Friday, June 20, 2008

Sonus responds to Legatum letter about vote holdout

By Mass High Tech Staff

After receiving word earlier this week that a major shareholder would withhold its vote for nominees to the board of directors, Sonus Networks Inc. has issued a response, indicating that while the board would be open to continued negotiations, the investors’ protests indicate a lack of understanding about Sonus’ business.

The shareholder, Legatum Capital, owns about 25 percent of Sonus’ shares. On Wednesday, the Dubai-based investment firm filed a letter with Sonus (Nasdaq: SONS) announcing its intention to withhold the votes “because (Legatum Capital) believes that Sonus’ board of directors has not taken necessary action to change the way the company is managed or to deliver value to shareholders,” according to a statement from Mark Stoleson, president of Legatum Capital.

The protest comes a month after Sonus announced that long-time CEO Hassan Ahmed would be replaced as CEO by Richard N. Nottenburg, a former executive at Motorola Inc. Ahmed, however, would remain as chairman and director.

In the letter, Legatum said the moves “demonstrate Sonus’ poor corporate governance practices.”

Sonus, in a letter from Ahmed, responded by saying Legatum Capital’s letter and subsequent press releases were “filled with mischaracterizations and misstatements,” and said that while Sonus’ board of directors has considered proposed management moves from Legatum representatives in the past, many of such suggestions “reflect a lack of appreciation of our business and best corporate governance practices.”

Details regarding any future meetings or discussion between the two companies have not been disclosed. Sonus’ annual shareholder meeting is scheduled for today.

In 2007, Sonus reported $97.1 million in revenue and a net profit of $14 million.