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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 7)*
SONUS NETWORKS, INC.
 
(Name of Issuer)
Shares of Common Stock, par value $0.001 per share
 
(Title of Class of Securities)
835916107
 
(CUSIP Number)
Darrin Payne
P.O. Box 71082
Dubai, United Arab Emirates
+971-4317-5800
 
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 30, 2008
 
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(c), 240.13d-1(f) or 240.13d-1(g), check the following box. o
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act.


Table of Contents

                     
CUSIP No.
 
835916107 
  Page  
  of   
8 Pages 

 

           
1   Name of Reporting Persons

Galahad Securities Limited

I.R.S. Identification Nos. of above persons (entities only)
     
     
2   Check The Appropriate Box if a Member of a Group (See Instructions)

  (a)   o 
  (b)   o 
     
3   SEC Use Only
   
   
     
4   Source of Funds (See Instructions)
   
  WC
     
5   Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
   
  o
     
6   Citizenship or Place of Organization
   
  British Virgin Islands
       
  7   Sole Voting Power
     
NUMBER OF   67,295,079
       
SHARES 8   Shared Voting Power
BENEFICIALLY    
OWNED BY   0
       
EACH 9   Sole Dispositive Power
REPORTING    
PERSON   67,295,079
       
WITH 10   Shared Dispositive Power
     
    0
     
11   Aggregate Amount Beneficially Owned by Each Reporting Person
   
  67,295,079
     
12   Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
   
  o
     
13   Percent of Class Represented by Amount in Row (11)
   
  24.8%*
     
14   Type of Reporting Person (See Instructions)
   
  OO
* The calculation of the foregoing percentage is based on 271,138,012 shares of Common Stock outstanding as of May 2, 2008, as reported in the Issuer‘s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 8, 2008.


Table of Contents

                     
CUSIP No.
 
835916107 
  Page  
  of   
8 Pages 

 

           
1   Name of Reporting Persons

Legatum Capital Limited

I.R.S. Identification Nos. of above persons (entities only)
     
     
2   Check The Appropriate Box if a Member of a Group (See Instructions)

  (a)   o 
  (b)   o 
     
3   SEC Use Only
   
   
     
4   Source of Funds (See Instructions)
   
  WC
     
5   Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
   
  o
     
6   Citizenship or Place of Organization
   
  British Virgin Islands
       
  7   Sole Voting Power
     
NUMBER OF   67,295,079
       
SHARES 8   Shared Voting Power
BENEFICIALLY    
OWNED BY   0
       
EACH 9   Sole Dispositive Power
REPORTING    
PERSON   67,295,079
       
WITH 10   Shared Dispositive Power
     
    0
     
11   Aggregate Amount Beneficially Owned by Each Reporting Person
   
  67,295,079
     
12   Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
   
  o
     
13   Percent of Class Represented by Amount in Row (11)
   
  24.8%*
     
14   Type of Reporting Person (See Instructions)
   
  OO
* The calculation of the foregoing percentage is based on 271,138,012 shares of Common Stock outstanding as of May 2, 2008, as reported in the Issuer‘s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 8, 2008.


Table of Contents

                     
CUSIP No.
 
835916107 
  Page  
  of   
8 Pages 

 

           
1   Name of Reporting Persons

Legatum Global Holdings Limited

I.R.S. Identification Nos. of above persons (entities only)
     
     
2   Check The Appropriate Box if a Member of a Group (See Instructions)

  (a)   o 
  (b)   o 
     
3   SEC Use Only
   
   
     
4   Source of Funds (See Instructions)
   
  WC
     
5   Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
   
  o
     
6   Citizenship or Place of Organization
   
  British Virgin Islands
       
  7   Sole Voting Power
     
NUMBER OF   67,295,079
       
SHARES 8   Shared Voting Power
BENEFICIALLY    
OWNED BY   0
       
EACH 9   Sole Dispositive Power
REPORTING    
PERSON   67,295,079
       
WITH 10   Shared Dispositive Power
     
    0
     
11   Aggregate Amount Beneficially Owned by Each Reporting Person
   
  67,295,079
     
12   Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
   
  o
     
13   Percent of Class Represented by Amount in Row (11)
   
  24.8%*
     
14   Type of Reporting Person (See Instructions)
   
  OO
* The calculation of the foregoing percentage is based on 271,138,012 shares of Common Stock outstanding as of May 2, 2008, as reported in the Issuer‘s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 8, 2008.


