Integral Systems, Inc. (NDAQ:ISYS) has recently come under fire by Fursa Alternative Strategies LLC, who demanded an immediate declassification of the board and a leveraged recapitalization of the company. The demands came after the company's failure to find a strategic buyer after over three months of searching, which has caused widespread frustration among shareholders. The hedge fund argued in their Schedule 13D/A filing with the SEC that the company's substantial amount of cash and unutilized debt capacity could be used to finance a stock repurchase as an alternative means to unlock shareholder value. Moreover, Fursa expressed concern over the company's treatment of ex-CEO Steven Chamberlain, who continues to receive pay from the company despite no longer working for the company! These concerns were unaddressed until the hedge fund began to take the preliminary steps necessary to partake in a proxy fight.

Finally, the company caved in yesterday by offering Mr. Harley (an associate of Fursa) a seat on the company's newly-declassified board of directors. Fursa said that they were pleased with the appointment and would begin exploring strategic alternatives to enhance shareholder value. It is likely that Harley will attempt to push for a recapitalization of the company along with a special dividend or share buyback program. Combined, these things will likely push up Integral Systems' stock price and distribute their excessive cash to shareholders. This makes ISYS a stock that is definitely worth watching over the next few months!

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