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Oct 2, 2024

Getting RICH After POISONING A Community

BioLab, a chemical plant in Conyers, Georgia, sent a massive blast of toxic chemicals into the community around it.
  • 11 minutes
Shelter in place advisory was extended in Rockdale County, Georgia, this morning after a fire and chemical release erupted at a bio lab plant. This is east of Atlanta. Thousands of residents in the city of Conyers had to be evacuated. [00:00:15] The presence of chlorine has been confirmed by the EPA. I feel like this story is just like a mainstay in America these days. A chemical plant in Georgia erupted into a cloud of flames [00:00:30] and smoke on Sunday, and that resulted in 90,000 people in the community being ordered to shelter in place. Now, the story is even more sinister than you might think because as Georgia residents were breathing in toxic levels of chlorine and sheltering in their homes, [00:00:48] private equity executives were, you know, doing what they do best, getting real rich. So before we get to that element of the story, let's get to some more details on what occurred at the Bio Labs chemical plant. 5 a.m. [00:01:05] Today, as employees were inside. A sprinkler malfunctioned, causing a chemical to start the blaze, which is now out and was contained to the roof. The company saying in a statement our team is on the scene working with first responders and local authorities to assess and contain the situation. [00:01:21] No one was injured. The Environmental Protection Agency is now conducting air monitoring. Now, initially, firefighters were successful in putting out the flames. Unfortunately, the fire was reignited. I should also note that chlorine is a harmful irritant and it was in fact [00:01:41] detected in the air near the plant. I mean, how could it not be considering the explosion that we just saw images of? And local news is reporting that residents are already exhibiting some symptoms, such as shortness of breath, lung tightness, coughing and eye irritation. [00:01:58] Now, similar incidents have actually happened, Dumb before this explosion at this particular plant. Let's watch. This isn't the first chemical scare at the Biolab facility that manufactures pool and spa products, according to the U.S. Chemical Safety Board in 2020. [00:02:13] A plume of hazardous chemicals was released. Since I've been a part of Rockdale County for seven years, this is probably the third incident of this magnitude. This is insane. Absolutely insane. It just keeps happening. [00:02:30] And why does it keep happening? Like, why doesn't bio labs do what's necessary? Take the measures necessary to lessen the possibility of these types of explosions from happening in the future. It could be because the punishments have been a complete and utter joke. [00:02:47] After the most recent bio lab fire earlier this summer in Westlake, Louisiana, the U.S. Chemical Safety Board found the company responsible for negligence and five separate safety violations that led to the fire. Bio lab was fined. [00:03:02] Oh, wow. They were fined a measly $2,500. Okay, not even a quarter million. We're talking about $2,500. John. $2,500 for causing all this harm. That's what they paid to the local authorities. [00:03:19] Yeah, we, we did a story on the damage report this morning about one of the most out of control police departments in the country. It's a small town, and there's been so much fining going on from the cops. A quarter of the population has been arrested at one point or another that, on average, each individual has been fined $1,400 for things like, [00:03:39] like not getting out of their car fast enough outside of a grocery store, which was considered to be suspicious and stuff like that. - Just nonsense stuff. - What is this the HOA like? Exactly. Yeah, it's like it's cop via HOA. And that's one individual impoverished person being fined more than half [00:03:58] what the company is. The reason they're fined $2,500 is that the legal regulatory system has been set up to protect them from fines, because it's better for business if you if you not only that, you don't get fined, but because the fines don't really exist, you don't have to really do much to avoid causing the problems that lead [00:04:15] to the fines, because it's not that bad. - If it happens. - Exactly. If the fines were bad, then you might have to invest in safety procedures or equipment or training or whatever, and that's expensive. They don't want to do it. And so they elect politicians that dismantle regulations. And this is how you get this outcome, where, you know, [00:04:30] one company can have multiple fires and it's just a part of doing business. Yeah. Like the severity of the fines need to outweigh the cost of implementing the safety measures to mitigate these types of disasters [00:04:46] or prevent these types of disasters. But that's not the case. 2500 is not I mean, that's not a fine for a corporation. Like it's nothing. It's pocket change. They looked under the cushions of the couch and they found that Anyway, [00:05:02] so this story and this incident in in Georgia is just another example, okay, of corporations not really giving a damn about the community that they're based in and not taking the appropriate measures to protect that community. And at the same time, the executives, [00:05:20] are just they're getting so wealthy and it seems like they're doing it with a certain scheme. We've talked about this scheme on the show before, where they're taking out a lot of debt for this company. And if push comes to shove and if they're taken to court by the local community [00:05:39] and they're ordered to pay, they might just file for bankruptcy and say, sorry, saddled with debt, we