Well, have you got the answer? What does American Wealth have to do to extricate itself from Banco del Rio's very shrew proposition? Answer: Bring another party into the deal. The only way for American Wealth to get out of its dilemma was to bring in another investor who would be willing to take half of American Wealth's investment in Banco del Rio.
In this case, the new investor was a Middle Easterner with large oil interests, lets call him Sheik Bin Real. The proposal to Bin Real was that American Wealth would invest an additional $100 million in Banco del Rio, then, in a tandem transaction, sell one-half on its 25% position in Rio to Bin Real for $100 million. Ergo, there would be no dilutive impact and American would not have to write-down its investment. And yes, as you've already guessed, American Wealth lent the $100 million to Bin Real. A win, win, win.
Many times situations may seen, on their face, to be insurmountable but examining every angle and brainstorming will often spawn a solution to the problem.
Stay in touch,
Jim Lavorato
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