Midcom Investors Seek Changes, Possible Sale

WASHINGTON - Several Midwestern investors have pooled their holdings in Midcom Communications Inc. and may seek change at the Seattle telecommunications company.

John and Maryanne Dennis joined forces with Donald and Maureen Szymik to create an investment group that holds a 5.17 percent stake in Midcom, according to documents filed today with the Securities and Exchange Commission. The Dennises and Szymiks are married couples.

Operating under the name Telecommunications Capital Advisors, the investors said in the filing that they may ask Midcom's management to form strategic alliances or sell the company to a third party. John Dennis has also spoken to the company about the current composition of its board, according to the filing.

The investors purchased the shares "because they individually considered the company's common stock to be undervalued in comparison to other similar companies in its peer group," the filing said.

The Dennises and the Szymiks paid a total of $6.39 million to acquire 801,000 shares, according to the filing. The stake has a current market value of about $6.2 million.

John and Maryanne Dennis are an investor and homemaker who reside in Edina, Minn. Donald and Maureen Szymik, residents of Sioux Falls, S.D., also describe themselves as investor and homemaker, respectively.

Founded in 1989, Midcom provides telecommunications services to small and medium-sized businesses nationwide.

Midcom stock was trading at $7.75, up 12.5 cents, in late trading today. Recent problems at the company have dragged Midcom's stock down from its peak of $19.50 six months ago.

Midcom first ran into trouble in January, when its planned acquisition of Telco Communications, a Virginia company, collapsed. Then in March, Midcom discovered that a billing system it employed last summer had fouled up, forcing it to report a more than doubling of its already announced third-quarter loss and a much-steeper-than-expected fourth-quarter loss.

The company's president and chief executive officer, Ashok Rao, resigned last month.

Information from Seattle Times staff is included in this report.