BKF Capital Group, Inc. (BKFG) today responded to the recommendation of
Glass Lewis & Co. regarding the Special Meeting of Shareholders of
Qualstar Corporation (NASDAQ:QBAK) to remove and replace the Qualstar
In contrast to Institutional Shareholder Services which has recommended
that Qualstar shareholders vote to remove the Qualstar board and replace
it with the nominees of BKF, Glass Lewis believes circumstances do not
warrant a wholesale change in the Board at this time. As explained
below, however, both the merits and considerations of California law
require that the entire Board be removed.
While BKF disagrees with Glass Lewis, it is important to note the things
that Glass Lewis says about the Company, which BKF believes support its
Taken together, we [Glass Lewis] find the [factors analyzed by Glass
Lewis] paint an image of a board that has generally failed to generate
attractive returns for shareholders or stanch declining revenues and
contracting margins, while concurrently maintaining a disproportionately
liquid balance sheet comprised of non-productive assets.
On that basis, we consider that the incumbent board has effectively
eschewed the notion that Qualstar should invest its capital in
earnings-positive projects or return such capital to shareholders, in
each case on the dubious basis that the Company's customer base would
flee to Qualstar's competitors in the absence of a significant,
uncommitted pool of capital.
The impact of this approach seems relatively clear, as the board
received a sharp rebuke at Qualstar's March 2012 annual meeting, and the
Company's share price performance continues to trail its peers.
Glass Lewis takes issue with the wholesale replacement of the current
Board. BKF believes that removal of all the current directors is
justified, because with an average tenure of six years, the Board has
presided over the Company’s disappointing performance during this
period. Moreover, as BKF has explained in its proxy materials, piecemeal
removal of directors is not an option here. Qualstar is a California
corporation. Under California law, unless the entire Board is removed,
holders of only 14.3% of the outstanding shares can block removal and
replacement of any of the directors. And that effectively means no
change at all.
BKF strongly urges Qualstar shareholders to follow the ISS
recommendation. Vote the GOLD proxy card to remove the
current Board and support the BKF slate. Do not return a WHITE
proxy card or any other card sent on behalf of the current Board.
Shareholders with questions should contact BKF’s proxy advisors—
PHOENIX ADVISORY PARTNERS
About BKF Capital Group Inc.
BKF Capital Group Inc. (OTCQB - "BKFG") is a publicly traded company
focused on arranging a merger, acquisition, business combination or
other arrangement with both public and private companies with unique
value opportunities and/or acquiring a controlling position in such
companies through equity purchases or debt financings. For additional
information please visit: www.bkfcapital.com.
Learn How ›
Wednesday, September 21, 2011
Marriott Marquis, New York
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