TCC INDUSTRIES
SHAREHOLDERS COMMITTEE
1301 Capital of Texas Highway South
Suite B125
Austin, Texas 78746
March 28, 1997
DEAR FELLOW SHAREHOLDER:
We are writing to introduce ourselves as the TCC Industries Shareholders
Committee. Together we own 256,400 shares of TCC common stock, or about 9.3% of
the Company, making us the largest investors in TCC.
We know that many of you share our interest in improving the value of our
collective investment and were as stunned as we were by the recent announcement
of the Company's loss of $1,536,999 for 1996. We have been concerned for some
time about the Company's deterioration in value and have been expressing this
concern to the Company's directors and management.
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** PLEASE NOTE **
With this letter we have enclosed a PRELIMINARY proxy
statement, which we have filed with the Securities and Exchange
Commission. Securities laws do not allow us to provide our GOLD
proxy card for you to sign at this time. The preliminary
statement does, however, provide more detailed information on our
candidates and our platform.
We will shortly be sending you a DEFINITIVE proxy statement
accompanied by our GOLD proxy card which you can use to support
us in electing two new directors to the TCC Board of Directors.
IN THE MEANTIME, WE ASK THAT YOU NOT DO ANYTHING WITH ANY
WHITE PROXY CARD SENT TO YOU BY MANAGEMENT UNTIL YOU HAVE
RECEIVED OUR DEFINITIVE PROXY MATERIAL AND GOLD PROXY CARD SO
THAT YOU CAN MAKE A DECISION BASED ON ALL THE FACTS.
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TCC'S CURRENT FINANCIAL PICTURE
We, like you, had not been given any information by management to indicate
the speed by which the Company's decline in earnings, from a positive net income
of $2,009,000 in 1993, would accelerate to a loss of over $1.5 million for 1996.
WE WERE SHOCKED TO BE ADVISED OF A LOSS OF $812,000 IN THE FOURTH QUARTER OF
1996 ALONE, DESPITE REPEATED OPTIMISTIC STATEMENTS
<PAGE>
BY MR. SCHUMANN, THE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF THE
COMPANY.
The accompanying graphs demonstrate the deplorable condition of the
Company today - a condition that is directly attributable to the miserable
performance of the Company's current leadership both over the long term and in
recent years.
TCC INDUSTRIES, INC.
COMPARISON OF STOCK PRICE TO
STANDARD & POOR 500 INDEX
1993 - 1996
The graph reflects the following comparison of the value of $2.75 invested
in the Company in 1993 and continuing through 1996 to $2.75 invested in a mutual
fund that tracked the performance of the Standard & Poor 500 Stock Index for the
same time period:
Company S&P Stock Index
------- ---------------
1993 $2.75 $2.75
- ----
1994 $2.625 $2.71
- ----
1995 $2.00 $3.63
- ----
1996 $1.625 $4.37
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GRAPH A
TCC INDUSTRIES, INC.
NET INCOME (LOSS)
1993 - 1996
The graph reflects the following Net Income (Loss) for the Company from
1993 through 1996:
Net Income (Loss)
-----------------
1993 $612,000
- ----
1994 $(77,000)
- ----
1995 $(90,000)
- ----
1996 $(1,536,000)
- ----
<PAGE>
GRAPH B
Three years ago, the Company's stock was trading at $2.75 a share; it is
now trading at $1.50 a share. On the other hand, three years ago, the Standard &
Poor 500 Index was about 466; on December 31, 1996, it was 740 and today still
higher. As the graph indicates, if, three years ago, $2.75 was invested in a
mutual fund that merely tracked the performance of the Standard & Poor 500 Stock
Index, that investment would be worth approximately 81.96% more as of December
31, 1996, and even more today. (See Graph A)
In addition to the steep and long term decline in stock price, the
financial health of the Company has plummeted in more recent times. IN THE PAST
THREE FISCAL YEARS, WE HAVE SEEN ONLY LOSSES - TELLING EVIDENCE OF THE FAILURE
OF THE COMPANY'S MANAGEMENT IN TODAY'S HEALTHY FINANCIAL AND BUSINESS
ENVIRONMENT. (See Graph B)
Management of the Company has failed to implement a single strategy to
grow, or at a minimum, maintain our investment and has pursued a number of
failed strategies that have resulted in the extraordinary deterioration of the
Company's business and its prospects. Despite the Company's totally
unsatisfactory performance, these board members(1) and management have
generously rewarded themselves from your corporate assets, authorizing the
payment of compensation to themselves, while the Company's shareholders, the
real owners of the Company, have received no dividends and have suffered from
declines in the stock price.
By hiring an outside consultant, management has finally acknowledged its
inability to successfully address on its own the challenges currently facing the
Company. However, there is no reason to believe that current management will be
capable of working with or implementing the advice of such professionals. New
directors are needed to provide leadership and to ensure that such
recommendations are thoughtfully evaluated for the benefit of ALL SHAREHOLDERS.
It is clearly time for a dramatic change.
OUR PLATFORM TO RESTORE SHAREHOLDER VALUE
To stop the ongoing erosion of the Company's value and to rapidly increase
and maximize the value of the Company for its shareholders, WE MUST ELECT
DIRECTORS COMMITTED TO AND CAPABLE OF ACHIEVING RESULTS.
Mr. Walter A. DeRoeck has approximately thirty years experience as an
owner, director and officer of a bank holding company where he successfully
learned to judge people's character and business opportunities and instill
leadership confidence in other shareholders of the bank. Today, he is a private
investor, and also serves on the Board of Directors of a publicly traded Fortune
500 company where he is the Chairman of the Compensation Committee and on the
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1 Of the six members of the Board of Directors, five were directors or
involved in management of the Company when its subsidiary filed bankruptcy.
<PAGE>
Nominating Committee which is responsible for approving the hiring of senior
management and the selection of new members of the board.
Mr. Robert Thomajan has over thirty years of corporate, finance and legal
experience. He has had business relationships with approximately fifty Fortune
500 companies and has recently participated in the leveraged buy out of a
company with over $40 billion of revenues. Mr. Thomajan is currently the
managing director of a hedge fund that invests in equities, commodities,
currencies and other financial instruments.
Mr. DeRoeck and Mr. Thomajan are people who have a meaningful equity
position in the Company and the energy, determination, knowledge, business
acumen, integrity and courage to lead and who WILL NOT BENEFIT UNLESS ALL
SHAREHOLDERS BENEFIT THROUGH AN INCREASE IN THE VALUE OF THE SHARES OF THE
COMPANY.
We will be asking for your vote for Mr. DeRoeck and Mr. Thomajan, the two
Shareholders Committee nominees. With over sixty successful years of combined
experience, COUPLED WITH YOUR MANDATE, we believe that we will be able to
effectively and efficiently influence the course of conduct of the board.
We will stay focused on the issues. Unfortunately, based on the Company's
SEC filings, it appears that the current board will not. Rather, in an effort to
maintain control over the Company, it appears that the board will resort to
distortion and misleading personal attacks on our nominees. Do not be
distracted. Remember -- the preservation and restoration of our Company and the
value of our collective investment is what is paramount.
Our definitive proxy statement and further information about our Company
will be sent to you shortly. We ask that you await receipt of that material
before voting. In the meantime, if you have any questions please call MacKenzie
Partners, Inc. who is assisting us at (800)322-2885.
Please support our efforts to enhance the value of each shareholder's
investment.
Very truly yours,
/s/ Walter A. DeRoeck /s/ Robert Thomajan
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WALTER A. DEROECK ROBERT THOMAJAN
THE TCC INDUSTRIES
SHAREHOLDERS COMMITTEE
