The_Open_Door_deel1

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even after the initial investments had been made and substantial
profits were accruing to the owners each year.
LAMCO's share in the Joint Venture represented an (initial)
investment of about $ 152.2 million, which amount was financed as
is shown in Table 12. One could say that the non-interest bearing
equity capital amounted to $ 15,750,000.00 which results in an
over-all debt-equity ratio of about 9:1 but one author, Tarpeh,
even arrived at a ratio of 27:1 by excluding from the equity
capital an amount of $ 10,250,000.00 which the Swedish LAMCO
Syndicate and I.A.A.C, advanced LAMCO prior to 1960, and which
amount was later assigned to L.1.0. in return for L.1.0.'s
capital stock. This amount is carried forward on LAMCO's
financial records as a non-interest bearing "Capital Obligation"
which LAMCO is obliged to pay back to L.1.0., at cost, even in
the event of the liquidation of LAMCO (44). In terms of the
definitions provided in the i960 LAMCO Joint Venture Agreement,
however, Equity Financing means "all loans, advances and
contributions by the Participants, subordinated to the Loan
7inancing, for the Construction Costs, excluding any
participation by a Participant in the Loan 7inancing" (45),
Thus defined, the debt-equity ratio would approximate 2:1, but
such a definition does not make much sense because of a deviation
from generally accepted accounting principles.
In 1961 the Bethlehem Steel Corporation paid (cash) about $ 11.4
million to LAMCO. Of this amount $ 4-5 million represented
Bethlehem's "entrance fee" into the LAMCO Joint Venture and some
$ 6.9 million was the U.S. company's participation (25?) in the
total amount which LAMCO-i.e. the Swedish LAMCO Syndicate,
I.A.A.C, and L.1.0.- had spent on the Project up to December 31,
1960 (46).
It might with some truth be said that 50? of this "entrance fee"
belongs to the Liberian Government, which has a 50? interest in
LAMCO, and that - in a similar manner - the Government may claim
50? of the contribution to the investments which LAMCO made
through iron ore sales amounting to $ 10,590,000.00 (see Table
12). Thus calculated the contribution of the Government to the
financing of LAMCO's share in the initial investments amounts to
some $ 7.5 million.
However, by allowing for the deduction of interest payments and
debt amortization from the Company's annual gross business
income the Government contributed the most costly incentive to
the realization of the mining venture. In this way the
Government's income from LAMCO was reduced by 50? of the amount
borrowed, i.e. a loss of some % 68.2 million (excluding the
Capital Obligation to L.1.0. of % 10.2 million) whereas during
the years 1963 through 1977 a total of $ 119 million was paid
on interest on outstanding loans (47), thus reducing the
Government's income from LAMCO-profit-sharing by a further
$ 59.5 million. Besides, the deductions from annual gross
business income which LAMCO was allowed to make not only
included debt amortization and interest payments but