The battle for control of Magal Security Systems escalated yet more in advance of an August 12 shareholder meeting that will decide the company's fate, amid accusations of attempted extortion.

Attorney Avigdor Klagsbald wrote a letter earlier this week on behalf of Nathan Kirsh, who is Magal's largest shareholder, accusing Yoav Stern of attempted extortion.

Stern is a former Magal executive who heads a group of American investment funds that is seeking a takeover of the company.

According to Klagsbald's letter, Stern asked Kirsh, who owns a 24% stake in Magal, to abstain from the shareholder vote, in what Stern's letter reportedly termed an elegant solution before things get too dirty.

Stern's letter also allegedly stated that, although Kirsh's chances of prevailing in the shareholder vote were slim, if he was successful, there would be a great deal of dirt uncovered.

These statements constituted extortion, Klagsbald wrote.

Stern wrote in his initial correspondence that although Kirsh had released a letter in support of Magal's current management, his real opinion of the firm's management is much lower.

The battle for control of Magal stems from the company's sinking profit margins. The firm finished the first quarter of the year with revenues of just $9.8 million and a net $2.4 million loss.

Three American investment funds, Diker Management, Clough Capital Partners and Prescott Group Capital Management are attempting the takeover of Magal. The three together currently hold about 18% of Magal. They are facing off against the company's current board of directors headed by Jacob Perry as well as CEO Eitan Livneh, backed by Kirsh.

In response to the controversy, the three U.S. funds stated that the accusations are a pathetic attempt to stitch together a selection of sentences taken out of context from straightforward business correspondence between Kirsh and Stern in which Stern was responding to Kirsh's attempt to convince him to withdraw the proposed replacement of the board of directors.

In other Magal news, on Sunday, the company reported it had received $5.5 million in orders for its security equipment.

The orders include two $1.2 million deals for the protection of critical infrastructure to secure nuclear reactors in North America, as well as a deal to provide perimeter protection at a major Western European air force base.