Inter-Tel postpones vote on buyout

Inter-Tel Inc has postponed the shareholder vote on the $723-million buyout bid by Mitel Networks Corp and Francisco Partners. The decision came after a majority of Inter-Tel shareholders appeared to favour the recapitalisation proposal of the company''s founder, Steven Mihaylo.

Inter-Tel is yet to announce the new shareholder or record date. The new vote may likely take place in the summer. The Mitel deal has a September 30 termination date.

Mitel had recently turned down a request from Inter-Tel to bid more than the agreed $25.60 per share, a price that, it said, had been finalised after "lengthy and sometimes difficult negotiations." It also cited Inter-Tel''s below-expectation first quarter performance, the negative impact of the sale on its revenue generation, lack of higher offers, and the integration risk for Mitel shareholders.

Though Mitel said it wouldn''t pay more, an open process and a long delay in the voting process may bring Mitel back to the negotiating table, with Mihaylo on board. He had proposed using $200 million cash on hand and $200 million from new debt raised through RBC Capital Markets to tender just short of 50 per cent of Inter-Tel shares at $28. His proposed tender offer is likely to increase his 19 per cent stake to roughly 38 per cent, provided he retained all his shares. In the past, Mihaylo has bitterly contested over the Inter-Tel deal, and expecting a friendly outcome could be overly optimistic.

Inter-Tel shares were trading relatively flat on June 29, closing at $23.93, down by 1 cent.