Debtors threaten to seize control of Elan

BONDHOLDERS in Elan owed in excess of €1 billion may take control of the company if Elan's share price does not rise significantly when the debts mature in December 2003.

If Elan fails to pay off this debt then bondholders can convert the debt to shares. If Elan's market capitalisation was to remain anywhere close to the 640 million euro it fell to yesterday then a conversion of the bondholders debt of 1bn euro to shares would given them full control of the company at the end of 2003.

Merrion stockbrokers analyst Peter Frawley said: "Elan has failed to provide the necessary clarity on future cash flows, which is needed to arrest our concerns surrounding the group's ability to repay the $1bn Liquid Yield Option Notes (LYON) debt due in December 2003 and provide comfort on the group's continuing liquidity beyond that".