29th Nov 2006 07:03
Spirent Communications PLC29 November 2006 29 November 2006 DUE FOR RELEASE AT 7.00AM Spirent Communications plc Circular and Notice of Requisitioned EGM London, UK - 29 November 2006: Spirent Communications plc ("Spirent" or "theCompany") (LSE: SPT; NYSE: SPM), a leading communications technology company,announces that it is today posting to its shareholders a circular including anotice of an extraordinary general meeting requisitioned by three shareholdersled by Sherborne Investors GP, LLC ("Sherborne") to be held on 22 December 2006. Resolutions are to be considered at the Extraordinary General Meeting for: • The removal from office as a director of the Company of John Weston, the Chairman, Andrew Given (Chairman of the Audit Committee) and Frederick D'Alessio (Chairman of the Remuneration Committee); and • The appointment as a director of the Company of Edward Bramson (who proposes to become Chairman), Ian Brindle, Gerard L. Eastman Jr. and Alexander Walker. Highlights of the Circular: • Contains a unanimous recommendation from the Board of Spirent to vote against all the Resolutions as it does not believe they are in the best interests of the Company and its shareholders as a whole; • Notes that if all the Resolutions are passed, both Kurt Hellstrom and Marcus Beresford, the remaining independent Non-Executive Directors, have notified the Company of their intention to resign with immediate effect. They have decided that, in such circumstances, the Board will no longer be able to function in accordance with established principles of corporate governance, and it would no longer be appropriate for them to continue as Directors; • States that the Board believes that there are compelling reasons why shareholders should vote against the Resolutions proposed by Sherborne, namely: - Spirent's track record to date under the current Chairman and Board deserves support - Spirent has a clear and well established strategy - Sherborne has no stated plan for the Company - Sherborne offers no premium for control - Sherborne's proposal would cause the Company to breach important corporate governance principles - Sherborne's proposed directors lack relevant sector experience Marcus Beresford, Spirent's Senior Independent Director, said: "The Board is wholly satisfied with, and continues fully to support, John Westonas the Chairman and Andrew Given and Frederick D'Alessio as Non-ExecutiveDirectors. Together with the other Directors, they have overseen atransformation of Spirent. The track record of the Company under theirstewardship speaks for itself compared to its peer group and relevant marketindices. The Company has a clear strategy and a unified independent Board which is fullycompliant with the Combined Code. The Board has taken actions which are expectedto yield significant benefits to the Company's performance in 2007. In contrast,the Sherborne proposals would, if approved, cede effective control of the Boardto Sherborne, result in a Board which is fundamentally non-compliant with theCombined Code and leave shareholders holding shares in a company with no clearlystated alternative strategy." For further information please contact: Reg Hoare Smithfield +44 (0)20 7360 4900Angus Maitland Maitland +44 (0)20 7379 5151 Spirent Communications plc 29 November 2006 Spirent Communications plc Circular and Notice of Requisitioned EGM Spirent Communications plc ("Spirent" or the "Company") announces that it istoday posting to its shareholders a circular setting out the reasons whyshareholders should vote against the resolutions to be considered at theforthcoming extraordinary general meeting requisitioned by a nominee on behalfof funds managed by Sherborne Investors GP, LLC ("Sherborne"), ArtemisInvestment Management Limited and Credit Suisse Asset Management Limited(together the "Sherborne Investor Group") to be held on 22 December 2006. Seven separate resolutions are to be considered at the Extraordinary GeneralMeeting (the "Resolutions") for: • The removal from office as a director of the Company of John Weston, the Chairman, Andrew Given (Chairman of the Audit Committee) and Frederick D'Alessio (Chairman of the Remuneration Committee); and • The appointment as a director of the Company of Edward Bramson (who proposes to become Chairman), Ian Brindle, Gerard L. Eastman Jr. and Alexander Walker. The circular contains a unanimous recommendation from the Board of Spirent tovote against all the Resolutions, as it does not believe they are in the bestinterests of the Company and its shareholders as a whole. It should also be noted that if all the Resolutions are passed, both KurtHellstrom and Marcus Beresford, the remaining independent Non-ExecutiveDirectors, have notified the Company of their intention to resign with immediateeffect. The Board believes that there are compelling reasons why shareholders shouldvote against the Resolutions proposed by the Sherborne Investor Group: 1. Spirent's track record to date under the current Chairman and Board deserves support John Weston's appointment to the Board as Chairman was announced on 31 October2002, since which time both Frederick D'Alessio and Andrew Given have also beenappointed directors (January 2004 and October 2003 respectively). From 31October 2002 to date, Spirent has been transformed from a company in aprecarious financial position with a share price of 12.5 pence to 54.75 pence atthe close of business on 28 November 2006, a rise of some 335 per cent. This share price performance reflects