GREENVILLE, S.C., Jan. 9, 2015 /PRNewswire/ -- The Special Committee of the Board of Directors (the "Special Committee") of JPS Industries, Inc. (Pink Sheets: JPST) (the "Company") today responded to the letter sent to it by Handy & Harman Ltd. (HNH) ("HNH") on December 30, 2014, disputing numerous factual assertions made by HNH in its letter and stating that HNH's offer to acquire the Company for up to $10.00 per share in cash (subject to certain potential deductions) undervalues the Company and does not represent a premium to the fair value of the Company's stock. The Special Committee disputed that the Company's "Over-the-Counter" stock price represents the fair value of the Company's stock given the stock's limited trading.
In a letter addressed to the Chairman of HNH, Mr. Warren G. Lichtenstein, the Special Committee stated that it felt compelled to respond to the numerous factual omissions and misrepresentations in HNH's letter. The Special Committee went on to state that it has worked diligently towards a negotiated transaction with HNH, but that HNH has each time submitted an offer significantly less than the fair value of the Company's stock and that each offer that HNH has submitted, including its offer in its letter of December 30, 2014, has included a reservation of rights to reduce the offer price. The Special Committee further noted that it believes that HNH has engaged in improper conduct throughout the process to decrease the value of the Company's stock and to undermine and circumvent the exclusive authority of the Special Committee to negotiate the transaction. The Special Committee noted that throughout the process it has worked to protect the best interests of the stockholders of the Company against low-ball offers and hostile maneuvers from HNH and its affiliates and representatives, who had been seeking to acquire the Company for as little as $7.00 per share.
The full text of the letter follows:
January 9, 2015
Handy & Harman Ltd.
1133 Westchester Avenue, Suite N222
White Plains, New York 10604
Attention: Mr. Warren G. Lichtenstein
Dear Mr. Lichtenstein,
Given the numerous factual omissions and misrepresentations in the letter dated December 30, 2014 (the "Letter") sent by Handy & Harman Ltd. ("Handy") to the Special Committee of the Board of Directors (the "Special Committee") of JPS Industries, Inc. (the "Company"), the Special Committee feels compelled to respond.(i) As explained in more detail below:
-- Handy is an affiliate of Steel Partners Holdings L.P. ("SPH"), the
largest single holder of the Company's stock. The Special Committee
believes that Handy and SPH have improperly used SPH's ownership
interest and board representation to further Handy's offer.
-- Indeed, the conduct of SPH and its proxies evidence a desire to strip
value away from the stockholders and obtain the Company for the lowest
possible price with no real competition -- consistent with its initial
"offer" of just $7.00 per share or lower.
-- The current offer made by Handy in the Letter to acquire the Company for
up to $10.00 per share in cash (the "Proposal), just like all previous
offers made by Handy to acquire the Company, is below the fair value of
the Company. And this is before taking into account the fact that all
offers have been made subject to potential reductions in the offer
price, whether through further diligence or otherwise.
-- The Special Committee believes that Handy, SPH and their representatives
(the "Steel Agents"), in an effort to drive down the value of the
Company's stock and ultimately take control of the Company at a reduced
amount, have:
(i) made offers to, or solicited interest from, select stockholders to purchase stock of the Company to avoid paying fair value to the other stockholders,
(ii) sought to improperly use their board influence to terminate the Company's poison pill plan after they launched their low-ball offer,
(iii) threatened the employment of management in retaliation for their trying to maximize value for all stockholders,
(iv) manufactured a baseless claim that the poison pill plan had been triggered by the mere nomination of a slate of directors to run against SPH's own hand-picked slate which would sell the Company to Steel at the lowest possible price if given the chance, and
(v) tried to circumvent the authority of and disband the Special Committee, authority which was unanimously granted to the Special Committee by the Board of Directors of the Company (the "Board"), including those members of the Board appointed by SPH.
-- As recently as the 2013 Annual Meeting of Stockholders, SPH nominated
Mr. Alan B. Howe, a current member of the Special Committee and Mr.
