Tuesday, December 24, 2019

Home Dialysis Goes PEU


The U.S. for-profit healthcare system arose from bipartisanship and is a major investment target for private equity underwriters (PEU).  Ensuring profits is behind the talk of empowering patients.  Take the burgeoning area of home dialysis, encouraged by last summer's Presidential Executive Order.

PEU Town Hall Ventures is behind Somatus, while Frist-Cressey Ventures backs Monogram Health.  Town Hall Ventures founder Andy Slavitt is a former Obama Medicare Chief.  Dr. Bill Frist is former Republican U.S. Senator and founder of Frist-Cressey Ventures.

Humana recently partnered with Somatus and Monogram Health.  Humana aggressively entered homecare with its 40% purchase of Kindred at Home, a giant home health and hospice provider.  PEU Welsh, Carson, Anderson and Stowe owns 30% of Kindred at Home, as does TPG Capital.  WCAS employs Tom Scully, former Medicare Chief under President George W. Bush.

Turn over a PEU rock and you'll find a former Medicare Chief.   They will do for healthcare what The Carlyle Group did for giant nursing home ManorCare and LifeCare Hospitals.  Their grand returns will not be deterred by a "lonely, agitated" public sick of overpaying for healthcare. 

Friday, December 20, 2019

Swift vs. Carlyle: Round Two


The Carlyle Group plans to make big money off its investment in Ithaca Holdings, the company that owns most of Taylor Swift's music.  Carlyle nearly doubled its money in Beats Electronics in eight short months and would love for Taylor Swift to give them that level of return.

Business news sources gave considerable deference to Carlyle co-founder David Rubenstein and current high level executives.  Reports highlighted how much Rubenstein likes Swift's music and how Carlyle will have a successful investment, i.e. profitable exit in resolving the controversy over Swift's music.

How much extra will Swift have to pay the next set of middlemen to get the rights to her creations?  Taylor eloquently shared her concerns at the Billboard Women in Music Event where she received "Woman of the Decade" honors.
 
Swift told the audience that as the “resident loud person,” she wanted to talk about the “new shift that has affected me personally” and “is a potentially harmful force in our industry.” She said it’s the “the unregulated world of private equity coming in and buying up our music as if it's real estate. As if it’s an app or a shoe line.”
Carlyle owns luxury shoe company Golden Goose Deluxe Brand and is ready to flip the high end tennis shoe firm.  The Carlyle Group also owns streetwear retailer Supreme.  Taylor could well own products from both affiliates. 
She continued, “This just happened to me without my approval, consultation or consent. After I was denied the chance to purchase my music outright, my entire catalog was sold to Scooter Braun’s Ithaca Holdings in a deal that I’m told was funded by the Soros family, 23 Capital and the Carlyle Group. Yet, to this day, none of these investors have ever bothered to contact me or my team directly— to perform their due diligence on their investment. On their investment in me. To ask how I might feel about the new owner of my art, the music I wrote, the videos I created, photos of me, my handwriting, my album designs.” (Big Machine Label Group has said Swift was given an opportunity to buy her music back, however, she has said it wasn’t a straight-forward deal.)
Music superstar Swift is in a similar position as Missoula, Montana which tried numerous times to purchase Mountain Water, before Carlyle swooped in and bought its parent holding company.  Missoula later won a lawsuit against Carlyle and acquired Mountain Water.  
 
Swift went on to say Braun — a music manager who reps megastars including Ariana Grande, Justin Bieber and Demi Lovato — “never contacted me or my team to discuss it prior to the sale or even when it was announced. I’m fairly certain he knew exactly how I would feel about it though — and let me just say that the definition of toxic male privilege in our industry is people saying, ‘But he’s always been nice to me,’ when I’m raising valid concerns about artists and their right to own their music. And of course he’s nice to you — if you’re in this room, you have something he needs.”

Swift said that “private equity is what enabled this man, according to his own social media post, that he could ‘buy me,’” before adding, “[I’m] obviously not going willingly.”
There are more rounds to come.  Swift's truth telling could wake up people to the harm done by private equity underwriters.  The PEU boys don't play nice, so neither should she.  One music video could counter decades of PEU public relations, which never resonated with citizens (many of whom actually work for private equity owned companies and have experienced the damage done by the greed and leverage boys).

Update 12-24-19:  FT reported "Scooter Braun and The Carlyle Group are currently learning how it feels to be one of Swift’s exes as she seeks to frame a battle over her masters as a fight for artists’ rights. Don’t bet against her."

Update 12-26-19:  Swift is in a position to hurt Carlyle and company by re-recording her music.  She can also make products sold by Carlyle affiliates less cool.

Thursday, December 19, 2019

PEU Blackstone's Mascot Recalls Carlyle's Beats Rap


The Blackstone Group released a "fun" video of the private equity underwriter's mascot development project.  The mascot role was shunned or poorly performed until an unknown person showed their dance moves and dunked for the PEU faithful.  It was Blackstone co-founder Stephen Schwarzman exceeding the low hurdle for the slam. 


