I pity those investors who are vested in Contel since their IPO days (although i dont think the number is high). 1.5 years ago, i had a posting, in which i advised all investors to avoid Contel due to its constant and urgent need for capital. On top of that, free cash flow was non-existent. http://level13-analysis.blogspot.com/2007/07/raising-capital-at-contel.html Let me do a recap on the amount of money that Contel raised ever since it was listed and you can make up your mind if it was indeed a value destruction job. In Dec 2005, Contel was listed at an IPO price of $0.22. It managed to raise $9.1 million. There were about 250.92 million shares outstanding. Thus, the market cap was around $55.2 million. At that time, the book value per share was $0.162. On 7th June 2006, Contel announced a proposed issue of up to $50 million in principal value of non-interest bearing equity linked redeemable structured convertible notes due 2011 in ten equal tranches of principal value S$5 million each to Advance Opportunities Fund. Investors should head for the nearest exit when the news was released. In a report http://www.sfc.hk/sfc/doc/EN/speeches/public/surveys/07/exchange_audit_report_070404.pdf by the Securities and Futures Commission on the 2005 work of the Stock Exchange Listing Division published in April 2007, the SFC said (para. 48, p.12):

In the last few years, several companies issued a particular type of convertible note, now commonly referred to as "toxic convertibles"... In the absence of other factors, each conversion is likely to lead to a reduction of the issuer's share price and an increase in the number of shares into which the remaining notes can be converted, resulting (because of the falling share price) in a spiral of further dilution of existing shareholders and reduction in share prices. In the worst-case scenario, the notes are converted into shares at the par value and the convertible noteholders may end up holding almost all the company's shares.

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