Target Logistics, Inc. Issues Update on Merger with Mainfreight

Business Wire, Oct 23, 2007

BALTIMORE -- On September 17, 2007, Target Logistics, Inc. (Amex: TLG), a Delaware corporation, Mainfreight Limited, a New Zealand corporation ("Mainfreight"), and Saleyards Corp., a Delaware corporation and wholly owned subsidiary of Mainfreight entered into an Agreement and Plan of Merger. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Saleyards will merge with and into Target with Target continuing as the surviving corporation and a wholly owned subsidiary of Mainfreight.

On October 9, 2007, Target distributed a Notice of Action by Written Consent and of Appraisal Rights and an Information Statement in accordance with the General Corporation Law of the State of Delaware and Regulation 14C promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934. Subsequently, Target learned that a lawsuit had been filed prior to, and had been amended after, October 9, 2007, by a single stockholder (seeking to represent a class of all stockholders other than the insiders who voted to approve the Merger) alleging that the Merger consideration of $2.50 per Share is inadequate, and that certain additional information is needed in order for stockholders to have sufficient information to decide whether to exercise their appraisal rights. The lawsuit is pending in the Circuit Court for Baltimore City, Maryland, and is captioned Schnipper v. Target Logistics, Inc., et al., Case No. 24-C-07-07333-OT.

While Target is confident that the Merger consideration is fair, and that all material information necessary for stockholders to make a decision whether to exercise their appraisal rights has been set forth in the Information Statement, Target is herein providing information in a "Q&A" format that is responsive to the allegations in the lawsuit concerning the purported need for additional information.

Are Target stockholders obligated to accept the Merger consideration?

No. Target stockholders are entitled to appraisal rights under Delaware law. If a stockholder believes that the Merger consideration offered is less than the fair value of his or her Target Shares, an appraisal proceeding can be pursued as explained in detail in the Information Statement.

Did Target or Mainfreight have any prior relationship with Target's financial advisor, BB&T Capital Markets, a division of Scott & Stringfellow, Inc. ("BB&T")?

Mainfreight has had no prior relationship with BB&T.

BB&T has followed Target since 1997, and periodically Target has discussed business opportunities with BB&T. Target believes that BB&T and its transportation group have particular expertise and are uniquely qualified to advise companies in the freight forwarding industry. Prior to BB&T's services to Target in connection with the Merger, Target had paid BB&T a $25,000 consulting fee in 1998 in connection with a prospective acquisition by Target which was aborted prior to finalization. In January 2006, BB&T arranged a meeting between Target and the "other forwarder" which was seeking to acquire a significant equity interest in Target, as explained in the Information Statement. In January 2007, in response to Target's management's request for a review of strategic alternatives to maximize stockholder value, BB&T reviewed with Target certain parameters of a possible sale of Target. As discussed below, Target's Board determined at that time that a sale of Target was not then in the best interest of Target's stockholders.

When did Target first discuss with BB&T the potential Merger with Mainfreight?

On June 8, 2007, Target advised BB&T on a "no-name" basis that Target received Mainfreight's unsolicited offer. Target delayed formally engaging BB&T and incurring a fee obligation until Mainfreight concluded its early due diligence and the letter of intent with Mainfreight was negotiated.

Was BB&T's fee contingent on its opinion as to the fairness of the Merger consideration to Target's stockholders from a financial point of view?

As stated in the Information Statement, in connection with BB&T's services as the Board's financial advisor (including the rendering of a fairness opinion and conducting a market check), Target paid BB&T an aggregate fee of $200,000. Target was obligated to pay this fee whether BB&T concluded that the Merger consideration was fair or not fair to Target's stockholders from a financial point of view.

What data was used by BB&T to calculate Target's diluted shares outstanding using the treasury stock method?

As noted on page 15 of the Information Statement in the presentation to Target's Board, BB&T used the treasury stock method to calculate the diluted shares outstanding for Target. This method assumes that the cash proceeds from the exercise of options are used to buy back shares at the offer price. The calculation adds the dilutive effect of options (as defined by the treasury stock method) to the basic shares outstanding. The dilutive effect of options is calculated as the product of the number of options outstanding and the exercise price divided by the offer price. The data for the options outstanding were obtained from Target.