Kirk Mandy. (Image supplied)

Zarlink Semiconductor Inc. has been dealt a fresh blow with the announcement that trading of its shares on the New York Stock Exchange will be suspended, shortly before the company's annual general meeting and the unveiling of the results of a heated proxy battle.

The Ottawa-based chipmaker said the NYSE Regulation company has said it will halt trading of Zarlink's common shares on the exchange prior to the opening bell on July 29, due to the fact that the company's shares have fallen below the minimum US$1 trading mark over the past 30 consecutive business days.

The company said it had tried to work out a plan to address non-compliance with the NYSE, but had failed to meet its goals within the prescribed time.

"The technology advances in equities trading mitigates the requirement for Zarlink to continue to be listed on multiple exchanges," said Zarlink CEO Kirk Mandy in a statement. "This decision will not impact the financial status of Zarlink or affect the way it conducts its business."

The company's stock will continue to trade on the Toronto Stock Exchange, which represents more than 75 per cent of its total daily trading volume.

Zarlink, which will hold its AGM today, is currently embroiled in a proxy battle with a group of shareholders who are blaming the company's current management for, among other things, Zarlink's 95-per-cent stock price drop since 2003.

In a separate announcement, the company said it had tried ahead of the AGM to work out a deal with the dissident shareholders' group – comprised of Scott Leckie, Daniel Owen and David Banks, who together hold nearly six per cent of Zarlink's total shares – but its proposal was rejected.

The group had asked to put three of its nominees on Zarlink's board, as well as approximately $600,000 in reimbursement of proxy costs. The shareholders said they believed their nominees should be provided with proportional representation on the board, since it had received approximately 40 per cent of all proxy votes cast, or more than 34 million shares.

However, the Leckie group admitted in its own statement that it was prevented from gaining a majority of the votes cast by a "single large shareholder."

Zarlink's management said the demands were unreasonable in light of the expected voting results, and had proposed the addition of two new independent directors to the current board, with the Leckie Group collaborating with management on the list of potential candidates.

The company said the group had rejected the board's proposal. In fact, the dissident group urged shareholders to revoke their proxy votes in support of current management "to demonstrate their dissatisfaction with the entrenchment, arrogance and failure of the Zarlink board to protect and generate shareholder value."

"We have always watched for any sign that this board was prepared to act in the best interests of all shareholders and make a change. It has refused," said Mr. Leckie.

Shares of Zarlink closed on the TSX on Tuesday at 86 cents, down four cents.

For more details about Zarlink's proxy battle, see:

Zarlink shareholders stage coup

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