Point Blank Solutions, Inc.
(OTC:PBSO) may be a small company with a market cap of just $188
million but some investors see big value in the body armor maker.
Warren Lichtenstein’s Steel Partners is one such investor who offered
to acquire the company for no less than $5.50 per share in cash.
Unfortunately, the company rejected the offer last year and the
activist hedge fund is now nominating its own slate of directors to
take over the board and presumably force a sale. So, is this a stock
worth buying at these depressed levels?
Point Blank shares plummeted after former chief executive David
Brooks was charged last October with securities fraud, insider trading,
tax evasion, and other offenses. Prosecutors alleged that he improperly
inflated corporate profits and made the company pay for personal
expenses including a face-lift for his wife. The news infuriated
shareholders as the stock sank from around $6.20 per share to around
$2.70 per share earlier this year. Shareholders are now ready for a
change as shares continue to fall as investors are losing hope.
Steel Partners then announced this week that it would be taking
matters into its own hands by nominating five of its own directors to
the company’s board. The activist hedge fund has extensive experience
working with and maximizing the value of other public companies in the
defense industry, including United Industrial Corporation, Aydin Corp.,
ECC International corp. and Tech-Sym Corp. Additionally, the proposed
directors have extensive experience in the defense industry and could
provide valuable insight for the company to turn itself around after
the disaster last October.
Very little has changed materially since the $5.50+ offer from Steel
Partners, so it should be interesting to see whether the offer is still
on the table. If so, that would mean a 37.5%+ premium to the current
market price of $3.97. Otherwise, if the firm simply works to turn
around the company it could lead to even higher share prices if
successful. Combined, these factors make PBSO a stock that is
definitely worth watching over the next few months!
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