Dear Shareholder:

A Special Meeting of shareholders of Hammond Manufacturing Company Limited ("Hammond" or the "Corporation") will be held at the Holiday Inn, 601 Scottsdale Drive, Guelph, Ontario on Friday, December 8, 2000 at 10.00 a.m.

The purpose of the meeting is for the shareholders to consider and vote upon a proposed arrangement involving Hammond and its shareholders (the "Arrangement") . The Arrangement provides for the spin-off of the dry-type transformer business into a newly incorporated public company, Hammond Power Solutions Inc. ("Hammond Power" or "HPSI"), for which a listing application has been made to the TSE. HPSI will use the name Hammond Transformer in the marketplace initially in transition to the new name. This transaction will effect the separation of Hammond’s businesses into two distinct, publicly-traded companies. As a result, holders of the Class A subordinate voting shares and Class B common shares of Hammond will hold directly, on the effective date of the Arrangement, Class A subordinate voting shares and Class B common shares of Hammond, which will carry on the enclosure business, and Class A subordinate voting shares and Class B common shares of Hammond Power, which will carry on Hammond’s dry-type transformer business. The spin-off will be completed in accordance with an advance income tax ruling obtained from Canada Customs and Revenue Agency. The Moloney oil filled utility transformer business, excluding the properties on which the business is operated, will be sold to a newly incorporated company, which will be owned jointly by Hammond and Hammond Power.The land in Georgetown, Ontario formerly occupied by the Smith and Stone Division of Hammond, and the properties related to the Moloney oil filled utility transformer business will be jointly owned (directly or indirectly) by Hammond and Hammond Power.

The Special Committee of the Board of Directors has determined that the Arrangement is in the best interests of Hammond and its shareholders and is fair to all shareholders of Hammond and therefore recommends that the shareholders vote for the resolution approving the Arrangement. The Management Information Circular accompanying this letter contains a detailed description of the proposed Arrangement and the business and affairs of Hammond and Hammond Power, as well as historical and proforma financial information. Please give this material your careful consideration and, if you require assistance, consult your financial, income tax or other professional advisors.

Your vote on the matter , to be acted upon at the meeting , is important as the special resolution in respect of the Arrangement must be approved by 662/3% of the votes cast by shareholders of both the Class A subordinate voting shares and Class B common shares present at the meeting or represented by proxy. Eramosa Group Limited, the Hammond family holding company, and certain members of the Hammond Family , which together owns 100% of the outstanding Class B common shares and 27.3% of the outstanding Class A subordinate voting shares, have advised Hammond that they intend to vote all of their Class A subordinate voting shares and Class B common shares in favour of the resolution approving the Arrangement. If the Arrangement is approved, Hammond shareholders will receive one Class A subordinate voting share and one Class B common share of Hammond Power for each Class A subordinate voting share and one Class B common share of Hammond held. Share certificates in the name of Hammond will continue to reflect the ownership of Class A subordinate voting shares and Class B common shares of the Corporation. Shortly after the meeting, certificates representing Class A subordinate voting shares and Class B common shares of Hammond Power will be mailed to registered shareholders by the transfer agent of the Corporation.

We hope that you will be able to attend the meeting in person ; however if you cannot attend, would you please complete and return the enclosed proxy, which will assure you of representation at the meeting.

Sincerely,

R.F. Hammond, Chairman & CEO
W.G. Hammond, President