One report, two views; Insituform and Water Asset Management try to use information to their advantage

By Lisa Kerner

Charlotte, N.C., May 9 - Insituform Technologies, Inc. and its shareholder Water Asset Management LLC both used a May 2 report from Glass Lewis & Co. to boost their positions in an ongoing proxy contest.

According to Water Asset Management, the proxy advisory firm recommended that stockholders vote for independent candidates Nick Vande Steeg and Disque D. Deane Jr. at the Insituform's annual meeting on May 19.

Water Asset, a 5.3% stockholder, cited the Glass Lewis report as saying, "In this case, we believe that [Water Asset Management] has successfully raised serious concerns regarding the company's performance. Notably, when the dissident first approached the board of directors, Insituform's stock price was near a five year low value. Further, the company's stock has underperformed the noted indices in each year since 2002. This should be concerning for shareholders."

Insituform released a statement in response to the hedge fund's claims, saying Water Asset Management misrepresented the conclusion of Glass Lewis' report.

According to Insituform, Glass Lewis said in its May 2 report that it was "not swayed by the dissident's argument that it should control a majority of the seats on the board of directors."

Insituform called Water Asset Management's announcement "another example of the ever-changing strategy of misstatements, distortions and misrepresentations that Water Asset Management has employed in its effort to take control of Insituform by electing its slate of five under-qualified, hand-picked nominees."

In its news release, Insituform said both RiskMetrics Group (formerly ISS) and Glass Lewis agree that Water Asset Management's plan to replace a majority of the company's board is not in the best interests of all Insituform stockholders.

Water Asset Management "firmly disagrees" with RiskMetrics' recommendation, saying that it "obliges Insituform stockholders to continue to suffer with the same incumbent board that has presided over the company's dismal record of poor stock price, shrinking margins, chief executive officer turnover and failed acquisitions."

Glass Lewis did not return calls seeking comment.

As previously reported, Water Asset Management wants Insituform shareholders to vote for the investor's nominees, which include:

• Senator Alfonse M. D'Amato;

• Nickolas W. Vande Steeg, former president of Parker-Hannifin Corp.;

• Richard Onses, a water industry consultant based in Barcelona, Spain;

• Matthew J. Diserio, president of Water Asset Management; and

• Disque D. Deane Jr., chief investment officer of Water Asset Management.

Insituform, based in Chesterfield, Mo., provides proprietary trenchless technologies to rehabilitate, replace, maintain and install underground pipes.

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