RE: RE: Millright aka Victor2009 aka Fool!Legend7,
I think that you answering your own questions. It is harsh to say that the Chinese are out to "screw" LBE shareholders. They, like you, and I, and every other investor, are looking to maximize return on investment (ROI). These terms were negotiated when they invested in LBE, and I expect that they would have the right to reserve or exercise their options based on what is best for them. In fact, directors of any private or public corporation have a fiduciary duty to look out for the best interest of their shareholders. In the case of JJ, is that the shareholders of JJ, or the shareholders of LBE. This should be obvious. Their statements of intent, in my opinion, are based on what I call a "mediocre" future returns of LBE, where it is unclear whether they will experience a higher RIO from the 8% return on the "preferred" shares versus the future potential of LBE going forward. LBE has modest reserves at best for the next 4.5 years, and then what? The Chinese are cognizant of this, and given their "controlling" interest in LBE, will also be aware of future potential long before LBE minority shareholders would be. They have members of the LBE board that could easily relay and give credibility to any potential discovery. The point being, they are in a no lose situation that translates to a "conflict of interest" from my perspective. Bottom line, securities violations in Canada are virtually non-existent. To specifically answer your questions based on this background information, my observations would be:
1) It would be a political nightmare if they decided to exercise the preferreds.
No, they are simply exercising their rights. What do you think their shareholders would expect them to do? Roll over and give "free" value to minority LBE shareholders. Class Action Lawsuit against JJ for violating their own shareholders interest.
2) In the grand skeem (should be scheme) of things Liberty is not big enough for them to take the political damage.
LBE is such a small blip on their radar that their investment here was only done so they could rape and hollow out LBE. The real issue here is that Dr. G. Nash did not have enough credibility to establish the necessary "credit lines" to reap the rewards of past exploration. To go further, this is the very person that serves as the liaison between JJ and LBE as a company. If the LBE potential is so great then far more favourable credit terms between a friendly (versus predatory) majority shareholder should have been possible. Why 8%, blanket, regardless of risk. This is predatory! With the clock ticking, given the magnitude of the debt, it systematically moves monies from the LBE shareholders (of which JJ holds 51%) to the creditors (or which JJ is 100%). Obvious to me, but obviously not to all, including our fool!
3) JJ has much more at stake then Liberty and doing this would damage the chances of them doing any other deals in Canada.
Really, JJ considers the Canadian LBE deal as a no lose, only win scenario. The terms were negotiated under distress. They will pick up the "no lose" deal, without conscience, knowing that they cannot lose. You really give to much emphasis to reputation. Buddy, cash is king and this is a resounding example of that!
4)Believe it or not the Chinese are honorable business men and we have noreason not to believe there word. They have proven it over and overagain by supporting Liberty in recent times and in the past.
Really, and what planet are you from, and what have you been smoking. The Chinese have a long history of unethical behaviour and human rights violations. North Korea, the battle over control of the China Sea, their newly introduced "US Aircraft Carrier" killer, patent and copyright violations, and the lack of law to enforce compliance. Are you really that stupid? Business is the "human" version of "natural selection". Dog eat dog, survival of the fittest! This is a dog eat dog world where the strongest survive and the naive parish! Get with the game or you will be a future Chinese slave!
5) Ifthey wanted to take Liberty over they could have done it when Libertywas looking for Financing? They didn't and us as shareholders havegained because of it and much more to come.
Now, this is the most ridiculous statement of them all!. They knew they had control, they simply had to employ simple propaganda to convince those naive LBE shareholders that their "might" be a return, some day. Putting it in a direct fashion, they are using the minority LBE shareholders equity in LBE for free for the hope that they will be "honourable"? But to who? JJ shareholders or LBE shareholders? The answer is obvious to me but may elude those delusional minority LBE shareholders. Simply put, according to our weak Canadian law, and with that weak accountability to Canadian LBE shareholders, you have been had! When the fox eats the rabbit, only in Canada can you claim it isn't fair. It goes nowhere. You lose!
Lastly, this scenario of JJ being honorable is what many have been advocating. The "fools" have bought in lock, stock and barrel. History says otherwise. Time will tell! Don't hold your breath. The LBE minority shareholder slaughter was put in play some time ago. It is hard to believe that all do not see this -- time will tell. In the mean time Millright is still the official LBE BB clown and fool!