Point Blank Solutions Inc. (
OTCBB: PBSO)
announced another delay in their annual meeting today, which has some shareholders
furious and others grateful. The body armor manufacturer said they need to wait for
the Army's IOTV contract award before completing their review of strategic alternatives,
which includes a potential sale of the company to some 90 potential parties.
Point Blank has already been awarded with a bridge buy of 150,000 IOTV's for a total
of $86.2 million while the Army finishes determining who will win the larger 736,000
IOTV contract. The latter could be worth around $200 million or more, which is more
than Point Blank's current market capitalization. Obviously, the award would substantially
impact PBSO's valuation to a potential buyer.
However, at least one activist investor is sick of constantly waiting around. Steel
Partners, who has been involved with the company since its fraud charges, has been
waiting for an annual meeting for over two years and is currently suing the company
to hold it. Interestingly, the activist hedge fund is also holding a proxy contest
to overtake the board.
"The postponement was a unilateral stunt pulled by a Board in fear of losing an election
contest and was designed to block the democratic process, limit accountability and
further entrench the Board and management team," said Steel Partners in a regulatory
filing. "Ask yourself whether you believe this Board was truly serious about exploring
alternatives to maximize stockholder value or whether the Board was more interested
in disenfranchising stockholders? We think the answer is obvious."
Supporters of Steel Partners believe that the hedge fund is simply trying to deliver
shareholder value as quickly as possible. However, skeptics believe that they may
be positioning themselves to acquire the company on the cheap before any major contract
is awarded. After all, it is not uncommon for hedge funds to privatize a company during
a turnaround when they are vulnerable and then re-IPO it later on and make bank.
Point Blank also faces problems with its former CEO David Brooks, who is facing criminal
charges for fraud. Combined, Point Blank contends that it is facing adverse interests
from both of these large shareholders and they say they are simply trying to protect
the interest of the thousands of minority shareholders.
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