When urban broadcasters go prospecting for gold
Otto Rock, over at IKN, has uncovered one of the more bizarre prospectuses I’ve ever seen. It’s an attempt to raise up to $370 million in 8% bonds, with the money ostensibly being used to develop a gold mine in California. The mine will make lots of money, we’re told, because there’s a “proprietary process” involved, which “allows us to extract approximately 98% of the metals, compared to the paltry 20% by current day standards”.
But it gets so much weirder than that. The company being used to raise the money is the Urban Broadcasting Company, a company “dedicated to promoting and showcasing up-and-coming talent and airing programs that might not otherwise be seen or heard”. Which doesn’t seem to have much to do with mining, although UBC does feature an “AstroNumerologist” on its home page. Maybe he can use the stars to find gold!
Otto is convinced that the offering memorandum is a scam, and that anybody investing in these bonds will never see their money again. But I can’t imagine that anybody would dream of investing in these bonds, given how amateurish the prospectus is: the law firm is one guy in Atlanta, and the prospectus includes a photocopy of the CEO’s passport before going on to say of UBC that “it is a lifestyle network that has crossed all races and boundaries and has evolved into a global revolution” which “has entered into numerous mega agreements that will begin to propel UBC-TV into the national spotlight in 2010″.
I have no idea what’s really going on here: perhaps there’s some plan to take over the mining site through a debt-for-equity swap when the bonds default. But the prospectus does say that a qualified mining engineer who has nothing to do with the scheme is part of the management team, so maybe this really is a crazy attempt to raise millions of dollars from unsuspecting investors. If it is, I suspect it was doomed to fail even before Otto got his hands on it.