Handy & Harman Ltd. Responds to Adoption of Tax Benefit Preservation Plan by ModusLink Global Solutions, Inc.

WHITE PLAINS, N.Y., Oct. 19, 2011 /PRNewswire/ -- Handy & Harman Ltd. (NASDAQ: HNH) (“HNH”), which together with certain affiliates owns approximately 10% of the outstanding shares of ModusLink Global Solutions, Inc. (NASDAQ: MLNK), today issued a letter in response to ModusLink’s adoption of a tax benefit preservation plan purportedly to help preserve the value of its net operating losses and other deferred tax benefits. The letter calls on ModusLink to promptly and fully disclose the current number of shares that may be purchased by existing five-percent stockholders without triggering an “ownership change” under Section 382 of the Internal Revenue Code, as well as the current “ownership change” percentage for purposes of Section 382. To the extent there currently are shares available to be purchased, the letter requests an exemption under the plan for HNH and its affiliates to purchase up to approximately 14.9% of the outstanding shares, subject to pro rata reduction to the extent other five-percent stockholders request a similar exemption under the plan and the aggregate number of shares for which exemptions have been requested exceeds the number of shares available for purchase without triggering an “ownership change.”

The full text of HNH's letter appears below:

October 19, 2011

ModusLink Global Solutions, Inc.
1601 Trapelo Road
Waltham, Massachusetts 02451
Attn: Joseph C. Lawler, Chairman, President and CEO

Dear Mr. Lawler:

Handy & Harman Ltd., together with BNS Holding, Inc. and Steel Partners, Ltd. (collectively, the "HNH Group" or "we"), own an aggregate of 4,418,705 shares of Common Stock of ModusLink Global Solutions, Inc. (the "Company"), representing approximately 10% of the outstanding shares.  We have reviewed the Tax Benefit Preservation Plan, dated as of October 17, 2011 (the "Plan"), which prohibits stockholders from acquiring 4.99% or more of the outstanding Common Stock and prohibits stockholders, such as the HNH Group, that already own in excess of 4.99% of the outstanding Common Stock from acquiring any additional shares without Board approval.  The Plan was adopted by the Company purportedly to help preserve the value of its net operating losses ("NOLs") and other deferred tax benefits.  

As disclosed in our Schedule 13D filed with the Securities and Exchange Commission on October 14, 2011 (the "Schedule 13D"), we have been actively acquiring shares of Common Stock of the Company.  We believe the Company's current stock price does not reflect the intrinsic value of the Company and continues to represent an attractive investment opportunity.  Accordingly, we are interested in continuing to increase our investment in the Company.  We understand the need to appropriately protect the Company's NOLs and other deferred tax benefits and that the Company's ability to utilize these tax benefits would be substantially limited if it were to experience an "ownership change" as defined under Section 382 of the Internal Revenue Code ("Section 382").  We note, however, that under Section 382, an "ownership change" that could impair the Company's use of its NOLs as a tax attribute is generally not deemed to occur unless "5-percent stockholders" increase their ownership in the Company by more than 50% during a rolling three-year period.  Accordingly, to the extent that additional shares of Common Stock may be purchased by the Company's existing "5-percent stockholders" without triggering an "ownership change" under Section 382 ("Available Shares"), we believe the Company should have no objection granting exemptions under the Plan for the purchase of additional shares.  We call upon the Company to immediately disclose to the public the current number of Available Shares and the current "ownership change" percentage for purposes of Section 382, and thereafter to promptly disclose to the public each time there is an increase in Available Shares representing one percent (1%) of the outstanding shares.  

To the extent there currently are Available Shares, we hereby request that the Board grant us an exemption, pursuant to Section 28 of the Plan, to purchase in the open market up to such number of Available Shares that would result in the HNH Group owning an aggregate of approximately 14.9% of the outstanding shares.  We recognize that there may be other "5-percent stockholders" and, if so, they may submit similar requests for exemptions to purchase additional shares under the Plan.  To the extent the aggregate number of shares for which we and any such other "5-percent stockholders" have requested exemptions exceeds the number of Available Shares, we propose that the Available Shares be allocated for purchase on a pro rata basis based on the number of shares owned by us and such other "5-percent stockholders".  We refer the Board to the attached Schedule A for the additional information required under Section 28 of the Plan regarding the HNH Group and its affiliates and associates.  We are available to answer any reasonable and appropriate requests for additional information the Board and its advisors may have in order to assist in making their determination on the exemption requested herein.  

We recognize the value of the Company's significant NOLs and the role of similar rights agreements to protect these tax benefits.  However, to the extent the Board is unwilling to fully disclose the current number of Available Shares and current "ownership change" percentage and to promptly comply with our request, we would have to assume that the Plan was adopted as an anti-takeover measure intended to insulate the current Board from the influence of all stockholders.  If this were the case, we would be left with no choice but to take any and all action necessary to protect our investment in the Company.  As time is of the essence in this matter, we demand that the Board respond to this request promptly.

This letter should not be construed as an admission that the Board's adoption of the Plan is legal, valid or binding.  We reserve all rights under applicable law.

Sincerely,

HANDY & HARMAN LTD.

By: /s/ Warren Lichtenstein
Name:  Warren Lichtenstein
Title:  Chairman of the Board

cc:  Peter L. Gray
Board of Directors:
Virginia G. Breen
Jeffrey J. Fenton
Thomas H. Johnson
Francis J. Jules
Edward E. Lucente
Michael J. Mardy
Joseph M. O'Donnell

Our Company

Handy & Harman Ltd. is a diversified manufacturer of highly engineered niche industrial products with leading market positions in many of the markets it serves. Through its operating subsidiaries, HNH focuses on high margin products and innovative technology and serves customers across a wide range of end markets.

Our companies are organized into five businesses: Precious Metal, Tubing, Engineered Materials, Arlon Electronic Materials, and Kasco Blades and Route Repair Services.

We sell our products and services through direct sales forces, distributors and manufacturer's representatives. We serve a diverse customer base, including the construction, electronics, telecommunications, home appliance, transportation, utility, medical, semiconductor, aerospace, military electronics and automotive markets. Other markets served include blade products and repair services for the food industry.

We are based in White Plains, New York and our common stock is listed on the NASDAQ Capital Market under the symbol HNH. 

SOURCE Handy & Harman Ltd.

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