The public hasn't had this much fun since Carlyle Group co-founder David Rubenstein rapped a holiday greeting wearing Beats headphones, where it made $430 million in 243 days (on its original $500 million investment).

Trump corporate tax cuts reduced their tax burden to an average 11.3% last year, yet half of workers got no raise this year. 


This phenomenon occurred under Red and Blue political teams.  That's our PEU world where politicians Red and Blue love PEU.

P. Buttigieg needs only a few letter change to become PEUttigieg, the second coming of President Obama for the greed and leverage boys.

Tuesday, December 10, 2019

Carlyle Refinery Exploded due to 45 Year Old Pipe Elbow


State Impact Pennsylvania reported:

An outdated piece of pipe that had corroded so much its sides were the width of half a credit card led to the catastrophic explosion and fire at the Philadelphia Energy Solutions refinery in June, according to a new report out Wednesday by the Chemical Safety and Hazard Investigation Board.

“The PES refinery is 150 years old,” she said. “The piping component that failed was installed in the 1970s, and although parts of the piping circuit had been inspected as recently as 2018, the specific component that failed has not been inspected for corrosion in the past 45 years.”
Carlyle Group co-founder David Rubenstein spoke with Delta Airlines CEO Ed Bastain, another Philadelphia area refinery owner, but the topic of explosions did not come up.  Rubenstein interviewed Bastain a month before the CSB finding was released.

“The CSB continually points out that the most obvious causes of a major incident, such as a corroded pipe, are not what actually caused the incident,” Wilson said. “Major industrial failures like this are nearly always the consequence of management decision-making and the way safety is prioritized or not.”
Mr. Rubenstein has not been deposed but former Carlyle joint venture executive, Lord John Browne was forced to give deposition in the Texas City refinery explosion that killed fifteen people and injured another 500.

After refusing to testify for almost 3 years, Lord John Browne, former CEO of British Petroleum at the time of the Texas City explosion, was recently forced to give a deposition to attorney Brent Coon of Brent Coon and Associates, by the Texas Supreme Court. Mr. Coon, who argued before the Supreme Court in October of 2007, was finally allowed to depose Browne for one hour on April 4th 2008. He fought, wrangled and appealed the courts requests every step of the way, said Mr. Coon. We wondered what he was hidingand now we know.  
Carlyle hired Browne with full knowledge of safety lapses under his watch.  Lord Browne's deposition was the opposite of the hand's on leader who challenged the Texas City refinery to cut maintenance 25%.

Insisting that he had only ever visited Texas City twice, Browne said it looked the same as any other refinery and that he did not perceive it to be dilapidated: "I didn't see that it was unusually - I didn't come away with an impression that is lasting with me that it was unusually different."

When asked about an internal document suggesting that he was personally monitoring accident statistics at Texas City because he knew of its poor safety performance, Browne gave a qualified denial: "Well, certainly to the best of my recollection, this is an inaccurate statement. I don't recall doing this."

Browne did, however, accept that a survey of employees' worries at the site was "disturbing" and he accepted responsibility for company-wide cutbacks which were blamed by certain victims for falling safety standards. "It was necessary to reduce costs to get [BP] competitive with others and to bring a degree of discipline into the management of the firm," he told Brent Coon, a lawyer for bereaved families and injured workers.
Browne did acknowledge Carlyle being his sponsor in the deposition.

Browne said he had never read a report into the tragedy's causes by the Chemical Safety Board.
We will see if history buff David Rubenstein's reads the CSB report on the PES refinery explosion.  I expect it to be de-riveting.

Update 12-15-19:  Philadelphia Inquirer reported bankrupt Philadelphia Energy Solutions is seeking a new round of bonuses that would pay seven top executives millions of dollars, depending upon the success of a plan to reorganize or sell the company.  Board member Mark Cox could get millions, employees zip.  This is on top of $4.5 million in retention bonuses paid two weeks after the massive explosion.

Monday, December 9, 2019

Carlyle's Rubenstein Learned Delta Can't Offer Free Wi-Fi


TravelPulse reported:

Delta Airlines CEO Ed Bastian told podcast host David Rubenstein that charging for internet access prevents too many people from using it.

“One of the reasons why I say it’s ‘not a good reason’ why we charge for internet’ — you don’t pay for internet practically anywhere else — is that the planes do not have the technical capacity, and capability yet that if we made it free the system would crash,” Bastian said. “So, once it gets above about a 10% take-rate onboard performance starts to erode…if you turned it on free.”
Bastian didn/t mention Carlyle owned ARINC which makes airline communication equipment 

 
FT reported:

Rubenstein has, he admits, always been a workaholic but he denies that the happiest day of his life was the one he found out he could send emails while airborne.
Carlyle bought ARINC in 2007 and sold it in 2013 to Rockwell Collins for $1.4 billion. Not many people know of David Rubenstein's history with airline WiFi systems. Rubenstein received the Digital Patriot Award from CES on the Hill in April 2012.  He received his award for protection of technology. 

