The_Open_Door_deel1

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Prior to 1974 fifty per cent of all LAMCO-ore sold on a c.i.f.
basis was shipped in Granges-owned ships, the remaining fifty per
cent in ships owned by the Providence Shipping Company or ships
designated by the Liberian Government, As a result of the 1974
amendment of the Shipping Arrangement the Providence Shipping
Company acquired 100? of these shipping rights but given the fact
that the fleet of this shipping company, a joint venture between
the Liberian Government and Granges, consisted of only one
vessel at the end of 1977, the practical outcome of this
arrangement differed little from the previous situation.
The Financial Advisor (43)
By contract, the Stockholmsk Enskilda Bank (later Skandinaviska
Enskilda Banken, after the merger of the Stockholmsk Enskilda
Bank with other Swedish banks in the 1970's) was to act as
LAMCO's Financial Advisor for an indefinite period, an
arrangement which is subject to cancellation at 90 days notice.
S.E.B.'s activities with respect to the realization of the mining
venture were discussed before and for a number of years the
Bank's prime function remained that of being LAMCO's contact with
its lenders and - in later years - that of contacting potential
future lenders. Besides managing the financial affairs of LAMCO
the Bank rendered financial advice if actions were considered by
the Company's Board of Directors. In the past the Bank's personnel
were not paid by LAMCO; the only direct charges to LAMCO by the
S.E.B. were for travel, telegram and overseas telephone expenses.
The bank usually bore the costs of advising services, which in
1968 were estimated by the Bank at some $ 100.000.00.
Besides the $ 750,000.00 which the S.E.B. received under the
1960 arrangement the S.E.B. received a fee of $ 150,000.00 per
year starting from I965 and until 1975> Since that year LAMCO
has paid the S.E.B. $ 200,000.00; the decision in June 1975 to
raise the fee by 25? was taken in order to compensate for the
cost increases which had occurred since 1961 and the devaluation
and depreciation of the dollar after 1971. Thus a total of
$ 2,850,000.00 was paid by LAMCO for these services to the
S.E.B. In spite of these services LAMCO experienced severe
liquidity problems (caused primarily by the Company's borrowing
practices). In 1976 the Government therefore expressed the
desire to terminate the contract with the Financial Advisor.
The Debt-Equity Ratio
Perhaps the best-known feature of the LAMCO-Investment is its
extreme reliance on non-equity capital, which sometimes took the
form of disguised equity capital. Less generally known, however,
are the full details and costs of these borrowing practices.
Neither is it generally known that the Company continued to
finance the operations of the mining enterprise with loans,