UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2006
SPIRENT COMMUNICATIONS plc
_____________________________________________________________________
(Translation of registrant's name into English)
Spirent House, Crawley Business Quarter, Fleming Way, Crawley, West Sussex
RH10 9QL, UK.
_____________________________________________________________________
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F.....
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ..... No X
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82- ________
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 "the
Company") (LSE: SPT; NYSE: SPM), a leading communications technology company,
announces that it is today posting to its shareholders a circular including a
notice of an extraordinary general meeting requisitioned by three shareholders
led 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 Weston
as the Chairman and Andrew Given and Frederick D'Alessio as Non-Executive
Directors. Together with the other Directors, they have overseen a
transformation of Spirent. The track record of the Company under their
stewardship speaks for itself compared to its peer group and relevant market
indices.
The Company has a clear strategy and a unified independent Board which is fully
compliant with the Combined Code. The Board has taken actions which are expected
to yield significant benefits to the Company's performance in 2007. In contrast,
the Sherborne proposals would, if approved, cede effective control of the Board
to Sherborne, result in a Board which is fundamentally non-compliant with the
Combined Code and leave shareholders holding shares in a company with no clearly
stated alternative strategy."
For further information please contact:
Reg Hoare Smithfield +44 (0)20 7360 4900
Angus 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 is
today posting to its shareholders a circular setting out the reasons why
shareholders should vote against the resolutions to be considered at the
forthcoming extraordinary general meeting requisitioned by a nominee on behalf
of funds managed by Sherborne Investors GP, LLC ("Sherborne"), Artemis
Investment 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 General
Meeting (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 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.
It should also be noted 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.
The Board believes that there are compelling reasons why shareholders should
vote 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 October
2002, since which time both Frederick D'Alessio and Andrew Given have also been
appointed directors (January 2004 and October 2003 respectively). From 31
October 2002 to date, Spirent has been transformed from a company in a
precarious financial position with a share price of 12.5 pence to 54.75 pence at
the close of business on 28 November 2006, a rise of some 335 per cent.
This share price performance reflects the substantial progress that the Company
has made during John Weston's chairmanship, with the support of the executive
and 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 GBP100 million to its shareholders;
- Restructured the business to focus on its core communications activities,
completing the sale of HellermannTyton for GBP298 million on a cash and
debt free basis earlier this year, approximately GBP70 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 GBP33 million in total (including an estimated
GBP7 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 every
major index against which it is appropriately benchmarked, including the FTSE
250 Index and the FTSE 350 Technology Hardware & Equipment Index.
Furthermore, whilst the Company has been operating in a difficult sector of the
market, during this period its share price has outperformed by a significant
margin a peer group of Agilent Technologies, Anritsu, Catapult, Exfo, Ixia, JDS
Uniphase, 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 create
shareholder value. It also reiterated how the proceeds from the HellermannTyton
sale would be used to grow Spirent through organic investment and selective
acquisitions.
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 GBP7 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 GBP3 million per year
Return of capital to shareholders
- The current GBP50 million rolling buy back programme
- A further GBP50 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 nor
has it put forward any proposal to the Board on how the Company could be run
better, nor offered any different strategic plan. In the absence of any such
explanation from Sherborne, it is unreasonable to ask shareholders to support
changes to the Board. Furthermore, the Board considers that its strategic plan
represents a realistic and achievable way forward to generate value from the
business. The plan builds on the investments made over recent years to
rationalise Spirent's product range. This, together with the benefits from the
cost reduction programme that management has been following, paves the way for
the targeted increase in margins as indicated in the Company's announcement of 5
October 2006.
In contrast, Sherborne wants shareholders to take on trust that it offers a
better way forward than the clearly articulated strategy that the Board is
presently following. The Board has a particular concern that Sherborne's
intervention will disrupt the careful balance that the Board has established
between short term cost minimisation and investment in new products and markets.
The attendant uncertainty, with negative consequences for key customer
relationships and employee retention and motivation, risks serious damage to the
Company's performance.
4. Sherborne offers no premium for control
Sherborne has made it clear that it wants effective control of the Board and its
proposal to remove and replace a number of the directors and the Chairman is
designed to achieve this. The Board believes that it is totally inappropriate
for control to be transferred in this way with no premium for this control being
offered to the other shareholders.
