firearms businesses in a management buy-out scheme.

Challenger's firearms businesses include Savage Arms and Lakefield Arms rifle makers as well as Passive Bullet Traps shooting range systems.

The company, with offices in Reid House, Hamilton, has signed a detailed letter of intent with Mr. Ron Coburn, president and CEO of Savage Arms for the purchase of Savage, Lakefield and its range system subsidiary.

The purchase price is $33 million with the buyer assuming up to $6 million in Savage-related debt, the company said.

"The real story is that it is local. It has all been done here. Challenger is controlled and managed in Bermuda,'' Challenger president and managing director Mr. Peter Leighton said yesterday.

The sale will double Challenger's shareholders' equity, said Mr. Leighton, who owns seven percent of the company's shares.

The purchase, anticipated to be closed September 30, will be financed by Rhode Island-based Fleet Equity Partners.

Challenger is already eyeing other potential companies to add to its holdings, he said.

The recently acquired Dallas-based telecommunications company Intelect, Inc.

remains part of the company, said Mr. Leighton.

"We saw an opportunity to invest in a company with greater potential,'' he said, of the acquisition of Intelect.

"Intelect was a low priced company with a good product and good management, all it needed was money,'' he said.

Intelect is an international provider of multi-media systems which deliver integrated voice, data and video solutions.

The new deal with management supersedes Challenger's previous letter of intent to sell its firearms businesses to Mossberg Corp.

Mossberg provided Challenger with $9 million to fund the company's June 27 acquisition of Intelect.

The money from Mossberg will be repaid from proceeds of the sale of Savage or over a two year period if that transaction does not close.

Challenger, a spin-off of a US energy company, was bankrupt when acquired by Mr. Leighton in 1988.

The oil trading company, incorporated in Bermuda in 1980, was barely operating when resurrected by Mr. Leighton and Challenger chairman Mr. Herman Frietsch, in 1988.

The duo successfully turned the company's focus away from oil trading by making Savage an asset of the company.

Savage was then turned from bankruptcy to profitability.

Challenger then expanded its rifle holdings last November when it completed the purchase of Ontario-based Lakefield, which was, up until the purchase, the only Canadian-owned manufacturer of. 22 calibre rifles.