BOSTON, March 21 /PRNewswire/ -- On March 6, 2007, RISCO Ltd.
(RISCO), through Rokonet Industries, U.S.A., Inc., its indirect
wholly-owned subsidiary, commenced a cash tender offer to purchase
all of the outstanding shares of International Electronics, Inc.
(IEI) (OTCBB: IEIB) not already owned by it for $3.50 per share. On
March 16, 2007, IEI issued a press release and filed documents with
the U.S. Securities Exchange Commission (the SEC) indicating that
it recommends IEI stockholders reject RISCO's offer because, among
other things, IEI believes RISCO's offer is inadequate, does not
reflect the long-term value and prospects of IEI's strategy, is
"opportunistically timed to take advantage of depressed 2006
results" and is "highly conditional". In an open letter to IEI
stockholders (attached), Moshe Alkelai, Chairman of RISCO, called
IEI's response disappointing, but not surprising. "Once again, when
presented an opportunity to create value for all stockholders, the
IEI board and management has dug in its heels and refused to do
so." In response to IEI's concerns, RISCO points out: -- RISCO's
offer allows IEI stockholders to choose for themselves whether to
accept cash for their shares now, at a significant premium to their
historical trading prices prior to RISCO's offer rather than wait
for management's speculative strategy to work. -- RISCO believes
that IEI's current strategy is incapable of delivering the results
management hopes for. IEI's product offering is too narrow and the
global market place is too competitive, with customers demanding
more and more systems integration, which IEI, as a smaller company,
is challenged to offer. IEI lacks the resources for significant
investment in R&D, sales channel growth, distribution and
product support necessary to implement its strategy successfully.
IEI lacks the resources to effectively compete with many of its
global competitors, including Honeywell, Tyco, Bosch or Siemens, or
even smaller competitors. -- IEI has not generated positive net
income in any of the last three fiscal years. According to its
publicly filed financial statements, it has actually lost money for
11 of 12 consecutive quarters ending August 31, 2006, over $2.2
million in the aggregate, or $1.33 per share (more than 2-1/2 times
the cumulative net income of IEI for the three fiscal years prior
to 2004). While IEI points to recent positive earnings of $0.15 per
share for the six months ended February 28, 2007 as ratification of
its strategy, it would take another 4-1/2 years to recoup the
losses accumulated during the previous three years at the current
rate. -- IEI has yet to report retaining a recognized financial
advisor to advise the board as to what the current value of
management's speculative long-term strategy is. -- There has been
no significant trading market for IEI's common stock since it was
delisted from Nasdaq in July 2005. Management has not indicated
that it is even a goal of the company to again qualify for listing.
IEI and its stockholders bear all of the additional expense and
burden of being a public company, without stockholders being
entitled to the corresponding benefits of a liquid market for their
shares. Management has only begun making customary earnings
announcements since RISCO commenced its offer. -- RISCO's offer of
$3.50 per share is almost twice the $1.86 average share price of
IEI common stock during the period March 15, 2005 through October
31, 2006, the date of RISCO's undisclosed offer to the IEI board of
directors. During this period, daily trading volume averaged just
4,169 shares. -- The conditions to RISCO's offer, by any objective
measure, are much less significant, more concrete, more achievable
and more certain than the conditions associated with management's
proposed alternative to RISCO's offer - management's execution of
its speculative strategic plan. -- Most of the conditions to
RISCO's offer are a direct result of management's refusal to
negotiate. Management could eliminate the most significant
conditions by engaging in discussions with RISCO and supporting its
offer, including the conditions related to the Massachusetts
Control Share Acquisition Statute and the Massachusetts Business
Combination Statute. -- RISCO continues to strive to reduce or
eliminate conditions to its offer. It is not conditioned upon RISCO
obtaining third-party financing or customary due diligence review
of IEI's operations. RISCO reports that today it filed preliminary
proxy materials with the SEC for a special meeting IEI has
indicated it intends to call on April 25, 2007 regarding RISCO's
proposal under the Massachusetts Control Share Acquisition Statute.
If a sufficient number of other IEI stockholders vote FOR RISCO's
proposal at that meeting, RISCO will be entitled to exercise voting
rights with respect to any IEI shares it acquires in the offer.
Such an outcome would satisfy one of RISCO's conditions and
preserve the ability of IEI stockholders to take advantage of the
offer. On the other hand, if holders of a majority of outstanding
IEI shares either vote against RISCO's proposal or do not vote
their shares, any IEI shares RISCO might otherwise acquire in its
offer may not have voting rights that RISCO can exercise. Such an
outcome would significantly detract from RISCO's ability to realize
value in IEI shares that it would like to purchase and could
prevent IEI stockholders from taking advantage of its offer.
