Inter-Tel to Mihaylo: shareholders need more time

By Lisa Kerner

Charlotte, N.C., July 9 - Inter-Tel, Inc. responded to shareholder Steven Mihaylo's objection to the delayed vote on the company's merger with Mitel Networks Corp. by reiterating that stockholders "deserve the opportunity to make a fully informed decision, especially in light of recent developments."

Mihaylo believes stockholders have already had enough time to evaluate the deal in light of his own recapitalization alternative, according to a company news release.

Mitel is seeking to acquire Inter-Tel for $25.60 per share in cash for all shares. Despite Inter-Tel's urging, Mitel will not raise the offer price.

"We believe it is important for Inter-Tel stockholders to recognize that the process to maximize shareholder value undertaken by the special committee, all of whose members are independent (except for our chief executive officer) has resulted in an opportunity for all shareholders to receive cash for all of their shares at a price that exceeds by more than 10% what you and Vector Capital were willing to pay for the company," Inter-Tel chairman Alexander L. Cappello wrote to Mihaylo.

If stockholders reject the Mitel acquisition at the special meeting on July 23, Cappello said the special committee will remain committed to maximizing shareholder value and invited Mihaylo to constructively discuss such opportunities.

In his July 2 letter to the board, Mihaylo also called for Inter-Tel's board to be reduced to six members from the current 11 and for the company to name him chairman and interim chief executive officer.

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.

Mihaylo recommends 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, 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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