Telefix Communications Holdings Inc. (TLFX)

[Heimie1]

Reverse Merger With a Public Shell:

A "reverse merger" is a method by which a private company goes public. In a reverse merger, a private company merges with a public company with no assets or liabilities. The publicly traded corporation is called a "public shell" since all that exists is its corporate structure. By merging into such an entity, a private company becomes public.

The Private company merges into a public company and obtains the majority of its stock (usually 90% or more). The private company normally will change the name of the public corporation (often to its own name) and will appoint and elect its management and board directors.

The advantages of public trading status include the possibility of commanding a higher price for a later offering of the company's securities. Going public through either a reverse merger or a registered spin-off allows a private company to go public, typically at a lesser cost and with less stock dilution than through an initial public offering (IPO).

In an IPO, the process of going public and raising capital is combined. In a reverse merger, these two functions are unbundled - a company can go public without raising additional capital. Through this unbundling operation, the process of going public is simplified greatly.

It's probably a good idea to buy now for future public shell conversions if TLFX goes under, but that could be a long wait.