bain Capital, Romney's Boston-based firm … took over a Marion, Indiana, paper plant and laid off one-fifth of its workers, cut wages, sharply reduced health benefits and eliminated the company retirement plan.”Boston Globe, 9/23/94
—Randy Johnson, former worker at the Marion, Indiana, plantLA Times, 12/16/07
We were just fired … They came in and said, ‘You’re all fired. If you want to work for us, here’s an application.’ We had insurance until the end of the week. That was it. It was brutal.
1995Romney and his partners continue their “roll-up” strategy, buying up companies within the industry and merging operations, cutting jobs along the way.
“In 1995, several months after shuttering a plant in Indiana and firing roughly 200 workers, Bain Capital borrowed more money to have Ampad buy yet another company, and pay Bain and its investors more than $60 million—in addition to fees for arranging the deal.”The Boston Globe, 6/26/07
1996Romney’s firm takes Ampad public in order to sell some of its shares. Romney and his investors receive between $45 million and $50 million on the sale, in addition to a $2 million fee for arranging the public offering.
“By 1999, Ampad’s debt reached nearly $400 million, up from $11 million in 1993, according to government filings.”The Boston Globe, 6/26/07
2000Ampad declares bankruptcy
“The result: Ampad couldn’t pay its debts and plunged into bankruptcy. Workers lost jobs and stockholders were left with worthless shares. Bain Capital, however, made money—and lots of it.”The Boston Globe, 6/26/07
—Phyllis Detro, who lost her job when the Ampad plant in Marion, Indiana, closed in 1995Bloomberg, 7/20/11
I would not vote for [Mitt Romney] for anything. ... I’d like to see the jobs that he’s created. He has taken away jobs.
Even with the bankruptcy and subsequent bailout, Mitt Romney and his partners made millions on the Ampad deal. They played by their own set of rules, and profited even as workers lost their jobs and the local community suffered.
It’s this same experience that Mitt Romney now cites as his qualification to be president, and the same economic philosophy he would bring to the entire country.