|Millwright at Wisconsin protest in Feb. in Madison|
You know the Scott Walker administration won't lose any sleep over a bunch of families getting kicked in the gut by the machinations of hedge funds and private equity firms: AKA employers.
NewPage Corp., which employs about 1,700 in Wisconsin and just filed for bankruptcy, is owned by the private equity firm Cerberus Capital Management L.P.
Nathaniel Shuda in the Wisconsin Rapids Tribune has the news on the bankruptcy.
One of central Wisconsin's largest employers has begun the process of restructuring its operations in an attempt to improve its financial standing.Workers have been dreading the bankruptcy for a long time, and in speaking to working folks and their families [whom today's Republicans refer to as "parasites"] in central Wisconsin the last year the attitude is: Walker and the big-money interests don't much care what happens to workers and families. Our labor is held in low esteem.
NewPage Corp., which employs about 1,700 people at its paper mills in Wisconsin Rapids, Biron and Stevens Point, requested Chapter 11 protection Wednesday, according to documents filed in the U.S. Bankruptcy Court. It also filed similar documents in Nova Scotia Supreme Court. Company officials said U.S. operations would continue as normal during the process.
Vendors were reportedly called in to Ohio the first half of this year and assured they would be paid; and word spread quickly that bankruptcy was imminent. The word was correct.
NewPage Corporation includes among its holdings paper mills in Biron, Stevens Point and Wisconsin Rapids.
Wisconsin families can't do much more than hope that forces out of their control minimize the damage to families.
As for Scott Walker, maybe he'll send over a copy of Ayn Rand's books explaining why workers are parasites and really, for the good of society deserve what they get.
As for what NewPage is, Peter Lattman of NYT explains this morning:
The NewPage Corporation, the ailing papermaker owned by the private equity firm Cerberus Capital Management, filed for bankruptcy on Wednesday, blaming a sharp decline in the magazine industry, a spike in the cost of raw material and too much debt.Perhaps Tommy Thompson, advisor to the Capital Fund Firm hedgefund, can help explain why communities and families ought to love hedgefunds
The company, which is based in Miamisburg, Ohio, and has 6,000 workers, will now operate under Chapter 11 bankruptcy protection while it restructures its balance sheet and seeks to slash its debt, which exceeds $3 billion.
The long-expected Chapter 11 filing in United States Bankruptcy Court in Delaware punctuates a painful investment for Cerberus, which borrowed heavily to acquire the MeadWestvaco paper mill business in 2005 for $2.3 billion and renamed it NewPage.
“The company’s current capital structure was put in place during a different time with different assumptions,” NewPage said in a statement.
NewPage is one of only several multibillion-dollar buyouts struck in the market boom — a list that includes the retailer Linens ’n Things, the music company EMI Group and the aluminum maker Aleris — that have ended in bankruptcy.
During the depths of the financial crisis, many private-equity watchers expected deep misery for the buyout firms that issued more than $1.5 trillion in debt to finance leveraged buyouts since 2003, according to Dealogic. But the number of bankruptcy filings was limited as the capital markets quickly recovered, allowing firms to shore up their companies by repurchasing debt or issuing new equity.
Still, Wednesday’s filing provides fodder for critics of the private equity industry who contend leveraged buyouts like the Cerberus takeover of NewPage destroy companies and jobs.
The NewPage filing is the second recent prominent legal case involving Cerberus, the New York investment firm that had ill-fated investments in GMAC and Chrysler. Last month, Cerberus was sued by Innkeepers USA Trust after it backed out of its $1.1 billion acquisition of the hotel company.
After being battered during the financial crisis, and suffering sizable redemptions in its hedge funds, Cerberus has had vast improvements. Among successful investments, the firm has made a killing buying distressed mortgages at the market bottom.
It has already written off its stake in NewPage, which has been a troubled investment from the start. Under private-equity ownership, NewPage, which specializes in coated paper for magazines, has shut factories and slashed jobs. The company operates 16 paper mills from Duluth, Minn., to Rumford, Me.
Cerberus brought in Robert Nardelli, the former head of Home Depot and Chrysler, last year as chairman to help turn the company around. He did not do so, and resigned in May.
NewPage alluded to another reason for the bankruptcy filing: the iPad. While not mentioning the Apple tablet or similar devices by name, the company’s bankruptcy papers cite “increases in the use of electronic data transmission and storage” and “an increased demand for electronic reading material.”
Now, several private-equity firms and hedge funds that own NewPage’s debt — the Avenue Capital Group, Apollo Global Management and Oaktree Capital Management among them — will fight in court to control the company.