Youngsville-based Xerium, a publicly traded company that makes equipment used in paper production, indicated in a Securities and Exchange Commission filing this week that it is going along with a plan requested by private equity fund Apax Partners to install five new board members -- a majority of the board. London-based Apax, an equity fund with more than $40 billion under management, owns 54.3 percent of Xerium's shares.

The filing is a declaration that Apax plans to "take control of the board," said securities lawyer Don Reynolds of Raleigh's Wyrick Robbins Yates & Ponton. Although the new members may not actually be employees or otherwise affiliated with Apax, it's clear that the new board members will be hand-picked by Apax, Reynolds said.

The filing could be a prelude to various scenarios, including possibly taking advantage of the company's deflated stock price to take Xerium private, said James Cox, a securities law professor at Duke University. Xerium shares, which fetched more than $12 in October 2006, closed Friday at $3.92.

"I don't see it as good news for shareholders," Cox said. "I see it as, 'When is the next shoe going to drop, and is it going to drop on me?' "

Apax spokesman Ben Harding, contacted late Friday afternoon in London, had no immediate comment.

Xerium maintains in its filing that Apax's majority ownership stake makes it a "controlled company" that exempts it from New York Stock Exchange rules requiring a majority of directors to be independent.

"At this time, and in line with Apax's corporate governance policy," Xerium states in its filing, "it is appropriate to build a new board to oversee the execution of the new strategy under the company's new leadership."

Xerium skirted bankruptcy last month by restructuring $660 million in debt, and is focused on cutting costs and improving profit margins, a strategy that could lead to selling some of its manufacturing plants or eliminating some jobs. Earlier this year, Stephen Light was named Xerium's president and CEO, succeeding Thomas Gutierrez.

Efforts to reach Light were unsuccessful.

"Obviously, this is a company that almost filed for bankruptcy, so changes have to be made," said analyst Ned Borland of Next Generation Equity Research.

In its filing, Xerium said it has agreed to Apax's proposal to increase the board from seven directors to eight. Apax has proposed a nominee for the new seat, Nico Hansen, a partner at Apax. The new director will be elected at the company's annual shareholders meeting, which is scheduled for Aug. 6.

Xerium also reported that four "non-management directors of the company who are not affiliated with Apax" are expected to stand for re-election at the annual meeting.

However, "they are expected to be replaced at an undetermined time" after "suitable" new candidates are identified.

Xerium already has one director who is a partner at Apax, Michael Phillips.

Securities lawyer Jim Verdonik of Ward and Smith in Raleigh said some institutional shareholders have policies against owning shares in companies that don't have a majority of independent directors on their board. Those institutions could sell off their shares if Xerium ends up with a majority of board members who are affiliated with Apax.