Born - if your math is correct, that would work perfectly. Remember, Sam paid about $20 million for FD, $14 million in stock and then he absorbed about $6 million in debt. If investors value $1 million at 5%, then Sam can claim that the asset isn't impaired and no write-off needs to happen.
Of course, the minute the stock begins to trade all bets are off. I don't fully understand the rules, but I do know that as long as Sam stays under 20% ownership, he doesn't have to take the company on his books. He may also not have to take any write down even if his 19.9% is now worth far less than 19.9% of $20 million. Don't know those fine points of accounting. I do know that below 20% means it it just a passive investment with no requirement to co-sign for anything.
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