The bitter proxy battle has intensified at California Micro Devices Inc. (CMD).
Simply put, CMD is fighting back. As previously reported, an investment firm, Dialectic Capital Management LLC, recently sent letters to the stockholders of CMD, blasting CMD and claiming it has ''poor corporate governance.'' The firm also urged the chip maker to elect three of its own directors.
Dialectic said it is the second largest stockholder of CMD and beneficially owns 2,025,011 shares, representing approximately 8.8 percent of that company's outstanding common stock.
In a letter sent on Friday (Aug. 28), Wade Meyercord, chairman of CMD, took issue with Dialectic's claims. CMD also urged shareholders to re-elect all the nominees of its board: Jon Castor, Robert Dickinson, Wade Meyercord, Ed Ross, David Sear, John Sprague and David Wittrock.
''Your board believes that the continued execution of CMD's clear action plan is in the best interests of the company and its stockholders and provides the greatest opportunity to create long-term stockholder value,'' according to the CMD letter.
CMD also dismissed Dialectic's claims, saying that the investment firm is misleading shareholders.
''It is telling that in a recent letter to CMD stockholders, Dialectic said that its nominees will join the board 'with a mandate to fully and objectively explore all strategic alternatives with one goal -- the maximization of stockholder value,' '' according to the CMD letter. ''We believe that Dialectic is insinuating that it would like to put the company up for sale, a belief bolstered by Dialectic's continued silence on its strategy for CMD. While the board is open to all paths to increased stockholder value, we firmly believe that now is not the right time to pursue a sale process.''
In the letter, CMD made other claims:
*''Dialectic has said that it has a plan to create value for all CMD stockholders, yet has never offered a single concrete operational or financial step to improve CMD's performance and profitability.''
*''At the same time, Dialectic has bizarrely criticized CMD for cutting expenses in order to return to positive cash flow, an action we would expect to be applauded by a stockholder that describes itself as 'focused on achieving profitability.' ''
*''In the same breath, Dialectic questions the CMD board's willingness to listen to stockholders and then attacks us for doing exactly that when we recently decided to redeem CMD stockholder rights plan in response to input from our stockholders. ''
*''Dialectic would like to claim that it has tried to negotiate a settlement to this costly and distracting proxy contest, but in fact, Dialectic has twice unilaterally stopped active negotiations, insisting on its unreasonable demands.''
*''Dialectic contends that its nominees have the right experience to enhance your board but the only specific example it has provided to support this claim is nominee Michael Gullard's role in selling Transmeta Corporation after joining the Transmeta Board as part of a proxy contest settlement.''