Obrem seeks shareholder support for changes to Micrel's board

By Lisa Kerner

Charlotte, N.C., April 10 - Micrel, Inc. investor Obrem Capital Management, LLC filed a preliminary proxy statement soliciting proxies for several matters, according to a schedule 13D filing with the Securities and Exchange Commission.

Obrem wants shareholders to vote to:

• Remove Micrel's five current directors;

• Amend Micrel's bylaws to permit shareholders to fix the number of directors to a range of not less than four and not more than seven directors;

• Amend Micrel's bylaws to establish the number of directors at six;

• Elect six nominees proposed by Obrem to fill the six seats on the board; and

• Approve a non-binding shareholder resolution recommending that the board rescind the shareholder rights plan adopted by Micrel on March 28.

If the above proposals are accepted by Micrel shareholders, Obrem intends to ask that directors have Micrel engage an investment bank with semiconductor industry expertise to pursue a sale of the company, the filing said.

On April 1, Micrel sent an open letter to stockholders refuting what the company called Obrem's "inaccurate and self-serving assertions."

Obrem, a 14.9% shareholder, announced on March 26 that it had called a special meeting of Micrel shareholders to be held May 21 for the purpose of, among other things, removing Micrel's five current directors under article 3.4 of the company's bylaws.

Micrel's letter accused Obrem, a very recent Micrel investor, of using a "cherry-picked" set of comparables to make its case against Micrel.

While Micrel introduced 82 new products in 2007 and amassed a large patent portfolio, the company admitted the potential of these products is not reflected in Micrel's stock price.

Micrel questioned whether Obrem was attempting to secure its own near-term gain without considering the interests of all Micrel shareholders.

Obrem, in its own April 1 open letter to fellow Micrel stockholders, said it was disappointed that Micrel management chose to "attack" Obrem rather than address what the investor said is its primary concern: creating permanent value for stockholders.

The investor accused Micrel of improperly blaming the semiconductor market conditions for its ongoing underperformance, citing the strength of the analog semiconductor industry over the past five years, and stood by its claim that Micrel's operating performance lags its peer group.

Obrem also denied any attempt to remove Micrel chief executive officer Ray Zinn but added that during the past 10 years under Zinn's leadership, "there has been a decrease in Micrel's share price and no tangible value creation for stockholders."

Obrem's nominees for election to the Micrel board are:

• Bill Bradford, a co-founder and general partner of Saguaro Ventures;

• Keith R. Gollust, a founding partner of Gollust, Tierney, and Oliver, a private investment firm;

• Eric Gomberg, a senior investment analyst at Obrem Capital Management;

• Ben Goren, a principal at GCG Capital;

• Keith M. Kolerus, former chairman of the board of ACI Electronics; and

• Andrew Rechtschaffen, founder and managing member of Obrem Capital Management.

Micrel develops and manufactures high-performance analog power integrated circuits (ICs), mixed-signal ICs and digital ICs. The company is based in San Jose, Calif.

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