Contel takes steps to repay 1% convertibles put back to company

By Angela McDaniels

Tacoma, Wash., March 2 - Contel Corp. Ltd. said the holder of its $8 million zero-coupon convertible bonds due 2010, ABN Amro Bank NV, elected to put the convertibles back to the company at 113.3 on Feb. 2.

Contel does not have the financial resources to repay the convertibles and plans to sell its existing business to Good Idea Ltd. for $22.5 million in order to fund the redemption, according to a company announcement. Good Idea is a subsidiary of Sharpthink Finance Ltd., which is a large Contel shareholder.

The company announced plans for the sale on Jan. 31. On Monday, Contel said its bank lenders and the bondholder have indicated their willingness to cooperate with the sale and are negotiating among themselves about the distribution of the proceeds from the sale.

Contel is a Shenzhen, China-based holding company that manufactures and sells digital media products.

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