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As you've noted, the transaction was a leveraged buyout. Said PE firms will take on leverage (debt) to purchase the company in hopes of generating enough cash that pays off interest and a certain required rate of return. PE firms make profit through that cash or by improving performance enough to provide positive returns to the portfolio of companies. Said PE firms will likely have influence or control over management and the board.
Sometimes, things don't go as planned and said firms are either over leveraged or the bought out company just doesn't generate enough cash to service the debt. The debt is the companys debt, and the liability is owed to the bank.
So does this leave employees high and dry? Yes and no. Employee equity is not the aim for an LBO. If the company does well under new ownership and management then in hindsight we will say the LBO was a great idea. THe buyout was required in the first place because poor company performance. While I can see how LBOS have a negative impact on wages and correlate to job cuts, there are also studies that show LBOS result in better workplaces and longer term employment. Two sides to the coin, and you can see which side the article has chosen to take.
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