ABS a.b.c. learning centres limited

dj abc learning vulnerable to convertible note

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    MELBOURNE (Dow Jones)--ABC Learning Centres Ltd. (ABS.AU) may be at the mercy of a A$600 million debt instrument, known as 'exploding' convertible notes, which if converted will see the ex-noteholders own more than half of the company, The Australian reported Thursday.

    Without citing its sources, the newspaper said Commonwealth Securities, the broking arm of Commonwealth Bank of Australia (CBA.AU), holds A$360 million of the A$600 million in convertible notes on issue and could conceivably ending up owning a significant amount of stock upon conversion.

    The newspaper said hedge funds may have been short selling the stock at the same time as buying up the A$600 million debt instrument to seize control of the company.

    The notes could be converted if the ABC's market capitalization falls below A$500 million, the newspaper said.

    At one point during Tuesday's share price tumble the market capitalization was A$550 million.

    Newspaper Web site: http://www.theaustralian.news.com.au

    -By Melbourne bureau; 61-2-8235-2950; [email protected]

    (END) Dow Jones Newswires

    February 27, 2008 16:30 ET (21:30 GMT)

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