Buyouts, Bread Sticks, Biscotti: Stella D’Oro in Context

The Stella D’Oro story has gone global.

A new article on the IUF website explains that the current situation at Stella D’Oro is the unfortunate result of risky and all-too-common corporate practices:

The dispute at Stella D’Oro is much more than a routine conflict over wages involving a union intent on defending members’ living standards and a hard-nosed management struggling with a tough economic climate. At the heart of the conflict is the huge burden of debt weighing down the balance sheets of companies taken private through a [leveraged buyout].

Outstanding LBO debt is a ticking time bomb in the debt markets. Like the sub-prime debt, it has been sliced, diced, securitized and “warehoused” in obscure corners of the financial universe that are only now coming to light.

In short,

Stella D’Oro is a classic example of a profitable company which has been drained and shrunk in the quest for quick gains and then turned over to the financial markets to leverage out the last bit of cash.

Finally, the article calls on the Obama administration to enact tougher regulations on these kinds of practices — “because working Americans can’t stand many more Stella D’Oros.”

Tagged: IUF, Stella D'Oro

 Print