HIGH RIVER LIMITED PARTNERSHIP
C/O ICAHN ASSOCIATES CORP.
000 Xxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No. (000) 000-0000
Fax No. (000) 000-0000
May 11, 2000
Nabisco Group Holdings Corp.
c/o Xxxxx Xxxxxx c/o Xxxxxxx XxXxxxx
Managing Director Managing Director
Warburg Dillon Read LLC Xxxxxx Xxxxxxx & Co. Incorporated
000 Xxxx Xxxxxx 0000 Xxxxxxxx--00xx Xxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
Ladies and Gentlemen:
In conformity with your letter of April 24, 2000, we are hereby notifying
you that we wish to proceed to the next level of review of Nabisco Holdings
Corp. ('NA") and Nabisco Group Holdings Corp. ("NGH"). In that regard, please be
advised as follows:
1. Subject to additional diligence which would be performed by my legal and
financial staff and advisors as well as by The Industrial Bank of Japan, Limited
("IBJ") and others who may become involved at our request, we presently foresee
proposing a transaction which would yield NGH stockholders $22 in a combination
of cash and face amount of notes in return for each of their NGH shares.
Following the transaction, a new Icahn entity ("Newco") would own 100% of the
equity of NGH, which would at that time continue to own its interest in NA. At
our request, IBJ has already performed certain preliminary due diligence
functions and executed a confidentiality letter with NGH.
2. Our transaction calls for the refinancing of the debt of NA, which IBJ
envisions arranging on several levels and which, in IBJ's estimate, would yield
a net sum to NA (after repayment of existing debt) of approximately $3.4 billion
in additional cash. This cash would be distributed as a dividend to NA's
stockholders, including the public, and would yield approximately $2.7 billion
of cash to NGH.
3. Immediately thereafter, in a business combination involving NGH and
Newco, NGH stockholders, excluding Icahn related stockholders, who own an
aggregate of approximately 31.2 million NGH shares, would receive a combination
of cash and face amount of two-year, surviving company notes equaling $22 for
each share of NGH they then hold. The cash, which we estimate would come to
approximately $19 per NGH share, would be obtained from a combination of the
$2.7 billion received from the NA dividend and approximately $3 billion, which
will have been obtained from cash on hand at, and specific borrowings by Icahn
entities and contributed to Newco. The notes of the surviving company ("Notes"),
which we estimate would have a principal amount of
May 11, 2000
Page 2
approximately $3 per NGH share, would be secured by the stock of NA (which would
be owned by Newco) and would carry an interest rate of approximately 14 % per
annum. Both principal and interest would be payable only at maturity. We believe
that the notes will be paid at maturity out of refinancing proceeds or out of a
sale of NA assets, in whole or in part.
4. Should the transaction be acceptable to NA and NGH, and assuming that
our continued diligence proves satisfactory, in our discretion and the
discretion of IBJ and other possible financing sources, we would be prepared to
act rapidly to enter into agreements, satisfactory to each party, and to the
closing of the transactions. We do not envision any required governmental
approvals other than the expiration of the Xxxx-Xxxxx- Xxxxxx waiting periods
which should present no issues. Furthermore, no public stockholders of any Icahn
entity will be required to approve the proposed transaction.
To date, the internal staff of Icahn entities has been involved in both the
legal and financial analysis involved in putting together this proposal. In
addition, as needed we have consulted with professionals outside of Icahn
personnel and we may, should we go further in this transaction, engage other
professionals to advise us and help complete the transaction. Any questions or
comments that you have regarding this proposal should be addressed to Xxxx X.
Icahn at (000) 000-0000.
Thank you for your cooperation in providing materials to us and to our
advisors in connection with our consideration of a possible NA and Nabisco Group
Holdings Corp.
Very truly yours,
HIGH RIVER LIMITED PARTNERSHIP
By: Riverdale LLC
By:________________________
Xxxx X. Icahn, Member
[Letter advising NGH financial advisors of Icahn desire to proceed to next
level of NGH review]
