BEL Increases Holdings to Over 6%, States Concerns to Toko Management

Business Wire, Dec 20, 2006

JERSEY CITY, N.J. -- BEL FUSE INC. (NASDAQ:BELFA) & (NASDAQ:BELFB) today made the following announcements with regard to its roughly 6% investment in Toko Inc.(TSE: 6801; head office, Tokyo):

1) Over the past months, Bel has requested meetings with Toko to discuss its management strategy. On November 30, Bel requested a meeting with President Kitano of Toko for purposes of discussing the worsening financial position of the company, the need to retreat from the semiconductor business, the need for more oversight by the board, and Bel's intention to nominate at least one independent board member at the next annual shareholders meeting. Toko has refused to meet with Bel during this period and has not responded to its letters of October 18th and November 30th, even though the two firms have had discussions in the past and Bel is one of Toko's largest shareholders.

2) Bel is concerned about the significant worsening of Toko's financial performance and future projections, as reflected by the recent downward adjustment of its estimates for fiscal 2006 ordinary and net income (by 60% and 75%, respectively) from their amounts as forecasted last May. Further, Bel is disturbed that the company has not disclosed the detailed causes for its deteriorating financial position and has not announced any credible plan to restore profitability. Bel believes the company needs more external oversight, including independent directors on its board.

3) Bel believes that Toko's semiconductor division should be divested in a process directed by independent board members, as it continues to be a major drag on the company's profitability. Bel CEO Dan Bernstein said, "This part of Toko's strategy has completely failed. The foundry business is one which requires continuous large investments, scale, and competitive technology. For many years, Toko has mis-allocated huge resources to this non-core business without ever achieving scale, profitability, or competitiveness. This has clearly been sapping resources and managerial focus from the products where Toko is competitive. In terms of preventing further erosion of long-term corporate value, divestment is the only sensible decision at this point."

Bel has presented to Toko an overview of its company and strategy, and has given Toko executives a tour of its factory in China. It hopes that the company will reciprocate in a similar manner. In addition, Bel has had discussions with other companies about its holdings in Toko.

4) Bel has recently purchased additional stock of Toko in the market, and now holds approximately 6% of Toko's outstanding stock. Depending on the market price, Bel is considering further increasing its holdings in Toko stock.

Background

Since the end of 2005, Bel has presented to Toko's management ways to combine the respective strengths of the two companies in one "group" in a mutually beneficial, friendly transaction. Bel CEO Daniel Bernstein said, "Structurally we are very flexible, as long as the two companies can achieve the goals of fairness to all shareholders, enhancing efficiencies and technology delivery to customers, and managing for greater long-term growth, innovation, and stability. In addition to a friendly TOB, we have also proposed a triangular merger in which Bel would effectively acquire Toko, or even a triangular merger whereby Toko would be the 'acquiring company,' effectively absorbing Bel as its 100% affiliate."

Mr. Bernstein explained that "In any of the transactions we have proposed, we believe that the long-term value that Toko shareholders stand to receive from this highly synergistic combination could be significantly higher than current prospects for their shares. But unless Toko's board discusses and negotiates details with us, we cannot refine further details about pricing, transaction structure, or the joint strategy, since all of these depend on one another."

Bel has proposed that joint management of the new "group" would focus on healthy growth based on synergies from the two firms' highly complementary customer bases, distribution networks, production facilities, products, and technologies. Bel stressed that the full prior agreement and understanding of Toko's management is an essential precondition to executing any transaction, both legally and from Bel's point of view. "A triangular merger cannot be executed at all unless Toko's board first negotiates terms of a merger agreement and then passes a resolution approving the deal for consideration and final approval by shareholders. This would be the Toko board's own decision," Mr. Bernstein pointed out. Bel is confident that Toko's employees will benefit from the growth opportunities and business revitalization that can be captured by the proposed transaction.

Through its 100% subsidiary Bel Ventures Inc., Bel currently holds 5,874,919 shares of Toko stock, corresponding to 6.02% of Toko's total outstanding shares. The acquisition of Toko stock has been conducted through market purchases. Bel is hopeful that the two companies will soon resume meaningful discussions to determine how best to maximize shareholder and stakeholder value for both companies.