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January 11, 2000
Dear :
Unfortunately the management of Simpson Industries, Inc. ("Simpson" or
the "Company") has continued its refusal to discuss with us their plans to
increase shareholder value. The following are two important topics we would
discuss with management were we granted the opportunity:
1. Michael Ward's (Salomon Smith Barney) recent research report concludes
that the Company's 12-month price target (as of 11/10/99) is $10 per share,
which is lower than the current price (on 1/10/00) of $10 1/8. We find such
a prediction by the Company's only major analyst an unfortunate confirmation
of our concerns about the stock price. In this light, it seems appropriate
to ask management the following:
- What is management's plan to increase shareholder value within the
next 12 months?
- Why will management's plan translate into a higher stock price,
despite Wall Street's apparent skepticism?
- Why is management's plan preferable in terms of generating shareholder
value to attempting to access the premiums that have been available in
the merger and acquisition market for automotive parts suppliers?
2. On 11/2/99, MMI submitted a shareholder value proposal calling for an
auction of the Company. The Company's management refused to carry our
proposal in its proxy materials as was their right to do, although a) the
company was FULLY ENTITLED to include MMI's proposal and b) the passage of
this proposal WOULD NOT COMPEL ACTION by the Company. Therefore:
- If a majority of the common stock votes in favor of MMI's proposal,
will the board commit publicly to abide by such resolution, and undertake
the auction of the Company?
- Given the non-binding nature of this proposal, do shareholders who
support MMI's proposal need to elect a dissident slate of directors in
order to ensure the Company's compliance with their wishes?
- Is management's refusal to discuss this issue based upon a rejection
of the auction process? If so, is this refusal to consider an auction of
the Company related to a belief that auctions do not maximize value or a
concern that an auction would not safeguard management's jobs into the
future?
Please remember that at MMI we manage OUR OWN MONEY. We do not have
quarterly gain/loss or redemption requirements, and are very patient
investors. Since our initial proxy filing we have increased our holdings of
Simpson by an additional 107,100 shares (giving us a total of 807,100). We
are financially prepared to run a successful proxy contest in order to
protect our collective investment, even though Simpson's management appears
to have hired a very expensive law firm, Skadden Arps.
If you discover that management does have a credible plan to increase
shareholder value (a plan that for some reason they have been unwilling to
share with us or, it would appear, Salomon Smith Barney), please implore them
to relate it to us. We do not wish to hinder any reasonable attempts to
create value for shareholders, but we refuse to stand idle while Roy Parrott
and Simpson's Board continue to fail to increase our share price.
Sincerely,
MMI Investments II-A, L.P.
By: MCM Management, LLC as General Partner
By: Clay B. Lifflander
____________________
Member and President