5. Sherborne's proposal would cause the Company to breach important corporate
governance principles
One of the key principles of the Combined Code on Corporate Governance is that
the board should include a balance of executive and non-executive directors
(and, in particular, independent non-executive directors) such that no
individual or small group of individuals can dominate the board's decision
taking.
The specific terms of the Combined Code that would be breached if Sherborne's
proposals 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 other
institution had previously approached me as the Senior Independent Director (as
provided for under the Combined Code) to express to either of us any concerns
about the Company's performance.
Against this background, shareholders should note that if all the Resolutions
are passed, both Kurt Hellstrom and Marcus Beresford, the remaining independent
Non-Executive Directors, have notified the Company that they intend 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.
6. Sherborne's proposed directors lack relevant sector experience
Spirent is a complex high technology industrial group specialising in
telecommunications and operating in demanding global markets. Under John
Weston's leadership, a group of non-executive directors have been assembled with
in-depth senior management experience from a broad range of major companies,
including Ericsson, BAE Systems, GKN, Verizon Communications and Northern
Telecom. This group has significant telecoms sector expertise amongst its
members, which is essential to finding the optimum balance between short-term
performance and long-term value creation. In contrast, the Sherborne candidates
appear to lack telecoms sector expertise.
Conclusions
The Board is wholly satisfied with, and continues fully to support, John Weston
as the Chairman and Andrew Given and Frederick D'Alessio as Non-Executive
Directors of the Company. Together with the other Directors, they have overseen
a transformation of Spirent. The track record of the Company under their
stewardship speaks for itself compared to its peer group and relevant market
indices.
The Company has a clear strategy and a unified independent Board which is fully
compliant with the Combined Code. The Board has taken actions which are expected
to yield significant benefits to the Company's performance in 2007. In contrast,
the Sherborne Investor Group proposals would, if approved, cede effective
control of the Board to Sherborne, result in a Board which is fundamentally
non-compliant with the Combined Code and leave shareholders holding shares in a
company with no clearly stated alternative strategy.
The Extraordinary General Meeting to consider the proposed Resolutions will be
held at 10.00am on Friday 22 December 2006 at The Copthorne Hotel (London
Gatwick), Copthorne Way, Copthorne, Crawley, West Sussex RH10 3PG United
Kingdom.
For further information please contact:
Reg Hoare Smithfield +44 (0)20 7360 4900
Angus Maitland Maitland +44 (0)20 7379 5151
About Spirent Communications plc
Spirent Communications plc is a leading communications technology company
focused on delivering innovative systems and services to meet the needs of cus
tomers worldwide. We are a global provider of performance analysis and service
assurance solutions that enable the development and deployment of
next-generation networking technologies such as broadband services, Internet
telephony, 3G wireless and web applications and security testing. The Systems
group develops power control systems for specialist electrical vehicles in the
mobility and industrial markets. Further information about Spirent
Communications plc can be found at www.spirent.com.
Spirent Communications plc Ordinary shares are traded on the London Stock
Exchange (ticker: SPT) and on the New York Stock Exchange (ticker: SPM; CUSIP
number: 84856M209) in the form of American Depositary Shares ("ADS"),
represented by American Depositary Receipts, with one ADS representing four
Ordinary shares.
Spirent and the Spirent logo are trademarks or registered trademarks of Spirent
Communications plc. All other trademarks or registered trademarks mentioned
herein are held by their respective companies. All rights reserved.
This press release may contain forward-looking statements (as that term is
defined in the United States Private Securities Litigation Reform Act of 1995)
based on current expectations or beliefs, as well as assumptions about future
events. You can sometimes, but not always, identify these statements by the use
of a date in the future or such words as "will", "anticipate", "estimate",
"expect", "project", "intend", "plan", "should", "may", "assume" and other
similar words. By their nature, forward-looking statements are inherently
predictive and speculative and involve risk and uncertainty because they relate
to events and depend on circumstances that will occur in the future. You should
not place undue reliance on these forward-looking statements, which are not a
guarantee of future performance and are subject to factors that could cause our
actual results to differ materially from those expressed or implied by these
statements. The Company undertakes no obligation to update any forward-looking
statements contained in this press release, whether as a result of new
information, future events or otherwise.
END
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
______MICHAEL ANSCOMBE______
(Registrant)
Date: 29 November 2006 By ____/s/ Michael Anscombe____
(Signature)*