Mikel Williams, the Company's current Chief Executive Officer, to serve
as directors of the Company, and as recently as the 2014 Annual Meeting
of the Stockholders, SPH voted for the election of Mr. Robert J.
Capozzi, a current member of the Special Committee, and Messrs. Howe and
Williams as directors of the Company. Nevertheless, SPH has now
excluded Messrs. Howe, Williams and Capozzi from its 2015 nomination
slate due to their insistence that Handy pay a fair value for the
Company.
The Special Committee is not seeking to maintain control, but instead is attempting to protect the interests of the stockholders against a significant stockholder bullying the Special Committee into selling the Company at a below fair value price.
I. SPH has a History of Making Offers for the Company that it Later Reduces and Drops.
SPH has a long history of making offers for the Company's stock, only to reduce and finally drop such offers when the Company attempts to engage in discussions. SPH is a major holder of the Company's stock (approximately 39%). It has previously used that position to try to negotiate prior low-price offers to acquire the Company's stock. Indeed, as recently as September 2011, SPH made a series of offers for the Company. SPH expressed its willingness to acquire the Company for a purchase price of $8.00 per share only to later reduce that offer price to $7.50 per share. After the Company attempted to engage SPH in discussions, SPH later dropped the offer, even at the reduced price. This prior history has replayed itself in SPH's current bid for the Company, and suggests that neither stockholders of the Company nor the Special Committee can simply accept assertions made by SPH at face value.
II. Before Launching its Current Low-Ball Offer, Steel Agents Attempted to Drive Down the Price of the Company's Stock.
From the beginning of this process, The Special Committee believes that Handy sought to hinder efforts to increase stock value and submit low offers in the hopes of acquiring the Company on the cheap. On June 2, 2014, Handy submitted to the Company an unsolicited offer to acquire the outstanding shares of the Company that it and its affiliates did not otherwise own for $7.00 per share in cash (the "Initial Offer"). In advance of making the Initial Offer, SPH's representative (Mr. Howard, who also serves as Chairman of the Board) took action to drive down or keep flat the Company's stock price. In early May 2014, Mr. Howard asked that Mr. Williams, on behalf of the Company, not present at the B. Riley Conference (the "Conference") to be held on May 19-21, 2014, at which Mr. Williams was invited to speak and which represented an ideal forum for the Company to present its prospects for growth. The Conference provides an opportunity for companies to present to potential investors. If Mr. Williams had participated in the Conference, his participation could have had the effect of increasing investor interest in the Company and thus increasing the Company's stock price and value. Mr. Howard requested that Mr. Williams not participate, and assured Mr. Williams that SPH did not seek to acquire the Company. These assurances were false. The purpose was clear, to keep the stock price low and avoid competition for SPH.
III. The Special Committee Was Appointed to Protect Stockholders From SPH's Conflict of Interest and Has Worked to Preserve Stockholder Value.
In response to the Initial Offer and understanding the conflict of interest presented by Mr. Howard and Mr. John Quicke, a member of the Board and a SPH representative, being involved in the negotiations and discussions with Handy, the Board, including Messrs. Howard and Quicke, unanimously created the Special Committee appointing Messrs. Howe and Capozzi as its sole members. The Board authorized the Special Committee to have full and exclusive authority, and to the extent permitted by Section 141(c) of the Delaware General Corporation Law, to exercise all the powers and authority of the Board, in its sole discretion, to among other things, study and determine strategic alternatives available to the Company, including, without limitation, to communicate with Handy and SPH in connection with the Initial Offer or any future proposal. But upon discovering that the Special Committee would not bow to Handy's will, but instead would fight for the best interests of the stockholders, the Steel Agents have continually attempted to undermine the process and circumvent the Special Committee's authority.
