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EXHIBIT 99.3
FOOD 4 LESS HOLDINGS, INC.
777 South Harbor Boulevard
La Habra, California 90631
May 18, 1995
Dear Food 4 Less Holdings, Inc. Stockholder or Warrantholder:
Food 4 Less Holdings, Inc., a California corporation ("Holdings"), is
soliciting the consents of its stockholders, as more fully described in the
accompanying Prospectus and Solicitation Statement, to approve a proposed merger
between Holdings and its newly-formed wholly-owned subsidiary Food 4 Less
Holdings, Inc., a Delaware corporation ("New Holdings"), pursuant to which
Holdings will change its state of incorporation from California to Delaware by
merging with and into New Holdings (the "Reincorporation Merger"), with New
Holdings surviving the Reincorporation Merger. In the Reincorporation Merger,
each share of common stock of Holdings outstanding immediately prior to the
consummation of the Reincorporation Merger will be converted into the right to
receive one share of common stock, par value $.01, of New Holdings.
Immediately prior to the Reincorporation Merger, Holdings' parent
corporation, Food 4 Less, Inc. ("FFL"), will merge (the "FFL Merger") with and
into Holdings, and Holdings will survive the FFL Merger.
Holdings is also soliciting the consents of its warrantholders to approval
a proposal (the "Stockholders Agreement Proposal") to become party to a new
stockholders agreement (the "1995 Stockholders Agreement") which will be entered
into by New Holdings and certain other parties who are investing in newly-issued
preferred stock of New Holdings. The 1995 Stockholders Agreement will replace
the Food 4 Less Holdings, Inc. Warrantholders Agreement dated as of December 31,
1992 (the "Warrantholders Agreement"), as well as certain existing stockholders
agreements of FFL.
The FFL Merger and the Reincorporation Merger (collectively, the "Proposed
Mergers") and the Stockholders Agreement Proposal are being undertaken at the
request of certain investors who will purchase a minimum of $140 million of
preferred stock of New Holdings in connection with New Holdings' acquisition of
Ralphs Supermarkets, Inc. ("RSI"). The Proposed Mergers will simplify the
holding company structure of the combined entities by consolidating all of the
existing stockholders of FFL and Holdings, as well as the new preferred
stockholders, at the same corporate level. This streamlining of the corporate
structure will serve to facilitate the acquisition of RSI. In addition, approval
of the Stockholders Agreement Proposal will eliminate conflicting contractual
obligations of New Holdings and provide significant benefits to existing
Holdings warrantholders. Following its acquisition of RSI, New Holdings will
operate the largest supermarket chain in Southern California, consisting of 332
stores with combined pro forma annual sales in excess of $5 billion.
By consenting to the Stockholders Agreement Proposal, each Holdings
warrantholder will be deemed to consent to the amendment of the Warrantholders
Agreement to eliminate all contractual obligations of New Holdings and its
warrantholders thereunder (other than certain obligations to participate in any
sale of New Holdings). Accordingly, if the Stockholders Agreement Proposal is
approved by the holders of a majority of the outstanding warrants (as required
for amendment of the Warrantholders Agreement), any Holdings warrantholder will
have no substantial rights under any equityholders agreement unless such holder
consents to the Stockholders Agreement Proposal.
Holdings warrantholders should note that the Registration Rights Agreement
dated December 31, 1992, by and among Holdings and the original purchasers of
the Holdings warrants, will continue in effect for the benefit of current
warrantholders following the closing date of the RSI acquisition, and will not
be amended by the Stockholders Agreement Proposal. In addition, the current
management stockholders of Holdings should note that their Management
Stockholders Agreements will continue in effect following the closing date of
the RSI acquisition, subject to any amendments that may be agreed upon by them.
Accordingly, the Stockholders
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Agreement Proposal does not provide for the current stockholders of Holdings to
become parties to the 1995 Stockholders Agreement.
The members of the Board of Directors of Holdings and New Holdings, as
applicable, have unanimously approved the terms of the Reincorporation Merger
and the Stockholders Agreement Proposal. THE BOARD OF DIRECTORS OF HOLDINGS
RECOMMENDS THAT ITS STOCKHOLDERS AND WARRANTHOLDERS APPROVE THE REINCORPORATION
MERGER AND THE STOCKHOLDERS AGREEMENT PROPOSAL, WHICH WILL PROVIDE SEVERAL
IMPORTANT BENEFITS TO SUCH HOLDERS, AS DETAILED IN THE ACCOMPANYING PROSPECTUS
AND SOLICITATION STATEMENT. For a description of possible conflicts of interest
of Holdings directors in approving the Reincorporation Merger and the
Stockholders Agreement Proposal, see "The Solicitation -- Possible Conflicts of
Interest of Certain Officers and Directors."
The Board of Directors of Holdings has fixed the date of the effectiveness
of the FFL Merger as the record date for determining the stockholders entitled
to consent to the Reincorporation Merger. Accordingly, Holdings is soliciting
Consents to the Reincorporation Merger from all persons who are expected to be
holders of record of Holdings' common stock as of the date of effectiveness of
the FFL Merger. In addition, Holdings is soliciting Consents to the Stockholders
Agreement Proposal from all record holders of its warrants as of May 15, 1995.
See "The Solicitation -- Consents Required."
The accompanying Prospectus and Solicitation Statement provides more
detailed information describing the RSI acquisition, the Proposed Mergers and
the Stockholders Agreement Proposal. Please review this information carefully.
In order to implement the Reincorporation Merger, a favorable vote of a
majority of the outstanding shares of Holdings common stock is required. In
addition, as noted above, the 1995 Stockholders Agreement will inure to the
benefit of only those Holdings warrantholders who have consented to the
Stockholders Agreement Proposal. Therefore, please sign, date and complete the
enclosed Consent Form in accordance with the instructions contained herein and
return it as promptly as possible. Thank you in advance for your cooperation.
Sincerely,
Ronald W. Burkle
Chairman of the Board and Chief
Executive Officer
Los Angeles, California
May 18, 1995
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YOUR CONSENT IS IMPORTANT
TO CONSENT TO THE REINCORPORATION MERGER OR STOCKHOLDERS AGREEMENT PROPOSAL,
PLEASE SIGN, DATE
AND COMPLETE THE ENCLOSED CONSENT FORM AND RETURN IT PROMPTLY
IN THE ENCLOSED RETURN ENVELOPE
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