Zell/Chilmark Fund to Vote Against Proposed Merger of Bell Sports Corp.

CHICAGO--(BUSINESS WIRE)--June 22, 1995--The Zell/Chilmark Fund today issued the following statement:

CG Acquisition, owner of 772,500 shares of Bell Sports Corp. and 100 percent owned by the Zell/Chilmark Fund, is planning to vote against the company's planned merger with American Recreation Company Holdings, Inc.

Both Bell Sports and American Recreation have suffered earnings declines within the past 12 months due to competitive conditions in the market for bicycle helmets. Bell failed to react quickly enough to the adverse conditions and preserve profitability. Bell's operating profit for the nine months ended April 1, 1995, was approximately 90 percent lower than the profit for the comparable period in the prior year.

The proposed merger has considerable business logic, as it will improve Bell's market share in the helmet market and will create certain operating efficiencies. However, this transaction violates prudent norms of corporate governance due to the enrichment and entrenchment afforded Bell's management by the new compensation package and the proposed shareholders agreement.

In spite of Bell's recent performance, employment agreements for Bell's top executives are being extended and improved upon as part of the transaction. Management's bonus opportunities are increasing from a target of 50-60 percent to 125 percent of salary. In addition, management has reduced the exercise price of its options from as high as $42.37 per share to $13.87 per share. These compensation changes are not justified by performance and are contrary to the interest of the shareholders.

The shareholder agreement that is being signed in connection with the merger effectively increases management's voting interest in the combined company from under 4 percent to over 25 percent. American Recreation's largest shareholders will support management's recommendations on a wide range of issues, from compensation to the selection of directors and any extraordinary transactions. Perhaps these shareholders are agreeing to the voting restrictions since Bell is paying 12 times pre-tax cash flow for American Recreation.

Although the merger is a valid business proposition, the new compensation packace and the shareholders agreement are adverse to the interest of shareholders. In this case, where management of Bell has done poorly, where they have taken substantial steps in their own economic interest despite poor performance, and where the controlling shareholders of the company for which Bell is very generously paying have entered into such an agreement, the shareholder agreement is simply unacceptable.

CONTACT: Zell/Chilmark Fund,

Kirk Brewer, 312/466-4042