IV. Steel Agents Interfered with Management of the Company as Part of Handy's Bid.
The Steel Agents have not respected the process established unanimously by the Board to negotiate with the Special Committee. On or around June 2, 2014, just prior to Handy submitting its Initial Offer, Mr. Warren G. Lichtenstein, the Chairman and Chief Executive Officer of SPH and the Chairman of Handy, attempted to win the support of Mr. Williams for its offer by indicating to Mr. Williams that SPH would facilitate other opportunities for Mr. Williams to serve as chief executive officer of companies affiliated with SPH. Mr. Williams informed Mr. Howard that such discussions with the Steel Agents were inappropriate in light of Handy's interest in purchasing the Company.
When that effort failed, the Steel Agents changed tactics with management. They even went so far as to threaten management with the loss of employment by stating to Mr. Williams that his role was duplicative with the role of the Company's Composite Materials division president and that one of those roles should be eliminated. In direct conversations with Mr. Williams after the Special Committee rejected the Initial Offer, Mr. Lichtenstein suggested that Mr. Williams services may no longer be needed given the recent sale of one of the Company's divisions, thereby taking actions that could destabilize management of the Company and further decrease its value. SPH's Board representatives adopted a similar tone. This appears to have been in retaliation for the rejection of Handy's Initial Offer.
V. SPH and its Board Agents Attempted to Eliminate the Poison Pill Plan to Further the Handy Offer.
After the Special Committee rejected the Initial Offer (at $7.00 per share) as being well below the fair value of the Company, on August 14, 2014 during a meeting of the Board, Mr. Quicke, a representative of SPH, requested that the Board vote to terminate the Company's poison pill plan or to not take any action to renew the plan. Thus, Steel Agents attempted on behalf of Handy and SPH to evade the authority of the Special Committee. If successful, this step would have eliminated a valuable protection of the Company's minority stockholders against a significant stockholder's bid to acquire the Company or take a controlling position in the Company at the expense of the minority stockholders. It also represented a conflict of interest, which the Special Committee was established to avoid. In response to Mr. Quicke's request, the members of the Special Committee successfully took steps to block this attempt to eliminate the Company's poison pill plan. The plan remains in place as a result.
VI. The Special Committee Negotiated Hard for Increased Value to Stockholders.
Despite the efforts by Handy and SPH to put pressure on management and to force the Special Committee to agree to the Initial Offer, the Special Committee maintained its resolve to protect and fight for the best interests of the stockholders of the Company. If a sale of the Company was determined by the Special Committee to be in such best interest, it would obtain the highest value for the Company's stockholders reasonably attainable in accordance with its duties. The Special Committee remained interested in reaching a negotiated transaction with Handy.
However, Handy made little progress on its revised offer. On August 18, 2014, Handy indicated that it was prepared to increase its offer price to a loose range of between $8.00 and $10.00 per share in cash, an offer that was still significantly below the fair value of the Company and added the unusual wrinkle of a wide range without any methodology as to how Handy would determine where in the range the final offer price would settle instead of a targeted dollar amount. Even this range was subject to further deductions and a demand for diligence (despite SPH's familiarity with the Company given its large ownership position). After thoughtful consideration and given that this appeared to be another offer from Handy lacking sincerity in providing the Company's stockholders with fair value for their shares, the Special Committee informed Handy that it would be willing to engage in further discussions with Handy on a potential transaction if the floor for the offer price range was increased to $12.50 per share in cash. In this response, the Special Committee put Handy and SPH on notice that the Special Committee was protecting the best interests of the stockholders as a whole and not looking to skirt its duties and responsibilities by giving Handy a sweetheart deal.
