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Started by KanKhaderKhanKan on May 15, 2019 10:51:00 PM
British Steel owners who demand bail-out charge company £20 million year in interest

From today's Guardian:

Excerpt from the above link:

The multi-millionaires who bought British Steel for £1 in 2016 and are now seeking financial aid from the government are charging £20m a year in fees and interest from the company.

Marc Meyohas and Richard Perlhagen are in talks with British Steel’s lenders over a £75m rescue package that is understood to be at risk of falling apart unless the government contributes.

The company, which owns the Scunthorpe steelworks, claims that without the new funding it could collapse, putting 4,500 jobs at risk.

I see the rent-seeking parasitical equityfund industry has learnt a thing or two from the 'Too Big To Fail' banks (i.e. privatise the profits but socialise the losses).

KanKhaderKhanKan - 15 May 2019 23:00:08 (#1 of 25)

Brexit gets brought but everyone should know the equityfund industry are the biggest asset-stripping, rent-seeking parasites on the face of this planet.

As a general rule if an equityfund company takes over a corporation the first thing they do is change working conditions (e.g. outsource or introducing 'zero hours contracts'), raid the worker pension funds, start ripping off their customers & SME suppliers and begin engaging in industrial scale tax evasion.

Their entire business model is like a giant financial suction pipe: Which is to extract the most amount of money as possible in the shortest amount of time as possible.

Then once they've tapped out exploiting the company they 'invested in' their next trick is to sell off the company assets (e.g. sell of production machines, sell of buildings - usually to another company they own in order to avoid paying taxes on that) then sell off the company premises to another firm but rent it.

The final phase of their scam is that once the company can no longer return exorbitant financial returns for their 'investment' (AKA price bilking their clients) these equityfund guys (using their presence on the executive boards?) FORCE the company they 'invested' in to pay them their dividend and how do they finance such dividend payments? They force those companies to borrow money from them so in every possible way these equityfund industries are scamming the companies they 'invested' in a dozen different ways.

They are fucking scum and nor is it surprising the equityfund industries are the Tory party's biggest donors and that the Tory party returns that favour by ensuring the financial sector never ever gets regulated like it should.

Seriously the equityfund industry is the one group of industry I would personally have no fucking qualms declaring class war on, the more you learn about these swines the more you wish Leninist confiscation of their assets.

Shadrack22 - 15 May 2019 23:22:28 (#2 of 25)

Time to pull the plug on steel production in the U.K.?

guigal - 16 May 2019 00:04:53 (#3 of 25)

You get the impression that the point of British Steel is not making steel. Judging from the Guardian article.

Greybull says that it is “passionate about making companies successful”. However, as well as British Steel, the firm backed the attempted rescues of Monarch Airlines; retailers Comet Group, Game Group and My Local; and Rileys snooker hall business. All of those businesses collapsed, putting several thousand people out of work. (The Guardian)

Winner - 16 May 2019 08:00:50 (#4 of 25)

I’m sure if we nationalise the steel industry it will become profitable again...

browserbutton - 16 May 2019 08:03:13 (#5 of 25)

The steel that Blighty needs to build great motor cars.

RosyLovelady - 16 May 2019 08:05:06 (#6 of 25)

More Dreadnoughts!

xDiggy - 16 May 2019 08:07:32 (#7 of 25)

everyone should know the equityfund industry are the biggest asset-stripping, rent-seeking parasites

This is really a caricature. Of course some buyout funds behave in the way described. But of the companies I have worked for, the best run one was owned by a private equity consortium. A PLC was run in terror of the finance dept, an LLP was an amateurish mess.

The problem with British Steel is the same problem as existed with Rover cars. You've got a business which is fundamentally not viable but politically sensitive, and thus open to abuse by snake-oil merchants who tell the politicians they can find a future for it.

dottie30 - 16 May 2019 08:44:07 (#8 of 25)

I've worked for one of the largest private equity firms in the world. I know they are beloved whipping boys of many but the research doesn't work in the favour of the naysayers. The research indicates that generally on exit, a firm usually employs more people and under better conditions than on buyout. Now that doesn't apply to all investments of course.

But also, the days of 90% leverage are long gone. These days a buyout is more likely to be 60% debt to 40% equity. It's why PE firms have such large fundraising departments these days - huge amounts of capital come from investors (along with capital from PE partners).

They also tend to be grouped with hedge funds and that's rather unfair because a PE firm usually holds onto a company for around a decade - often longer.

mememe - 16 May 2019 08:47:16 (#9 of 25)

Don't confuse them with facts.

nemo75 - 16 May 2019 08:48:16 (#10 of 25)

I doubt British Steel is all that viable. It’s been bailed out at least twice that I know of.

mememe - 16 May 2019 08:53:03 (#11 of 25)

Seems to me that if you want a strategic steel industry in the UK the only option is to nationalise it and suck up the losses. But I'm equally convinced that the UK doesn't really need one.

HerrWalrus - 16 May 2019 08:54:38 (#12 of 25)

Hard Brexit - that'll sort it.

Ginmonkey - 16 May 2019 08:59:32 (#13 of 25)

Interestingly if Labour want to encourage green tech a lot of traditional manufacturing skills are needed. Wind turbines for example rely heavily on masssive gears and ball bearings.

Then there are the towers and the undersea cabling.

FleurDuMal - 16 May 2019 09:07:39 (#14 of 25)

If I were PM, re-nationalising British Steel wouldn't be on my list of priorities.

mememe - 16 May 2019 09:11:46 (#15 of 25)

Well no. Volule steel in the UK has never really been competitive.

bossab2 - 16 May 2019 09:13:12 (#16 of 25)

Insulating houses is also usefully job creating.

Gotout - 16 May 2019 09:16:28 (#17 of 25)

A lot of countries are producing steel. Could there be an opening for British steelmakers to produce a higher grade of steel as opposed to the ordinary run of the mill stuff?

mememe - 16 May 2019 09:17:33 (#18 of 25)

They do - there's some very successful highly specialised steel produced in the UK. But I fear it's slightly exceptionalist to think that only the Brits could think of making higher grade steel.

Gotout - 16 May 2019 09:21:41 (#19 of 25)

I don't think that only the Brits could think of making higher grade steel, I just think that other countries seem less interested in specialising in a corner of the market and prefer mass production of ordinary steel.

mememe - 16 May 2019 09:24:25 (#20 of 25)

I just think that other countries seem less interested in specialising in a corner of the market and prefer mass production of ordinary steel.

And what do you base that on?

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