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MEI DIVERSIFIED FILES CHAPTER 11

 MINNEAPOLIS, Feb. 23 /PRNewswire/ -- MEI Diversified Inc. (NYSE: MEI) announced that it has received a letter from the IMR Fund withdrawing its investment proposal and that it has filed today for protection under Chapter 11 of the United States Bankruptcy Code. MEI and its principal beauty salon operating subsidiaries, including MEI Salon Corp., Essanelle Salon Co. and Maxim's Beauty Salons, Inc. have each filed separate petitions for Chapter 11 protection in the United States Bankruptcy Court, District of Delaware.
 Donald E. Benson, president of MEI said, "The Chapter 11 filings will permit the prompt implementation of debtor-in-possession financing which will enable MEI to provide the financial support necessary to continue the turnaround of its beauty salon business and to realize its considerable potential as indicated by MEI's Canadian operations which are profitable and not a part of the Chapter 11 filings. The filings are substantially the result of unprofitable operating results from the salons acquired from the Finkelstein family, Regis Corporation and Myron Kunin in 1990."
 In May 1991, MEI filed suit against the former shareholders of The Glemby Company, Inc. for violations of federal securities laws and racketeering laws, common law fraud, misrepresentation and breach of contract in connection with the sale of The Glemby Company, Inc. to MEI. The suit is currently pending in the Federal District Court of Minnesota subject to completion of discovery proceedings. In May 1992, MEI filed suit in Hennepin County District Court against Regis Corporation, its Chairman Myron Kunin, its President Paul D. Finkelstein and certain of its executives claiming that Regis and the other defendants are guilty of fraud, racketeering, contract violations and mismanagement in the sale and subsequent operation of The Glemby Company, Inc., Essanelle Salon Co. and Maxim's Beauty Salons. MEI is aggressively pursuing such suit. Discovery in both cases is to be completed by June 30, 1993 and each case should proceed to trial as permitted by the calendar of the respective courts.
 The filings will not affect the services provided to customers of the beauty salons. In addition, the filings will not affect the operations of MEI's subsidiaries not covered by the filings including MEI's medical products subsidiary, NDM Acquisition Corp., and MEI's Canadian beauty salon subsidiaries Seligman & Latz of Polo Park, Ltd.; MEI Salons Canada Ltd.; and Glemby International Canada, Ltd.
 Benson added that, "Although it is unfortunate that we found it necessary to seek protection under Chapter 11, we remain confident that we will be able to resolve this situation as promptly as practicable. MEI continues to believe that the salon business and the litigation claims against the former owners of the salons represent valuable assets to the shareholders of MEI and that their value will be recognized and preserved at the conclusion of the Chapter 11 proceedings."
 MEI also announced today that it has received a letter from the IMR Fund, L.P. stating that the fund was withdrawing its proposal to acquire newly issued shares of MEI voting stock in consideration of cash and stock of Brown-Minneapolis Tank Company. Irwin L. Jacobs, on behalf of the IMR Fund, stated in a letter to MEI that as a result of IMR's due diligence to date, the IMR Fund has determined it is unable to proceed with its offer. Jacobs added, however, that the IMR Fund "remains interested in pursuing an alternative transaction whereby IMR would purchase a controlling interest in the enterprises of MEI and remains available to continue discussions with MEI management to review alternative structures."
 -0- 2/23/93
 /CONTACT: James A. Cesario of MEI Diversified, 612-339-8853/
 (MEI)


CO: MEI Diversified Inc. ST: Minnesota IN: SU:

KH -- MN013 -- 9467 02/23/93 13:43 EST
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Publication:PR Newswire
Date:Feb 23, 1993
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