Steel Partners Japan Requests Sapporo Committee Clarify "Inaccuracies" in Opinion

Business Wire, Feb 24, 2008

TOKYO -- Steel Partners Japan Strategic Fund (Offshore), L.P. ("SPJSF") today delivered to Sapporo Holdings Limited (2501.JP) (the "Company") a letter reiterating its request that the Special Committee (the "Committee") established under the Company's Advance Warning System clarify inaccuracies contained in the Committee's opinion (the "Opinion") issued on February 4, 2008, in which it opposed SPJSF's offer to increase its stake in the Company.

In response to SPJSF's earlier request for clarification, the Committee stated in a letter dated February 20, 2008: "[SPJSF is] not in the position to raise questions to us and the Committee is not in the position to answer to [SPJSF]."

Warren Lichtenstein of SPJSF stated: "The Opinion affects the rights of all shareholders. The Opinion is heavily reliant on assertions not supported by the facts. These inaccuracies and mistakes cannot be overlooked or ignored."

SPJSF noted the following inaccuracies contained in the Opinion:

* Wrongfully stating that SPJSF's proposed acquisition falls within the pattern of a coercive two-step acquisition. In fact, SPJSF repeatedly informed the Committee and the Company that the Proposed Acquisition would not be a coercive two-step acquisition.

* Wrongfully asserted that SPJSF did not submit a post acquisition management plan. In fact, SPJSF submitted a plan in the form of a detailed presentation titled "Approach to Enhancing Corporate Value," which was well received and praised by many observers.

"We therefore respectfully request that the Committee reconsider its recommendation or demonstrate how it can support its conclusions while remaining within the scope its authority," Mr. Lichtenstein stated.

SPJSF has been a long-term, supportive shareholder of Sapporo Holdings since 2004 and is currently the largest single shareholder with approximately 19%(a) of outstanding shares.

Text of letters:

February 25, 2008





Sapporo Holdings Limited (the "Company")





20-1, Ebisu 4-chome, Shibuya-ku, Tokyo 150-8522





Attention: Special Committee (the "Committee")





Steel Partners Japan Strategic Fund (Offshore), L.P. ("SPJSF")


P.O. Box 2681 GT, Century Yard, 4th Floor


Cricket Square, Hutchins Drive


George Town, Grand Cayman


Cayman Islands, British West Indies

Re: Letter dated February 20, 2008

In your letter dated, February 20, 2008, you stated, "[SPJSF is] not in the position to raise questions to us and the Committee is not in the position to answer to [SPJSF]". We respectfully remind the Committee, however, that most of our questions stem from factual mistakes in the Committee's opinion (the "Opinion") delivered pursuant to the Company's Advance Warning System adopted February 17, 2006 (the "AWS"). The Committee is also reminded that the independent Special Committee was established pursuant to the AWS in order to make fair and neutral decisions and to make sure that the Company's board of directors (the "Board") does not make any arbitrary decisions in connection with the AWS or the proposed transaction. If the Committee is "not in a position" to address its own mistakes, we request that the Committee inform us of who is in such a position, as it would appear to be in contravention of the AWS to have this authority now vest with the Board.

The Opinion affects the rights of all shareholders. The Opinion is heavily reliant on assertions not supported by the facts. These inaccuracies and mistakes cannot be overlooked or ignored. One of the many factual mistakes, which we examined in greater detail in our letter to the Committee dated, February 13, 2008 (the "February 13 Letter"), involves the Committee wrongfully stating that SPJSF's proposed acquisition (the "Proposed Acquisition") falls within the pattern of a coercive two-step acquisition and that SPJSF had only "stated generally" that shareholders will not be deprived of their rights. The facts, however, as more fully examined in the February 13 letter, clearly demonstrate that we made the Committee and the Company fully aware that we have no intention of depriving Sapporo's shareholders of their rights and that the Proposed Acquisition would not be a coercive two-step acquisition. A second and equally troubling factual mistake is the Committee's assertion that we did not submit a post acquisition management plan, when in fact we did. Our plan, in the form of our presentation titled "Approach to Enhancing Corporate Value" (the "Plan"), was well received and praised by many observers and, we believe, represented the most comprehensive assessment and analysis possible to address the current state of the Company's business, as well as opportunities we believe could improve the corporate value and prospects of the Company. Information regarding our post-acquisition management plans were also delivered as responses to the Company's many AWS related requests for necessary information. Again, the Committee's assertion that we did not submit a post acquisition management plan is inaccurate and it is merely a matter of semantics to argue that our suggestions did not constitute a "plan."