Rubenstein cited Delta Airlines in a Spring 2018 Philanthropy interview:

I was surprised to learn that Delta was broadcasting the interviews on airplanes. Friends would e-mail me, saying they were flying and watching an interview. People around the world watch them because Bloomberg is a global television network. 
Rubenstein returned the favor when he interviewed Delta's CEO in Fall 2019.  Bastain's "if you turned it on for free" comment runs against the decade long tide of airline's charging for anything and everything, known as ancillary revenue.


Face the Nation recently interviewed David Rubenstein on his appreciation for history.   Rubenstein, like Thomas Jefferson, started working as an idealistic youth.  Jefferson crafted the "All men are created equal" Declaration of Independence.  Rubenstein worked in President Carter's White House. 

Both used leverage in innovative ways and ended up obsessed with profits.  Jefferson was the first man to use slaves as collateral for a loan when he had access to riches by simply setting his slaves free, something Jefferson refused to do.  Rubenstein pioneered private equity's connection to the seat of power, Washington, D.C. and helped grow covenant light debt. 

Mr. Rubenstein wants people to study and recall history.  Carlyle's history has a number of dark spots, 26 patient deaths at LifeCare Hospitals post Hurricane Katrina, torture rendition flying by Landmark Aviation, World Bank procurement violations by ARINC and several pay to play (bribery) settlements where Carlyle paid tens of millions but admitted no wrongdoing.

History is written by the winners, like Mr. Rubenstein.  Face the Nation did not interview the Brinton's family, who had their company back-doored by Carlyle's purchasing discounted debt and forcing it into bankruptcy.  John Dickerson did not interview Former Texas Governor Rick Perry who gave Carlyle $35 million for 3,000 new jobs at Vought Aircraft Industries' Dallas operations.  Vought cut 35 jobs during the six year performance period for $1 million per job reduced.  Vought sent Boeing 787 Dreamliner production to South Carolina where they gunked up Dreamliner production.

Character is revealed across a person's interactions with others.  Mr. Rubenstein's philanthropy is admirable but it does not counter the tremendous damage the private equity model has done to industries and workers.  Prioritizing profits over people had Thomas Jefferson use slaves as loan collateral.  Private equity is its modern day expression.

Tuesday, December 3, 2019

Cisneros, Albright, Cohen and Rubin: From Clinton Cabinet to PEU


PEU lobbying group American Investment Council reported over seven years ago:

May 31, 2012Former President Bill Clinton appeared on CNN’s Piers Morgan Tonight, guest hosted by Harvey Weinstein, to provide his take on the presidential election.  When Clinton was asked about the recent attacks on private equity, he responded:

“If you go in and try and save a failing company…you can go into a company, have cutbacks and make it more productive with the goal of saving it, and when you try, like anything else you try, you don’t always succeed…so I don’t think that we ought to get into the position where we say this is bad work. This is good work.”
Good work for many former members of the Clinton cabinet.   Many joined the greed and leverage boys after serving President Clinton.

Madeline Albright founded Albright Capital.

APR Energy, an Albright Capital portfolio company, secured a contract to supply the South Australian government with a new fast-start power plant made up of nine turbines to help avert potential shortages over summer.  The company also filled the breach for Tasmania last year when an under-sea power cable to the mainland failed.
In the article, APR Energy's executive chairman John Campion discusses the transaction and the invaluable involvement of Ms Madeleine Albright and Albright Capital Management.
Henry Cisneros is Co-Chief Investment Officer and Chairman of American Triple I Partners.  His PEU landed a deal this week to redevelop New York's JFK Airport.

A minority-owned private equity firm led by Clinton administration veteran Henry Cisneros has been selected as an investment partner for a project at New York’s John F. Kennedy International Airport. American Triple I Partners will contribute 30% of the equity for the redevelopment of terminals 6 and 7 at JFK. 

The addition of American Triple I, a 100% minority-owned business, helps the consortium meet Governor Andrew Cuomo’s goal for the JFK redevelopment plan to include 30% participation from minority and women-owned business enterprises, known as MWBEs. 
The Carlyle Group is behind the new Terminal 1 at JFK.  Carlyle co-founder David Rubenstein worked in President Jimmy Carter's White House but benefited from Clinton's privatizing the government's background check arm.  Carlyle flipped USIS several times for huge returns.

William Cohen founded TCG Financial Partners in 2004.  His co-founding partner sold a Palm Beach house for $2,312 a square foot in June 2019.

Robert Rubin joined Insight Capital Partners before moving on to Centerview Partners.  Rahm Emanuel worked in the Clinton and Obama White Houses and recently joined Rubin at Centerview Partners.

New Democratic Presidential Candidate Deval Patrick headed up the Civil Rights Division under Bill Clinton.  He recently resigned his PEU position with Bain Capital.

A flashback to Bill Clinton defending the PEU boys to Harvey Weinstein is symbolic on a number of levels.  The greed and leverage boys are predatory. 

Update 12-19-19:  Presidential Candidate Pete "PEU" Buttigieg worked for The Cohen Group and the Truman Center, where Madeleine Albright sat on the board.   Peuttigieg!