instrument that will allow it to dispose of its 24 percent stake in ADT, the Bermuda-registered security service and vehicle auction group, according to a report in the Financial Times.

Laidlaw considers its stake in ADT, in which it is the biggest single shareholder, a non-core investment, said the report.

The terms of the $280 million debenture issue give Laidlaw the choice of converting the securities into ADT shares after five years, converting them into Laidlaw stock or redeeming them for cash.

In the meantime, debenture holders will share any increase in ADT's share price to a maximum of $12.60, a 40 percent premium on the existing share price of $9.

Any appreciation above $12.60 would be exclusively for Laidlaw's benefit, the report said.

The reasoning behind the debenture issue was that Laidlaw believed ADT's shares were currently undervalued, said the FT.

It quoted an unnamed Laidlaw official as saying: "When they do appreciate, we want to share in that appreciation.'' Laidlaw currently values ADT on its books at $11.69 per share.

The issue allows Laidlaw to sell its ADT shares before the conversion date if it received an acceptable offer.

The debentures are being underwritten by a group of Canadian securities dealers.

They are being issued in two tranches, one denominated in Canadian dollars carrying an interest rate of 6.75 percent and the other in US dollars with a coupon of six percent.

The maximum yield, if ADT shares climb to $12.60, would be 12 percent a year.

ADT was bought by Laidlaw when Canadian entrepreneur Mr. Michael DeGroote headed the conglomerate. The Laidlaw founder is a Bermuda resident and recently won a highly publicised court battle for the luxurious Perot's Island proeprty.

Mr. Michael Ashcroft, chairman of ADT, is due to step down as a director of Laidlaw at the company's AGM next month.