V Band Adopts "Poison Pill" As Feil Vies For Control

V Band Corp. last week adopted a "poison pill" common share rights plan following the announcement by its chairman and largest shareholder, Thomas E. Feil, that he wants to boost his 23% stake in the telephone turret manufacturer.

While V Band sought to assure customers that whatever the outcome of the ownership wrangle, V Band and its products would emerge unscathed, industry observers spoke of civil war between Feil and management. They rated Feil's chances of success as slim, but said his actions might force V Band to turn around the drop in earnings it suffered in fiscal 1988.

V Band said the plan "will not prevent a takeover, but is a tool against abuses." The plan would be activated by the acquisition of 20% or more of V Band's stock, or in the case of an existing 20% shareholder, by the purchase of a further 1%.

Following such actions, V Band holders other than the acquirer would be permitted to buy V Band shares at half the market price. Shareholders would also be able to buy stock at a 50% discount in case of a merger or asset transaction. The idea is to protect holders from a two-tier or partial tender offer.

Adoption of the scheme followed by a week the creation by the board of directors of a four-member committee to explore alternative strategies, including the possible sale of the company. The committee was established after Feil filed a schedule 13D with the Securities and Exchange Commission indicating that he planned to explore the possibility of an acquisition or other transaction that might involve a third party.

Feil says that he is working in full cooperation with V Band's directors in seeking a strategic investor or investors in the company. But, he says, that doesn't preclude purchase of the company by a third party. "I recognize the industry is in a slump," he says, "and that the company's fortunes are tied to the industry. But I know that it will turn around. V Band's potential has not nearly been reached."

For the year ended Oct. 31, 1988, V Band reported net income of $2 million, compared with $22.5 million a year earlier. The 1987 figure included a gain of $21 million from the sale of its VB PLC UK subsidiary, which has since been renamed TR Financial Communications PLC. Sales for fiscal 1988 dropped to $36.2 million from $54 million.

The outcome of the battle for control will have "no impact on the company as far as its products are concerned," according to Peter Leslie, V Band's principal financial officer. Leslie declines to speculate on the identity of the strategic investors Feil is seeking. V Band, meanwhile, he says, will go on enhancing its existing products and its market position.

But many in the industry believe that the uncertainty caused by the recent situation could lose V Band customers and affect product development.

V Band makes and markets electronic key telephones and data distribution and display systems. Its newest product -- ViAX -- was launched in September 1987. ViAX features an enhanced version of the VK 6000 series turret requiring one-fourth of the back-room space for control and switching equipment needed by the original VK 6000. ViAX also has "smart" consoles, giving users access to such features as soft keys and memory recall. As of Oct. 31, 1988, V Band had sold more than 4,000 ViAX EKT consoles.

In addition to a turret system, ViAX includes an information distribution and display system comprising a personal computer-based local area network, a wideband video switch and multiple terminals.

Last year V Band entered into a product development agreement with FX Development Group Inc., and acquired 20% of the FXD common stock outstanding for $1.5 million. The result was an interface between FXD's Advanced Dealer Workstation and the ViAX voice systems. The development provides users with an integrated voice, video and digital decision support system for foreign exchange trading and risk management environments.