by Gordon Cain
In the words of Gordon Cain, observers from outside of the business community depict businessmen ďas amoral creatures driven by greed, and leveraged buyouts and junk bonds as instruments of the devil.Ē Gordon Cainís remarkable story renews our faith in intelligence, business enterprise and the human spirit. In his words itís Ďa simple account of how honorable men, advised by competent lawyers and investment bankers who never violated a confidence, carried out transactions in which everybody won.Ē (ed.)
Everybody Wins! is a case study in American business enterprise told through the life of an extraordinary man. The book chronicles how Gordon Cain - a chemical engineer well past retirement age - effected a turnaround in the commodity chemicals industry through the strategies of innovative management, employee stock ownership, and leveraged buy outs.
Everybody Wins! begins with Cainís childhood in rural Louisiana, where he witnessed the havoc the boll weevil caused for the cotton industry. He worked as a chemical engineer for Freeport Sulphur and Merck until service in World War II. There he commanded an Army battalion, which gave him his first experience in management. Later he returned to civilian life and held a series of important managerial roles in the petrochemical industry.
Ultimately, Gordon Cain became an unprecedented visionary who profoundly affected management practices in the chemical industry. Using high-risk debt instruments (junk bonds), he acquired and restructured many companies - creating Vista Chemical, Arcadian, Sterling Chemicals, Cain Chemical, and Fiber Industries. Vista Chemical Company was taken public in 1986 and became a Fortune 500 company before being purchased by RME. Sterling Chemicals, Inc., owned 60% by employees, had an initial public offering of company stock in late 1988. Cain Chemical Inc., formed in 1987 to purchase two major ethylene facilities and five ethylene-based processing plants from five corporate sellers and with 43% of the equity owned by the Cain employees, was sold less than one year later in a transaction in which the 1350 employees of Cain Chemical received in excess of $535 million. Fiber Industries, a polyester fiber business bought from Celanese, was sold two years later. Arcadian was started with the purchase of a small nitrogen fertilizer business in 1984 and is now the largest nitrogen fertilizer business in the world.
The result of each LBO was a win for management, workers, investors, and the general economy. Everybody Wins! offers a clarion call for better management and more accountable boards of directors. It outlines a new paradigm of business management - one in which workers help business anticipate and embrace market change.
Press Release: July 10, 1987
The Sterling Group, Inc. announced today the purchase of seven ethylene based chemical facilities in a leveraged buyout and the formation of Cain Chemical, Inc. to own and operate the facilities.
Acquired from E. I. du Pont de Nemours & Co. was an ethylene plant at Chocolate Bayou, Texas, a polyethylene plant at Beaumont, Texas, a polyethylene plant at Bay City, Texas, and a polyethylene plant at Victoria, Texas. Acquired from Imperial Chemical Industries PLC was an ethylene-glycol plant at Victoria, Texas. Acquired from Corpus Christi Petrochemicals, Inc. was an ethylene plant at Corpus Christi, Texas, a pipeline, and ethylene storage. Acquired from PPG Industries, Inc. was a half interest in an ethylene-glycol plant in Beaumont, Texas.
The purchase price of $1.1 billion was financed with bank debt and high yield (junk) bonds.
The employees of the company will own slightly over 43% of the equity.
Press Release: March 28, 1988
The 1325 employees of the company own approximately 43% of the stock and will receive $536 million. About one-third of this will go to 150 managers who bought stock. One-third will go to 75 top managers who received stock through options, and a third will go to all the employees through a stock ownership plan. The lowest paid employee will receive over $100,000.
Everybody Wins! illustrates how blind alleys can become new beginnings, how business restructuring can benefit everyone, how the free market economy provides unparalleled opportunity, and how, even in the tumultuous 1980s, a gentleman still managed to finish on top - and generate several billion dollars in the process.
ďI am deeply grateful for having lived at a time when what one could do was limited only by skill and imagination. I am astonished at how much can be done with some luck and a lot of help from others.Ē Gordon Cain
Gordon Cainís remarkable story is a triumph of creative leadership, superior
performance, character, integrity, and human values. (ed.)
Everybody Wins! A Life in Free Enterprise, by Gordon Cain, Chemical Heritage Press, Philadelphia, 1997.
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