Offer to Purchase for Cash
All Outstanding Shares of Common Stock,
Together With the Associated Rights Attached Thereto
of
KENETECH Corporation
at
$1.04 Net Per Share
by
KC Merger Corp.
a wholly owned subsidiary of
KC Holding Corporation
a wholly owned subsidiary of
ValueAct Capital Partners, L.P.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON DECEMBER 7, 2000, UNLESS THE OFFER IS EXTENDED.
November 6, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by KC Merger Corp., a Delaware corporation
("Purchaser") and a wholly owned subsidiary of KC Holding Corporation, a
Delaware corporation ("Parent"), to act as Information Agent in connection
with the Purchaser's offer to purchase all of the shares of common stock, par
value $0.0001 per share ("Common Stock"), of KENETECH Corporation, a Delaware
corporation (the "Company"), that are issued and outstanding, together with
the associated rights attached thereto (the "Rights" and, together with the
Common Stock, the "Shares") issued pursuant to the Rights Agreement, dated as
of May 4, 1999, as amended, between the Company and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent, for $1.04 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in Purchaser's
Offer to Purchase, dated November 6, 2000 (the "Offer to Purchase"), and the
related Letter of Transmittal (which, together with the Offer to Purchase and
any amendments or supplements thereto, collectively constitute the "Offer")
enclosed herewith. Please furnish copies of the enclosed materials to those of
your clients for whose accounts you hold Shares registered in your name or in
the name of your nominee.
The Offer is conditioned upon, among other things, there having been
validly tendered and not withdrawn prior to the expiration of the Offer at
least the number of Shares that shall constitute 85% of the then outstanding
Shares on a fully diluted basis (excluding those Shares held by Mr. Mark D.
Lerdal, President and Chief Executive Officer of the Company, who has agreed
not to tender his Shares in the Offer).
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase, dated November 6, 2000;
2. Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents are not immediately available or
cannot be delivered to ChaseMellon Shareholder Services, L.L.C. (the
"Depositary") prior to the Expiration Date (as defined in the Offer to
Purchase) or if the procedure for book-entry transfer cannot be completed
prior to the Expiration Date;
4. A letter to stockholders of the Company from Dianne P. Urhausen, Vice
President and Corporate Secretary, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;
5. A 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 for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON DECEMBER 7, 2000, UNLESS THE OFFER IS EXTENDED.
The Board of Directors of the Company (with Mark D. Lerdal abstaining),
based on the recommendation of a special committee of independent directors,
has (i) determined that the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, are fair to and in the best
interests of the Company and its stockholders, (ii) approved and declared
advisable the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger and (iii) recommended that the stockholders
tender their Shares in the Offer and, if applicable, approve and adopt the
Merger Agreement in all respects.
In all cases, 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 a confirmation of a book-entry transfer of such
Shares into the Depositary's account at the Book-Entry Transfer Facility (as
defined in the Offer to Purchase)), (ii) a Letter of Transmittal (or manually
signed facsimile thereof) properly completed and duly executed 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
required documents.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents prior to the expiration
of the Offer, a tender may be effected by following the guaranteed delivery
procedure described in Section 3 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Depositary and the Information Agent (as
described in the Offer to Purchase)) in connection with the solicitation of
tenders of Shares pursuant to the Offer. However, Purchaser will 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 stock transfer taxes payable with respect to the transfer of Shares
to it, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent at the address and telephone number set forth on the
back cover page of the Offer to Purchase. Additional copies of the enclosed
material may be obtained from the Information Agent, at the address and
telephone number set forth on the back cover page of the Offer to Purchase.
Very truly yours,
MacKenzie Partners, Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE
YOU OR ANY OTHER PERSON THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE
INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF THE
FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO
MAKE ANY STATEMENT ON BEHALF OF ANY OF THE FOREGOING IN CONNECTION WITH
THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED
THEREIN.
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