Zarlink Concerned Shareholders Send Open Letter to Fellow Investors



    OTTAWA, Aug. 12 /CNW/ - The Concerned Shareholders of Zarlink
Semiconductor Inc. today issued an open letter to their fellow shareholders
thanking them for their consideration and significant support at the Company's
annual meeting on July 23, 2008. The Concerned Shareholders also note that
they intend to hold the Zarlink Board of Directors accountable for claims made
during the proxy contest and responsible for its promises of improvement at
the Company.

    
    The text of the letter follows:

    Dear Fellow Shareholder of Zarlink Semiconductor Inc.

    With the Zarlink Annual and Special Meeting behind us, we are writing to
    thank all of you who became engaged in the recent proxy contest,
    especially those who submitted the Blue proxy for change. We appreciate
    the willingness of all you to listen to our proposal and we believe that
    - whether you supported us or not - the increased scrutiny of Zarlink can
    only help the Company's performance.

    In the end, we lost the vote, although we were gratified to have secured
    the support of more than 40% of the votes cast at the meeting, given the
    short time we had to mount our campaign and the hostility of the
    incumbent board in its continuing efforts to entrench itself. I am
    tempted to say "we appear to have lost" the vote because analysis of the
    voting indicates that we received a majority of 54% of the votes cast by
    Canadian shareholders, but only 5% of the US vote. This is an unusual and
    suspicious voting pattern. We are left to wonder if our slate of
    directors may have actually won the proxy contest but for some
    irregularity in communication with US shareholders. Since the vote, we
    have been investigating this unusual voting pattern in the US but as of
    yet cannot find a satisfactory explanation.

    Whatever the final outcome, despite the strong support from many
    shareholders, the day before the meeting, the Board rejected our proposal
    for a negotiated settlement to place two of our nominees on the Zarlink
    Board. We also agreed to drop our demands for the immediate removal of
    Kirk Mandy and Henry Simon. The flat rejection was consistent with the
    Board's established pattern of ignoring or rejecting the concerns of its
    shareholders.

    We were told they would never have any of the Concerned Shareholder
    Nominees on "their" Board. They claimed they were personally offended by
    our challenge. This was despite our specifically noting in our Proxy
    Circular: "Individually, there are very good directors on the current
    Board of Zarlink. They are people of integrity, insight and experience."
    That is what we believed on July 4, even with the prima facie case
    against the Board based on the loss of shareholder value. That's what we
    still believe, although our belief was badly shaken by the tactics they
    employed leading up to the annual meeting and by the Board's
    unwillingness to put aside our differences and work together to make
    Zarlink a more valuable enterprise.

    We believe the Board's rejection of our proposal was inappropriate as
    well as revealing of an entrenched and self-serving attitude. The Zarlink
    Board talked about "their" Board. But it's not "their" Board; it is the
    shareholders' Board. The directors' duty is to protect the best interests
    of the company and its shareholders, not itself and certainly not to
    ignore the 40% of shareholders who voted for a new Board.

    While Chairman of the Board Henry Simon said we "wasted" the Board's time
    in our efforts to engage shareholders in understanding the abysmal
    performance of their Company, we do not believe involving owners in the
    affairs of their company can ever be considered a "waste". It is clear
    from the vote that a substantial number of Zarlink shareholders wanted to
    replace the Board. Even more clear is that every Zarlink shareholder
    wants change, whether implemented by a new Board or the current
    directors. No rational person would want Zarlink to continue to perform
    as it has over the past decade. There must be change.

    At the annual meeting, Mr. Simon once again promised improvement in the
    future, using almost exactly the same words he has since he first took
    that job 14 years ago. As he has for several years, CEO Kirk Mandy once
    again said that Zarlink was at a turning point.

    As significant shareholders of Zarlink, we hope this time they are right.
    Even their supportive shareholders have given this Board only a year to
    prove it. We will monitor the leadership's performance, and expect them
    to meet their commitments for immediate, significant improvements in
    profitability.

    The Concerned Shareholders will continue to work on behalf of all
    shareholders to find the best path to value realization for their Zarlink
    holdings. Despite their abysmal record of value realization, the current
    leadership is intent on continuing to implement the most recent three-
    year plan without considering alternate strategies to maximize value for
    stakeholders. We have learned that shareholders cannot rely on the
    current leadership to consider wider alternatives, as it is not part of
    their agenda.

    We sincerely hope the Board now understands that the owners of Zarlink
    want results and are not going to wait forever.

    We are not going away. We will hold this Board accountable until either
    the results improve or the current Board is changed.

    In the meantime, we extend our deeply felt thanks for your consideration
    and for your support.

    The Concerned Shareholders of Zarlink Semiconductor Inc.

        (signed)
        Scott Leckie
    





For further information:

For further information: The Concerned Shareholders of Zarlink
Semiconductor Inc., Scott Leckie, (416) 363-3399

Organization Profile

CONCERNED SHAREHOLDERS OF ZARLINK SEMICONDUCTOR INC.

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