Bondholders Sue Chantal Pharmaceutical

Chantal Pharmaceutical Corp. faces lawsuits from holders of its 8% convertible debentures over claims the cosmetic company has refused to convert the bonds into its stock. Bondholders filed suit in Chancery Court in Wilmington, Del., asking the court to order Los Angeles-based Chantal to execute the conversion. FT Trading, a London-based company, said Chantal refused to convert the bonds or redeem them for cash, even though both options are available under the sales contract for the debentures. The contract calls for the conversion at the lesser of $3.91 a share or 80% of the average closing bid price of the common stock for five business days immediately before the conversion date. In a proxy filing, the company said that the common stock required to convert the debt would exceed the number of shares Chantal is authorized to issue. The company said it wants to restructure the bond offering in order to solve the problem. Chantal shares fell 19 cents to close at $1 in Nasdaq trading.