EXHIBIT (a)(1)(D)
909 East Main Street
Richmond, VA 23219
[LOGO OF BB&T CAPITAL MARKETS] (804) 782-2005
Offer to Purchase for Cash
Up to 2,500,000 But Not Less Than 2,000,000
of the
Outstanding Shares of Common Stock
(Including the Associated Common Stock Purchase Rights)
of
Katy Industries, Inc.
at
$8.00 Net Per Share in Cash
by
KKTY Holding Company, L.L.C.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON TUESDAY, JUNE 5, 2001, UNLESS THE OFFER IS EXTENDED.
April 25, 2001
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by KKTY Holding Company, L.L.C., a Delaware limited
liability company ("Purchaser"), to act as Dealer Manager in connection with
Purchaser's offer to purchase up to 2,500,000 but not less than 2,000,000 of
the issued and outstanding shares of Katy Industries, Inc., a Delaware
corporation (the "Company"), common stock, $1.00 par value per share (the
"Common Stock"), inclusive of their respective associated Common Stock purchase
rights (the "Rights" and together with the Common Stock, the "Shares"), at a
price of $8.00 per Share, net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated April 25, 2001 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which, as they may be amended and supplemented from time
to time, together constitute the "Offer"), copies of which are enclosed
herewith. Please furnish copies of the enclosed materials to those of your
clients for whose accounts you hold Shares in your name or in the name of your
nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS: (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN IMMEDIATELY PRIOR TO THE EXPIRATION DATE (AS DEFINED
IN THE OFFER TO PURCHASE) AT LEAST 2,000,000 SHARES; (ii) AT THE COMPANY'S
UPCOMING ANNUAL STOCKHOLDERS' MEETING, THE COMPANY'S STOCKHOLDERS HAVING DULY
(A) ELECTED THE DIRECTORS OF THE COMPANY'S BOARD OF DIRECTORS, INCLUDING FIVE
NOMINEES DESIGNATED BY PURCHASER, (B) APPROVED AND ADOPTED AN AMENDMENT TO THE
COMPANY'S CERTIFICATE OF INCORPORATION AUTHORIZING THE CLASSIFICATION OF THE
COMPANY'S BOARD OF DIRECTORS INTO TWO CLASSES AND 600,000 SHARES OF CONVERTIBLE
PREFERRED STOCK AND (C) AUTHORIZED AND APPROVED THE ISSUANCE AND THE SALE OF
400,000 SHARES OF THE COMPANY'S CONVERTIBLE PREFERRED STOCK TO PURCHASER; (iii)
THE COMPANY HAVING CONSUMMATED THE SALE OF HAMILTON METALS, L.P., ONE OF ITS
WHOLLY OWNED SUBSIDIARIES, AND RECEIVED GROSS PROCEEDS IN CASH, NET OF ANY
RETAINED LIABILITIES OF HAMILTON RETAINED BY THE COMPANY, IN AN AMOUNT NOT LESS
THAN $20 MILLION; AND (iv) THE COMPANY HAVING ENTERED INTO DEFINITIVE
DOCUMENTATION WITH BANKERS TRUST COMPANY WITH RESPECT TO THE CREDIT FACILITIES
TO BE ESTABLISHED IN CONNECTION WITH THE REFINANCING OF THE COMPANY'S EXISTING
LOANS. THE OFFER IS ALSO SUBJECT TO THE SATISFACTION OF CERTAIN OTHER
CONDITIONS REFERRED TO IN THE OFFER TO PURCHASE. SEE THE INTRODUCTION AND
SECTION 1, "TERMS OF THE OFFER; EXPIRATION DATE" AND SECTION 15, "CERTAIN
CONDITIONS TO PURCHASER'S OBLIGATIONS" OF THE OFFER TO PURCHASE.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated April 25, 2001.
2. The Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients. Facsimile copies
of the Letter of Transmittal may be used to tender Shares in the Offer.
3. A letter to stockholders of the Company from Robert M. Baratta,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company and mailed to
stockholders of the Company.
4.The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if the procedures for tendering Shares set forth in the Offer to
Purchase cannot be completed prior to the Expiration Date.
5.A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer.
6.Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON TUESDAY,
JUNE 5, 2001, UNLESS THE OFFER IS EXTENDED.
