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I would like to clarify several statements in response to your article on Chemical Investors Inc. (Paper Tiger, July).

In reference to Chemical Investors' once partially owned subsidiary, Specialty Chemicals, you stated that it was "virtually a shell." Specialty Chemicals was set up in 1976 in full accordance with the existing guidelines for minority-vendor companies. During the next three years, local federal guidelines emerged which restricted Specialty's ability to function as a minoriiy vendor because of its non-minority "purent." To enable Specialty to realize its full potential us a minority company, Chemical Investors sold its interest in the subsidiary to minoity management. Specialty Chemicals did what it was intended to do: It became a viable minority-owned and -operated business.

The caption "When Zintgraff had to move his Mystik Tape staff, he thought three weeks would suffice" is sheer ridicule of a man in the middle of crisis management. The move was common knowledge long before the three-week plan was implemented. However, Gary Zintgraff never believed three weeks "would suffice." He was under the gun by his lender to cut expenses immediately and had little choice. Prior to the move, an employee-assistance program was designed and implemented by a committee of employees directly involved with the move.

I found noticeably absent those quotes by shareholders and current employees who trust and admire the chief executive officer of Chemical Investors. Those people do exist in force. The absence of these quotes implied a bias by you toward Mr. Zintgraff, which in turn created a very distorted picture, to say the least.

EDITOR-NOTE:

INC. replies: The word "shell" was the term used by Specialty's second president, Bill Mays. Specialty's equity base was only slightly more than $1,000. In its early years, it owned virtually no assets. Most of its "capital" consisted of loans made by CI, to which it paid interest and hefty management fees. Specialty parchased its inventory from Chemical Investors, and, according to Mays, Specialty's gross margin on sales came to 2.5%.

As to Chemical Investors' iniatives in selling Specialty Chemicals: Mays tried to buy the company from CI while it was profitable, and his offer was refused. CI sold Specialty to management only after sales and profits had fallen dramatically.

The article analyzed Zintgraff's management style and strategy. Two weeks after it was published, CI filed for protection under Chapter 11 of the federal Bankruptcy Code.