November 10, 2005
November 10, 2005
Dear Shareholder:
On October 27, 2005, Xxxxx’s Family Clothing, Inc.
(“Goody’s” or the “Company”) entered
into a Merger Agreement with GF Goods Inc. and GF Acquisition
Corp. (collectively, the “Purchaser”), which are
affiliates of GMM Capital LLC and Prentice Capital Management,
LP to purchase all of the issued and outstanding common stock of
Goody’s for $9.60 net per share in cash. GF Acquisition
Corp. has commenced a Tender Offer for all of Goody’s
outstanding shares today. Following the Tender Offer, subject to
the satisfaction of the conditions in the Merger Agreement, GF
Acquisition Corp. will merge into Goody’s, and all shares
not purchased in the Tender Offer (other than shares owned by
Purchasers or their respective affiliates) will be converted
into the right to receive $9.60 per share in cash.
Also, on October 27, 2005, GF Goods Inc. and GF Acquisition
Corp. entered into a Support Agreement with holders of
approximately 42.8% of the outstanding shares (or approximately
39.7% of the shares on a fully diluted basis and, in each case,
assuming the exercise of all options that will not be cancelled
in the merger) under which the shareholders agreed, among other
things, to tender their shares to GF Acquisition Corp. in the
Tender Offer. Together with shares owned by affiliates of
Purchaser, these shares represent approximately 49.0% of the
outstanding shares of Xxxxx’s.
The Board of Directors of Xxxxx’s, based on the
recommendation of a Special Committee consisting of its
independent directors, unanimously (i) declared the
advisability of the Merger Agreement and the transactions
contemplated thereby and approved and adopted the Merger
Agreement and the transactions contemplated thereby, including
the Tender Offer and the Merger, (ii) determined that the
Merger Agreement and the transactions contemplated thereby,
including the Tender Offer and the Merger, are fair to and in
the best interests of the shareholders of the Company,
(iii) determined that the consideration to be paid in the
Tender Offer and the Merger is fair to and in the best interests
of the shareholders of the Company and (iv) subject to the
Company’s rights under the Merger Agreement, resolved to
recommend that the shareholders of the Company accept the Tender
Offer and tender their Shares and approve and adopt the Merger
Agreement and the Merger and the other transactions contemplated
thereby.
In arriving at its recommendation, the Board of Directors of
Xxxxx’s gave careful consideration to a number of factors,
including the material factors set forth in Goody’s
Solicitation/ Recommendation Statement on Schedule 14D-9,
which is enclosed with this letter.
Also enclosed is a copy of GF Acquisition Corp.’s offer to
purchase and related materials, including a letter of
transmittal for use in tendering shares. Those documents set
forth the terms and conditions of the Tender Offer.
We urge you to read the entire Solicitation/ Recommendation
Statement on Schedule 14D-9 and the other enclosed
materials and consider them carefully before deciding whether to
tender your shares.
| Sincerely, | |
 |
|
| Xxxxxx X. Xxxxxxxxxx | |
| Chairman and Chief Executive Officer |