Table of Contents

                     
CUSIP No.
 
835916107 
  Page  
  of   
8 Pages 

 

           
1   Name of Reporting Persons

Legatum Global Investment Limited

I.R.S. Identification Nos. of above persons (entities only)
     
     
2   Check The Appropriate Box if a Member of a Group (See Instructions)

  (a)   o 
  (b)   o 
     
3   SEC Use Only
   
   
     
4   Source of Funds (See Instructions)
   
  WC
     
5   Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
   
  o
     
6   Citizenship or Place of Organization
   
  British Virgin Islands
       
  7   Sole Voting Power
     
NUMBER OF   67,295,079
       
SHARES 8   Shared Voting Power
BENEFICIALLY    
OWNED BY   0
       
EACH 9   Sole Dispositive Power
REPORTING    
PERSON   67,295,079
       
WITH 10   Shared Dispositive Power
     
    0
     
11   Aggregate Amount Beneficially Owned by Each Reporting Person
   
  67,295,079
     
12   Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
   
  o
     
13   Percent of Class Represented by Amount in Row (11)
   
  24.8%*
     
14   Type of Reporting Person (See Instructions)
   
  OO
* The calculation of the foregoing percentage is based on 271,138,012 shares of Common Stock outstanding as of May 2, 2008, as reported in the Issuer‘s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 8, 2008.


Table of Contents

                     
CUSIP No.
 
835916107 
  Page  
  of   
8 Pages 

 

           
1   Name of Reporting Persons

Senate Limited, acting on behalf of that certain trust formed under the laws of The Cayman Islands as of 1 July 1996.

I.R.S. Identification Nos. of above persons (entities only)
     
     
2   Check The Appropriate Box if a Member of a Group (See Instructions)

  (a)   o 
  (b)   o 
     
3   SEC Use Only
   
   
     
4   Source of Funds (See Instructions)
   
  WC
     
5   Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
   
  o
     
6   Citizenship or Place of Organization
   
  The Cayman Islands
       
  7   Sole Voting Power
     
NUMBER OF   67,295,079
       
SHARES 8   Shared Voting Power
BENEFICIALLY    
OWNED BY   0
       
EACH 9   Sole Dispositive Power
REPORTING    
PERSON   67,295,079
       
WITH 10   Shared Dispositive Power
     
    0
     
11   Aggregate Amount Beneficially Owned by Each Reporting Person
   
  67,295,079
     
12   Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
   
  o
     
13   Percent of Class Represented by Amount in Row (11)
   
  24.8%*
     
14   Type of Reporting Person (See Instructions)
   
  OO
* The calculation of the foregoing percentage is based on 271,138,012 shares of Common Stock outstanding as of May 2, 2008, as reported in the Issuer‘s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 8, 2008.


TABLE OF CONTENTS

Item 4. Purpose of Transaction
Item 7. Material to be Filed as Exhibits
SIGNATURE
Letter from the Reporting Persons to the Issuer


Table of Contents

EXPLANATORY NOTE
     This Amendment No. 7 amends the Statement on Schedule 13D (the “Schedule 13D”) filed with the Securities and Exchange Commission (the “Commission”) on August 6, 2007, Amendment No. 1 filed with the Commission on September 10, 2007, Amendment No. 2 filed with the Commission on December 13, 2007, Amendment No. 3 filed with the Commission on December 26, 2007, Amendment No. 4 filed with the Commission on April 21, 2008, Amendment No. 5 filed with the Commission on June 19, 2008 and Amendment No. 6 filed with the Commission on June 23, 2008, by Galahad Securities Limited, Legatum Capital Limited, Legatum Global Holdings Limited, Legatum Global Investment Limited and Senate Limited, acting on behalf of that certain trust formed under the laws of The Cayman Islands as of July 1, 1996. Unless otherwise defined herein, all capitalized terms shall have the meanings ascribed to them in the Schedule 13D.
Item 4. Purpose of Transaction
     The disclosure in Item 4 of the Schedule 13D is hereby amended by adding the paragraph below as a new paragraph following the last paragraph of the current disclosure:
     On June 30, 2008, the Reporting Persons delivered a letter to the Issuer’s chief executive officer addressing the Issuer’s adoption of a stockholder rights plan and certain other matters. A copy of the letter is attached hereto as Exhibit 1.
Item 7. Material to be Filed as Exhibits
     The disclosure in Item 7 of the Schedule 13D is hereby supplemented by adding the following Exhibits.
Exhibit 1 – Letter from the Reporting Persons to the Issuer, dated June 30, 2008.

