HomeLatest NewsFeatured HomebuildersHome Buyer ResourcesBinding ArbitrationResource LinksSubmit ComplaintsView ComplaintsTake Action 101!Report Mortgage FraudMortgage Fraud NewsForeclosure NewsConstruction DefectsHome DefectsPhoto GalleryFoundation ProblemsHomeowner Website LinksHOA Reform
Main Menu
Home
Latest News
Featured Homebuilders
Home Buyer Resources
Binding Arbitration
Resource Links
Submit Complaints
View Complaints
Take Action 101!
Report Mortgage Fraud
Mortgage Fraud News
Foreclosure News
Construction Defects
Home Defects
Photo Gallery
Foundation Problems
Homeowner Website Links
HOA Reform
Featured Topics
Builder Death Spiral
Report Mortgage Fraud
Foreclosure Special Report
Mold & New Home Guide
Special News Reports
Centex & Habitability
How Fast Can They Build Them?
TRCC Editorial
Texas TRCC Scandal
Texas Watch - Tell Lawmakers
TRCC Recommendations
Sandra Bullock
People's Lawyer
Prevent Nightmare Homes
Choice Homes
Smart Money
Weekly Update Message
HOBB Archives
About HOBB
Contact Us
Fair Use Notice
Legislative Work
Your House

 HOBB News Alerts
and Updates

Click Here to Subscribe

Support HOBB - Become a Sustaining Member
Who's Online
ABC Special Report
Investigation: New Home Heartbreak
Trump - NAHB Homebuilders Shoddy Construction and Forced Arbitration
BusinessWeek: The Buyout Boom's Dark Side
Saturday, 04 August 2007

 

The Buyout Boom's Dark Side
Spectrum Brands' plight could foreshadow what's ahead when the LBO high wears off


There has been a lot of lamenting in recent months over the debt that private equity firms have been piling on companies. And there's even more worry over what will happen to those businesses when the buyout boom ends. If the story of Atlanta-based Spectrum Brands Inc. (SPC ) is any indication, the fallout could be painful.

Pieced together over the years largely by prominent buyout firm Thomas H. Lee Partners, the conglomerate took advantage of the market's generous borrowing terms to fund an aggressive buying spree. But instead of transforming itself into a consumer brand powerhouse, Spectrum remains little more than a hodgepodge of middling brands, such as Rayovac batteries and Hot Shot insecticide. And serial dealmaking has left the company hobbled by a massive $2.5 billion debt load, one that is 10 times larger than Spectrum's value on the stock market.

Now the company has temporarily staved off creditors by refinancing its debt and putting one of its biggest divisions up for sale. In a last-ditch attempt to salvage their investment, the THL partners who sit on the board, along with the rest of the company's directors, have replaced Spectrum's longtime chief executive and other senior managers. Since March, 2005, the stock has dropped 90%, to 4.38. "This [investment] has been disappointing to us," says Scott M. Sperling, co-president of THL, the largest shareholder in Spectrum.

The destruction of capital and jobs at the company follows a history of wheeling and dealing—by THL and by Spectrum's executives, handpicked by THL—that goes back more than a decade. It's a history that shows just how much damage leveraged buyout firms can inflict on companies as they dress them up to sell to the stock market.

Read More on Businessweek website...
http://www.businessweek.com/magazine/content/07_33/b4046616.htm

 
< Prev   Next >
Search HOBB.org

Reckless Endangerment
BY: GRETCHEN MORGENSON
and JOSHUA ROSNER

Outsized Ambition, Greed and
Corruption Led to
Economic Armageddon


Amazon
Barnes & Noble

NPR Special Report
Part I Listen Now
Perry Home - No Warranty 
Part II Listen Now
Texas Favors Builders

Washington Post
The housing bubble, in four chapters
BusinessWeek Special Reports
Bonfire of the Builders
Homebuilders helped fuel the housing crisis
Housing: That Sinking Feeling

Consumer Affairs Builder Complaints

IS YOUR STATE NEXT?
As Goes Texas So Goes the Nation
Knowledge and Financial Responsibility are still Optional for Texas Home Builders

OUTSTANDING FOX4 REPORT
TRCC from Bad to Worse
Case of the Crooked House

TRCC AN ARRESTING EXPERIENCE
The Pat and Bob Egert Building & TRCC Experience 

Build it right the first time
An interview with Janet Ahmad

Bad Binding Arbitration Experience?
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
or call 1-210-402-6800

top of page

© 2017 HomeOwners for Better Building
Joomla! is Free Software released under the GNU/GPL License.