Agree with dahs...if you've gotten the second e-mail (which it sounds like you have as I don't think the first one actually mentions leaving the program) and the work ethic has dropped 4+ points you've got a chance of the player walking. The question really is...since you're obviously not playing the kid that much, do you want to keep him?
If he walks, you will get that scholarship money for recruiting (as opposed to not getting it if you were to cut the kid). I've never really fussed that much when a junior complains about PT. If he's not getting it, there's a reason for that and if you don't have a promise to the kid, then there's really not much down side to it. Unless you really feel you'll need the kid as a starter next year, I wouldn't sweat it.