Let's say I hypothetically agree with you for the sake of argument (although I don't agree about raising the shares authorized because that requires a change in the articles and bylaws, and a change there is rare. Usually they would just do a reverse split to lower the shares outstanding and keep it below the shares authorized so they can then print shares if they wanted to dilute shares with convertible debt)...
... but let's say Offor could easily issue preferred shares and the like. Why would he do that when he could just issue a simple dividend. If he owns the vast majority of voting shares, then he's not really sharing the total dividend payout much.... the vast majority of the dividend payout by ERHC would go to him anyway.
Add to this fact that a dividend payout is more TAX EFFICIENT than any other form of payout, why wouldn't Offor choose the most logical path of least resistance and just give himself a dividend rather than embark on all manner of nonsense, even if that nonsense was legal?
What you're failing to grasp is that neither Erhc nor Offor has to make any dividend payment to shareholders of shorted shares. Why would Offor care? That's not his problem.
The shorts have to deliver the dividend payment to the owners of the non voting shorted shares not Offor and not ERHC. That's the short seller's problem not Offor's.
If Offor is getting nearly all of the dividend issued because he owns nearly all of the voting shares, then that's going to be far more TAX EFFICIENT than trying to pay himself a bonus or preferred dividend, etc.
He or his financial advisors would be idiots to ignore that.
And to those who think there's still convertible debt on the balance sheet, you are forgetting that convertible debt, if not converted into shares, has a maturity date. Once the debt is mature it must either be paid or it is defaulted on. After a default, the parties would have to try to collect via courts, and that hasn't happened either. After a while, the debt is simply written off by the debt collector, if it's deemed uncollectible. By now, that convertible debt has long been removed from the books and no new convertible debt can be issued without a reverse split, and no reverse split has occurred, so no new convertible debt has been issued. The debt has been vaporized.
Krombacher
