Hedge Fund Has Point Blank In Its Sights

Point Blank is finally headed for a shareholder showdown.

The scandal-plagued maker of protective body armor may want to don its own bulletproof vests next week as it faces stockholders for the first time in three years.

The Delaware Chancery Court last week ordered Point Blank Solutions, formerly known as DHB Industries, to hold its annual meeting next week, as it had earlier promised shareholders.

The activist hedge fund Steel Partners II sought the court order after Point Blank sought court approval to postpone its meeting while seeking a buyer. Steel Partners has put forth an alternate slate of directors for the company, which it is trying to take over.

It's difficult to determine who's the good guy in this battle, if one exits at all.

On one hand, Point Blank has kept shareholders at bay for three years, as the defense contractor's net sales have plummeted 70 percent during the first six months of 2008 compared to the previous year. In the last 12 months, Point Blank's share price has lost roughly half its value.

In it decision, the Delaware Chancery Court said Point Blank's arguments to postpone its annual meeting "fail to provide a basis upon which the shareholder franchise may be further impinged by any additional delay of the exercise of that fundamental right."

Steel Partners, on the other hand, wants to snap up a cheap asset at the expense of other shareholders, it seems. The hedge fund wants to elect its own directors to the board and has publicly stated its interest in acquiring all of Point Blank's stock and purchasing the company.

The current board thinks Steel Partners has an interest in obtaining the lowest possible price for Point Blank shares.

The face-off is scheduled for high noon next Tuesday at the Fort Lauderdale Mariott North hotel in Florida.

by Alfonso Serrano F.