the substantial progress that the Companyhas made during John Weston's chairmanship, with the support of the executiveand non-executive directors, under very challenging market conditions: • Transformed the Company's financial position, from having to renegotiate its banking covenants on $144.5 million of debt in 2002 to now being in the process of returning £100 million to its shareholders; • Restructured the business to focus on its core communications activities, completing the sale of HellermannTyton for £298 million on a cash and debt free basis earlier this year, approximately £70 million more than the average of market analysts' expectations; • Appointed Anders Gustafsson as Chief Executive to lead the business in August 2004 and Kurt Hellstrom, Andrew Given and Frederick D'Alessio as non-executive directors to strengthen the Company's telecoms and wireless expertise; • Positioned the business in a number of high growth market segments and restructured the senior management team; • Balanced the Company's cost base with the need to generate long-term growth against a background of significant product transition. The Company is now poised to realise significant cost and efficiency benefits from these changes; and • Taken actions in the period from 31 October 2002 to date realising annualised cost savings of £33 million in total (including an estimated £7 million on an annualised basis as a result of actions announced on 5 October 2006). During this period, Spirent's share price has significantly outperformed everymajor index against which it is appropriately benchmarked, including the FTSE250 Index and the FTSE 350 Technology Hardware & Equipment Index. Furthermore, whilst the Company has been operating in a difficult sector of themarket, during this period its share price has outperformed by a significantmargin a peer group of Agilent Technologies, Anritsu, Catapult, Exfo, Ixia, JDSUniphase, Tektronix and Tollgrade. 2. Spirent has a clear and well established strategy Under John Weston the Company has been pursuing a clear and consistent strategy.Most recently, on 5 October 2006, the Board provided an update on this strategy,setting out its plans to continue to focus on telecommunications and to createshareholder value. It also reiterated how the proceeds from the HellermannTytonsale would be used to grow Spirent through organic investment and selectiveacquisitions. Key features of Spirent's strategy are: Margin improvement plan • The Company continues to focus on the realignment of resources and reduction in operating expenses across its Performance Analysis and Service Assurance divisions • A 15 per cent. operating margin is targeted in Performance Analysis Broadband by the end of 2007 • Exploitation of the substantial investment in Spirent TestCenter to enable significant operating efficiencies in product development, sales and marketing and other areas Restructuring actions • Reduction in operating costs of £7 million on an annualised basis (as noted above) Review of US listing and SEC de-registration • The Board has commenced a process to terminate the US listing and registration, which costs the Company some £3 million per year Return of capital to shareholders • The current £50 million rolling buy back programme • A further £50 million return of capital to shareholders announced 3. Sherborne has no stated plan for the Company Sherborne has given no indication of what it intends to do with the Company norhas it put forward any proposal to the Board on how the Company could be runbetter, nor offered any different strategic plan. In the absence of any suchexplanation from Sherborne, it is unreasonable to ask shareholders to supportchanges to the Board. Furthermore, the Board considers that its strategic planrepresents a realistic and achievable way forward to generate value from thebusiness. The plan builds on the investments made over recent years torationalise Spirent's product range. This, together with the benefits from thecost reduction programme that management has been following, paves the way forthe targeted increase in margins as indicated in the Company's announcement of 5October 2006. In contrast, Sherborne wants shareholders to take on trust that it offers abetter way forward than the clearly articulated strategy that the Board ispresently following. The Board has a particular concern that Sherborne'sintervention will disrupt the careful balance that the Board has establishedbetween short term cost minimisation and investment in new products and markets.The attendant uncertainty, with negative consequences for key customerrelationships and employee retention and motivation, risks serious damage to theCompany's performance. 4. Sherborne offers no premium for control Sherborne has made it clear that it wants effective control of the Board and itsproposal to remove and replace a number of the directors and the Chairman isdesigned to achieve this. The Board believes that it is totally inappropriatefor control to be transferred in this way with no premium for this control beingoffered to the other shareholders. 