Micrel to shareholders: Reject Obrem Capital's proposals, nominees at May 20 special meeting

By Lisa Kerner

Charlotte, N.C., May 1 - For the second time in less than a week, Micrel, Inc. asked its shareholders to vote against Obrem Capital Management LLC's proposals and director nominees at the company's special meeting on May 20.

Micrel said the hedge fund, which has owned Micrel stock for approximately two months, is trying to oust the company's current board and force a sale of the company.

"We believe Obrem Capital Management is attempting to take control of your company to secure a quick, opportunistic gain for themselves at the expense of shareholders," Micrel said in a May 1 letter to shareholders.

The company sent its shareholders a similar letter on April 25 in which it called Obrem's slate of nominees inexperienced and reiterated its view that Obrem wants board representation for the purpose of selling the company.

Micrel cited its plans for growth include doubling new analog power products in its portfolio and targeting opportunities in voice-over-internet protocol, automotive and power over Ethernet.

According to the letter, Micrel also plans to continue "significant" share repurchases and to increase the dividend.

Two shareholders together owning 30% of Micrel, Warren H. Muller and founder and chief executive officer Raymond D. Zinn, intend to vote against the hedge fund's proposals and nominees, Micrel noted.

On April 26, Obrem urged Micrel shareholders to elect its director nominees:

• 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.

In an April 26 letter to Micrel shareholders, Obrem said it believes stockholders will continue to suffer if the company's board is allowed to remain in place.

Micrel's board "continues to try to deflect attention from its own poor track record by using Obrem's tenure as a stockholder as an irrelevant distraction," the letter stated.

According to Obrem, more than $1 billion of stockholder value has been lost since January 2001 under Zinn and the current board.

Obrem noted the high cost of the proxy contest to Micrel and said it believes Micrel's board would "spend whatever it takes in an attempt to cast a dismal track record in the best possible light to keep themselves in control of the company."

On April 16, Micrel announced it was soliciting proxies against Obrem's proposals.

Micrel cited its directors' collective 200 years of relevant experience and said they "bring a valuable blend of deep strategic, senior executive, operational and public company board expertise inside and outside of the semiconductor industry."

Obrem reported the purchase of additional Micrel shares in an April 23 schedule 13D filing with the Securities and Exchange Commission. The hedge fund has a 15% stake in Micrel.

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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