Sport Supply Group Inc – ‘8-K’ for 12/13/96 – EX-20.B

As of:  Thursday, 12/12/96   ·   For:  12/13/96   ·   Accession #:  950134-96-6804   ·   File #:  1-10704

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Form 8-K Dated December 13, 1996                       5     24K 
 2: EX-2        Securities Purchase Agreement                         39    125K 
 3: EX-4.A      Warrant Agreement                                     14     38K 
 4: EX-4.B      Registration Rights Agreement                         22     70K 
 5: EX-4.C      Modification Agreement                                18     54K 
 6: EX-4.D      Amdmt No.4 to Amended/Restated Loan/Security Agrmt    16     44K 
 7: EX-4.E      $2,500,00 Consolidated, Amended/Restated Term Loan    10     30K 
 8: EX-4.F      $22,500,000 4th Amended/Restated Revolving Loan        9     28K 
 9: EX-20.B     Letter to Shareholders                                 2±     9K 
10: EX-99       Pledge and Security Agreement                         15     42K 

EX-20.B   —   Letter to Shareholders

EX-20.B
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                                                             EXHIBIT 20(b)

[SPORT SUPPLY GROUP, INC. LETTERHEAD]   

TO: ALL SHAREHOLDERS OF SPORT SUPPLY GROUP, INC.                                

   Sport Supply Group, Inc. (NYSE - "GYM") is pleased to report to you
that, subject to the terms and conditions of a Securities Purchase Agreement    
between Sport Supply and Emerson Radio Corp. ("Emerson"), Sport Supply intends  
to issue to Emerson (i)  1,600,000 newly-issued shares of its Common Stock and  
(ii)  five-year warrants to purchase up to 1,000,000 newly-issued shares of its 
Common Stock at an exercise price of $7.50 per share.  In exchange for such     
issuance, Sport Supply will receive $12,000,000 in cash and $2,000,000 of       
available trade finance credit for the purchase of goods sourced in the Far     
East through a foreign subsidiary of Emerson.  In addition, and subject to Sport
Supply's receipt of the cash infusion, Sport Supply and its Senior Lender have  
agreed to amend their existing credit agreement.  Sport Supply will no longer   
be in default under such agreement because the $12,000,000 cash infusion will be
used by Sport Supply primarily to repay outstanding bank debt.  Sport Supply    
will then have significant availability under its senior credit facility to be  
used for general corporate purposes.                                            

 Upon closing the Securities Purchase Agreement, a majority of the
members of Sport Supply's Board of Directors will consist of Emerson's          
designees.  Information regarding Emerson and Emerson's designees to the Sport  
Supply Board of Directors is included in the information Statement attached to  
this letter.                                                                    

  The terms of the transaction described above were recommended by a
Special Committee of independent directors of Sport Supply and were unanimously 
approved by Sport Supply's Board of Directors.  In addition, an independent     
investment banking firm opined that Sport Supply's sale of securities to        
Emerson on the terms described above is fair, from a financial point of view,   
to Sport Supply.                                                                

The transaction with Emerson would normally require approval of 
shareholders according to the Shareholder Approval Policy of the New York Stock 
Exchange (the "Exchange").  The Audit Committee of the Board of Directors of    
Sport Supply determined that the delay necessary in securing shareholder        
approval prior to the issuance of the foregoing securities would seriously      
jeopardize the financial viability of Sport Supply.  Because of that            
determination, the Audit Committee, pursuant to an exception provided in the    
Exchange's shareholder approval policy for such a situation, expressly approved 
Sport Supply's omission to seek the shareholder approval that would otherwise   
have been required under that policy.  The Exchange has accepted Sport Supply's 
application of the exception.                                                   

     Sport Supply, in reliance on the exception, is mailing a copy of this
letter to all shareholders notifying them of its intention to issue the shares  
without seeking their approval.  Upon closing of the transaction with Emerson,  
which is expected to occur ten days after the notice is mailed, Sport Supply    
will proceed to issue certificates for 1,600,000 newly-issued shares of Common  
Stock and will reserve an additional 1,000,000 shares of Common Stock for       
issuance upon exercise of the Warrants.                                         

        I believe Emerson's equity investment will be the capital infusion Sport
Supply needs to support its expanding revenue base and bring all vendor payables
current.  It will also enable Sport Supply to return to a historic level of     
profitability.  Sport Supply's current revolving debt will be reduced to less   
than $10 million, which is the lowest level in years, and Sport Supply's        
related interest expenses are expected to decline dramatically as compared to   
year earlier results.  I hope you share my enthusiasm for this significant      
investment by Emerson and I thank you for your continued interest in Sport      
Supply.                                                                         

                 Very Truly Yours,

                   /s/ MIKE BLUMENFELD

                     Michael J. Blumenfeld
                     Chairman of the Board
                           and Chief Executive Officer