Post by
RoyallyScrewed on Jan 24, 2011 7:34pm
glenerikson, cowfish
glenerikson, in reference to the passage you posted:
"Any cash availabe for distribution recieved by JJ shall be applied toreduce outsanding amount of the JJ contribution by the correspondingamount of such cash available for distribution recieved by JJ. Cashavailable for distribution shall be distributed as follows:
( 1 ) firstly, to make the required payments of the sum of the financing expenses"
-- The above has absolutely nothing to do with share issuance. It refers only to the condition where the mine is in full production and JJ is making a profit. THAT cash would be use for financing expenses.
There are articles that do affect ownership and shares, which I have posted before. They are as follows:
Article 1 Interpretation: "Shareholder"means (i) JJ and GBK and (ii) any other person who becomes ashareholder of AcquisitionCo in accordance with the terms of thisAgreement, and executes a Deed of Adherence substantially in the form ofattached hereto as Exhibit A" (AcquisitionCo is defined as Jein Canada Mining Ltd.)
Thatclearly states that it is possible to bring in other shareholders. Thatalso means that it is impossible to maintain a predetermined % splitbetween JJ and GBK. From that single statement you must assume that theownership of Jein Canada Mining Ltd. will expand and GBK's share willbecome diluted.
Article 17.4 states that thereis NO PARTNERSHIP between GBK and Jilin Jein Nickel. In fact if eitherparty claims there is a partnership, the other party can sue fordamages.
Despite this, GBK wants partnership status. GBKthought they had a fixed share arrangement, like a partnership, whenclearly the contract states there is no partnership. It really makes mewonder if GBK secured a contract lawyer for this transaction.
Article 4.1: "EachShareholder shall be entitled from time to time to make contributionsto AcquisitionCo as determined by the AcquisitionCo board."
Each Shareholder can only mean GBK and JJ.
Then there is the question about what ownership of 25% of the voting shares means. It appears to mean absolutely nothing. First, 25% when voting against only one other shareholder who owns 75% guarantees that you will always lose. Second, All shares are created equal in terms of ownership. There are currently 241,643,914 shares In Jein Canada Mining Ltd.. GBK owns 25 of the 100 voting shares. 25 shares represents .00001% of the company. The 25% voting shares are just useless nonsense to impress newbies IMHO. The term is "a dog and pony show".
So what does GBK really own even if they win through arbitration? They currently own 4,750,025 shares of the original 241,643,914 shares of the company. Doing the math... that is still only 1.966 % ACTUAL ownership of Jein Canada.
So you see, JJ may have a legal right to what they are doing and may also have understood the contract completely differently. The whole fault of this problem might fall squarely on the shoulders of GBK management for not understanding what they were agreeing to. That's what contract lawyers are for, and I wonder who GBK used?
So you see glenerikson, things aren't as simple as you make them out to be, and may I add that Canadian investors are as savvy as any other investors you might name. This doesn't look good, and those who chose to sit on the sidelines or move on while things get sorted out were smart investors, regardless of how this turns out.