NEW YORK, Oct. 5 (UPI) -- Private equity firms own more than half the 220 U.S. companies that have defaulted on their debt in 2008, Standard & Poor's analysts said.
The figures point to a Wall Street revolving door in which equities firms purchase companies with mostly borrowed money, then borrow against the equity of the company just bought, The New York Times reported Monday.
That means, the equity firms have borrowed money to buy a company, then used that company to borrow money to invest elsewhere.
In quick order, private equities look to sell the company, lining their pockets with profits, but leaving a company devastated by rising debt.
The Simmons Bedding Company in Kenosha, Wis., is heading for bankruptcy and its seventh sale in a little more than 20 years, the Times reported.
In the economic downturn the debt-saddled company has struggled and the next sale bondholders could lose $575 million, workers could lost jobs, but the equity firm Thomas H. Lee Partners and banks that arrange the deals will make millions, the Times said.
"From my experience, none of the private equity firms were building a brand for the future," said Robert Hellyer, Simmons's former president.
