Tollgrade prepares for proxy fight with Ramius Group - Pittsburgh Business Times:

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Tollgrade (NASDAQ:TLGD) released its proxy materials Tuesday andset Aug. 5 as the date of its annual shareholdetr meeting. In the proxy materials, the Cheswick-based maker of telecommunicatione testing equipment warned investors against supportinbRamius Group, which would become “a highlyh disruptive and destabilizing influence” should its nomineex join the board. In a letter to shareholders, Tollgradee called Ramius “an opportunistic hedge fund with a focuwon short-term gains” and said the proxy contesg “only serves to interfere with the progressx we are making.
” The company urgedr shareholders to re-elect Tollgrade’s “verhy experienced and highly-qualified” directors: President and CEO Joseph Ferrara, formee managing partner James Barnes, director Daniek Barry, Reed Smith Chief Marketing Officer David Egan and retired SCA Northh America CFO Brian Mullins. In May, Ramius filed its own nominating former broadband executiveScott Chandler, former CEO of Cavalierd Telephone & TV Edward Meyercor III and Ramius managing partner Jeffrey M. Solomonj to board positions. Ramius, which began investin g in Tollgradein 2005, owns aboutr 14 percent of the company’ s stock. Ramius outlined severalo concerns in itsproxy filing.
For the group said Tollgrade’ s current board members, with the exception of former Marconii North AmericaCEO Ferrara, lack experience in the technology and telecojm industry. It also asserts that operatin performance issues have not been addressed and that the businesw has suffereddespite “excessive” spending on research and developmenr and “poorly executed” acquisitions. Between 2003 and Tollgrade’s revenue declined 12 percent, from $65.1q million to $57.2 million, and gross profirt dropped 18 percent.
In its lettedr to shareholders, Tollgrade’s management argued that the compangyis “at a pivotal moment in its and is “more efficient, better organized and more than two years ago. Besides bolstering its balance sheett toinclude $60 million in cash reservez and no debt, the company has reduced won a $20 million multi-yea r contract with a new customer and revised its board structurse to include an independent lead director.
The companu is not opposed to shareholder representationb onthe board, but it is “adamantlyg opposed to any change in the composition that would allow any individual shareholder or group of shareholders to assert disproportionate influence, if not effective control.” “Axs shareholders, Ramius is concerned and has a right to said David Weissman, a telecokm analyst with . “Buty it looks like management is tryinhg to get its act together in terms of a plan and lookin g forshareholder support.
” Ferrara’s backgrouns at Marconi brings telecom “but it all comes down to execution,” Weissman “Based on the stock price and limitedc growth of revenue, (the board achieved their objective. In this economic it’s more difficult to do With less than 20 percent ofoutstanding shares, though, Ramius will probably have a difficulf time convincing more long-term shareholders to give it the boarcd representation it seeks, Weissman Ramius referred phone calls to an outside public relatione agency, which did not immediately respond to a request for Tollgrade, which has been unprofitable for two of $1 million, or 8 centsz a share, on $12 million in Shares fell 2 percent in Tuesday morning tradinfg to $5.
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