LENS Letter to Juno Shareholders
June 23, 1999 To Our Fellow Shareholders of Juno Lighting, Inc. VOTE "NO" ON THE PROPOSED MERGER Enclosed is a Proxy Statement from the Lens Group(1), which is the beneficial owner of approximately 7.2% of the outstanding shares of Juno Lighting, Inc. ("Juno" or the "Company"). As the holders of 1,346,263 shares, we urge you to join with us to:
Juno's shareholders will be asked to consider these matters ata Special Meeting that will be held on June 29, 1999. As more fully explained in our Proxy Statement, we believe: PRICE IS TOO LOW o The consideration offered in the Fremont Investors' merger, even if worth the $25 per share claimed by the Company, is too low. We believe that the Company's current and potential value is much greater based upon the trading multiples of Juno's peers and even based upon the discounted cash flow analysis of Juno's own financial advisor utilizing management's "base case" projections. Note especially the recently announced acquisition of Holophane Corp., a Juno peer, by National Service Industries Inc. in an all cash transaction at multiples exceeding significantly those offered by Fremont Investors for Juno. OFFER MAY BE WORTH LESS o Fremont Investors has not made an all-cash offer for all Juno shares. Because of the proration requirements of the Merger Agreement, Juno shareholders who elect to receive only cash may also receive a portion of their merger consideration in a "stub" security (new shares of Juno to be issued in the merger). Based, among other things, upon the facts that (i) there will be a reduced public "float," (ii) the Company does not expect to pay dividends on such shares and (iii) such shares may be subject to a "minority discount," we believe their market value may be substantially less than $25 per share and neither Juno nor its financial advisor expresses any opinion as to their trading price. THE TIMING IS BAD o If the sale process was as exhaustive as the Company alleges and the Company was still unable to obtain a higher price at this time, we say: Why sell? We see no compelling reason for a sale at this time and no explanation is offered by the Company beyond a general comment about the conditions of the overall stock market, interest rates and the economy. THE SELLING PROCESS IS INADEQUATE o We think a public auction is a better way to sell a company than the selective process utilized by the Company. The Company does not refute our assertion that at least one of the five companies identified by Juno as being part of its "peer group" was not even contacted to make a bid. The $12 million of "break-up" fees and up to $3 million of expenses payable to Fremont Investors if a better deal was accepted may well have provided a disincentive to a "topping" bid. If we vote down the Merger Agreement, these fees would be avoided and an open, public auction could be conducted at a later date. CURRENT STOCKHOLDERS WILL HAVE NO MEANINGFUL SAY IF THE DEAL GOES THROUGH o After the merger and related transactions, Fremont Investors would have more than 60% of the voting power of Juno's equity securities. It will control the Board. NEW STOCK INCENTIVE PLAN IS A CONDITION o A condition to the merger is the requirement that Juno's shareholders approve a new management equity incentive plan which could lead to substantial equity dilution. We are not convinced that this is in the shareholders' interests. STOCK BUY BACK ALTERNATIVE o We believe implementing a meaningful share repurchase program could increase the value of the Company's shares that remain outstanding while, at the same time, provide meaningful liquidity to those shareholders who want cash now. CONTROL OUR OWN DESTINY o If the Merger Agreement is turned down, Juno will be forced to have an annual meeting at which we are proposing two director nominees and a by-law amendment which, effective one year after approval, would prohibit more than one "inside" director from serving on the Board. Our nominees would urge the Company to implement a share repurchase program and, if conditions are not right for a sale, urge Juno to focus on expansion through internal growth or acquisition. If current management is not up to the task, we would urge the Board to find suitable replacements. Unlike management, Lens is using its own money to send out these letters and to ask for your vote. We welcome your comments and suggestions, and would be glad to answer any questions you have about our record of working to create shareholder value or about our analysis of Juno. As the third largest holder of Juno stock, our only goal is to insure that shareholders get maximum value for our ownership. Accordingly, we are urging you to vote NO on the Merger Agreement and related proposals. If you have already voted, it is not too late to change your vote. Very truly yours,
(1) The Lens Group consists of Lens Investment Management, LLC ("Lens"), Ram Trust Services, Inc. ("Ram"), Robert B. Holmes, John B. Goodrich, Nell Minow andRobert A.G. Monks. |
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