Sonus to appoint qualified Legatum designee to board once standstill agreement in place

By Lisa Kerner

Charlotte, N.C., June 20 - Sonus Networks, Inc. said Legatum Capital misconstrued the company's offer to appoint a qualified Legatum designee to its board of directors.

In a June 20 letter to the United Arab Emirates-based Legatum, Sonus clarified that its offer was to create a specific board seat and add a Legatum designee based on the individual being qualified by the Sonus nominating committee and Legatum's willingness to enter into a standstill agreement.

"We are surprised at Legatum's resistance to a shareholder agreement containing a customary standstill provision," the letter stated.

"A standstill provision provides certainty and stability by preventing Legatum from exploiting its favorable position and significant ownership by engaging in coercive, unfair or abusive tactics that are not in the best interests of all shareholders," Sonus noted.

According to Sonus, Legatum called the company's request to review the shareholder's source of funds "discriminatory" and "disingenuous."

Sonus cited the company's place within the national security infrastructure of the United States and the "foreign nature" of the Legatum family of investment funds.

Regarding Legatum's claim that Sonus ignored its proposals, Sonus said it did consider the proposals and that many of them were inappropriate.

The proposals included acquiring a small internet protocol private branch exchange (IP PBX) company to compete with Cisco and Avaya in the enterprise market and engaging in a "highly dilutive" transaction to acquire a "marginal" software company.

Legatum had also proposed that Sonus appoint two directors to the board without knowing the identity or qualifications of the candidates and "in circumvention of the board's established standards and policies with respect to board appointments."

Sonus also clarified that it voluntarily sent out updated proxy materials reflecting the appointment of its new chief executive officer Dr. Richard Nottenburg, who also replaced a retiring board member.

The company noted that it separated the role of chairman and CEO, which Legatum had suggested.

Sonus said it welcomes Legatum's participation on its board and will begin the process of qualifying its designee and will review the information requested from the shareholder.

It was previously reported that Legatum, a 25% shareholder, announced it would withhold its vote for all nominees standing for election to the Sonus board at the company's meeting on June 20.

The shareholder does not believe the board has taken steps to change the way the company is managed or to deliver value to shareholders, a prior Legatum news release said.

Sonus, based in Westford, Mass., specializes in voice infrastructure solutions for wireline and wireless service providers.

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