MacKenzie Partners, Inc. is the Information Agent for RISCO's
tender offer and any questions or requests for the Offer to
Purchase and related materials with respect to the tender offer may
be directed to MacKenzie Partners, Inc. Additional Information and
Where to Find It This communication may be deemed to be
solicitation material in respect of the solicitation of proxies of
Rokonet Industries, U.S.A., Inc. from stockholders of IEI in
connection with the special meeting of IEI stockholders expected to
be held on April 25, 2007. Rokonet Industries, U.S.A., Inc. will
file a definitive proxy statement on Schedule 14A. IEI STOCKHOLDERS
SHOULD READ THOSE MATERIALS CAREFULLY BECAUSE THEY CONTAIN
IMPORTANT INFORMATION REGARDING RISCO'S PROPOSAL. Stockholders will
be able to obtain the proxy statement and related materials with
respect to the special meeting free at the SEC's website at
http://www.sec.gov/ or from Rokonet Industries, U.S.A., Inc. by
contacting Mackenzie Partners, Inc. toll free at 1-800-322-2885, or
collect at 1-212-929-5500, or via email at . The offer to buy IEI
common stock is only being made pursuant to an offer to purchase
and related materials that Rokonet Industries, U.S.A., Inc. has
filed with the SEC. IEI STOCKHOLDERS SHOULD READ THESE MATERIALS
CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION, INCLUDING THE
TERMS AND CONDITIONS OF THE OFFER. Stockholders will be able to
obtain the offer to purchase and related materials with respect to
the tender offer at the SEC's website at http://www.sec.gov/ or
from Rokonet Industries, U.S.A., Inc. by contact Mackenzie
Partners, Inc. toll free at 1-800-322-2885 or collect at
1-212-929-5500 or via email at . Participants in Solicitation
Rokonet Industries, U.S.A., Inc. and its directors and executive
officers may be deemed to be participants in the solicitation of
proxies from the holders of IEI common stock in respect of the
proposed special meeting of stockholders. Certain information about
such persons and their interest in the solicitation will be
contained in the proxy statement regarding the special meeting,
when it becomes available. [RISCO Letterhead] March 20, 2007
Stockholders of International Electronics, Inc. Dear Fellow
Stockholders: On March 6, 2007, RISCO Ltd. ("RISCO") through its
wholly-owned subsidiary, Rokonet Industries, U.S.A., Inc.,
commenced a tender offer to acquire all of the outstanding shares
of International Electronics, Inc. ("IEI"), subject to certain
conditions, at a price of $3.50 per share in cash. We were forced
to launch our offer without the support of IEI's board of directors
or management because, despite our repeated attempts to negotiate a
consensual transaction, IEI has stonewalled and refused to engage
in serious discussion with us. We were disappointed, but not
surprised, to learn that last week IEI decided to oppose our offer.
Once again, when presented an opportunity to create value for all
stockholders, the IEI board and management has dug in its heels and
refused to do so. IEI offers two principal reasons why it opposes
our offer. First, IEI management says our offer is inadequate,
takes advantage of a temporary depression of the company's stock
price based on 2006 operating results and does not reflect the
long-term value of the company based on management's 2- 1/2 year
old strategic plan to turn the company around. Second, IEI says our
offer is highly conditional. In response to the first concern
regarding the long-term prospects of IEI under current management's
direction, we can only point out the following: -- In our view,
IEI's current strategy is incapable of delivering the results
management hopes for. IEI's product offering is too narrow and the
global market place is too competitive, with customers demanding
more and more systems integration, which IEI as a smaller company,
is challenged to offer. IEI lacks the resources for significant
investment in R&D, sales channel growth, distribution and
product support necessary to implement its strategy successfully.
