Chapman Capital Reiterates Demand for Cypress Semiconductor Reorganization

LOS ANGELES, Jan. 24 /PRNewswire/ -- Chapman Capital L.L.C. today announced that it had been contacted by the Chairman of the Board of Directors (the "Board") of Cypress Semiconductor Corporation ("Cypress") in response to Chapman Capital's late December 2006 reorganization proposal. However, when implored by Chapman Capital Managing Member, Robert Chapman, Jr., to cite any and all points of disagreement with the claims and assumptions made within Chapman Capital's December 28, 2006 letter to Cypress's Board (the "December Letter"), Chairman Eric Benhamou failed to convey any message of substance rebutting even one (much less all five) of the detailed, pro-split off arguments made therein.

Mr. Chapman commented, "Cypress's virtually ownership-free Board of Directors shall not be allowed by its frustrated shareholder base to hide behind weak and vague excuses for failure. As has been the case arguably for two decades, we anticipate that Cypress's enfant terrible CEO T.J. Rodgers will present on January 25th a plethora of pretexts for Cypress's failure to eliminate the "Rodgers Discount" via a change-of-control transaction involving the likes of Texas Pacific Group, Blackstone Group or Silver Lake Partners. However, given that the Board and its hired servant Bradley Buss reportedly have failed to exert even minimalist effort to resolve tax complications by calling Wall Street's leading reorganization tax specialist, Lehman Bros.'s Robert Willens, despite his having published a Cypress-SunPower tax resolution over three months ago, they should not expect Cypress's owners to sit idle and allow Thurman to fumble yet another share-maximizing opportunity."

Regarding Cypress's claims that certain parts of the December Letter contain "gross inaccuracies," Chapman Capital feels compelled to reiterate several core components of its reorganization proposal ahead of Cypress's January 25, 2007 earnings conference call:

1) No Firm Cypress Acquisition Bid Was Made Due to Rodgers'/Board's Refusal to Solve Rather than Merely Identify Deal Hurdles. The December Letter stated, "It is our understanding that this past fall, Cypress engaged Credit Suisse to represent Cypress in LBO discussions that valued Cypress Core at $1.8 - $2.0 billion." The December Letter at no point contended that a firm bid for Cypress had been made, at $23.00 per share (or at any other price for that matter). Instead, Chapman Capital herein reiterates its strong contention that Cypress "engaged Credit Suisse to represent Cypress in LBO discussions that valued Cypress Core at $1.8 - $2.0 billion," a value computable with simple arithmetic (hopefully Mr. Rodgers's PhD included some basic algebra) utilizing SunPower's public share valuation. Furthermore, Chapman Capital emphasizes that it is the responsibility of Cypress's Board to find solutions to complex tax and other problems that may thwart shareholder value creation of an enormous magnitude, such as Chapman Capital's proposed SunPower split-off/LBO reorganization. A Board that allows a 1% shareholding CEO to exert seemingly full control over Cypress should not expect to remain in its position for an extended period.

2) A Premium Bid Over Market Value Is Not Requisite to an "Adequate" Merger Proposal: Any semi-sophisticated investor realizes that the public market may value excessively the target of an announced or rumored change of control transaction. On October 6, 2006, Cypress issued a press release that disseminated the fact of Cypress's having "expanded the scope of [its strategic review] to include a variety of strategic alternatives involving the Company as well as its investment in SunPower." There is clear causation between this Cypress press release and Cypress's stock vaulting temporarily over $20/share. This release, combined with language placed in Cypress's Form 10-Q on July 2, 2006, itself fueled speculation of a value-creating change-of-control transaction. Thus, to use the market speculation accentuated by Cypress's own press release as an excuse for terminating reorganization discussions/negotiations is patently absurd. Furthermore, a premium to immediate market share prices has been dismissed for decades as a requisite to a merger proposal being "adequate," as seen dozens of times over the last year alone in situations involving private equity transactions. More often, a premium to longer-term, average prices (e.g., percentage over the average closing price over 30 trading days) is evaluated when valuing the proper change-of-control premium for merger targets. However, Chapman Capital must make clear that any acquisition proposal not involving a structure that delivers a sizable premium to Cypress's current "Core" valuation of approximately $5-6/share (excluding $12/share in SunPower value as of today's date) shall not be considered adequate.

Chapman Capital L.L.C. is a Los Angeles, CA based investment advisor focusing on takeover and turnaround investing. The firm currently manages over $300 million as the registered investment advisor to Chap-Cap Partners II Master Fund, Ltd. and Chap-Cap Activist Partners Master Fund, Ltd., the combined owners of approximately 1% of Cypress Semiconductor Corporation's common shares. Over the past ten years, Chapman Capital has agitated successfully for the restructuring or sale of over twenty publicly-traded companies. Mr. Chapman previously was employed by Goldman Sachs & Co., Scudder Stephens, & Clark, and NatWest Bank USA. Related news releases, as well as additional information on Chapman Capital, may be found at http://www.chapmancapital.com/.

Cypress Semiconductor Corporation designs, develops, manufactures, and markets a line of digital and mixed-signal integrated circuits. The Company's circuits are used in consumer, computation, data communications, automotive, industrial, and solar markets. Leveraging proprietary silicon processes, Cypress's product portfolio includes a broad selection of wired and wireless USB devices, CMOS image sensors, timing solutions, specialty memories, high- bandwidth synchronous and micropower memory products, optical solutions and reconfigurable mixed-signal arrays. Related news releases, as well as additional information on Cypress Semiconductor, may be found at http://www.cypress.com/.