Qualstar Comments On BKF Capital’s Latest Attempt

Qualstar Corporation commented on the latest attempt by BKF Capital Group, Inc., an entity controlled by Steven N. Bronson, to seek control of the company without paying shareholders an appropriate control premium.

On May 28, 2013, BKF Capital Group issued a press release confirming that it once again intends to pursue a proxy contest to replace the entire membership of the Qualstar board of directors with its ‘hand-picked’ nominees at this year’s annual shareholder meeting. As such, shareholders can expect to be faced with a third attempt by BKF Capital and Bronson to take control of Qualstar. In the weeks ahead, Qualstar intends to communicate further with its shareholders with respect to the choices that will be before them at this year’s annual shareholders meeting.

The previous failed attempts of BKF Capital and Bronson to take control of Qualstar without paying shareholders an appropriate control premium included: BKF Capital’s failure to take control of Qualstar through a special meeting of shareholders. Last June, Qualstar’s shareholders voted down BKF Capital’s attempt to replace the entire membership of the Qualstar board at a special meeting of shareholders with BKF Capital’s ‘handpicked’ nominees.

BKF Capital’s unsolicited, coercive
and inadequate partial tender offer
This past January, BKF Capital and Bronson commenced and then abruptly terminated an unsolicited partial tender offer to purchase up to 3,000,000 shares of Qualstar’s common stock for $1.65 per share, which if completed and fully subscribed would have increased their collective ownership to approximately 43.2% of Qualstar’s outstanding shares. It was the unanimous view of the Qualstar board that BKF Capital’s unsolicited partial tender offer was inadequate and was not in the best interests of Qualstar and all of its shareholders.

Lawrence D. Firestone, Qualstar president and CEO, said: "As we continue to execute our strategic turnaround plan for Qualstar, Mr. Bronson and BKF Capital, in pursuing their proxy contest for control of Qualstar despite our numerous attempts to reach an amicable settlement, are once again inflicting a needless and wasteful distraction upon us. The previous failed attempts by Mr. Bronson and BKF Capital to take control of Qualstar have forced our Board and management team to devote significant resources – including management time and shareholder money – to protect the interests of ALL shareholders, when these resources could have been better devoted to our ongoing efforts to transform Qualstar. We remain committed to transforming and refocusing Qualstar on its growing core storage and power supply businesses and, accordingly, driving sustainable revenue, profitable growth and increasing returns for all shareholders."