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ROSECLIFF PENSLER PARTNERS L.P. PROPOSES TO ACQUIRE ALL OUTSTANDING COMMON STOCK OF KATY INDUSTRIES

 NEW YORK, Sept. 2 /PRNewswire/ -- Rosecliff Pensler Partners, L.P. today announced that it has proposed to acquire all the outstanding common stock of Katy Industries, Inc. (NYSE: KT) for at least $29 in cash per share. The following letter was sent yesterday by Peter T. Joseph, chairman and chief executive officer of Rosecliff, Inc. and Sanford N. Pensler, chairman and chief executive officer of Pensler Capital Corp., representatives for Rosecliff Pensler Partners, L.P. to Jacob Saliba, chairman of the board of Katy Industries describing the proposal:
 Rosecliff Pensler Partners L.P., an entity to be formed by Rosecliff, Inc. and Pensler Capital Corp., proposes to acquire Katy Industries in a friendly transaction (the "transaction") pursuant to which the holders of all the company's outstanding common stock would receive at least $29 in cash per share. Our proposal is based upon our review of Katy's recently released final proxy statement and 1992 annual report to stockholders, as well as our detailed analysis of the information contained in Katy's preliminary filings on Schedule 13E-3, including the recent valuation reports prepared by Goldman Sachs & Co. and Morgan Stanley & Co. Incorporated, and other public documents.
 Our proposed transaction would provide Katy's public stockholders with a significant premium over the value they would receive in Katy's currently proposed "going private" transaction.
 Our proposal is subject to the completion of due diligence; obtaining the definitive financing commitments referred to below; the negotiation and execution of a definitive agreement for the transaction on terms substantially similar to those of Katy's current merger agreement; and the receipt of any necessary governmental approvals. We believe the foregoing can be accomplished within 30 days.
 Rosecliff Pensler Partners has over $35 million of equity committed to finance the transaction. Other consideration for the transaction would be provided in part from Katy's cash balances and cash equivalents and from the cash proceeds of the sale, on or before closing, of Katy's Union Pacific stock. Representatives of Continental Bank and Nomura Securities International Inc. are available to meet with you at your earliest convenience to provide you with the necessary assurances regarding the remainder of the financing for the transaction.
 Depending upon the results of our due diligence, we may be willing to pay consideration in excess of $29 per share. We believe that, with the company's full cooperation, due diligence can be completed within two to three weeks. A definitive agreement would be signed and revised proxy materials filed very shortly thereafter. We recognize this will necessitate a delay for several weeks of the stockholders' meeting. Therefore, upon consummation of the transaction, we would be willing to compensate Katy's public stockholders for the time value of the consideration they would have received if the existing proposal had been consummated on Set. 16, 1993.
 We wish to reiterate our desire to proceed only on a friendly basis. We would not be making our proposal if Katy has not already announced a merger through which the public stockholders' interest would be acquired. Accordingly, we shall not pursue the transaction through an unsolicited tender offer. We would also welcome the opportunity to discuss the ongoing involvement and participation of management at all levels and expect to provide incentives for their continued involvement.
 As you can appreciate with a proposal of this nature, time is of the essence. We are prepared to meet with your legal and financial advisers and to commence due diligence at your earliest convenience.
 We look forward to your prompt response so that we may proceed to enhance public stockholder value through the transaction.
 -0- 9/2/93
 /CONTACT: Lissa Perlman or Josh Pekarsky, both of Kekst and Company, 212-593-2655/
 (KT)


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

TM -- NY086 -- 8652 09/02/93 19:22 EDT
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Publication:PR Newswire
Date:Sep 2, 1993
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