Mihaylo objects to delay in Inter-Tel vote, asks to be named chairman, CEO

New York, July 3 - Inter-Tel Inc. shareholders Steven Mihaylo objected to the company's decision to delay a vote on the company's merger with Mitel Networks Corp.

He also called for the board to be reduced to six members from the current 11 and for the company to name him chairman and interim chief executive officer.

Mihaylo's proposed new board would include Anil K. Puri, Kenneth L. Urish and himself plus three people named by the current board.

An executive search firm would find a new CEO.

In addition, the current special committee would be disbanded and replaced with a new one that has a majority drawn from Mihaylo's directors.

The new committee would be "issued with an immediate directive to implement my recapitalization proposal unless a superior proposal emerges prior to implementation of the recapitalization," Mihaylo wrote in a letter to Inter-Tel's board that was released via a filing with the Securities and Exchange Commission.

Inter-Tel announced the delay on June 29 so that stockholders could evaluate "recent developments."

"We believe stockholders should have the opportunity to consider the significant recent changes in the debt capital markets adversely affecting the availability and cost of financing for acquisition or recapitalization transactions and the disclosure in Steven G. Mihaylo's definitive proxy statement, which has only recently become available," special committee chairman Alexander L. Cappello said in a company news release.

But Mihaylo argued stockholders have already had enough time to evaluate the deal in light of his own recapitalization alternative.

He also said that the board did not consult RBC Capital Markets, which, he said, advised him on Friday "that the current events in the debt markets would not impede the execution of its committed financing."

On April 26, Mitel agreed to acquire Inter-Tel for $723 million. Both companies' boards have approved the transaction, which is expected to close in the third quarter of 2007.

Meanwhile Mihaylo recommended that the company use $200 million from its cash reserves and an additional $200 million of borrowings to begin a tender offer to purchase, after expenses and break-up fees, 13.4 million Inter-Tel shares at $28.00 per share.

Mitel, based in Ottawa, Ont., provides unified communications solutions and services for business customers.

Tempe, Ariz.-based Inter-Tel specializes in applications using networks and server-based communications software.

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