August 17, 1998
To the Shareholders of Real Silk Investments, Incorporated:
Real Silk Investments, Incorporated (the "Corporation") has recently
learned that certain of you may have received an Offer to Purchase Shares of
Common Stock (the "Offer") from Madison Liquidity Investors I ("Madison").
You are not required to sell your shares to Madison or to anyone else.
As we previously informed you, the Corporation was not officially informed
of the Offer and, to the best of our knowledge, no materials were filed with
the United States Securities and Exchange Commission (the "Commission"),
although we have been informed that under the particular circumstances of the
Offer, such filing may not be required by applicable law.
Your Board of Directors has determined that the tender offer by Madison
is not in the best interest of the Corporation or its shareholders. Your
Board recommends that you reject the offer and not sell your shares to Madison.
Based on a review of the circumstances, the financial condition of the
Corporation, the current market price of the Corporation's shares available
from market makers and the current net asset value per share of the
Corporation's shares, the Board of Directors believes that the price offered
by Madison, $379.00 per share, is sorely inadequate.
As discussed in my letter to shareholders dated August 12, 1998, the Board
of Directors recommends and believes that you should consider, in addition to
any other matters which you feel are material, the following:
1. The purchase price specified in the Offer is $379.00 per share of the
Corporation;
2. According to information available to the Corporation, there is
currently a quote from a market maker for the Real Silk shares
pursuant to which the market maker is willing to pay $580.00 per
share for the Real Silk shares;
3. While the Corporation does not redeem its shares, the Corporation
estimates that its shares currently have a net asset value per share
of approximately $758;
4. On March 20, 1998, the Board of Directors of the Corporation issued
a press release indicating that it intended to explore the options
for the future of the Corporation, including merging with another
investment company or liquidating;
5. The Board of Directors continues to explore those options, while
realizing that the potential built in gains tax liability will not
expire until January 1, 1999; and,
6. Significant and material information concerning the Corporation is
contained in the annual report and other documents which are filed
with the Commission and sent to shareholders and you are encouraged to
review those documents prior to making any decision with respect to
your shares of the Corporation.
The Board of Directors recognizes that each shareholder's interests,
circumstances, investment objectives and needs are different. We would
therefore encourage each shareholder to seek advice from the shareholder's
personal financial advisor or consultant before making any decision to sell
their shares pursuant to the Offer and the Board of Directors recommends that
you reject the tender offer from Madison.
The Board of Directors
Real Silk Investments, Incorporated
By: Daniel R. Efroymson, President