 


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SIGNATURE
     After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated as of June 30, 2008
         
  GALAHAD SECURITIES LIMITED
 
 
  By:   /s/ Mark A. Stoleson    
    Mark A. Stoleson   
    Director   
 
  LEGATUM CAPITAL LIMITED
 
 
  By:   /s/ Mark A. Stoleson    
    Mark A. Stoleson   
    Director   
 
 
  LEGATUM GLOBAL HOLDINGS LIMITED
 
 
  By:   /s/ Mark A. Stoleson    
    Mark A. Stoleson   
    Director   
 
 
  LEGATUM GLOBAL INVESTMENT LIMITED
 
 
  By:   /s/ Mark A. Stoleson    
    Mark A. Stoleson   
    Director   
 
 
  SENATE LIMITED, acting on behalf of that certain trust
formed under the laws of The Cayman Islands as of 1 July 1996 
 
 
By:   /s/ Mark A. Stoleson    
    Mark A. Stoleson   
    Director   
 

 

exv99w1
Exhibit 1
(LEGATUM LOGO)
Monday, 30 June 2008
Dr. Richard. N. Nottenburg
Chief Executive Officer
Sonus Networks Inc.
7 Technology Park Drive
Westford, MA 01886
Via Electronic Mail
Dear Dr. Nottenburg,
We acknowledge receipt of your letter dated 28 June 2008 advising of the adoption by Sonus’ board of a poison pill. Wall Street has condemned this latest act from Sonus’ leadership as “indefensible” and an “inauspicious start for SONS’s new CEO” — a view which appears to be shared by many of the company’s shareholders. The fact that you have presented this retrograde step as being in shareholder interests simply serves to highlight the chasm that exists between the board’s perception of what is in the company’s best interest, and the markedly contrasting view of market professionals and the company’s owners.
It is appropriate to remind you that our current dialogue with the board was triggered by a benign and friendly shareholder initiative to strengthen the company by addressing shortcomings in governance and capital structure. These initiatives are only beneficial to the company and might be considered rather elementary steps for any business leadership seeking to demonstrate that they are worthy of the market’s trust.
The thinly veiled hostility demonstrated by the board, in response to both these proposals and to ourselves, is out of all proportion to the practical, common sense suggestions made, and we are at a loss to understand why you claim to be so threatened by the introduction of normal levels of transparency and accountability. Although you personally are a recent arrival at the company, it is important that you understand that many of the governance issues are long overdue to be addressed, and that shareholders are no longer willing to be brushed off with assurances that all will be well next year. There have already been too many “next years” that have gone unfulfilled.
As your most recent letter once again fails to address the issues at hand, and more worryingly, presents an account of recent events which we do not recognize, we thought it might be helpful to you if we set out the pertinent facts for the record:
1.   Sonus has a great business. Sonus’ two great strengths are its technology and its team. The talented and committed engineers, sales and other personnel have created market-leading products and captured market share, leading to a three-fold increase in revenues in the last five years. We applaud their dedication and performance, and expect that major customers such as BT, AT&T and others will continue to drive sales and even increase their purchases of Sonus equipment and services as they fully transition to IP.
 
    As the high cash balance attests, the business itself is doing well, thanks to the ground work that had been done long before the last two weeks. Indeed, it is this success which is contributing to the need to intelligently invest some portion of the accumulated cash (currently standing at 43% of the company’s market capitalization) either through a share buyback, or a value-accretive acquisition. A modest share buyback would be an unequivocal vote of confidence in the company’s own stock, it would improve the return on equity, and it would demonstrate that the board is capable of advancing shareholders’ interests.
     
