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EXHIBIT 99.2
FOOD 4 LESS, INC.
777 South Harbor Boulevard
La Habra, California 90631
May 18, 1995
Dear Food 4 Less, Inc. Stockholder:
Food 4 Less, Inc. ("FFL") is soliciting the consents of its stockholders to
approve the following proposals, as more fully described in the accompanying
Prospectus and Solicitation Statement:
1. A proposed merger between FFL and its majority-owned subsidiary Food 4
Less Holdings, Inc., a California corporation ("Holdings"), pursuant to which
FFL will merge (the "FFL Merger") with and into Holdings, with Holdings being
the surviving corporation. In the FFL Merger, each share of FFL common stock
outstanding immediately prior to the consummation of the FFL Merger will be
converted into the right to receive 2.082 shares of common stock, par value
$.01, of Holdings.
2. A proposal to change the state of incorporation of Holdings from
California to Delaware. Pursuant to such proposal, immediately following the FFL
Merger, Holdings will be merged (the "Reincorporation Merger") with and into a
wholly-owned subsidiary ("New Holdings") incorporated in Delaware. 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.
3. A proposal (the "Stockholders Agreement Proposal") to amend or terminate
certain existing agreements to which FFL stockholders are parties, and to have
FFL stockholders become party to (a) 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
and (b) a related registration rights agreement (the "1995 Registration Rights
Agreement"). The 1995 Stockholders Agreement and 1995 Registration Rights
Agreement will replace the FFL Holdings Corporation Stock Purchase and
Shareholders' Agreement dated as of May 23, 1987 (the "1987 Stockholders
Agreement") and the Food 4 Less, Inc. Stockholders Agreement and related
Registration Rights Agreement, each dated as of June 17, 1991 (the "1991
Stockholders Agreement" and "1991 Registration Rights Agreement," respectively).
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 FFL
stockholders. 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 FFL stockholder
who is a party to any of the 1987 Stockholders Agreement, the 1991 Stockholders
Agreement or the 1991 Registration Rights Agreement (collectively, the "Existing
Stockholders Agreements") will be deemed to consent to the termination of its
rights and obligations (except for certain obligations to participate in any
sale of New Holdings) under the applicable Existing Stockholders Agreements.
Except for certain limited covenants contained therein, the 1987 Stockholders
Agreement (but not the 1991 Stockholders Agreement or the 1991 Registration
Rights Agreement) will terminate by its terms in connection with the FFL Merger.
In addition, consent to the Stockholders Agreement Proposal by holders subject
to the 1991 Stockholders Agreement and
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the 1991 Registration Rights Agreement will constitute consent to the amendment
of each of those agreements to eliminate all contractual obligations of New
Holdings and its stockholders or warrantholders thereunder (other than the
obligations to participate in a sale of New Holdings). Accordingly, any FFL
stockholder formerly subject to the 1987 Stockholders Agreement, and (if the
Stockholders Agreement Proposal is approved by the holders of the requisite
shares required for amendment under the 1991 Stockholders Agreement) any FFL
Stockholder subject to the 1991 Stockholders Agreement, will have no substantial
rights under any stockholders agreement unless such holder consents to the
Stockholders Agreement Proposal.
The 1995 Registration Rights Agreement will give to FFL stockholders (who
will become New Holdings stockholders by virtue of the FFL Merger and
Reincorporation Merger) "piggyback" rights to have their New Holdings shares
included in any registration statements, relating to New Holdings equity
securities, proposed to be filed under the Securities Act by New Holdings. The
"demand" registration rights of FFL stockholders under the 1987 Stockholders
Agreement and the 1991 Registration Rights Agreement are no longer exercisable
in that their exercise requires the participation of Yucaipa, Apollo or other
FFL stockholders who have agreed to become party to the 1995 Stockholders
Agreement. Accordingly, such demand registration rights will be terminated.
The members of the Board of Directors of FFL, Holdings and New Holdings, as
applicable, have unanimously approved the terms of the Proposed Mergers and the
Stockholders Agreement Proposal. THE BOARD OF DIRECTORS OF FFL RECOMMENDS THAT
ITS STOCKHOLDERS APPROVE THE PROPOSED MERGERS AND THE STOCKHOLDERS AGREEMENT
PROPOSAL, WHICH WILL PROVIDE SEVERAL IMPORTANT BENEFITS TO ITS STOCKHOLDERS, AS
DETAILED IN THE ACCOMPANYING PROSPECTUS AND SOLICITATION STATEMENT. For a
description of possible conflicts of interest of FFL directors in approving the
Proposed Mergers and the Stockholders Agreement Proposal, see "The
Solicitation -- Possible Conflicts of Interest of Certain Officers and
Directors."
The Board of Directors of FFL has fixed the close of business on May 15,
1995 as the record date for determining the stockholders entitled to consent to
the FFL Merger and the Stockholders Agreement Proposal. In addition, although
FFL is not a party to the Reincorporation Merger, Consents to the
Reincorporation Merger are being solicited from the stockholders of FFL because
upon consummation of the FFL Merger, FFL's stockholders will become the holders
of more than 90% of the outstanding common shares of Holdings, which is a party
to the Reincorporation Merger. 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.
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In order to implement the FFL Merger, the favorable vote of a majority of
the outstanding shares of FFL common stock is required, and to implement the
Reincorporation Merger, the favorable vote of a majority of the outstanding
shares of Holdings common stock is required. In addition, as noted above, the
1995 Stockholders Agreement and 1995 Registration Rights Agreement will inure to
the benefit of only those FFL stockholders 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 PROPOSED MERGERS AND 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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