Thursday, August 23, 2012

Carlyle Seeks Brintons Subsidy after Ditching Pension Plan

After dumping Brintons' pension plan on the public, The Carlyle Group wants a government subsidy to update its weaving manufacturing technology.

Carpet-maker Brintons wants to install new technology at its Kidderminster plant, but owners Carlyle, a US private equity group, said it could be persuaded to spend the money in its Portuguese factory after the country offered better incentives than Britain.

The Portuguese Development Agency offered a 45 per cent subsidy on the total cost of investment in new weaving technology, developed by Brintons, while the best Britain could offer was 10 per cent through the Regional Growth Fund.
Carlyle pits one country against the other for a nondebt, nonequity capital injection.  Right now Portugal has the upper hand by offering 3.5 times more cash to Carlyle.

How much did Carlyle's back door acquisition of Brintons' already cost British taxpayers?

By using a pre-pack to acquire the business, Carlyle was able to jettison Brintons' pension fund – complete with its £10.5m deficit. The Pension Regulator is investigating. 

The Pension Protection Fund has been left to pick up the pieces and will almost certainly end up taking over the 1,500-member scheme. 
All's fair in PEU profit maximization.  PEU is my pet name for private equity underwriters.

The race to the lowest global common denominator continues on worker pay & benefits, taxes and regulation.  Exempt from the race downward is CEO/Board pay and economic development subsidies.

Update 2-27-13:  If Carlyle takes over Axminster Carpets out of a pre-packaged bankruptcy, can it ask the British government for a greater subsidy?

Update 9-22-13:  Without pension expenses Brintons returned to profitability and is ready to benefit from Dubai's return to growth.