Please note the following:
1. The offer price is $8.00 per Share, net to the seller in cash,
without interest thereon, as set forth in the Introduction to the Offer to
Purchase.
2. The Offer is being made for up to 2,500,000 but not less than
2,000,000 of the issued and outstanding Shares.
3. Tendering holders of Shares ("Holders") whose Shares are registered
in their own name and who tender directly to LaSalle Bank National
Association, as Depositary (the "Depositary"), will not be obligated to pay
brokerage fees or commissions or, except as set forth in Instruction 6 of
the Letter of Transmittal, transfer taxes on the purchase of Shares by
Purchaser pursuant to the Offer. However, federal income tax backup
withholding at a rate of 31% may be required, unless an exemption is
available or unless the required tax identification information is
provided. See Instruction 8 of the Letter of Transmittal.
4. The Offer and the withdrawal rights will expire at 5:00 P.M., New
York City time, on Tuesday, June 5, 2001, unless the Offer is extended.
5. The Board of Directors of the Company unanimously (other than one
director who did not vote because of a potential conflict of interest)
approved the Preferred Stock Purchase and Recapitalization Agreement (the
"Recapitalization Agreement"), dated as of March 29, 2001, by and between
Purchaser
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and the Company and the transactions contemplated thereby, including the
Offer, and determined that the Recapitalization Agreement and the Offer are
fair to, and in the best interests of, the Holders, and recommends that the
Holders consider accepting the Offer and tendering all or some of their
Shares pursuant to the Offer.
6. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) certificates evidencing such Shares or, if
such Shares are held in book-entry form, timely confirmation of a book-
entry transfer (a "Book-Entry Confirmation") of such Shares into the
Depositary's account at The Depository Trust Company, and if certificates
evidencing the associated common stock purchase rights (the "Rights") have
been issued, such certificates or a Book-Entry Confirmation, if available,
with respect to such certificates (unless Purchaser elects, in its sole
discretion, to make payment for the Shares pending receipt of such
certificates or a Book-Entry Confirmation, if available, with respect to
such certificates), (ii) a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message (as defined in the Offer to Purchase)) and (iii) any other
documents required by the Letter of Transmittal. Accordingly, tendering
Holders may be paid at different times depending upon when certificates for
Shares (or certificates for Rights, if applicable) or Book-Entry
Confirmations with respect to Shares (or Rights, if applicable) are
actually received by the Depositary. Under no circumstances will interest
be paid on the purchase price of the Shares to be paid by Purchaser
regardless of any extension of the Offer or any delay in making such
payment.
In order to take advantage of the Offer, certificates for Shares, as well
as a Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed with any required signature guarantees (or, in the
case of a book-entry delivery, an Agent's Message), and all other documents
required by the Letter of Transmittal must be received by the Depositary, all
in accordance with the instructions set forth in the Letter of Transmittal and
the Offer to Purchase.
Any Holder who desires to tender Shares and whose certificate(s) evidencing
such Shares are not immediately available, or who cannot comply with the
procedures for book-entry transfer described in the Offer to Purchase on a
timely basis, may tender such Shares by following the procedures for
guaranteed delivery set forth in Section 3, "Procedures for Tendering Shares"
of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer (other
than the Depositary, the Information Agent, and the Dealer Manager as
described in the Offer to Purchase). Purchaser will, however, upon request,
reimburse you for customary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to your clients. Purchaser will pay
or cause to be paid any transfer taxes with respect to the transfer and sale
of purchased Shares to it or its order pursuant to the Offer, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
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Any inquiries you may have with respect to the Offer should be addressed to
BB&T Capital Markets, a division of Scott & Stringfellow, Inc., as the Dealer
Manager, or Innisfree M&A Incorporated, as the Information Agent for the
Offer, at their respective addresses and telephone numbers set forth on the
back cover page of the Offer to Purchase.
Requests for copies of the enclosed materials may be made to the
Information Agent at (888)-750-5834.
Very truly yours,
BB&T Capital Markets,
a division of Scott & Stringfellow, Inc.
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL AUTHORIZE YOU
OR ANY OTHER PERSON TO ACT ON BEHALF OF OR AS THE AGENT OF PURCHASER, THE
COMPANY, THE DEPOSITARY, THE INFORMATION AGENT OR ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
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