Counsel says investment fund takes action to block share payment option for convertibles

New York, Sept. 30 - Counsel Corp. said it has received notice that private investment fund Amaranth LLC has made an application for an Ontario court order stopping the company from issuing shares to redeem its 6% convertible debentures due Oct. 31, 2003.

Counsel issued a notice on Sept. 9 saying that it would redeem the securities for stock under the terms of the securities' indenture.

Amaranth's application seeks a court order declaring the notice to be invalid, Counsel said.

Counsel said it believes Amaranth's action is "opportunistic and without merit" and said it intends to defend the application vigorously.

As previously announced, under the share option, Counsel will deliver 690 common shares per US$1,000 principal amount of any convertibles outstanding on Oct. 31, equivalent to a price of US$1.45 per share.

The Toronto communications and real estate company is also conducting a tender offer for the convertibles in which it is offering US$750 in cash per US$1,000 principal amount of the convertibles. It will also pay accrued interest.

It said the offer represents a 25% premium over the closing price of the convertibles on Sept. 8.

The company has US$40.861 million of the securities outstanding.

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