Steel Partners and Steel Connect Close Exchange Transaction

Steel Partners Holdings L.P. (NYSE: SPLP), a diversified global holding company (“Steel Partners”) and Steel Connect, Inc. (NASDAQ: STCN) (“Steel Connect”) today announced that Steel Partners and certain of its affiliates (the “Steel Partners Group”) have transferred certain marketable securities held by the Steel Partners Group to Steel Connect in exchange for 3.5 million shares of Series E Convertible Preferred Stock of Steel Connect (the “Preferred Stock”, and, such transfer and related transactions, the “Transaction”). Upon approval by the Steel Connect stockholders pursuant to NASDAQ Marketplace Rules, the Preferred Stock will be convertible into an aggregate of 184,891,318 shares of Steel Connect common stock, and will vote together with the Steel Connect common stock and participate in any dividends paid on the Steel Connect common stock, in each case on an as-converted basis. Upon conversion of the Preferred Stock, the Steel Partners Group would hold approximately 85.12% of the outstanding equity interests of Steel Connect. Steel Partners and certain of its affiliates which currently hold more than 50% of the voting power in Steel Connect have agreed to vote in favor of the stockholder proposal relating to the Preferred Stock.

The purpose of the Transaction is to provide Steel Connect with access to approximately $200 million of new capital which will be used for working capital, complementary and strategic acquisitions and general corporate purposes.

Steel Connect and Steel Partners also entered into a Stockholders’ Agreement on April 30, 2023 that includes, among other things, provisions relating to certain governance and voting matters following the closing of the Transaction.

Steel Connect will call a stockholders’ meeting to consider and vote upon the rights of the Preferred Stock to vote and receive dividends together with the Steel Connect common stock on an as-converted basis and the issuance of Steel Connect common stock upon conversion of the Preferred Stock by the holders at their option (the “Stockholder Proposal”).

Steel Connect’s Board of Directors, acting on the unanimous recommendation of the Strategic Planning Committee of the Board of Directors, approved the Transaction. The Steel Connect Board initiated a strategic alternatives process in January 2023 with the formation of a Strategic Planning Committee, comprised solely of independent and disinterested members of the Board. After careful consideration, the Strategic Planning Committee unanimously determined that the Transaction is in the best interests of Steel Connect and its stockholders. The Strategic Planning Committee exclusively negotiated the terms of the Transaction with Steel Partners, with the assistance of its independent legal counsel and financial advisor.