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Exhibit 99.2
June 29, 2001
Value City Department Stores, Inc.
c/o Special Committee of the Board of Directors
3241 Westerville Road
Columbus, OH 43224-3751
Gentlemen:
Schottenstein Stores Corporation (or an affiliated entity designated by
Schottenstein Stores Corporation) ("SSC") hereby submits the following proposal
to acquire certain subsidiaries of Value City Department Stores, Inc. ("VCDS").
1. Proposed Transaction. SSC proposes to acquire all of the capital
stock or assets of Shonac Corporation, DSW Shoe Warehouse, Inc. and Filene's
Basement, Inc., and the subsidiaries of each of them (collectively, the
"Companies"), for an aggregate purchase price of $275 million (consisting of
$200 million in cash and the assumption of the $75 million VCDS Senior
Subordinated Convertible Loan) (the "Transaction"), pursuant to a definitive
purchase agreement (the "Purchase Agreement) containing customary
representations, warranties, covenants, closing conditions and remedies.
2. SSC's Conditions. The obligation of SSC to consummate a Transaction
shall be subject to, among other things, the following conditions:
(a) VCDS obtaining approval of the transaction from the
banking group which has the current banking facility with VCDS and
which is led by National City Bank and Bank One Capital Group (if SSC
determines in its sole discretion that such approval is necessary);
(b) satisfactory completion of due diligence;
(c) receipt of committed financing, which we are highly
confident we can obtain;
(d) the Special Committee of the Board of VCDS engaging
independent legal counsel and independent financial advisers to advise
them with respect to the transaction being acceptable;
(e) approval of the transaction contemplated hereby by the
Board of Directors of SSC and by the Special Committee and Board of
VCDS;
(f) the negotiation, execution and delivery of a mutually
satisfactory Purchase Agreement;
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Exhibit 99.2
June 29, 2001
Special Committee of the
Board of Directors
(g) the obtaining of all required governmental and regulatory
approvals (including approval under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended), on terms and conditions which
are satisfactory to SSC, and the expiration of any required waiting
periods;
(h) the obtaining of all consents, assignments or approvals
from third parties as may be required or specified by SSC;
(i) execution by SSC and VCDS of a mutually satisfactory
shared service agreement with respect to the Companies;
(j) the repayment of all intercompany obligations to or from
SSC and its affiliates and VCDS and its subsidiaries;
(k) no pending material litigation, and no material adverse
change in the business, assets, results of operations, financial
condition or prospects of the Companies; and
(l) entering into a mutually satisfactory tax sharing
agreement with respect to the use of NOLs.
3. Inspection and Access to Information. In order to permit SSC, its
equity partners and other financing sources to continue with their due
diligence, VCDS will need to: (i) provide SSC, its equity partners, financing
sources and their authorized representatives with full access to, and make
available to them for inspection and review, all properties, books, records,
accounts, tax returns, agreements and documents of or relating to the Companies
and their business; (ii) furnish SSC, its equity partners, financing sources and
such representatives any financial and other information with respect to the
Companies and their business as may be reasonably requested from time to time;
and (iii) make the employees, attorneys and accountants of the Companies
available for consultation, and permit access by SSC, its equity partners,
financing sources and their representatives to persons as the parties shall
mutually agree for verification of any information so obtained.
4. Announcements. Any public announcement to the effect that a proposal
has been received by VCDS shall be subject to the approval of both VCDS and SSC.
5. Expenses. In consideration of the willingness of SSC to make, and
allow VCDS to disclose, the foregoing proposal, and to devote resources to
conduct due diligence and pursue a Transaction, VCDS agrees to pay SSC or
reimburse it for its reasonable costs and expenses incurred in connection with
pursuing a Transaction and the other matters contemplated by this Letter
(whether or not a Transaction is agreed to or consummated), including counsel
fees and disbursements and investment banking fees.
6. Governing Law. This Letter shall be governed by the laws of the
State of Ohio without giving effect to the laws, rules and principles of the
State of Ohio regarding conflicts of laws.
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Exhibit 99.2
June 29, 2001
Special Committee of the
Board of Directors
7. Non-Binding Nature of Letter. Except for the provisions of
Paragraphs 4 and 5 hereof, this Letter, including, without limitation, the
proposal set forth herein, is a non-binding statement of intent only and does
not impose any obligation or liability on SSC or VCDS, including, without
limitation, with respect to proceeding with a Transaction.
8. Timing. Our proposal will terminate at 5:00PM EDT on July 2, 2001
unless this Letter has been countersigned by VCDS with respect to the
reimbursement of expenses. We are prepared to include in the Purchase Agreement
a provision providing the independent directors until 5:00PM EDT on August 28,
2001, the sixtieth (60th) day from the date of this letter, the right to solicit
other indications of interest from third parties regarding a possible
transaction with VCDS and to terminate the Purchase Agreement if a superior
proposal is received, subject to payment of a break-up fee. However,
notwithstanding the Special Committee's potential interest in making such
solicitations, we believe that it is important for VCDS and its businesses that
the Special Committee determine on a prudent, but timely, basis whether or not
it is in the best interests of VCDS and its stockholders to proceed with a
Transaction. Accordingly, unless we enter into a Purchase Agreement by 5:00PM
EDT on July 23, 2001, three weeks from the Monday that follows the date of this
Letter, we will discontinue all discussions concerning a Transaction. Of course,
SSC does not waive its rights as a shareholder with respect to any other
proposal the Special Committee may receive.
Please have the Special Committee and its advisors contact SSC through
Conrad Bringsjord, head of Mergers & Acquisitions at CIBC, at 212-856-3666 or
Steve Reiner, Head of Specialty Retail Investment Banking, at 310-446-7378 at
your earliest convenience.
Very truly yours,
Schottenstein Stores Corporation
By: /s/ Thomas R. Ketteler
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Name: Thomas R. Ketteler
Title: CFO
The undersigned hereby agrees to comply with and be bound by the provisions of
Paragraphs 4 and 5 hereof, which shall be a binding and enforceable agreement of
the parties:
Value City Department Stores, Inc.
By: ______________________________
Name:
Title:
cc: Mr. Conrad Bringsjord
Mr. Steve Reiner