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Sandell Asset Management Seeks Sale of Rubicon & Tenon, Expansion of Board

NEW YORK, Oct. 10, 2011 /PRNewswire/ -- In response to Rubicon's poor stock performance, Sandell Asset Management's Chief Executive Officer Thomas E. Sandell sent today the following letter to Rubicon's Board of Directors:

Board of Directors
Rubicon Limited
Level 3
7 - 9 Fanshawe Street
New Zealand
Attn: Steve Kasnet, Chairman
Luke Moriarty, Chief Executive Officer

Dear Gentlemen:

As you are aware, funds managed by Sandell Asset Management Corp. ("Sandell") own approximately 41.1 million shares in Rubicon Limited (RBC NZ) ("Rubicon"), which represent approximately 14.4% of Rubicon's total outstanding shares. As a long-term investor in Rubicon, Sandell has financially and strategically supported Rubicon and its management over the past ten years. However, as we previously indicated to you, following the failure to launch the ArborGen IPO earlier this year, we have lost faith in the ability, or willingness, of Rubicon's current management to take the steps we believe are necessary to enhance shareholder value in the near term.  The company remains significantly undervalued in the public market, and we believe there are several opportunities the company should pursue to maximize shareholder value.

As we have previously indicated to you, we believe that Rubicon should pursue one of the following strategic alternatives to maximize its value: (1) sell Rubicon in its entirety; or (2) sell Rubicon's controlling interest in Tenon pursuant to an auction process, followed by ArborGen listing its shares for trading on the NASDAQ.  When we spoke earlier this year, you indicated that Rubicon could not focus on value-enhancing alternatives until it had addressed several refinancings that were in process at the time.  Those refinancings have been completed, and there should be no other excuse for your failing to promptly consider the strategic alternatives we have proposed.  

In addition, we believe that Rubicon should expand its Board of Directors to include an additional three directors who are representatives of Rubicon's shareholders.  We believe it is critical for the shareholders to have a voice at the board level, to insure that the board is focused on acting in the shareholders' best interest.

Rubicon's stock, after sustaining a loss of nearly 66% this past year, is currently trading at approximately NZD 0.40 per share.  We believe that it is potentially worth upwards of NZD 1.20 per share, or three times its current market value, and that pursuit of the strategies we suggest could achieve a realization of that value.  Furthermore, we believe Rubicon could be worth as much as NZD 1.65 per share based on the values of ArborGen and Tenon as separate strategic targets. On a standalone basis, each of ArborGen and Tenon is a very attractive investment opportunity.  ArborGen is one of the only global biotech companies focused on the genetically modified tree seedling market. This early-mover status has provided ArborGen with a competitive advantage that, with the help of additional equity investments obtained from listing on an exchange, could lead to a tremendous growth opportunity for ArborGen. On the other hand, Tenon is one of the largest vertically-integrated distributors of building products in the U.S. Although Tenon has sustained difficulties in recent years as a result of low levels of large discretionary remodeling activity in the U.S. and the rising NZD:U.S. exchange rate, we believe that there is a large amount of untapped growth that remains available to Tenon, especially in light of macro fundamental indicators that the U.S. housing market is at 40-year lows. A strategic buyer could fund growth and acquisition plans for the business, which should include restructuring Tenon's current operations, launching new do-it-yourself products, reducing costs and expanding into new geographic markets (e.g. China, Europe and Australia).

Enclosed is a white paper presentation containing a more detailed explanation of the strategies that we are recommending Rubicon undertake and a financial analysis of their potential effects.  Please do not hesitate to contact us with any questions you may have. We look forward to continuing our discussions with you and working with Rubicon in pursuing a direction that will maximize the value of the company for all of its shareholders.


Thomas E. Sandell

Chief Executive Officer

The white paper presentation referenced is available at or by request.

SOURCE Sandell Asset Management
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