TVI Corp.'s directors would have more credibility in arguing for the status quo if the company's shares had traded for more than 50 cents any time recently.
Or if the seller of first-responder equipment hadn't lost $30 million last year. Or if directors hadn't built impermeable barriers against hostile takeovers.
The two insurgents who hope to join the five-seat board probably won't get TVI's shares back to $5, a level last achieved in 2005. But the guys in charge have been trying for three years, with demonstrable failure.
Look for that rarest of events at the company's Friday shareholder meeting: a choice of board members in which incumbents might get ejected. The bloom may be off the defense investment boom. But this penny-stock homeland-security company is still attractive enough to cause a fight, even if it's something of a family feud.
"This board has done too little too late, and they're not moving aggressively enough to turn the company around," says Allen Bender, 77, who owns more than a million TVI shares - about 4 percent of the company - and was the chief executive officer from 1995 to 2002.
Two proxy-advisory services apparently agree. RiskMetrics Group and Glass Lewis have recommended votes for Bender and Jeffrey Squires, 62, an attorney who was on TVI's board in the 1990s.
"Given the company's weak stock performance, poor financial performance, questionable governance practices and lack of visible progress in its turnaround," RiskMetrics said, Bender and Squires are "more likely to create long-term shareholder value." RiskMetrics is especially critical of TVI's "poison pill," which gives existing shareholders the right to buy cheap new stock during a hostile takeover attempt.
Like many companies, Glenn Dale-based TVI was positioned to thrive on the appropriations surge that followed the 2001 terrorist attacks. The company sells decontamination systems, portable medical shelters and other equipment that became highly sought after as the country prepared for a possible repeat of 9/11.
The stock, stuck below a dollar for years, rose to $6 in 2004. But to the surprise of many, the emergency equipment market deflated as defense money got diverted to the war in Iraq.
To try to adjust, TVI bought a party-tent rental company, which flopped as an investment. Last year, the board dismissed CEO Richard Priddy and Executive Vice President Charles Sample for what it said were "questionable business transactions" in which the company overpaid $1.7 million for supplies. The Securities and Exchange Commission and the Justice Department are investigating, TVI told investors last month.
