Vulture capitalists rip the heart out of British companies

Phones4u closed

Phones4u closed

Vulture capitalists borrow huge sums of money, use the money to buy up companies, load the debt on the company, then take everything they can out of the company, leaving behind a broken shell.

The pubcos are zombie companies. Laden with debt, barely able to service the debt, and only then by screwing pub landlords and selling off for property development, those pubs that are forced out of business.

Such is the scale, we could be facing another banking crisis as they bring down the banks.

Phones4u

Bought with borrowed money, the company then loaded with the debt.

Borrowed yet more money, the money used to pay a dividend, the company loaded with more debt.

The company then went under, pushed over by the mobile phone networks.

The company was caught between a rock and a hard place, caught between being screwed by the phone companies who wanted a better deal and having no room to manoeuvre with a debt to service.

The tax payer has to pick up the cost of redundancies, which were rushed through by the liquidator.

Whether Phones4u would have survived, is a moot point, probably not. With the phone companies having shops in every High Street, every shopping centre, what function was performed by Phones4u? They should have moved to the sale of unlocked handsets.

Comet

Comet was sold for two pounds, plus a sweetener of a tens of millions of pounds.

The new owners then stripped the company.

When the finance director woke up to what was going on and alerted his Member of Parliament, it was too late, the money had already been transferred to an offshore account on the Cayman islands.

Whether Comet would have survived, is a moot point, probably not. It had put little electrical shops out of business on price. Now it was being undercut by Amazon. What had they to offer? People only shopped at Comet because they were cheap. No one went to Comet to seek expert advice.

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