What Bain Capital Left Out Of Its Ampad Defense

May 21, 2012 6:47pm

ABC News’ Michael Falcone reports:

After the Obama campaign unleashed another attack Monday on Mitt Romney’s business dealings at Bain Capital, the private equity firm went on defense. But Bain’s public statement is as notable for what it included as it is for what it left out.

Bain, which Romney founded in the 1980′s, sought to explain its 1992 acquisition of Ampad and its role in the office supplier’s eventual downfall — the subject of a 5-minute web video the Obama campaign unveiled on Monday. The video features testimonials from workers who lost their jobs when Bain merged Ampad with another office supply company in Marion, Indiana.

“We acquired Ampad from Mead Corp. in 1992, and grew the overall business during the four years we controlled the company.  The Marion plant was a challenging situation in a business that was performing well overall, growing revenues and adding jobs,” reads the statement from Bain Capital. “Our control of Ampad ended in 1996, fully four years before it encountered financial difficulties due to overwhelming pressure from ‘big box’ retailers, declines in paper demand, and intense foreign price pressures.  Despite political attacks that emphasize the few companies that have struggled, the facts are that during Bain Capital’s ownership, revenues grew in 80 percent of the more than 350 companies in which we have invested.”

Although the statement points out that Bain’s “control of Ampad ended in 1996,” up until 1999, Bain owned a nearly 36 percent stake in the paper supply company through stock ownership in five investment funds that bought shares in the company, according to public records.

In fact, in 1999, Bain was actually the largest single shareholder of Ampad. In addition, as of 1999, three Bain executives were sat on Ampad’s board of directors.

The statement mentions that Ampad “encountered financial difficulties due to overwhelming pressure from ‘big box”‘ retailers,” among other factors.

But it turns out that one of the big box retailers putting pressure on Ampad was a company Romney often holds up as a Bain success story — the office supply giant, Staples.

In a 2008 Boston Globe article headlined, “As Bain slashed jobs, Romney stayed to side,” reporter Robert Gavn writes that Ampad “became squeezed between onerous debt that had financed acquisitions and falling prices for its office-supply products. Its biggest customers — including Staples — used their buying power and access to Asian suppliers to demand lower prices from Ampad.”

The article also notes that Romney sat on the Staples board of directors during the period of Ampad’s slide into bankruptcy, which occurred in 2000.

Romney’s work at Bain has become a major flashpoint early in the general election. At a press conference in Chicago on Monday, President Obama underscored his campaign’s message:

“If your main argument for how to grow the economy is ‘I knew how to make a lot of money for investors’ than you’re missing what this job is about,” he said.

And Romney quickly chimed in with a statement of his own, saying that “President Obama confirmed today that he will continue his attacks on the free enterprise system.”

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