Metwood, Inc. (fka MTWD)

[Krysti]

Shawn at Metwood isn't to be trusted, Wilma.
The deal spells it out:
1. The buyer (Metwood) is restricted by covenants given to the holder of preference shares (Rainco)
2. The seller (Rainco) can take a controlling stake in the buyer (Metwood) on conversion of preference shares.
3. Metwood 'owns' GEG but Rainco has effective control over Metwood.

Rainco did precisely that with the REVO purchase of Greenwood.
Greenwood, like GEG, was a spin-off from Rainco.

Here's a likely scenario, drawn from the REVO transaction.
1. Rainco held a fistful of promissory notes from REVO. Those notes had a paper value, but were not receiving the interest payments due.
2. Rainco packaged those notes into a new company (Greenwood)
3. REVO then bought Greenwood (for $18m) by issuing REVO preference shares to Rainco.

The effects were:
1. A circular transaction in which REVO bought back its own promissory notes; and
2. A PR (which, as a fact) was supported by paid promotions
3. A jump in the REVO share price, because of their 'purchase' of Greenwood
4. An increase in REVO volume, which enabled shares to be dumped.

The problem with that scheme is that it is borders on the illegal. And may cross that border.

So with UBRG they changed it. Instead of having UBRG buy back their own debt they introduced a third party. That's where Metwood comes into the picture. Metwood was sufficiently at arm's length to be a buyer of UBRG debt.
So, instead of selling UBRG debt back to UBRG they sold it to Metwood. A perfectly legal transaction.