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TEXT OF LETTER SENT BY ROSECLIFF PENSLER PARTNERS TO SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS OF KATY INDUSTRIES, INC.

 NEW YORK, Sept. 8 /PRNewswire/ -- The following letter was sent today by Rosecliff Pensler Partners L.P. to the Special Committee of Independent Directors of Katy Industries, Inc. (NYSE: KT) regarding Rosecliff Pensler's proposal for at least $29 in cash per share for all the outstanding common stock of Katy Industries:
 Sept. 8, 1993
 Dear Special Committee of Independent Directors:
 We want to take this opportunity to reiterate our desire to meet with you and your advisors at your earliest convenience to discuss our proposal to acquire all the outstanding common stock of Katy Industries, Inc. in a friendly transaction for at least $29 in cash per share and to arrange the commencement of due diligence. The meeting will enable you to receive all the appropriate information about the proposal first hand as you proceed during the period prior to Katy's scheduled special shareholders meeting to exercise your fiduciary duty to Katy's public shareholders.
 We assume that the committee no longer is relying on the opinion of Goldman, Sachs as to the fairness of the Carroll family's proposal of $25.75 per share in light of our proposal for all Katy Industries common shares of at least $29 in cash per share. Clearly, our proposal is substantially higher than that of the Carroll family and provides Katy's public shareholders with immediate superior cash value.
 Since our proposal became public last Thursday, statements have been attributed to representatives of the Carroll family questioning our financing capability. We are puzzled by such statements since representatives of the Carroll family not only contacted us about our financing but subsequently spoke directly to our financing sources, Continental Bank and Nomura Securities. Both Continental and Nomura confirmed that, subject to their normal due diligence, we have the financing. (To our amazement the Carroll family representatives apparently attempted to dissuade Continental and Nomura by highlighting contingent liabilities of Katy such as environmental and product liability claims.)
 As we stated to Mr. Saliba, Katy's chairman, and to the other members of the board in our proposal letter dated Sept. 1, in addition to Continental and Nomura's financing, Rosecliff Pensler Partners has over $35 million of equity committed to finance the transaction. Other consideration for the transaction would be provided from Katy's cash balances and cash equivalents and from the cash proceeds of the sale, on or before the closing, of Katy's Union Pacific stock.
 We look forward to your prompt response.
 Very truly yours,
 Rosecliff, Inc.
 Peter T. Joseph
 Chairman and Chief Executive Officer
 Pensler Capital Corp.
 Sanford N. Pensler
 Chairman and Chief Executive Officer
 -0- 9/8/93
 /CONTACT: Lissa Perlman or Josh Pekarsky of Kekst and Company, 212-593-2655/


CO: Rosecliff, Inc.; Pensler Capital Corp.; Katy Industries, Inc. ST: New York IN: MAC SU: TNM

LG-OS -- NY067 -- 9915 09/08/93 15:08 EDT
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Publication:PR Newswire
Date:Sep 8, 1993
Words:468
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