Exhibit 21(b)
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[Mpower Communications Letterhead]
December[ ], 2000
To Our Stockholders:
Your Board of Directors has announced the adoption of a
Stockholder Rights Plan. We are enclosing a document entitled "Summary of Rights
to Purchase Preferred Stock" which provides certain information about the Plan,
and we urge you to read it carefully. This letter explains some of the Board's
reasons for adopting the Plan.
The Plan is intended to protect your interests in the event
the Company is confronted with coercive or unfair takeover tactics. The Plan,
together with certain charter and by-law provisions and certain provisions of
the Nevada General Corporation Law, is designed to safeguard stockholders from
abusive takeover tactics that have been used by certain bidders and that your
Board believes are not in the best interests of the Company's stockholders.
These tactics may unfairly pressure stockholders, squeeze them out of their
investment without giving them any real choice, and deprive them of the full
value of their shares.
A number of other major corporations have adopted rights plans
similar to the one we have adopted. We consider these Rights Plans to be very
valuable in protecting your right to retain your equity investment in Mpower
Communications and to realize the full value of that investment, while not
foreclosing a fair acquisition bid for the Company.
The Plan is not intended to prevent a takeover of the Company
and will not do so. The Plan is designed to deal with the very serious problem
of unilateral actions by hostile acquirors which are calculated to deprive the
Company's Board and its stockholders of their ability to determine the destiny
of the Company. However, the mere establishment of the Rights Plan should not
affect any prospective offeror willing to acquire the Company and to negotiate
with your Board of Directors. The Rights issued under the Plan may generally be
redeemed by the Company at a price of $0.0001 per Right up to the tenth business
day after any person or group has acquired 15% or more of the Company's common
stock, and thus they should not interfere with any merger or other business
combination approved by the Board. West Highland Partners, L.P., West Highland
Capitol, Inc., Mr. Land H. Gerhard and Estero Partners, LLC, which collectively
own in excess of 15%, may generally purchase up to an additional 1% without
causing the Rights to become exercisable.
The Rights Plans is not being adopted in response to any
effort to acquire the Company, and the Board is not aware of any such effort.
Rather, the Plan has been adopted in order to assure the ability of the Board to
protect your interests.
Issuance of the Rights under the Plan does not in any way
weaken the financial strength of the Company or interfere with its business
plans. The issuance of the Rights has no dilutive effect, will not affect
reported earnings per share, is not taxable to the Company or to you, and will
not change the way in which you can currently trade the Company's shares. As
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explained in the enclosed Summary of Rights to Purchase Preferred Stock, the
Rights will only be exercisable if and when an event arises which triggers their
effectiveness. They will then operate to protect you from being deprived of your
right to share in the full measure of your Company's long-term potential.
Your Board of Directors believes the Rights Plan will serve an
important role in protecting the value of your shares.
Sincerely,
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[Name]
[Title]
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