By Svea Herbst-Bayliss
BOSTON (Reuters) - Hedge fund Maglan Capital demanded on Wednesday that telecom carrier FairPoint Communications remove four board members, stepping up pressure on a company whose shares it believes could trade 70 percent above their current value.
In a letter sent to the board and FairPoint Chief Executive Paul Sunu and seen by Reuters, the hedge fund's two founders said they wanted board members Dennis Austin, Michael Mahoney, David Treadwell and Wayne Wilson to "immediately tender their resignations" and warned they would push for a special meeting if no action was taken.
Maglan, which owns 7.5 percent of the Charlotte, North Carolina-based company, said directors had not purchased their own shares even as the stock price tumbled recently, suggesting "a complacent Board that is misaligned with the interests of shareholders."
The hedge fund said it did not think those four board members were "critical to the board in any way."
FairPoint, like its competitors, has come under pressure as customers switch to cellphones from landlines.
Maglan had already asked the company to establish a share repurchase plan, appoint a board member selected by Maglan and form a special committee to consider strategic alternatives. On Wednesday, Maglan's David Tawil and Steven Azarbad escalated their pressure by saying they would call for a special meeting to push the directors out if they did not leave on their own.
"We strongly urge you to reconsider your uncooperative and non-constructive approach and instead, immediately engage with us to implement meaningful steps to enhance shareholder value," the pair said.
Less than three weeks ago, when Maglan urged the company to sell itself, it said such a move could boost the share price to $23 a share. It currently trades at $13.32.