Ohio Pension Threatens Permira Over Hugo Boss Plant Closure
When upscale men's fashion retailer Hugo Boss decided to close its Brooklyn, Ohio plant, state officials begged controlling shareholder Permira to reconsider. Both the facility and Hugo Boss itself were profitable, they argued, and the community could hardly afford the loss of another 400 jobs. Permira, a European private equity firm, didn't seem to listen. And, to add insult to injury, Hugo Boss said it was still on track to pay out a special dividend. Erin last month suggested that Permira was playing with fire: Companies usually cite fiduciary duties in making layoffs and shutting facilities — they have an obligation to make money for their shareholders. In the case of a private equity firm, those shareholders often are pension funds, which could quite possibly include the pensions of the workers getting laid off (and subsequently, losing their pensions?). Well, one of Permira's investors is the Ohio Public Employees Retirement System (OPERS), which has committed approximately 160 million to a pair of Permira funds (including the one that holds Hugo Boss). It doesn't appear that any OPERS members work at the Hugo Boss plant, but the system is still steamed with how the factory closure has been handled.