Handy would not be deterred from purchasing the Company on the cheap, using any means available. After further negotiations with the Special Committee during which the Special Committee diligently worked on behalf of the stockholders to get Handy to increase its offer, on October 31, 2014, Mr. Lichtenstein informed the Special Committee that Handy was prepared to offer $10.00 per share in cash, subject to further due diligence (the "Revised Offer"). However, on the very day that Handy submitted the Revised Offer to the Special Committee, it simultaneously offered to separately purchase the shares of stock of the Company owned by the Company's Pension Plan. This was yet another action to "end-run" the Special Committee and the process unanimously established by the Board for the benefit of all stockholders. It was also an effort to avoid paying a fair price to the rest of the stockholders by cleaving off enough shares to gain control of the Company. Nor was this the only solicitation made by Handy, SPH or their representatives to purchase the shares of individual stockholders. Steel Agents also reached out to other individual stockholders to solicit their interest in selling stock to SPH despite the poison pill plan. These actions were further evidence that Handy was not interested in negotiating a fair deal for the Company's unaffiliated stockholders.
In addition, the Special Committee again questioned the need for Handy to subject the offer price to further due diligence given its knowledge of the Company. The Special Committee's concern was that Handy was not actually willing to pay $10.00 per share, but instead would "find issues" in diligence to walk down the price, just as SPH had reduced the offer price in 2011. Even in the Letter, Handy stated that it reserves the right to reduce its offer price. Despite all of its knowledge of the Company given its relationship with SPH, Handy has still been unwilling to put forth a binding commitment to pay a fair value for the Company.
The Special Committee, having already successfully negotiated for Handy to increase its offer price from $7.00 to $10.00 per share, still hoped to persuade Handy to pay a fair price. In an effort to continue the process and reach a negotiated transaction, the Special Committee responded to Mr. Lichtenstein on November 8, 2014 stating that the Revised Offer did not adequately reflect the fair value of the Company. Based on Handy's valuation metrics (which the Special Committee did not concede were the correct metrics), the Special Committee stated, the offer price should be at least $11.20 per share in cash, which does not even give effect to the value of the net-operating losses of the Company.(ii) The Special Committee further stated to Handy that to continue discussions, Handy, SPH and their representatives must cease efforts to circumvent the authority of the Special Committee, including, without limitation, its efforts to purchase the shares of the Company held by the Company's Pension Fund or other individual stockholders. The Special Committee also demanded that SPH stop its threats to the Company's management and threats to the Special Committee that Handy and SPH would wage a proxy contest if the Special Committee did not acquiesce to Handy's offer.
VII. SPH Launched Its Second Proxy Contest in Two Years to Advance Its Own Efforts to Buy the Company at a Bargain Price.
On November 10, 2014, instead of increasing its price as requested by the Special Committee, Mr. Lichtenstein on behalf of Handy requested an exclusivity period with the Company to negotiate a transaction and to conduct due diligence. In addition, Mr. Lichtenstein proposed extending the director nomination deadline.
Wishing to give hope a chance and continue the process towards a negotiated transaction, the Special Committee orally agreed with Mr. Lichtenstein to an extension of the director nomination deadline and that Handy would enter into a customary Confidentiality Agreement. After delivery by the Special Committee to Handy of such documents, including a Confidentiality Agreement in a form customary for acquisition transactions, instead of negotiating any issues and without warning, SPH reneged on its agreement and submitted a slate of four director nominees to be voted upon at the 2015 Annual Meeting of the Stockholders of the Company. The discussion of extending the director nomination deadline and entering into a Confidentiality Agreement appeared to be a ruse in which SPH sought to have the only director nomination slate timely submitted. However, SPH's efforts were thwarted when Milfam II, L.P., a stockholder of the Company, submitted a slate of directors on November 21, 2014, which included Messrs. Howe, Capozzi, Williams, Michael Fulbright and Michael Brodsky.
