Mithras Capital, which owns a relatively small block of 1.7 million shares of Yahoo and would vote for Icahn’s replacement slate in a heartbeat, sent an open letter to Microsoft Thursday asking Steve Ballmer to take Microsoft’s “alternate transaction” directly to Yahoo’s stockholders. That’s the better-than-Google deal that Microsoft claimed – after talks with Yahoo fell apart a second time – was worth better than $33 a share.

Mithras says it would get shareholders to elect Icahn’s slate. Of course it is unclear whether there still is an Icahn slate any more.

The proposal reportedly involved Microsoft buying Yahoo’s search assets for a billion dollars and taking an $8 billion position in Yahoo for $35 a share.

Mithras claims that if “Microsoft cannot make a convincing and compelling case to Yahoo! shareholders, the company faces an intractable problem. We believe that for the last 10 years, the company has been stagnant, a stagnation reflected in a share price essentially unchanged since 1998. Meanwhile, over that same time period, Google has come out of nowhere to dominate the Internet space. Microsoft has as much chance of transforming itself into a viable competitor to Google as did IBM in the 1980s of transforming itself from a mainframe to a PC company. A bold and daring transformation is needed, and a transaction with Yahoo! is the only practical and viable means of achieving such a transformation.”