- Heinz has cut the amount it will reimburse retirees for medical expenses, according to the Pittsburgh Post-Gazette. The extent of the cuts and the number of former workers affected is not clear.
- The reductions, announced in letters sent to retirees, are to reimbursement accounts used to cover doctor visit co-pays. No cuts in pension payments have been reported.
- The cuts are the latest in a series of cost-reducing moves by Heinz following its acquisition by 3G Capital and Berkshire Hathaway.
We've seen this movie before .... a thousand times. Investors borrow millions, use it to buy a company, stick that company with the debt, then start slashing costs in an hysterical fashion, implying that the previous owners were throwing money away in some crazed, willy-nilly fashion. But what anyone with an ounce of sense knows is that the company was doing just fine before it was bought on credit. Costs aren't the problem. The debt is the problem.
The only thing different about the Heinz story is just how heavy a load the investors hung around Heinz' neck -- $14 billion in debt, plus $720 million a year in preferred dividends to Berkshire Hathaway.