SPH is now looking to expend more Company resources by launching its second proxy contest in the last two years. At the 2013 Annual Meeting of the Stockholders of the Company, SPH engaged in a proxy contest to place its nominees on the Board. Included in that slate of nominees were Messrs. Howe, Williams and Howard, as well as Mr. Quicke. From such nominations, it was clear that SPH valued the expertise and experience of Messrs. Howe and Williams. In support of their nominations, SPH stated that Mr. Howe is qualified to serve as a director of the Company due to his prior public company board experience and extensive financial and operational background and that Mr. Williams is qualified to serve as a director of the Company as a result of his operational and public company background and extensive experience in the electronics industry that the Company services, as well as his valuable knowledge and insights in finance and financial reporting matters. With the full support of SPH, including SPH voting in favor, Messrs. Howe and Williams, along with the other SPH nominees and Mr. Capozzi, were elected to the Board at the 2013 Annual Meeting of the Stockholders of the Company. Further, at the 2014 Annual Meeting of the Stockholders, SPH voted in favor of the election of Messrs. Howe, Williams and Capozzi. Thus, it is clear that the abilities of the members of the Special Committee and management are not the issue in the current proxy contest. Rather, SPH is simply upset that the independent members of the Board as well as Mr. Williams have resisted its efforts to obtain the Company at a low-ball price (at a level as low as $7.00 per share).
Noticeably, despite the praise SPH showed for Messrs. Howe and Williams during the 2013 director nomination process, and voting in favor of Messrs. Howe, Williams and Capozzi at the 2014 Annual Meeting of the Stockholders of the Company, Messrs. Howe, Williams and Capozzi were left off SPH's director nomination slate. Since their election, Messrs. Howe, Williams and Capozzi have exercised their duties as members of the Board in good faith, in the best interests of the stockholders of the Company and in accordance with applicable law. Nevertheless, SPH has excluded Messrs. Howe, Williams and Capozzi from its slate of nominated directors. It appears that as a result of opposing Handy's woefully inadequate offer to acquire the Company, despite their service, expertise and experience, SPH no longer wants Messrs. Howe, Williams and Capozzi on the Board. SPH wants directors who look after the interests of SPH at the expense of all other stockholders of the Company, which Messrs. Howe, Williams and Capozzi have shown they will not do. If SPH succeeds in its new proxy effort, it would effectively seize authority for SPH to decide at what price SPH will buy the Company. Alternatively, if SPH succeeds in its proxy effort, SPH could acquire a majority of the Company's stock and leave the remaining minority stockholders with an illiquid stock position that they can only reasonably sell to SPH at a time and price of SPH's choice.
VIII. The Steel Agents Once Again Tried to Use their Board Positions to Interfere with the Special Committee (this Time Making a Frivolous Claim that the Poison Pill Plan had been Triggered).
In spite of all of this conduct by the Steel Agents to undercut the Special Committee and obtain a bargain price for SPH's benefit, the Special Committee continued its diligent efforts to reach a negotiated agreement with Handy. On December 2, 2014, Handy, the Special Committee and their respective counsels had a productive discussion regarding the draft Confidentiality Agreement and a high level discussion of the structure of the proposed acquisition.(iii) The Special Committee stated that it would consider Handy's proposal for the Confidentiality Agreement and would respond the next day.
Mr. Howard, the Chairman of the Board of Directors, did not afford the Special Committee the opportunity to make its response. Instead, on December 3, 2014, Mr. Howard called a special meeting of the Board. The notice stated that Mr. Howard wanted to discuss whether the board slate submitted by Milfam II, L.P. on November 21, 2014 triggered the poison pill plan. Mr. Howard called for the creation of his own special committee, comprised of himself and the other SPH nominee (Mr. Quicke), to make such determination on their own. Given the frivolous nature of Mr. Howard's contention and the dire consequences of this claim, Messrs. Howe and Capozzi filed suit in the Delaware Chancery Court for a temporary restraining order to prevent such action. That suit remains pending. However, in response to the action filed by the Special Committee in Delaware, the Steel Agents purport to have abandoned their frivolous claim that the poison pill plan was triggered by the nomination of a counter-slate by Milfam II, L.P.
