Tollgrade, Ramius try to garner support for respective board nominees

By Angela McDaniels

Tacoma, Wash., July 16 - Tollgrade Communications, Inc. laid out its case against shareholder Ramius LLC in a letter to shareholders on Thursday.

As previously reported, Ramius subsidiary RCG Starboard Advisors, LLC has nominated Scott Chandler, Ed Meyercord and Jeffrey Solomon for election to the company's board of directors at the annual meeting on Aug. 5.

In a letter on Monday, Ramius said the Tollgrade board "desperately needs" telecom industry experience.

In the Thursday letter, Tollgrade chairman, president and chief executive officer Joseph A. Ferrara said the company has been "very receptive" to working with Ramius to "enhance the composition of the board" and went as far as appointing two new independent directors, Charles Hoffman and Edward Kennedy, both of whom have "decades of experience in the telecom industry."

According to the letter, Ramius was not receptive to any settlement agreement that included a standstill provision preventing it from bringing another proxy contest at next year's annual meeting, leading Tollgrade to believe that the "ultimate goal of the Ramius Group is to be able to exert substantial influence and effective control over Tollgrade disproportionate to their investment."

Ramius' three nominees, if elected, would make up close to 40% of board. Ramius and its affiliates have a 15.2% stake in the company.

Ferrara also expressed concern that, if elected, Ramius' nominees would "eventually become a disruptive and destabilizing influence" on the board - citing the experience of CPI Corp.'s board, which includes a Ramius representative - and that Ramius' interests would diverge from the interests of other stockholders.

Tollgrade is "very concerned" that Ramius may be "more attracted by our more than $60 million in cash reserves than Tollgrade's very significant potential for growing long-term shareholder value," Ferrara said.

Ramius seeks support

In a news release on Thursday, Ramius again urged shareholders to vote for its nominees.

The shareholder said the board has overseen an "extended period of underperformance" and "multiple failed strategies" and does not have a meaningful vested financial interest in Tollgrade.

In support of its nominees, Ramius noted that they collectively have more than 35 years of experience in the telecom equipment and services industries and are "committed to representing the best interests of all Tollgrade stockholders."

Tollgrade is based in Cheswick, Pa., and makes test system and status-monitoring hardware and software products for the U.S. telecommunications and cable industries.

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