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Hi IreneL,
TERMINATION OF SUBSCRIPTION AGREEMENT WITH ADVANCE OPPORTUNITIES FUND
http://info.sgx.com/webcorannc.nsf/560dd4b031b97d27482571b20043d38c/e9b267c4fe7b2603482572f900385ba4?OpenDocument
Hi centaur,
The deal with ABN is gd just because they can only convert the bonds into shares in Y2010.
Shareholders should ask the management why cant they borrow S$26.5 mil & USD$8 mil from the banks and pay the normal interest rate? Why would they opt for equities with the highest cost of capital?
unlikely to hit 30cts today, i'll be glad if it can hold its ground.
Later if big funds buy again, how huh ?
Technically, will it cross 30 cents today ?
Armarda and Baker Tech all kena short squeezed .....
Short squeezing for Contel too ?
Its quite early to tell, it depends whether ABN is a serious investor in Contel, otherwise like Advance, it might flood the market with more shares if they decide to convert and sell. In any case, the deal to ABN is a much better one as compared to Advance.
Hi level13
Its good of you to share your views and fears on Contel. At one stage I was eyeing the counter too.
And your evaluation of the transaction is not unfounded. Do you have any idea if this convertible notes transaction with Advance Opportunities Fund is contractual? I may be wrong, or may have missed out, but dont think I have seen such announcements anywhere.
Regards
Up by 4cts today. 
What happen ? Sudden surge - 0.285
i always have this feeling that contel is always in need of working capital. it is evident in the convertible notes issue to Advance Opportunities Fund and the zero coupon CONVERTIBLE BONDS issue to ABN. Thus, I would urge caution at putting $ into the company contel.
Below are the reasons using the FY2006 annual report as reference.
As shown in the annual report, it has US$6 million at the end of last year. To solve their cash problem, contel has issued convertible notes to Advance Opportunities Fund and collected S$26.5 million in the process. At 1st glance, it seems gd as contel does not need to pay interest on the notes. But it is clear that in the past few months, Advance Opportunities Fund have converted all the notes into shares. So in short, they are actually raising funds through the issue of more new shares. Basically, the cost of capital is the highest for equities as compared to bank loans or bonds. An investor will expect 8-10% return in the long run for the shares.
My question is, why cant contel borrow S$26.5 million from the banks and pay the normal interest rate? With the conversion, there are now 417 million shares outstanding and the minority shareholders? stakes are diluted.
However, the worst part is this: Suppose Advance Opportunities Fund did not sell any of the shares after the conversion, it should be holding 167 million shares. With this amount of shares, it should be a substantial shareholder. However, I have yet to see any announcement of this nature!! This has led me to conclude that Advance Opportunities Fund has been selling away the shares that it converted in the open market so that it will always hold less than 5% stake at any one time. Seems that Advance Opportunities Fund is not too eager to hold on to the shares.
CHEERS!
CLARIFICATION ON PRESS RELEASE ANNOUNCEMENT
The Board of Directors of Contel Corporation Limited (the ?Company?) wishes to provide clarification on the Press Release - ?Contel Hits New Chords with Leading Music Videogame Developer? announced via SGXNET on 9 July 2007.
The currency denomination of the ?Multi-million dollar deal? as mentioned in the first paragraph of the said Press Release is in United States Dollar (USD). The Company have to-date secured an initial order of approximately US$5 million from Harmonix Music Systems, Inc. for
the development and production of the guitar controllers. It is expected that more orders will be secured from now till the end of this financial year.
The aforesaid US$5 million order is not expected to have any material or significant impact on the Company?s financial results for the financial year ended 31 December 2007.
The Board of Directors of Contel Corporation Limited (the ?Company?) wishes to provide clarification on the Press Release - ?Contel Hits New Chords with Leading Music Videogame Developer? announced via SGXNET on 9 July 2007.
The currency denomination of the ?Multi-million dollar deal? as mentioned in the first paragraph of the said Press Release is in United States Dollar (USD). The Company have to-date secured an initial order of approximately US$5 million from Harmonix Music Systems, Inc. for
the development and production of the guitar controllers. It is expected that more orders will be secured from now till the end of this financial year.
The aforesaid US$5 million order is not expected to have any material or significant impact on the Company?s financial results for the financial year ended 31 December 2007.
ok, maybe that explain e 1ct increase today. but thats kinda of not very well received considering the fact that STI oredi cheong more than 60pts.
Latest news in SGX announcement...
PRESS RELEASE - Contel Hits New Chords with Leading Music Videogame Developer
waste a halt!!! why so humble? the news is BAD? thx for comments
Don't overlook 1 pt, they also mentioned that the price of the conversion may be adjusted according to terms and conditions.. Suppose, the price keeps going up, i think the conversion will then be higher than 24.5cts. Only thing is, we have yet to know the exact terms of the conditions. So hope they can issue a circular to clarify.
quoted from Valueformoney in CNA:
"Hi guys,
Ive done some analysis on the report...first of all this seems like a more credible deal that the one they had offered advance..atleast the arent allowed to convert at a discount! this indicates improved credit rating for the firm.
the conversion price is 0.245 therefore at that price ABN will just recieve their cash back after four years. ABN obviously will be expecting some return..lets see how much.
If you read the announcement, in case converting will erode sharpthinks share by a certain level, they will buy the notes back at a 25% pa rate.
so theyre expecting atleast a MINIMUM return of 25% pa...working that out over four years..they expect contels value to be ATLEAST 0.59 cents by 2011. This they have locked in on..ie..if it doesn't achieve this rate, then ABN is the one who loses. Therefore i am 100% sure their required rate of return on this stock is greater than 25%. Tell me one thing.. if personal investors like you and me are looking for huge returns in the market, why will ABN lock in 8mil of their funds at a lower rate than our expectations?
However, Contel was looking for $50mil originally... got $26mil for advance and now another $8mil from ABN. So either they plan to get the other $18mil from improved earnings.. or watch for more halts in the near future.
DISCLAIMER: I'm vested 150 lots @ 0.175 into this stock, so my views might be biased. But if it goes down on monday...i'll be buying in more for sure."
I don't think it's such good news. It will just dilute the EPS if the bonds are finally converted. Anyone care to comment ?
Is this considered good news?
Initial Conversion Price is $0.245... does this mean the share price will not dip too much from this conversion price from now on? :)
vested....
The news is out Contel is issuing a zero coupon rate bond. Check this link,http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_22A4487B22AD718B4825730B002B61B6/$file/Contel_Announcement_Bonds_ABN_Due2010.pdf?openelement