Ramius puts 3 on Tollgrade Communications' board
Tollgrade Communications Inc.'s CEO and the head of a New York hedge fund that successfully backed three nominees for the company's board of directors insisted Wednesday they're ready to put an acrimonious proxy fight behind them.
"The way I look at all these things is, this is an evolution of the company," CEO Joseph A. Ferrara said after Tollgrade's annual meeting at the Syria Shrine Center in Harmar.
Shareholders of the Harmar-based telecommunications company elected Jeffrey Solomon, Scott Chandler and Ed Meyercord to the board, over Tollgrade management's objections, according to preliminary results. All three were backed by dissident shareholders headed by hedge fund Ramius LLC, which criticized the company's efforts to turn around its financial performance.
Solomon, a Squirrel Hill native who is Ramius' managing partner, said he and his colleagues intend to work with Ferrara and other directors to improve the bottom line and shareholder value.
"The most successful boards are the ones that work collaboratively," Solomon said, "so we come in with the idea that as a group we should help to forge the direction of the company collectively."
Ramius owns more than 15 percent of Tollgrade's shares, Solomon said.
Final vote tallies are expected by early next week, and if the results stand, Solomon, Chandler and Meyercord will join five company-supported members on the company's board. Ferrara and Charles E. Hoffman were re-elected yesterday.
Tollgrade makes service assurance software and test equipment for telecommunications companies. Its stock went up by 12 cents yesterday, to close at $5.82.
Chandler is managing partner of Franklin Court Partners LLC of Littleton, Colo., a firm that advises broadband companies, and Meyercord is an ex-CEO of Cavalier Telephone & TV of Richmond, Va.
In mailings to Tollgrade shareholders, Ramius criticized the company for spending hefty amounts on research and development and on acquisitions in recent years, but still failing to improve the bottom line.
Ramius said the board lacked experienced telecom professionals. But it recently added Hoffman, formerly with Covad Communications Group Inc., and another industry veteran, Edward J. Kennedy, as it expanded from seven to eight members. Kennedy's term expires next year.
Incumbent board members James J. Barnes and David S. Egan, both with law firm Reed Smith LLP, along with Brian C. Mullins, a retired executive with packaging maker SCA North America, failed to win re-election yesterday.
Tollgrade said last week it lost almost $1.51 million for the second quarter ended June 30 on $10.6 million in revenue. It was the company's third consecutive quarterly loss.
Founded in 1986, Tollgrade boomed during the dot-com era, with its stock price hitting $166 in July 2000. But the company has struggled for much of the last decade as changes in telecom laws and technology eroded sales.
Tollgrade is pursuing managed service agreements while concentrating mainly on producing software to keep telecom networks running smoothly. It plans to introduce a new software platform this fall at a conference in Paris.
During the proxy contest, Tollgrade management often pointed out that Ramius never came out with a strategy to improve the company.
But Solomon said yesterday, "It isn't so much about coming up with a unique plan. It's looking at the product suite that Tollgrade already has and bringing to bear the telecom experts on the board who can help to advance the cause of the company."
