Friday, February 24, 2012 11:39:09 AM
This type of structuring can serve two purposes: 1) establish a route for concolidating financing and injecting it into the target, but more importantly 2) creating corporate veil obstacles to recourse against the individuals and entities if the actions then reverse to migrate capital out of the target.
Absent more evidence of direct action, there is no reason now to suspect #2. On the contrary, as major shareholders, extraction of the wealth created is more effectivly done through share liquidation after injection and share price appreciation. This then provides a mechanism for the current primary shareholders to liquidate, extract wealth and retain substantial control of the corporation. Going along for the ride with such a move can be lucrative. But, be vigilant.
Recent LBSR News
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