IEI lacks the resources to effectively compete with many of its
competitors, including Honeywell, Tyco, Bosch or Siemens, or even
smaller competitors. -- IEI has not generated positive net income
in any of the last three fiscal years. According to its publicly
filed financial statements, it has actually lost money for 11 of 12
consecutive quarters ending August 31, 2006, over $2.2 million in
the aggregate, or $1.33 per share (more than 2-1/2 times the
cumulative net income of IEI for the three fiscal years prior to
2004). While IEI points to recent positive earnings of $0.15 per
share for the six months ended February 28, 2007 as ratification of
its strategy, it would take another 4-1/2 years to recoup the
losses accumulated during the previous three years at the current
rate. -- We understand that IEI has yet to retain a recognized
financial advisor to advise the board as to what the current value
of management's speculative long-term strategy is. Our question is,
how does management know our offer does not reflect full value for
IEI? In all of our preceding discussions, management has never once
indicated what an appropriate, nonspeculative valuation of the
company would be. -- There has been no significant trading market
for IEI's common stock since it was delisted from Nasdaq in July
2005. Management has not indicated that it is even a goal of the
company to again qualify for listing. Management seems content for
IEI and its stockholders to bear all of the additional expense and
burden of being a public company, without stockholders being
entitled to the corresponding benefits of a liquid market for their
shares. Management has only begun making customary earnings
announcements since we commenced our offer. -- As reflected in the
attached Exhibit, our offer of $3.50 per share is almost twice the
$1.86 average share price of IEI common stock during the period
March 15, 2005 through October 31, 2006, the date of our offer to
the IEI board of directors, which IEI elected not to disclose
publicly to its stockholders. During such period, daily trading
volume averaged just 4,169 shares. Trading activity and the price
of IEI shares have increased since our offer, with public records
reflecting one stockholder coincidentally acquiring a significant
position. However, we believe the share price and trading volumes
would revert to their historic levels should our offer not be
consummated. (Photo/Exhibit:
http://www.newscom.com/cgi-bin/prnh/20070321/CLW070 ) In response
to the board's second concern, that our offer is highly
conditioned, we point out that: -- Most of the conditions to our
offer are a direct result of management's refusal to negotiate with
us. Management could eliminate the most significant of our
conditions by engaging in discussions with us and supporting our
offer, including the conditions related to the Massachusetts
Control Share Acquisition Statute and the Massachusetts Business
Combination Statute. -- The conditions to our offer, by any
objective measure, are much less significant, more concrete, more
achievable and more certain than the conditions associated with
management's proposed alternative to our offer-management's
execution of its speculative strategic plan. -- We continue to
strive to reduce or eliminate conditions to our offer. It is not
conditioned upon RISCO obtaining third-party financing or customary
due diligence review of IEI's operations. We have no interest in
not consummating our offer. Soon, you as an IEI stockholder can
help us satisfy one of our conditions. Today we filed preliminary
proxy statement and related materials with the Securities Exchange
Commission (the "SEC") for a special meeting IEI has indicated it
intends to call on April 25, 2007 regarding our proposal under the
Massachusetts Control Share Acquisition Statute. If you and a
sufficient number of other IEI stockholders vote FOR our proposal
at that meeting, we will be entitled to exercise voting rights with
respect to any IEI shares we acquire in our offer. Such an outcome
would satisfy one of our conditions and preserve your ability to
take advantage of our offer. On the other hand, if holders of a
majority of outstanding IEI shares either vote against our proposal
or do not vote their shares, any IEI shares we might otherwise
acquire in our offer may not have voting rights that we can
exercise. Such an outcome would significantly detract from our
ability to realize value in IEI shares that we would like to
purchase and could prevent you from taking advantage of our offer.
We believe that, should our offer not be consummated, over time,
IEI shares would revert to their historical trading prices and
volumes. Once we are permitted to do so by the SEC, we will send
you a definitive proxy statement and other materials describing our
proposal in more detail with instructions on how you can vote your
IEI shares. This communication may be deemed to be solicitation
material in respect of the solicitation of proxies of Rokonet
Industries, U.S.A., Inc. from stockholders of IEI in connection
with the special meeting of IEI stockholders expected to be held on
April 25, 2007. Rokonet Industries, U.S.A., Inc. will file a
definitive proxy statement on Schedule 14A. IEI STOCKHOLDERS SHOULD
READ THOSE MATERIALS CAREFULLY BECAUSE THEY CONTAIN IMPORTANT
INFORMATION REGARDING RISCO'S PROPOSAL. Stockholders will be able
to obtain the proxy statement and related materials with respect to
the special meeting free at the SEC's website at
http://www.sec.gov/ or from Rokonet Industries, U.S.A., Inc. by
contacting Mackenzie Partners, Inc. toll free at 1-800-322-2885 or
collect at 1-212-929-5500 or via email at . Rokonet Industries,
U.S.A., Inc. and its directors and executive officers may be deemed
to be participants in the solicitation of proxies from the holders
of IEI common stock in respect of the proposed special meeting of
stockholders. Certain information about such persons and their
interest in the solicitation will be contained in the proxy
statement regarding the special meeting, when it becomes available.
We look forward to the IEI special meeting on April 25 and
encourage you to attend in person or by proxy. Vote your shares,
preserve your options. Very truly yours, /s/ Moshe Alkelai Moshe
Alkelai Chairman of the Board DATASOURCE: RISCO Ltd. CONTACT: Bob
Marese, +1-212-929-5045, or Lex Flesher, +1-212-929-5397, both of
MacKenzie Partners, Inc. for RISCO Ltd. Web site:
http://www.sec.gov/
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