can't pay our bills bankrupt. Okay, so let's get into the nitty gritty of that. Okay. So Biolabs, Inc. Is owned by a private equity firm. It's called Centerbridge Centerbridge partners, which according to [00:05:58] The American Prospect, has a long history. Recent history, but extracting dividends from businesses financed not by the company's profits but by multibillion dollar debt assurances, and also in part [00:06:14] by the recent sale of a partner company. So, as the American Prospect reports, just two and a half months ago, the parent company Kik owned by Centerbridge, announced it would be selling Biolab sister company to the chemical [00:06:30] conglomerate Ricoh Chem for $850 million. A credit rating report on the transaction said that Centerbridge would be using the proceeds of the sale to pay investors sizable dividends and [00:06:47] modestly reduce its balance sheet debt, adding that the transaction would significantly elevate Biolabs in debt indebtedness to 8.4 times its earnings before interest, taxes, Depreciation and amortization. [00:07:04] Okay. So they have a lot of debt. They sell this, this company, right. The sister company, they take the proceeds of that sale and pay their shareholders dividends. And then they claim that they're going to pay down some of their debt, [00:07:20] but they're so in debt that it's 8.4 times its earnings before interest, taxes, depreciation and amortization. And it looks as though the $850 million sale was almost entirely pocketed by the investors. [00:07:35] So that's amazing. So on, and it gets worse. So on the occasion of Bio Labs last monster dividend in June, the credit rating agency S&P global estimated that the parent company would still generate enough profit to make its interest payments on their debt. [00:07:53] But it hedged that confidence with an astonishing admission it was grading the unsecured debt at a recovery rating of six, denoting negligible 0% to 10% rounded estimate. 0% recovery [00:08:10] in the event of a default. So let me just. That's a lot. I get. I get it. If you didn't understand that. - I understood a few of those words. - I did too. Okay, but I think the American Prospect did a good job. Kind of, simplifying it, translate it into plain English. [00:08:26] This means that if the explosion totals biolabs, chlorine plant and force. Yeah. Totals biolabs like, destroys biolabs because of the, settlement that they have to pay, and forces the company into bankruptcy, unsecured [00:08:44] creditors will likely get nothing. Okay. And that includes the company's pension funds. So they might screw over their workers. Yeah. Any contractors, staffing agencies or suppliers whom Biolabs owes money to, [00:09:01] as well as anyone who tries to sue Biolab for the harms caused by its not one, not two, but multiple toxic incidents. That's how the game is played, man. It's sick and the shareholders run off with the fat dividends they were paid. [00:09:17] It's disgusting. It really is. Well, it's the sort of story that, you know, we and you especially have profiled in a number of different industries for a very long time. There's seemingly no industry that this model doesn't work in where you you have people come in, they buy it, load it down with debt, [00:09:34] extract whatever value you can from it. There's no incentive whatsoever to have the company be healthy or sustainable in even the medium term, let alone the long term. And in this particular case, it's not just the like. The stakes are not just the destruction of the company, the loss of the jobs [00:09:49] or anything along the way. You know, maybe you sicken a couple of towns and you do that because that's not that's not on your balance sheet. You're not paying for that. And in a story like this, it's relatively easy for us to point to like a chemical fire and say, well, [00:10:04] whatever medical costs incurred by the people in the town from chlorine exposure or whatever is basically being subsidized to the company, like they pay for it, not the company. Even though the company did it. But bear in mind, you know, it's harder to see it because it's not an individual event, but carbon emissions, that's basically what that is. [00:10:23] All of us suffer from respiratory illnesses at increased rates. Many people get sick. Hundreds of thousands die every single year. We're not generating those emissions. The companies are, but we are paying for it. And in some cases, the government is paying for it. All of this doesn't appear in their books, but it obviously should [00:10:39] because they are directly causing it. Absolutely. And look, I understand the conservative argument against regulation in some cases. In fact, I'll give you a perfect example. I do think that there are too many regulations when it comes to construction [00:10:56] of new homes in states like California, which has essentially hindered the development of desperately needed housing units. So there are areas where I think there's overregulation. This is not one of the areas. Okay. There are regulations that are meant to protect communities [00:11:14] from corporations like this. Regulations that ensure by law that these corporations invest in the necessary measures to prevent explosions like this. So to just say regulations bad or regulations good [00:11:32] doesn't really make much sense because it's way more nuanced than that. In areas like this, when it comes to corporations, companies, rail companies dealing with literally toxic chemicals, I think there's a problem with the lack of regulation. It's not fair to the local communities at all that they're dealing with this not [00:11:51] just once, but over and over again. Thanks for watching. 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