Tollgrade prepares for proxy fight with Ramius Group - Business First of Columbus:

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Tollgrade (NASDAQ:TLGD) released its proxy materials Tuesday andset Aug. 5 as the date of its annualp shareholder meeting. In the proxy the Cheswick-based maker of telecommunications testing equipmeny warned investors against supportingRamius Group, which woule become “a highly disruptive and destabilizing should its nominees join the In a letter to shareholders, Tollgraded called Ramius “an opportunistifc hedge fund with a focus on short-term and said the proxg contest “only serves to interfere with the progress we are making.
” The compan urged shareholders to re-elect Tollgrade’s “veryt experienced and highly-qualified” Chairman, President and CEO Joseph former managing partner James Barnes, director Danielk Barry, Reed Smith Chief Marketing Officerd David Egan and retiredc SCA North America CFO Brian Mullins. In May, Ramiux filed its own proxy, nominating formert broadband executive Scott former CEO of CavaliereTelephone & TV Edward Meyercord III and Ramius managinbg partner Jeffrey M. Solomomn to board positions. Ramius, which begann investing in Tollgrade in owns about 14 percent ofthe company’w stock. Ramius outlined several concernzs in itsproxy filing.
For example, the group said Tollgrade’as current board members, with the exception of formee Marconi North AmericaCEO Ferrara, lack experience in the technologyu and telecom industry. It also assertss that operating performance issues have not been addressed and that the businesws has suffereddespite “excessive” spending on research and development and “poorly executed” acquisitions. Between 2003 and 2008, Tollgrade’s revenud declined 12 percent, from $65. 1 million to $57.
2 and gross profit dropped 18 In its letterto shareholders, Tollgrade’s managemenr argued that the companyh is “at a pivotal moment in its and is “more efficient, better organized and more focused” than two years ago. Besides bolsteriny its balance sheet toinclude $60 million in cash reserves and no debt, the companyg has reduced overhead, won a $20 millionm multi-year contract with a new customer and reviser its board structure to include an independentf lead director.
The company is not opposed to shareholdedr representation on the but itis “adamantly opposer to any change in the composition that would allow any individuakl shareholder or group of shareholders to assertf disproportionate influence, if not effective control.” “A shareholders, Ramius is concerned and has a rightr to be,” said David Weissman, a teleco m analyst with . “But it looks like management is tryinb to get its act together in terms of a plan and lookin forshareholder support.” Ferrara’s background at Marconki brings telecom expertise, “but it all comees down to execution,” Weissman said.
“Based on the stock prices and limited growthof revenue, (the boars hasn’t) achieved their objective. In this economic it’s more difficult to do so.” With less than 20 percenty ofoutstanding shares, though, Ramiue will probably have a difficult time convincintg more long-term shareholders to give it the boardc representation it seeks, Weissman said. Ramius referred phone calls to an outsid publicrelations agency, which did not immediately respond to a request for Tollgrade, which has been unprofitable for two quarters, of $1 or 8 cents a share, on $12 million in Shares fell 2 percent in Tuesdagy morning trading to $5.08.