Founders leave IASG board, seek buy back

Tuesday, August 1, 2006

ALBANY, N.Y.--Founders of Integrated Alarm Services Group Tim McGinn and Tom Few will attempt to purchase the publicly traded company after stepping down from the board of directors June 15.
The shareholder group collectively owns 10.49 percent of IASG and filed a joint filing and solicitations agreement to solicit proxies for the approval of its proposals to capitalize shareholder value through an acquisition, according to a filing with the U.S. Securities and Exchange Commission in June.
Former chairman and chief executive officer McGinn and former chief operating officer Few were removed from their positions by the company's board this spring.
During that same week, the holding company for Criticom International elected Jason Mudrick, a portfolio manager at hedge fund firm Contrarian Capital Management, to sit on the board of directors.
In November, Contrarian, owning 13 percent of the company, addressed IASG in a letter from Mudrick about the company's financial struggles and advised that the company sell. The plea from the company's largest shareholder provoked IASG to examine its business strategy by hiring an independent investment bank, Allen & Company.
Now that the board has received the Allen & Company report, which reviews strategic options for the company, Charles May, chief executive officer, said, "There is always a possibility that it is the best move for the company to sell. If these people feel they can do a better job this time around, and if they can come up with the money, then they should make an offer."
Jack Mallon, managing director of investment bank Mallon Associates, said, "Obviously there is an ongoing dispute between the two factions to control the company. Contrarian won, in a sense." Mallon added, the question really is "whether Contrarian forced the resignation of the board in a final step in disassociating them from the management of the company, or whether McGinn and Few decided it would be in their best interest to not be members of the board while they were attempting to buy back the company."
However, Joe Reinhart, investor relations representative for IASG, said the addition of Mudrick to the board has no effect on the company's plans to sell. "Certainly, the board of directors, including our newest director, are interested in increasing shareholder value," Reinhart said.
Mallon said, whether part of the board or not, the influence of the investor company was very apparent. "The largest shareholder has been able to effectuate these changes ... not from the vantage point of a board member but as a dominant shareholder. So his being on the board makes it more visible, but not necessarily more influential."