CSC Generation Submits Proposal to Acquire Bassett Furniture Industries for $21 Per Share in Cash

CSC Generation Holdings, Inc. today released the below correspondence sent to Bassett Furniture Industries, Incorporated (Nasdaq: BSET), which details CSC’s $21 per share all-cash acquisition proposal.

October 11, 2022

The Board of Directors

Bassett Furniture Industries, Incorporated

3525 Fairystone Park Highway

Bassett, Virginia 24055

Members of the Board of Directors:

As you know, CSC Generation Holdings, Inc. (together with its affiliates, “CSC” or “we”) is a significant shareholder of Bassett Furniture Industries, Incorporated (“Bassett” or the “Company”). Despite the fact that we have submitted bona fide, attractive acquisition proposals to the Board of Directors of the Company (the “Board”) on June 30, 2022 and September 26, 2022, the Board has been unwilling to engage with us in any meaningful way. As we believe that shareholders would be widely supportive of our efforts, we have decided to make public our proposal to acquire 100% of the outstanding shares of common stock of Bassett not already owned by CSC at a price equal to $21 per share in cash (the “Transaction”). We are doing so in order to facilitate constructive discussions with the Board with the goal of entering into a mutually agreeable transaction that is in the best interests of all shareholders.

We believe our proposal delivers an attractive opportunity for shareholders to obtain immediate liquidity at a full value that exceeds what the Company can be expected to achieve in the coming years if it remains on its current standalone course in the public market. We also believe our proposal has only become more appealing as the Company’s stock price continues to languish. For shareholders, our proposal represents a 27% premium over the most recent closing price of $16.51.

Based on discussions with our existing lenders, we are highly confident in our ability to fully fund the Transaction using cash on hand and external financing from our existing lenders. Accordingly, the Transaction would not be contingent on obtaining financing. Given our familiarity with the Company and our deep experience in the furniture products industry, we would require limited due diligence in connection with the Transaction. We are prepared to immediately enter into a customary confidentiality agreement with the Company and commence and promptly complete this diligence.

About CSC and its Track Record of Success in Retail and Ecommerce

CSC has a successful track record of acquiring store and catalogue-based companies and then transforming them into high-performance, digital-first brands through our proven omni-channel technology platform, operating expertise and scale. We are backed by world-class institutional investors, including Altos Ventures, Khosla Ventures, Panasonic, and the family offices of domain experts in the industry, such as the founders of Wayfair and Build.com.

Since our founding in 2016, we have acquired and successfully integrated a number of well-known brands, such as Sur La Table and One Kings Lane. When we acquired Sur La Table, the business – like Bassett – relied predominantly on in-stores sales and struggled to adapt to the online landscape. In just two years, we have evolved Sur La Table into a digital-centric business while also increasing adjusted EBITDA by more than 4x.

Across our portfolio, we have a strong track record of partnering with founders and building upon the legacies of family-run furniture businesses. One such example is the Home Consignment Center (“HCC”), which the long-time founder has continued to operate since we acquired the business in 2020. As a partner, we believe strongly in facilitating new connections and collaborations within our portfolio and throughout our network of retailers, suppliers, manufacturers and delivery companies. We have collaborated closely with HCC and have leveraged our resources, expertise and network of relationships to help drive success for the business – which had its best year in company history in 2021. As previously noted, if you would like to ask the founder of HCC about his experience working with us, we can connect you with him.

Based on our experience and today’s post-pandemic environment, we believe transformation is needed at Bassett and that a successful outcome can only be executed as a private business with the additional resources of a digitally native owner like CSC. We believe that the Company’s stock has traded at a substantial discount to its true value for the past four years and will continue to trade below its intrinsic value if it remains publicly listed due to Wall Street’s lack of interest in low growth, offline retail. While we commend management’s past efforts to adapt to the rapidly changing environment, we believe there is more that must be done in order to evolve the business to meet the needs of today’s digitally-native consumer.

Additional Proposal Details

The Transaction would be subject to the following conditions: (i) receipt of required Board (including pursuant to Article 14 under the Virginia Stock Corporation Act) and shareholder approvals; (ii) receipt of any required governmental and third-party approvals (including the expiration or termination of all applicable waiting periods under the Hart-Scott-Rodino Act, to the extent required, and any required consents under any material contracts); (iii) limited confirmatory due diligence; and (iv) the negotiation and execution of a definitive merger agreement providing for the Transaction, which agreement would provide for customary break-up fees and “go shop” and “fiduciary out” provisions, as well as other customary representations, warranties, covenants and conditions. We would work with the Company to promptly obtain shareholder approval for the Transaction. We, together with our legal advisors Olshan Frome Wolosky LLP, are ready to conduct the limited due diligence required, negotiate and prepare definitive documentation, and finalize and enter into binding agreements, including, without limitation, any required financing commitments, in short order. We are prepared to devote considerable resources to completing this Transaction. We are confident that with your cooperation, we will be able to execute a definitive transaction agreement without delay.

Please note that our proposal is based entirely on publicly available information. If upon further due diligence, we become aware of some component or aspect of the business and its prospects that evidences additional value inherent in the Company, we are prepared to increase our proposed price to reflect this new information.

We are also willing to discuss alternative transaction structures, including a potential joint venture or strategic partnership to collectively develop the Company’s online business, and stand ready to engage constructively with the Board to achieve a successful transaction in an efficient manner. Of course, this letter constitutes an expression of interest only and does not create and shall not be deemed to constitute or create any legally binding or enforceable obligations on the part of either of us until a definitive transaction agreement is executed. We reserve the right to withdraw or modify any proposal at any time and for any reason.

Next Steps

We believe that our proposal represents the best opportunity for the Company’s shareholders to achieve full and certain value for their shares on an expeditious basis. Now that our proposal is in the public domain, we would expect to hear from the Board promptly so that we may engage in a productive dialogue to accomplish a value-maximizing transaction. However, should the Board continue to stonewall our good faith efforts, we reserve the right to take any action that may be necessary for the protection of shareholders’ interests.

Sincerely,

Elizabeth Brown

General Counsel and Chief Administration Officer

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