IX. Handy Pretended to "Withdraw" its Offer as Part of a Ploy to Disband the Special Committee.
Handy and the other Steel Agents, however, weren't yet done with their deceitful tactics. On December 8, 2014, Handy sent a letter to the Special Committee formally withdrawing its offer to acquire the Company for $10.00 per share. In light of this "withdrawal," at the December 16, 2014 Board meeting, Mr. Quicke vehemently argued that since there was no longer an outstanding offer by Handy to acquire the Company, the purpose for the Special Committee had ended. Through its controlled representatives, Handy and SPH went so far as to claim Handy was no longer interested in acquiring the Company in an attempt to disband the Special Committee. However, this was just another attempt by the Steel Agents to circumvent the Special Committee and force a transaction at a low price. Just two weeks later, Handy publicly issued the Letter in which it included the Proposal. Handy clearly remained dedicated to acquiring the Company on its terms. SPH's ploy failed, and the Special Committee remained in place consistent with the terms of its mandate.
X. Handy's Offer Remains Subject to Reductions (as have all of its Prior Offers).
Handy stated in the Letter that although it will not be subject to diligence, the Proposal may be subject to a reduction in price essentially if the Special Committee continued to utilize its advisors as permitted by its charter. Of course, SPH very well knows that the Special Committee must continue to retain its advisors to counter the actions of the Steel Agents and serve the best interests of the stockholders. Thus, Handy has simply disguised the means by which it will lower its offer (as it has consistently done before).
Notably, had Handy followed the process unanimously established by the Board for Handy to negotiate with the Special Committee instead of continually trying to circumvent the process and submit low-ball offers, the Special Committee could have more efficiently used corporate assets to reach a negotiated transaction instead of attempting to defend the best interests of the stockholders against these hostile maneuvers by Handy, SPH and their representatives at every turn of this process.
XI. The Conduct of the Steel Agents Proves that Handy/SPH is not Interested in Paying Fair Value.
From the beginning of this process, it has been clear to the Special Committee that Handy is not interested in paying fair value for the Company. Handy's Initial Offer of $7.00 per share was not a premium at the time of the offer as the Company's stock price was then trading around $7.00 per share and has since traded above $7.00 per share. In any event, it is disingenuous for Handy to cite the Company's thinly traded "Over-the-Counter" stock price as evidence that the Proposal is at a premium.
Since fiscal year 2012, the Company has retired over $72 million in outstanding bank and pension obligations. This represents nearly $7.00 per share in value generated for the stockholders of the Company over the past couple of years. In addition, over this same period, the Company has improved its annual adjusted EBITDA significantly, despite having sold its Urethane division and eliminated the division's contribution to its adjusted EBITDA. This was accomplished through a combination of improved operating performance at the Company's Composite Materials division and aggressive reductions of the Company's corporate costs. These improvements do not appear to have been reflected in the Company's stock value on the OTC as the Company's quoted stock price has increased by only 10 cents, from $7.00 at the end of fiscal year 2012 to $7.10 at the end of fiscal year 2014. Given the lack of liquidity of the Company's stock, and the fact that Messrs. Howard and Quicke instructed Mr. Williams not to drum up interest among potential investors in the Company in the hopes of keeping the stock price down, the Company's OTC stock price is not a good indication of the current per share value of the Company's stock. As a result, in connection with valuing the Company's stock held by its pension plan, an annual independent appraisal of the value of the Company's stock is obtained.
For fiscal year 2013, the mid-point of the valuation range of the independent appraisal of the value of the Company's stock, which was approved unanimously by the Board when it approved the Company's financial statements, including approved by Messrs. Howard and Quicke, was $11.70 per share. In fiscal year 2014, the Company continued to see solid cash flows and a slightly improving outlook for its remaining Composite Materials business. The Special Committee believes that the valuation of the independent appraisal may well increase for 2014. Nevertheless, Handy would have the Company's stockholders believe that its "$10.00 per share Proposal" is at a premium even though Messrs. Howard and Quicke, SPH's representatives on the Board, approved the fiscal year 2013 appraisal, which had a mid-point of the valuation range of $11.70 per share and the economic position of the Company has only since improved. Even assuming that the $10.00 bid is a firm price (which it appears not to be), SPH's own representatives on the Board have implicitly acknowledged by approving the fiscal year 2013 financial statements, which contain the valuation, that Handy's offer is inadequate and not fair to the Company's stockholders.
