Butler National Corporation Announces Plans to Stop Conversion of its Convertible Debentures and Class B Preferred Stock to Common Stock at Prices Below $2.75, Consistent with Current Market Value.

OLATHE, Kansas--(BUSINESS WIRE)--July 7, 1998--Butler National Corporation (NASDAQ:BUKS) announces that the company plans to no longer issue common shares under the terms of the convertible debentures, issued in 1996, and convertible preferred stock, issued in 1997, (the "Convertibles") until the bid price for the common stock listed on NASDAQ moves to a price that is equitable to all shareholders and that more fairly represents the value of the company.

The company believes that the currently depressed stock price is, largely if not entirely, the result of the continuing sale and conversion by the owners of the Convertibles since November of 1996.

The planned action is being taken because the company believes that is the only effective way to address recent adverse market activity and it will enhance the value of each shareholder's investment. The company believes the action will curb the unwarranted and unnecessary stock dilution currently taking place in the market and should allowthe market to establish a more appropriate market capitalization for the company. The company believes that an equitable conversion price should be in a range between $2.50 and $3 per share.

As reported earlier, the company received a notice from NASDAQ stating that the common stock would be delisted by NASDAQ if the price did not trade at a bid price of $1 or more for 10 business days prior to August 6, 1998. The company considered a number of alternative actions including a reverse stock split, a repurchase of common shares on the open market, and/or the repurchase of the Convertibles at a premium. The plan to stop conversion was selected because it directly addresses what the company believes to be the cause of the price depression and it should be the most favorable action to increase shareholder value for all shareholders without further dilution.

During 1996 and 1997, the company issued the Convertibles to finance capital investment in the Indian Gaming and Aircraft Modification Segments. The Convertibles were sold to offshore investors under SEC Regulation "S" prior to recent SEC changes made to avoid investor abuses of that regulation. The investors represented to the company that they were "sophisticated investors" making long-term investments in Butler National Corporation. The related business segments have made significant accomplishments over the past two years, while the common stock price has continued to be depressed during the time period in which the owners of the Convertibles have continued to sell and convert.

Management Comments

"We believe this plan will enhance shareholder value for all shareholders. This should provide a market in which the true value of the company can be determined. While management believes that the company should have a market value in excess of $50,000,000, we realize that the market does not always agree with us.

"We believe, however, that the market has not had a fair opportunity to value our common stock over the past two years.

"We originally believed the owners of the Convertibles were serious and sophisticated long-term investors interested in the growth and enhancement of shareholder value for all shareholders. Instead, it appears that the Convertible owners are seeking to create a market favorable to short-term speculators and opportunists rather than long-term investors with a genuine interest in the growth of Butler National Corporation," commented Clark D. Stewart, president.

Our Business

Butler National Corporation operates in the aerospace and services business segments. The Services segment includes electronic monitoring of wastewater pumping stations, temporary employee services, Indian gaming services and administrative management services. Aerospace includes the manufacture of airborne electronic switching equipment for Boeing-McDonnell Douglas and structural modification of business aircraft.

Forward-Looking Information

The information set forth above may include "forward-looking" information as outlined in the recently enacted Private Securities Litigation Reform Act of 1995. The Cautionary Statements filed by the company as Exhibit 99 of its Form 10-Q filing are incorporated herein by reference and investors are specifically referred to such Cautionary Statements for a discussion of factors which could affect the company's operations and forward-looking statements contained herein.

For more information, or for a complete copy of Butler National's latest 10-Q, contact:

William A Griffith, Investor Relations Butler National Corporation 19920 West 161st Street Olathe, KS 66062 Phone: [phone] Fax: [phone]

    CONTACT: Butler National Corporation
              William A. Griffith, 913/780-9595
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