I think this is actually loss of maneuvering margin when an engine fails during a flap retraction?
The way I understand it: after takeoff when you retract flaps, some lift is lost. But because the airplane is also accelerating (higher speed == more lift) you also gain lift and can maintain maneuvering margin.
However, if while retracting the flaps you lose an engine, now you're not accelerating as fast (or at all). You're not generating as much lift and therefore you've effectively decreased your maneuvering margin compared to a normal climb.
So the 4 kts is the equivalent loss of the maneuvering margin, not an increase of stall speed.
(I'm sure someone will correct me if I'm off base here).