RECONDITIONED
SYSTEMS, INC.
444
West Fairmont
Tempe,
Arizona 85282
NOTICE
AND DISCUSSION
OF
20%
ISSUER TENDER OFFER
(Offer
to Purchase up to 273,426 shares of common stock, no par value)
To the Stockholders of Reconditioned
Systems, Inc.:
The Board has resolved that
the Company shall make a tender offer to its stockholders with the goal of
repurchasing up to 20% of its issued and outstanding common stock. The terms of the offer are summarized below
and set forth in detail in the materials accompanying this notice – the Offer
Statement, the Forms of Tender, and the Guarantee of Tender.
The Tender Offer. This tender offer is being made in the form
of a modified “Dutch Auction” and will entitle stockholders to tender all or a
portion of their shares at price increments of their choosing between $1.00 per
share and $2.00 per share, inclusive.
The Company will purchase the shares tendered, up to at least 273,426
shares, in ascending price order based on the price at which the shares are
tendered. However, the Company will pay,
for all shares it purchases, the highest price at which any of the shares it
purchases were tendered. The Company may
purchase additional shares based on the nature of the response to the tender
offer, such as, for instance, the mix of prices at which shares are
tendered. The Board has established June
16, 2004 as the record date for purposes of determining the stockholders to
whom this offer will be delivered.
Reasons for the Tender
Offer. This tender offer,
primarily, reflects the Company’s guiding commitment to deploy its assets in a
manner that most effectively creates or delivers value for its
stockholders. The Company believes that
in this instance utilizing a portion of its cash reserves in excess of its
foreseeable operational needs to repurchase up to 20% of its outstanding common
stock would effectively serve its commitment to shareholder value.
Secondarily, the Company
recognizes that for some of its stockholders the election to become a
non-reporting, non-Nasdaq company has caused its securities to become an
inappropriate or undesirable investment.
This may be due to the associated lack of liquidity and related
inefficiencies or to other reasons specific to the shareholder. In any event, the Company hopes to create for
those stockholders a means of liquidating all or a portion of their holdings by
this tender offer.
The Board is pleased to
afford stockholders this opportunity especially in light of the Company’s
cessation of reporting under the federal securities laws and the removal of its
shares from the Nasdaq Small Cap Market.
When the Board decided to terminate its reporting activity, it did so
with the belief that although removal from the Small Cap Market was inevitable
and the associated loss of liquidity was a negative, the overall relief from
the burden and expense of reporting and the fact that the Company’s stock had
consistently traded below book value made it the correct decision. Nevertheless, the Board appreciated that for
some stockholders the loss of liquidity would be a problem. By this tender
offer, the Company hopes to alleviate that problem.
By
adopting the modified Dutch Auction format and
selecting a price range inclusive of the price range at which the Company’s
stock traded historically as a Nasdaq Small Cap stock, the Company believes
that it has created a mechanism fairly serving both the interest of exiting and
continuing stockholders. Successfully
tendering stockholders will receive cash for their tendered shares at or above
the price at which they are willing to sell their shares and potentially at a
price above the market price at which shares of the Company’s stock traded on
the Nasdaq Small Cap Market.
WHILE
THE BOARD HAS APPROVED THE TENDER OFFER AND BELIEVES THAT IT IS A WORTHWHILE
OPPORTUNITY TO PROVIDE TO THE COMPANY’S SHAREHOLDERS, THE BOARD MAKES NO
RECOMMENDATION WITH RESPECT TO THE ELECTION OF WHETHER TO TENDER ANY SHARES IN
THIS OFFER. YOU SHOULD CAREFULLY
EVALUATE THIS OFFER, CONSULT WITH YOUR OWN INVESTMENT, TAX AND LEGAL ADVISORS
AND MAKE YOUR OWN DECISION.
Further
Initiatives. The Company would like to
explore further ways in which it may be able effectively to align its
management with the interests of its stockholders and to develop efficient
channels of communication with its stockholders. To that end, the Company is asking for
updated holdings and contact information from its beneficial stockholders. With a sufficient response, the Company will
be able to consider offering the convenience of email notification of
announcements and other reports from the Company and similarly invite informal
input from its shareholder community.
Please therefore return the Form of Tender, whether or not you decide to
tender any shares. In the event you
decide not to tender shares, simply indicate a zero in the appropriate space.
Please carefully review the
enclosed tender offer documentation and return the appropriate pieces according
to the instructions.
By Order of
the Board of Directors,
/s/ Kerrie A.
Leach
Kerrie A.
Leach, Secretary
Tempe, Arizona
June 28, 2004