The founder of US-based telecommunications equipment firm Inter-Tel is urging the company to consider a disposal of Dublin-based Lake Communications, just two years after the Irish firm was acquired for up to $46.3 million (€35.2 million).
Steven Mihaylo, has asked the Nasdaq-listed company to explore a sale of its Irish arm unless its financial performance improves, and to immediately take other measures to "enhance stockholder value in the near and longer term".
The board of Inter-Tel, which has a market capitalisation of $612 million, has told Mr Mihaylo, who owns over 19 per cent of Inter-Tel's stock, that "several" of his ideas are already the subject of management review.
The most recent accounts for Lake Communications, for 2005, show a seemingly healthy financial position.
In that year, it generated revenue of €30.5 million and recorded an operating profit of over €3 million. That compared with turnover of €23.9 million the previous year and an operating profit of slightly over €1 million. It is understood that Lake Communication's 2006 performance could exceed that of 2005, although in its last quarterly report, to the end of September 2006, Inter-Tel said that sales at Lake Communications had decreased, without giving additional information.
The deal to acquire Lake Communications provided for an upfront cash payment of $28.7 million (€21.6 million at the time), as well as an additional earn out of up to $17.6 million payable upon certain targets being met within 18 months of the acquisition.
Lake Communications, which employs almost 100 people between locations in Dublin and Sligo, was acquired by management including its current chief executive, Anthony Bermingham, from Swiss firm Landis & Gyr in 1991. In 2001, Lake paid €10 million to buy a US company, Home Wireless Networking.
Since urging Inter-Tel to consider the sale of Lake Communications, Mr Mihaylo has said he intends to nominate five directors, including himself, for election at Inter-Tel's next annual general meeting.
Inter-Tel chairman Alexander Cappello has said the board is "extremely disappointed" with the move and has urged Mr Mihaylo, who is already a board member, not to engage in a "destructive proxy contest".
