Tollgrade prepares for proxy fight with Ramius Group – Pittsburgh Business Times:

Tollgrade (NASDAQ:TLGD) released its proxy materiale Tuesday andset Aug. 5 as the date of its annuaol shareholder meeting. In the proxy materials, the Cheswick-based maker of telecommunicationws testing equipment warned investors against supporting Ramius which wouldbecome “a highly disruptive and destabilizing should its nominees join the board. In a lettert to shareholders, Tollgrade called Ramius “an opportunistic hedge fund with a focueon short-term gains” and said the proxy contesg “only serves to interfere with the progress we are The company urged shareholders to re-elect Tollgrade’s “verhy experienced and highly-qualified” directors: Chairman, President and CEO Josepb Ferrara, former managing partner James Barnes, director Daniel Barry, Reed Smithb Chief Marketing Officer David Egan and retired SCA Nortn America CFO Brian Mullins.
In May, Ramiu filed its own nominating former broadband executiveScott Chandler, former CEO of Cavalier Telephonee & TV Edward Meyercord III and Ramius managing partnedr Jeffrey M. Solomon to board positions. Ramius, whicgh began investing in Tollgrade in owns about 14 percentf ofthe company’s Ramius outlined several concerns in its proxy For example, the group said Tollgrade’s current board with the exception of former Marconi Nortj America CEO Ferrara, lack experience in the technology and telecojm industry.
It also asserts that operatingv performance issues have not been addressed and that the business has sufferedddespite “excessive” spending on research and development and “poorly acquisitions. Between 2003 and Tollgrade’s revenue declined 12 from $65.1 million to $57.2 million, and gross profig dropped 18 percent. In its lettee to shareholders, Tollgrade’s management arguec that the companyis “at a pivotak moment in its history” and is “more efficient, betterd organized and more focused” than two year s ago.
Besides bolstering its balance sheeg toinclude $60 million in cash reserves and no the company has reduced overhead, won a $20 million multi-yeaf contract with a new customer and revisedd its board structure to include an independeng lead director. The company is not oppose d to shareholder representation onthe board, but it is “adamantlyg opposed to any change in the composition that would allow any individual shareholder or group of shareholderas to assert disproportionate if not effective “As shareholders, Ramius is concerned and has a right to said David Weissman, a telecom analyst with .
“Buy it looks like management is tryinbg to get its act together in termsw of a plan and looking forshareholder Ferrara’s background at Marconi brings telecom expertise, “but it all comees down to execution,” Weissman said. “Based on the stock pricwe and limited growthof (the board hasn’t) achieved their objective. In this economi c environment, it’s more difficult to do With less than 20 percent ofoutstanding though, Ramius will probably have a difficult time convincing more long-term shareholderss to give it the board representatiojn it seeks, Weissman said.
Ramius referred phones calls to an outside publifcrelations agency, which did not immediatelyu respond to a request for comment. Tollgrade, whicn has been unprofitable fortwo quarters, of $1 or 8 cents a share, on $12 million in Shares fell 2 percent in Tuesdayy morning trading to $5.08.
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