A Message from the President: SHNIER Company Sales Process

Toronto, May 12, 2011

My Fellow Associates,

In the spirit of complete transparency and consistent with past practice, I would like to update everyone, as to the status of our company sale process, which, as you all know, we initiated in October 2010.

At the time, we gathered together numerous company materials, formulated and refined our story, targeted our audience (being financial buyers not strategic), presented our company and as a result attracted significant interest and received multiple offers. As we proceeded along the path to closure, we entered into, what we all know to have been a slower than anticipated selling period (January – April), due to multiple factors including the comparative effects of the H.R.T.C., H.S.T., rising fuel costs and weather amongst others. This has been further corroborated by recent press releases regarding not simply the slower than anticipated retail velocities, but the less than exciting individual performance results from several of the major players in the LBM, box and retail channels. That said, we know for a fact, that we at SHNIER continue to outperform the floorcovering market, as well as most if not all of our major competitors. As a result of this temporary lull in the market, various contenders for this business sought to take advantage, by discounting their earlier offers. This your Board has rejected outright. We have therefore decided to place on hold all company sale proceedings, at this time.

You may well ask, what have we learned? Well, we confirmed through the due diligence process that this company, its associates, the products, programs and services that we market and sell are all very highly regarded by suppliers and customers alike. We have also learned that our company is readily marketable and highly valued in financial terms both in Canada and stateside. And we have also had it confirmed that SHNIER’s future is not only promising, but ripe with opportunity, organic and strategic and that it is all very readily attainable.

 

So, where do we go from here? Well first and foremost, we continue as we have been all along, to serve the needs of our customers and to not simply meet but continue to exceed their expectations, when and wherever possible. Second, we will finish out our fiscal year and lay out our plans for the next, all in the context of our revised long term strategic plan. Third, we will continue to invest, in order to better and more fully organically grow this business, while expanding our market share. Fourth, we will continue to explore known strategic opportunities, that have made themselves known prior to, as well as during the last six month period. Fifth and finally, we will revisit the company sale process itself, at a time of our choosing, with a date yet to be determined.

Everyone should clearly understand that moving forward, our Board of Directors is 100% united. They are entirely supportive of the company’s leadership, management, strategic direction and current planned developments. And, I might add, they remain as both willing and highly enthusiastic investors, given the company’s current level of financial performance, including its relatively high return on investment, healthy cash flows, and future anticipated value appreciation.

I would also like at this time to openly express my sincere and heartfelt thanks, to those that have been so actively involved. First, the Senior Executive Team members, (John Deotto in particular). Second, the various members of management and the numerous staff associates involved in gathering the data and support materials. This exercise has once again demonstrated our ability to work as a team toward a common goal. Our finance and admin team for example, including our credit department, worked tirelessly together with our HR, IT, Inventory Management and sales admin groups, to produce the myriad of reports requested. Third, to our Board members (particularly our Chairman, Al Sellery). Also to Ironbridge (particularly Peter Dowse). As well thanks go out to our various customers and suppliers (many of which openly and on record endorsed us individually and collectively). Also, recognition to our field sales managers and respective teams, who month after month have worked diligently to record the best possible bookings and shipments. And to our numerous landlords, who responded so willingly when requested to do so. Thanks as well, to our many friends, both new and old, at the Royal Bank, BMO, Scotia, PNC, Davies (legals), Deloitte & S.B.H. (legals). Finally recognition to the numerous private equity contenders themselves, who like us, invested a great deal in this process.

To close, each of you should know that the last few months have only served to reconfirm, without question, that for SHNIER "the best is yet to come." I and you should believe it, as no doubt many others do.

Thank you very much for your attention.

Ed duDomaine
President & CEO,
Board Member
May 12, 2011