 
   
LEGATUM LIMITED
  TELEPHONE +971 4 317 5800
LEVEL 9, CONVENTION TOWER
  FACSIMILE +971 4 317 5811
71082 DUBAI, UAE
  WWW.LEGATUM.COM

 


 

2.   Despite the business success of the company, Sonus’ stock price is now at five year lows. The stock price has declined nearly 25% since the closing price immediately preceding the annual meeting. Shareholders have been voting daily with their stock, and the market is persistently sending the company the clear message that it has lost confidence and trust in the leadership. This profound vote of no-confidence was amplified at the annual meeting when 43% of the shareholders withheld their votes for the incumbent directors without any solicitation whatsoever. Without immediate, serious and constructive action to restore confidence and trust in the board’s ability to lead, it is only a matter of time before the shareholders, the true owners of the company, will seek accountability for any failure to protect the company and their investment. It is entirely in your hands to resolve the situation with Legatum and turn the market’s perception around.
 
3.   Legatum has proposed a plan which we believe will begin to increase transparency and restore confidence and trust in the leadership of Sonus. Specifically:
  w   Improve transparency by instituting normal corporate governance standards. This is a fundamental prerequisite if the company is ever to graduate to the major leagues.
 
  w   Provide one mutually agreeable independent board seat and one Legatum board seat, to promote shareholder interests and spearhead a process of reform from within the board. The ongoing efforts to marginalize and silence the constructive engagement initiated by shareholders does the board no credit. There needs to be a clear demonstration of the board’s enthusiasm to listen and respond to legitimate shareholder concerns.
 
  w   Conduct a share buyback; signaling the company’s confidence in itself, its ability to efficiently allocate capital, and the board’s desire to create shareholder value. 
4.   Sonus has yet to take action on any of Legatum’s proposals. By studying Sonus’ five-year stock chart you will see that winning contracts, building market share and increasing revenues does not necessarily translate into shareholder value. Other than separating the current Chairman and CEO, a move which has not yet been enshrined in the company’s bylaws and which therefore can be reversed at any time by the board, Sonus has failed to address the plan Legatum has put forward. It is baffling and galling for investors to watch the leadership of Sonus brush off sensible shareholder proposals to restore confidence and trust in the company’s leadership while the stock languishes.
 
5.   Legatum has no interest in taking over Sonus. Legatum has stated repeatedly that we take a long term view of the company and will use our best endeavors to hold the board and management to account for the benefit of all shareholders. There is no threat of a “creeping acquisition” of Sonus by Legatum. Had you taken a few minutes to perform a simple check of the public record you would have noticed that Legatum has neither bought nor sold a single share of Sonus since 20 December 2007. Furthermore, all of Legatum’s trading is completely transparent as it must be reported publicly through securities filings.
 
6.   Your statements regarding a standstill agreement are misleading. Legatum has repeatedly agreed to a standstill, making the adoption of a poison pill completely unnecessary. Legatum not only agreed to sign a standstill, we were the first to propose it in writing. On 21 June 2008 Legatum sent a term sheet (see attached) to Sonus that included a standstill provision which would preclude Legatum from buying additional shares. Sonus never replied. Instead, you sent through a one-sided ultimatum which sought to strip Legatum of its rights as a shareholder, including the right to make any proposal or nominate directors for the next two annual meetings. Accepting such an entrenchment plan would make a mockery of shareholder rights, amounting to handcuffs and a gag on an investor merely advocating for increased shareholder value.

 


 

7.   Your statements regarding the dialogue between Legatum and Sonus are misleading. Legatum, not Sonus, has repeatedly attempted to initiate a dialogue in order to resolve the current impasse. The following sequence of events is critical to understanding why shareholders lack trust in the company’s leadership:
  w   22 June 2008 – Through its lawyers, Sonus agrees to Legatum’s request for a meeting with the full Sonus board the coming week. There was some discussion regarding whether Thursday or Friday would work best as Hassan Ahmed was traveling on Thursday.
 
  w   23 June 2008 – Legatum sends the board a letter stating “we welcome the fact that the board has agreed to meet with representatives of Legatum this week and we look forward to the opportunity to have a productive dialogue.”
 
