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PCD Investments, LLC
1871 Folsom Street, Suite 106
Boulder, CO 80302
Tel (303) 526-7636
Fax (303) 526-2825
December 4, 2001
Board of Directors
PlanetCAD, Inc.
2520 55th Street
Suite 200
Boulder, CO 80301
Gentlemen:
We are writing to propose a purchase of all of the outstanding shares
of PlanetCAD, Inc., (the "Company") by PDC Investments, LLC or an affiliated
entity (the "Purchaser"), for a cash payment of $0.24 per share payable to all
stockholders of The Company. This proposal is an attractive opportunity for your
stockholders, and represents a 50% premium to the closing price of $0.16 for the
Company's stock today; and nearly a 100% premium over the average sale price for
the Company's stock since October 30. The Purchaser has all necessary financing
immediately available to complete this acquisition.
As of this writing, PCD Investments, LLC, is the Company's largest
stockholder and owns approximately 1.2 million shares of PlanetCAD, Inc. common
stork representing approximately 10% of the total shares outstanding. We will
shortly be filing an amended Schedule 13D with the United States Securities and
Exchange Commission disclosing this fact.
We and our advisors believe that the Company's unaffiliated
stockholders will support this proposal when submitted to them for stockholder
approval. As the Company's largest stockholder, we are deeply concerned about
several issues regarding the Company's operating performance. Our concerns
include the following:
a. Despite the expenditure of more than ten million
dollars since the sale of the Company's component
division to Dassault, meaningful revenues from the
PlanetCAD division have failed to materialize. The
Company lacks the resources to effectively pursue
this opportunity, and is likely to continue to lack
such resources in its current public company
configuration.
b. The Stock has performed far worse than its peers,
even in this bear market. In the eighteen months
ending November 30, the stock value has declined by
95%. By comparison, the Russell 2000 Index of small
company stocks has declined by 3%, and the PSE
Technology Index has declined by 32%. Further, the
thin trading market provides virtually no liquidity
for the Company's large stockholders.
c. Despite continued promises of improvement, the
Company's net loss in the most recent quarter was
$.32 per share, substantially more than the Company's
market value. At this rate of loss, the Company will
become insolvent by the end of the first quarter of
2002.
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d. The Company's recent public reporting and accounting
compliance difficulties and the organizational cost
related to its public status clearly reflect an
unnecessary financial and operational burden.
These problems, particularly the Company's poor financial performance,
explain the low valuation placed on the Company by the public; indeed if
stockholders were fully aware of all these (and other) factors, the valuation
could be even lower.
We believe that our proposal is a superior financial and strategic
alternative to the existing status and are prepared to meet with the Company's
directors immediately to conclude the definitive agreements required to complete
this transaction and to prepare the related stockholder approval materials. Our
proposal is based on the information currently available to us and closing is
subject to director and stockholder approval, confirmation that your disclosures
are complete and accurate and in full compliance with SEC requirements, waiver
of any employee change of control agreements, required regulatory or third party
approvals, and execution of an acceptable merger agreement.
Our recent purchases have represented a substantial portion of the
activity in the market for the Company's stock. This program has provided the
Company's shareholders with significant price support and liquidity for their
shares. Continuation of this purchase program is clearly in the best interests
of the Company and its stockholders. Therefore, in conjunction with this
proposal, and to facilitate discussions regarding this value-increasing
transaction, we request that the Board of Directors immediately approve our
purchase of additional shares beyond the 15% threshold. While we may purchase
the additional shares even without the board's approval, this approval will
allow us and the Company the flexibility to work to increase stockholder value
without unnecessary restrictions. For your convenience, we have attached a
sample form of board consent.
Please be advised that we may at any time seek to acquire more shares
either in the public markets, through private transactions, or through a tender
offer. Also, if we are unable to quickly reach an agreement on this transaction
with you, we may seek changes to the Company's direction or leadership; may seek
inclusion of certain stockholder initiatives concerning the governance and
operation of the Company in the Company's proxy materials; and may provide
independent proxy materials.
We are prepared to meet (or teleconference) with the Board of Directors
immediately to work toward the conclusion of this business combination. In order
to facilitate orderly discussions, we will not publicly disclose this proposal
prior to 5pm MST, December 6, 2001.
Sincerely,
/s/ Eric A. Weissmann
Eric A. Weissmann
President
Attachment
cc: Whitney Holmes, Esq.