This afternoon on Fox News' America Live, Megyn Kelly did a segment on criticism of the way venture capital firm Bain Capital, under Mitt Romney's leadership, handled the takeover of a steel mill that later went bankrupt. Unmentioned any point during the segment, however, was the fact that the U.S. government ultimately had to bailout the company by funding the pension payments that the steel mill had promised its employees.
During the segment, Kelly hosted the former CEO of the company Bain created during the takeover of the steel mill. Kelly said that Bain made a "$4 million profit" and "$4.5 million in consulting fees," and adding that an Obama campaign ad -- which PolitiFact rated as "Mostly True" -- "paint[s] Bain under Romney" as "just not caring about" the pensions or employment of the steel mill workers. But she did not mention the bailout.
Reuters reported that in October 1993, Romney's Bain Capital "became majority shareholder in a steel mill that had been operating since 1888." The mill, renamed GST Steel and merged into a new company, GS Industries, was "a gamble," as it "needed expensive updating, and demand for its products was susceptible to cycles in the mining industry and commodities markets."
GS Industries declared bankruptcy on February 7, 2001, citing "the critical need to restructure the company's liabilities." It announced that it would shut down Kansas City-based GST Steel, "eliminating 750 jobs." That April, GS Industries announced that it "it was shedding the guarantees it had promised its workers in the event of a plant closure -- the severance pay, health insurance, life insurance and pension supplements that had been negotiated during the 1997 strike." In 2002, the federal government had to bail out the steel mill's underfunded pensions plan.
The story of Bain's failed investment in the Kansas City mill offers a perspective on a largely overlooked chapter in Romney's business record: His firm's brush with a U.S. bailout.
His supporters say the pension gap at the Kansas City mill was an unforeseen consequence of a falling stock market and adverse market conditions. But records show that the mill's Bain-backed management was confronted several times about the fund's shortfall, which, in the end, required an infusion of funds from the federal Pension Benefits Guarantee Corp.
The U.S. Pension Benefit Guaranty Corp, which insures company retirement plans, determined in 2002 that GS had underfunded its pension by $44 million. The federal agency, funded by corporate levies, stepped in to cover the basic pension payments, but not the supplement the union had negotiated as a hedge against the plant's closure.