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ROSECLIFF PENSLER PARTNERS L.P. INFORMS KATY BOARD THAT IT IS READY TO BEGIN DUE DILIGENCE IMMEDIATELY

 NEW YORK, Sept. 21 /PRNewswire/ -- Rosecliff Pensler Partners L.P. today announced that it sent the following letter to Joseph Saliba, chairman of the board of directors of Katy Industries, Inc. (NYSE: KT) in response to Katy's announcement today:
 Dear Mr. Saliba:
 This will reiterate Rosecliff Pensler Partner's merger proposal to acquire all the outstanding common shares of Katy Industries, Inc. for at least $29.00 per share in cash subject to customary due diligence, which we have been trying to obtain since we made our proposal 20 days ago on Sept. 1. We are pleased that the Special Committee of the Board of Katy Industries, Inc., after consultation with its financial advisor Goldman Sachs, has concluded that our offer is financially credible and merits consideration. We also are pleased that, in light of our proposal and the basis on which the Carroll family's $25.75 per share merger proposal was made, that the Special Committee can no longer assure the Board of its recommendation that the Board recommend the Carroll family's proposal to Katy's shareholders for approval.
 However, while we are pleased with the Special Committee's recognition of the merits of our proposal, we are disappointed and confused by the Company's statement that the full Katy Board does not intend to allow Rosecliff Pensler to conduct its due diligence unless the Carroll family terminates its Merger Agreement. Katy says in its announcement that Rosecliff Pensler cannot complete its due diligence by Sept. 30, 1993. This is only the case because the Katy Board has precluded us since Sept. 1 from doing due diligence. Under the terms of the Merger Agreement, due diligence by another party is permitted if -- as seems clearly the case here -- the Board's fiduciary duty calls for it.
 Rosecliff Pensler is extremely eager to begin the due diligence process in order to achieve a transaction which serves the best interests of all Katy shareholders. We, therefore, do not understand how the best interests of all Katy shareholders are being served by the Board's delaying tactics in this regard and why it is trying to erect an artificial roadblock to our immediately undertaking due diligence.
 We have one further lingering concern with respect to the Katy announcement today.
 The announcement contains an alarming tone and response when it says that, if the Carroll family terminates its Merger Agreement, the Board intends to actively explore opportunities that may exist to realize greater shareholder values, listing as possible alternatives, among other things, management initiatives, increased dividends, or restructurings, etc. The corporate landscape is littered with financial and operating disasters of companies which, in the 1980s, pursued such actions in order to protect special interests at the expense of the company, its employees and shareholders.
 We hope and believe the full board will continue down the path traveled today by the Special Committee of serving all of Katy's shareholders by letting Rosecliff Pensler Partners begin due diligence immediately.
 -0- 9/21/93
 /CONTACT: Robert D. Siegfried or Josh Pekarsky, both of Kekst and Company, 212-593-2655/
 (KT)


CO: Rosecliff Penlser Partners, L.P.; Katy Industries ST: New York IN: MAC SU: TNM

TM -- NY097 -- 4436 09/21/93 19:12 EDT
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Publication:PR Newswire
Date:Sep 21, 1993
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