  w   24 June 2008 – Just hours before Legatum representatives board a plane to Boston, the board of Sonus advises, through its lawyers, that the meeting with Legatum has been cancelled, citing “scheduling conflicts”. Hours later, on a call initiated by Legatum, an independent director of Sonus gives “his word” that the cancellation is merely due to scheduling conflicts. The director promises to speak to the board regarding an alternate date. Taking this director at his word, Legatum takes no action and waits for an alternate date to be proposed. Despite patiently waiting two more days, no date is forthcoming.
 
  w   26 June 2008 – Legatum calls Sonus’ General Counsel to ask that an alternate meeting date be scheduled as soon as possible. The General Counsel promises to speak to the board and states that “someone will respond to you today”. Later that day the company announces the adoption of a poison pill. Since, as you state in your letter, the poison pill was unanimously adopted by the board we note that somehow the board was able to overcome its “scheduling conflicts” to adopt a poison pill, but not to meet with the company’s largest shareholder to address ongoing, serious concerns.
 
  w   You will understand that any reasonable person would interpret this series of events to mean that you at no time had any intention of entering into a bona fide discussion, or otherwise addressing shareholders’ concerns in any serious manner.
8.   Your statements regarding a non-disclosure agreement are misleading. Legatum has stated repeatedly that we do not want confidential information about the company. Nor is such information required in order to address the matters at hand. There is no necessity to have back-room discussions about Sonus or its prospects in order to address matters of good governance. Legatum wants what all other shareholders want: increased transparency, including better, more frequent and more trustworthy communications from the management about the strategic, operational and financial direction of the company. This is the cornerstone of Legatum’s push for reform at Sonus. There has been no objection to a non-disclosure agreement in principle, but rather to the specific, excessively broad, one-sided deal your lawyers offered up.
 
9.   The poison pill is unnecessary and harmful to the company. Usually, poison pills are adopted to prevent people from buying a company’s stock. In Sonus’ case, too many people buying its stock has not been the problem. Rather, the high volume of trading you have noticed is people selling the stock down. Moreover, the significant short position (14% of all outstanding shares) again reflects the market’s lack of confidence. The poison pill will only serve to further decrease demand, and will act as a drag on the stock until its repeal. Furthermore, given the transparency provided by the filing requirements surrounding any trading we might do, any suggestion of a surprise takeover by Legatum simply has no basis in reality. As there is no threat whatsoever of an unwanted takeover, it is difficult to avoid the conclusion that the board adopted the poison pill merely to entrench itself and maintain the status quo.

 


 

10.   Legatum remains open and committed to finding a resolution. If the board’s interests are truly aligned with shareholders, we see no reason for you to fear constructive engagement with your largest investor. We have made sensible proposals to the board which have been ignored. We have also asked for meetings with the board and been rebuffed. It is not possible to engage with a board that refuses to meet with us, or agrees to meet and then cancels. Nevertheless, to move things forward, we renew our offer to sign the standstill we sent to you on 21 June. In addition, to make the board feel more comfortable, Legatum would be willing to enter into a standard non disclosure agreement in the form attached hereto, subject to the full board’s agreement to meet with us and commitment to engage in a good faith dialogue to respond to our proposals.
Legatum believes that this board has a fundamental fiduciary duty to reverse direction and proceed in the best interests of all shareholders. Legatum has provided you with a clear and sensible path to resolve this matter expeditiously. Failing a collaborative response, we will be obliged to take all necessary steps to protect our investment, and thus once again urge you to abandon the current, pointlessly confrontational, course and invite you to instead pursue a respectful, honest and professional dialogue that will benefit the shareholders, employees and customers of Sonus alike.
It is not too late for us to work together to make Sonus the best it can be.
Yours sincerely,
LEGATUM LIMITED
-s- Mark Stoleson
Mark Stoleson
President
     
Cc:
  Dr. Hassan M. Ahmed
 
  Mr. Edward T. Anderson
 
  Mr. John P. Cunningham
 
  Mr. Howard E. Janzen
 
  Mr. Paul J. Severino
 
  Mr. H. Brian Thompson
 
  Akin Gump Strauss Hauer & Feld LLP
 
  Skadden, Arps, Slate, Meagher & Flom LLP