5. Sherborne's proposal would cause the Company to breach important corporategovernance principles One of the key principles of the Combined Code on Corporate Governance is thatthe board should include a balance of executive and non-executive directors(and, in particular, independent non-executive directors) such that noindividual or small group of individuals can dominate the board's decisiontaking. The specific terms of the Combined Code that would be breached if Sherborne'sproposals were implemented are that the Company would: (i) not have a Chairman who was independent on appointment; (ii) not have at least half of the Board (excluding the Chairman) comprising independent non-executive directors; and (iii) have a Board whose decision taking could be dominated by a small group of individuals. None of the shareholders in the Sherborne Investor Group or any otherinstitution had previously approached me as the Senior Independent Director (asprovided for under the Combined Code) to express to either of us any concernsabout the Company's performance. Against this background, shareholders should note that if all the Resolutionsare passed, both Kurt Hellstrom and Marcus Beresford, the remaining independentNon-Executive Directors, have notified the Company that they intend to resignwith immediate effect. They have decided that, in such circumstances, the Boardwill no longer be able to function in accordance with established principles ofcorporate governance, and it would no longer be appropriate for them to continueas Directors. 6. Sherborne's proposed directors lack relevant sector experience Spirent is a complex high technology industrial group specialising intelecommunications and operating in demanding global markets. Under JohnWeston's leadership, a group of non-executive directors have been assembled within-depth senior management experience from a broad range of major companies,including Ericsson, BAE Systems, GKN, Verizon Communications and NorthernTelecom. This group has significant telecoms sector expertise amongst itsmembers, which is essential to finding the optimum balance between short-termperformance and long-term value creation. In contrast, the Sherborne candidatesappear to lack telecoms sector expertise. Conclusions The Board is wholly satisfied with, and continues fully to support, John Westonas the Chairman and Andrew Given and Frederick D'Alessio as Non-ExecutiveDirectors of the Company. Together with the other Directors, they have overseena transformation of Spirent. The track record of the Company under theirstewardship speaks for itself compared to its peer group and relevant marketindices. The Company has a clear strategy and a unified independent Board which is fullycompliant with the Combined Code. The Board has taken actions which are expectedto yield significant benefits to the Company's performance in 2007. In contrast,the Sherborne Investor Group proposals would, if approved, cede effectivecontrol of the Board to Sherborne, result in a Board which is fundamentallynon-compliant with the Combined Code and leave shareholders holding shares in acompany with no clearly stated alternative strategy. The Extraordinary General Meeting to consider the proposed Resolutions will beheld at 10.00am on Friday 22 December 2006 at The Copthorne Hotel (LondonGatwick), Copthorne Way, Copthorne, Crawley, West Sussex RH10 3PG UnitedKingdom. For further information please contact: Reg Hoare Smithfield +44 (0)20 7360 4900Angus Maitland Maitland +44 (0)20 7379 5151 About Spirent Communications plc Spirent Communications plc is a leading communications technology companyfocused on delivering innovative systems and services to meet the needs of customers worldwide. We are a global provider of performance analysis and serviceassurance solutions that enable the development and deployment ofnext-generation networking technologies such as broadband services, Internettelephony, 3G wireless and web applications and security testing. The Systemsgroup develops power control systems for specialist electrical vehicles in themobility and industrial markets. Further information about SpirentCommunications plc can be found at www.spirent.com. Spirent Communications plc Ordinary shares are traded on the London StockExchange (ticker: SPT) and on the New York Stock Exchange (ticker: SPM; CUSIPnumber: 84856M209) in the form of American Depositary Shares ("ADS"),represented by American Depositary Receipts, with one ADS representing fourOrdinary shares. Spirent and the Spirent logo are trademarks or registered trademarks of SpirentCommunications plc. All other trademarks or registered trademarks mentionedherein are held by their respective companies. All rights reserved. This press release may contain forward-looking statements (as that term isdefined in the United States Private Securities Litigation Reform Act of 1995)based on current expectations or beliefs, as well as assumptions about futureevents. You can sometimes, but not always, identify these statements by the useof a date in the future or such words as "will", "anticipate", "estimate","expect", "project", "intend", "plan", "should", "may", "assume" and othersimilar words. By their nature, forward-looking statements are inherentlypredictive and speculative and involve risk and uncertainty because they relateto events and depend on circumstances that will occur in the future. You shouldnot place undue reliance on these forward-looking statements, which are not aguarantee of future performance and are subject to factors that could cause ouractual results to differ materially from those expressed or implied by thesestatements. The Company undertakes no obligation to update any forward-lookingstatements contained in this press release, whether as a result of newinformation, future events or otherwise. END This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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