Further, as noted above, in September 2011 SPH expressed its willingness to acquire the Company for a purchase price of $8.00 per share, which it then reduced to $7.50 per share. As noted above, since fiscal year 2012, the Company has seen significant economic improvement such that the Special Committee believes that the value per share has increased by at least $7.00 per share. Nevertheless, Handy's Initial Offer in June 2014 to acquire the Company for $7.00 per share was even below its September 2011 proposal before the significant economic improvement of the Company. By submitting its Proposal of $10.00 per share, SPH appears to contend that since 2011, the Company's value has only increased by $2.00 to $2.50 per share, yet SPH's representatives approved a mid-point of the range valuation for fiscal year 2013 that shows the value of the Company has increased by more. And with the continued economic improvement of the Company in fiscal year 2014, the Special Committee believes that value has continued to increase.
XII. The Special Committee Remains Open to all Strategic Alternatives that Could Maximize Stockholder Value.
The Special Committee's charter provides for it to consider strategic alternatives available to the Company. The Company currently has a valuable asset in its net-operating losses, which would likely be eliminated or at least greatly reduced if the Company were acquired now. The Company's net operating losses total approximately $54 million, which could generate a cash value to the Company in the form of tax savings of up to $18 million, based upon the current federal tax rate of 35%. As a result, in administering its duties, the Special Committee is not just considering whether Handy is or would be the highest bidder in an auction process, but also whether a sale of the Company at this time is even in the best interests of the stockholders. Even so, the Special Committee remains open to all alternatives that maximize stockholder value. It simply wants to assure that the fair value of its assets is reflected in any offer.
Now that Handy has re-submitted its unsolicited offer to acquire the Company, the Special Committee hopes to continue the process on a negotiated basis with Handy and without its and its affiliates' efforts to undermine the Special Committee's authority in evaluating strategic alternatives of the Company. Should Handy be willing to raise its offer price such that it reflects a true and fair value to the stockholders of the Company, and should Handy agree to enter into a customary Confidentiality Agreement and cease its hostile overtures, the Special Committee is willing and able to move quickly to a negotiated transaction and to waive the poison pill plan to permit such a transaction.
The Special Committee will continue to fight for the best interests of the stockholders of the Company.
Sincerely,
The Special Committee of the Board of
Directors of JPS Industries, Inc.
By: /s/ Alan B. Howe
Name: Alan B. Howe
Title: Member of the Special Committee
By: /s/ Robert J. Capozzi
Name: Robert J. Capozzi
Title: Member of the Special Committee
i Handy's December 30th letter
discloses material non-public
information about the Company,
including information that it
apparently gleaned from its
affiliate, SPH, and its two
nominees on the Company's Board.
The Special Committee believes that
the disclosure of information to
Handy by SPH's Board nominees was
improper, as was Handy's subsequent
publication of information it knew
had been improperly supplied to it
by persons under a duty to maintain
confidentiality. Nothing herein
constitutes consent by the Special
Committee or the Company for such
improper disclosures. Given
Handy's unilateral and unauthorized
disclosure, the Special Committee
has no choice but to respond to the
"factual" allegations in Handy's
letter.
ii One of the Company's significant
assets is its net operating losses,
which total approximately $54
million and could generate a cash
value to the Company in the form of
tax savings of up to $18 million,
based upon the current federal tax
rate of 35%.
iii On the December 2, 2014
conference call, Mr. Lichtenstein
noted to the Special Committee that
there would be potential deductions
to the $10.00 offer price relating
to, among others, environmental
liabilities, advisor fees and other
severance and change of control
payments.
CONTACT: JPS Industries Investor Relations, 864-239-3900
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SOURCE JPS Industries, Inc.
