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To: D. K. G. who wrote (399)	11/16/2007 11:33:41 AM
From: D. K. G.	Read Replies (2) \| Respond to of 484

MGST.OB 1-2000 R/S pay out 0.425 for fractional shares. secinfo.com This Rule 13E-3 Transaction Statement on Schedule 13E-3 (the “Schedule 13E-3”) is being filed by MagStar Technologies, Inc., a Minnesota corporation (“MagStar”, the “Company”, “we”, or “our”), in connection with a “going private” transaction. A special committee (the “Special Committee”) of our board of directors (the “Board” or “Board of Directors”) has approved a 1-for-2,000 share combination (the “Reverse Split”) such that shareholders owning less than one whole share of our common stock following the Reverse Split will have their fractional shares cancelled and converted into the right to receive the cash consideration described herein. The entire going-private transaction, including the Reverse Split and the purchase of fractional shares of those shareholders holding less than one whole share after the Reverse Split, is referred to below as the “Transaction.” As a result of the Transaction, each share of our common stock held of record or beneficially by a shareholder owning fewer than 2,000 shares of our common stock on , 2007 (the “Record Date”) will be converted into the right to receive $0.425 per pre-Reverse Split share, without interest. Shareholders who own 2,000 or more shares of our common stock on the Record Date will not be entitled to receive any cash for any whole or fractional shares that may result from the Reverse Split. The purpose of the Transaction is to reduce the number of record holders of our common stock to fewer than 300 so that we will be eligible to terminate the public registration of our common stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In such case, we will no longer be required to file periodic reports with the Securities and Exchange Commission (the “SEC”). The deregistration of our common stock will also have the effect of terminating the eligibility of our common stock for quotation on the Over-The-Counter Bulletin Board (“OTCBB”). We have made certain calculations regarding the Reverse Split relating to its effect upon our shareholder base. Based upon our review of our list of shareholders of record furnished to us by American Stock Transfer Trust Company, our transfer agent, as well as an analysis we have conducted taking into account information furnished to us by American Stock Transfer Trust Company concerning shareholders who beneficially own their stock in street name, referred to as non-objecting beneficial owners and objecting beneficial owners, we have determined that the Reverse Split will not result in the cancellation of more than 20% of the outstanding shares of our common stock. In the event the Reverse Split would result in more than 20% of our common stock being cancelled, which is not permitted by Minnesota law, we will take action to suspend or withdraw the Reverse Split. In such event, it is our intent to take all action necessary to reduce the number of shares that would be cancelled and receive a cash payment in lieu of a fractional share to comply with the Minnesota Business Corporation Act (the “MBCA”) by adjusting the split ratio used in the Reverse Split or, in the alternative, to seek shareholder approval of the proposed Reverse Split. The Transaction has been authorized by the Special Committee, on the authority of the Board, pursuant to Section 302A.402, Subd. 1 of the MBCA, which permits our Board to authorize a share combination without shareholder approval on the condition that (i) the rights or preferences of the holders of the outstanding shares of any class or series will not be adversely affected and (ii) the percentage of authorized shares of any class or series remaining unissued after the combination will not exceed the percentage of authorized shares of that class or series that were unissued before the combination. For purposes of the requirement set forth in (ii) above, the MBCA provides that any increase in the percentage of authorized common stock remaining unissued arising solely from our cancellation of fractional shares in accordance with Section 302A.423 of the MBCA will be disregarded. We are authorized under the MBCA to pay the fair cash value for fractional shares resulting from the Reverse Split, provided that, pursuant to Section 302A.423, Subd. 2 of the MBCA, we may not pay 2 -------------------------------------------------------------------------------- money for fractional shares if that action would result in the cancellation of more than 20% of the outstanding shares of our common stock. The Transaction will be conducted upon the terms and subject to the conditions set forth in our disclosure document, referred to herein as the “Disclosure Document.” The information contained in the Disclosure Document, including all exhibits thereto, is hereby expressly incorporated herein by reference. Capitalized terms used but not defined herein shall have the meanings given to them in the Disclosure Document.