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|CUSIP NO. 000000000 | | Page 8 of 9 pages |
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Steel Partners II, L.P.
000 XXXXXXXXX XXXXXX - 00XX XXXXX
XXX XXXX, XXX XXXX 00000
__________
TEL (000) 000-0000
FAX (000) 000-0000
September 29, 1995
BY FAX
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Mr. Xxxxxxx Xxxxxxxx
Chairman of the Board
P&F Industries, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxx 00000
Dear Xxxxxxx:
Congratulations on your appointment as Chairman of P&F Industries, Inc.
Steel Partners II, L.P. owns 14.9% of the outstanding shares of P&F Industries,
Inc. and has owned this amount for approximately two years. We believe that you
have done a terrific job in cleaning up the balance sheet of the company,
selling off its non-performing assets, and refocusing the company on its two
core businesses.
The market has refused to recognize the value enhancement which we believe has
occurred over the past 24 months and unfortunately we have been unable to
purchase additional shares because of the company's Poison Pill. As we have
discussed with you in our prior conversations, we believe that there are a
variety of alternatives available to the company to increase the value of its
stock.
Historically, you have stated that it is the company's intention to increase the
value of the company by making an acquisition in a related or unrelated
business. It is our understanding that the company currently has a $9 million
unused credit facility with its lenders which it can use as equity for an
acquisition or some other corporate purpose including a stock repurchase
program.
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|CUSIP NO. 000000000 | | Page 9 of 9 pages |
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It has been our experience that a company of the size of P&F Industries has a
difficult time attracting the attention of institutional investors and security
analysts due to market size and lack of liquidity. Even if the company makes an
acquisition in the $10M - $20M range, the company will still fall far below the
radar screen of most institutional investors and security analysts.
As an alternative, we would like to sit down and explore the possibility of
taking P&F private, with management, at a price of $4.00 per share with the
understanding that any going private transaction would include, not preclude a
strategy for acquisitions in the future. We are available at any time after
Wednesday of next week to discuss this, or any other ideas you have regarding
increasing shareholder value.
Have a happy and healthy New Year.
Sincerely,
/s/ Xxxxxx Xxxxxxxxxxxx
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Xxxxxx Xxxxxxxxxxxx
