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Zarlink shareholders call for new CEO and board of directors |
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Written by Craig Wong, THE CANADIAN PRESS
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Wednesday, 02 July 2008 |
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OTTAWA - A group of shareholders of Zarlink Semiconductor Inc. (TSX:ZL) want to replace the company's chief executive and nominate five new directors.
The dissident shareholders of the Ottawa-based chip maker include Scott Leckie, who manages funds owning a 5.2 per cent stake in the company, as well as David Banks and Daniel Owen. In a letter to the company, Leckie said he was "profoundly disappointed by the dismal performance of Zarlink's shares and by the failure of the company's leadership to achieve tangible value creation."
The shareholder group wants to replace chief executive Kirk Mandy, chairman Henry Simon, Jules Meunier, Dennis Roberson and Oleg Khaykin on the board.
Hubert Lacroix, Spencer Lanthier and Adam Chowaniec would remain as directors, under the proposal.
The company's annual meeting of shareholders is scheduled for July 23.
"The current CEO, Kirk Mandy, has had effectively 10 years to make Zarlink a success but instead has produced a falling share price, poor financial performance, ineffective management, and a strategy that has positioned the company poorly for the fierce competition and economic conditions it faces," Leckie wrote in his letter.
"Rather than improving, Zarlink's strategic options are diminishing."
The company strongly advised shareholders to support the Zarlink management team's current slate of directors and reject the dissidents' proposal.
Zarlink said Wednesday the replacement of five directors with five unnamed nominees would give give Leckie's fund control of the board.
"This is a hedge fund that owns just five per cent of the Company seeking an opportunity to generate a short-term gain, without any regard for the longer-term opportunities for the majority of our shareholders," Mandy said in a statement.
"We believe Mr. Leckie is intentionally misstating the financial position of Zarlink, our product strategy and market realities to further the hedge fund's agenda and destroy one of the few remaining Canadian-based high tech companies."
Mandy was president and CEO of Zarlink's predecessor company, Mitel Corp., from 1998 until it split its semiconductor division from its telecom equipment business in 2001. For several years, Zarlink was under the leadership of Patrick Brockett until he left and Mandy resumed the position of president and CEO in February 2005.
Shares in Zarlink closed up four cents or about 4.5 per cent at 93 cents on the Toronto Stock Exchange. The stock has a 52-week high of $1.92 and a 52-week low of 55 cents.
Zarlink shares traded as high as $48.25 in March 2007, but have remained below $4 since October 2004.
According to Thomson Financial, Zarlink's largest shareholder is T. Rowe Price Associates Inc. with an 8.1 per cent stake.
In its latest financial year ended March 28, Zarlink said it lost $48.4 million or 41 cents per share on $183.6 million in revenue. That compared with a profit of $15.8 million or 11 cents per share on $142.6 million in revenue a year ago.
In its guidance for the first quarter of 2009 financial year, the company said it expects revenue between $59 million and $61 million.
Excluding foreign exchange charges related to its debentures, Zarlink said it expects to break even for the quarter.
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Last Updated ( Sunday, 07 September 2008 )
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