CORRESPONDENCE
ANDERSON KILL & OLICK, P.C.
- --------------------------------------------------------------------------------
Attorneys and Counsellors at Law
1251 Avenue of the Americas |X| New York, NY 10020
Telephone: 212-278-1000 |X| Fax: 212-278-1733
www.andersonkill.com
Martin R. Bring, Esq.
(212) 278-1736
mbring@andersonkill.com
October 11, 2004
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
RE: GRISTEDE'S FOODS, INC.
SCHEDULE 13E-3 FILED ON SEPTEMBER 10, 2004
FILE NO. 5-30124
Gentlemen:
Reference is made to the comment letter dated October 1, 2004
(the "Comment Letter") to the undersigned, setting forth the Staff's comments
regarding the Schedule 13E-3, filed with respect to Gristede's Foods, Inc. (the
"Company").
We are hereby submitting one copy of Amendment No. 1 to
Schedule 13E-3 ("Amendment No. 1"), including all exhibits thereto not
previously filed.
This letter sets forth the Company's responses to the Staff's
comments contained in the Comment Letter. Unless otherwise indicated,
capitalized terms used herein have the same meanings as set forth in Amendment
No. 1. The numbered paragraphs in this letter set forth below correspond to the
numbered paragraphs in the Comment Letter.
Separately, we are sending a courtesy copy of Amendment No. 1,
this letter and the supplemental materials described herein to Nicholas P.
Panos, Special Counsel, Office of Mergers and Acquisitions, by overnight
courier.
1. Disclosure has been made to insert the premium to be paid
to stockholders in terms of a percentage under "Primary Benefits to and Impacts
on the Unaffiliated Stockholders" on page 3 and elsewhere throughout the
document.
2. Under "Selected Consolidated Financial Data of Gristede's",
on page 5 in the table, additional disclosure has been made by adding line items
for sales and gross profits under the heading "Statement of Operations" and line
items under the
New York |X| Chicago |X| Greenwich |X| Newark |X| Philadelphia
|X| Washington, D.C.
Securities and Exchange Commission
October 11, 2004
Page 2
heading "Balance Sheet Data", covering assets and liabilities, broken down into
current and non-current.
3. On page 6, under "The Parties", disclosure has been added
identifying the equity interest of each of the parties and the individual who
controls each of the entities.
4. On page 7, under "Background of the Merger", we have added
the price of Common Stock on the last trading date prior to the announcement of
the Offer.
5. On page 7, in the third paragraph under "Background of the
Merger", a description has been added of the basis upon which the Board of
Directors determined that the Offer appeared sincere and credible.
6. On page 7, in paragraphs 3-5, under "Background of the
Merger", disclosure has been added to describe in more detail the deliberations
of the Special Committee and the Board of Directors, including a listing of
meetings that took place and the nature of the discussions at such meetings.
7. On page 8, under "Fairness of the Merger", in the first
paragraph, disclosure has been added that the Special Committee adopted the
analyses of Brooks, Houghton.
8. On page 7, in the first paragraph under "Fairness of the
Merger", disclosure has been added that the Board of Directors believes that the
transaction is procedurally fair to Unaffiliated Stockholders, as well as a
discussion regarding the absence of a requirement that approval of a majority of
the Unaffiliated Stockholders be obtained. We believe that the safeguard
described in Item 1014(c).of Regulation M-A is fully complied with by the action
of the Board of Directors in appointing the Special Committee and the action of
the Special Committee in engaging Brooks, Houghton and obtaining its fairness
opinion.
9. On page 8, in the first carryover paragraph under "Fairness
of the Merger", the compensation being received by the Chairman of the Special
Committee has been disclosed.
10. On page 8, under "Cost of Complying with Securities
Regulations", the approximate amount of the Company's annual increased costs to
comply with the Sarbanes Oxley Act of 2002 has been disclosed.
11. The Company did not consider its lack of ability to
solicit other bids as a negative factor in that the consideration being offered
is not the result of an auction process that may have been resulted in a higher
price. See the disclosure under "Limited Ability to Introduce Proposals From
Other Potential Buyers" on page 8.
Securities and Exchange Commission
October 11, 2004
Page 3
12. On page 8, under "Market Price and Premium", additional
disclosure has been made regarding the market price of the Common Stock for the
past year having been higher at certain times than the Merger Consideration.
13. On page 9, in the last paragraph under "Fairness of the
Merger", additional disclosure has been made to the effect that the transaction
is deemed to be substantially and procedurally fair to the Unaffiliated
Stockholders, as well as a reference to adopting the analyses of Brooks,
Houghton. The reference in the Comment Letter to the "enumerated safeguard" has
previously been disclosed in this paragraph.
14. Brooks, Houghton prepared presentation materials for the
Special Committee and the Board of Directors entitled "Fairness Opinion
Valuation Analysis", a copy of which is being delivered as supplement material
to the Staff in the courtesy copy of Amendment No. 1 being forwarded by
overnight courier to Mr. Panos. After discussion with Brooks, Houghton, we
respectfully request that these written materials not be required to be included
as an exhibit to this Schedule 13E-3, because these materials were intended
solely for the members of the Special Committee and the Board of Directors with
a lengthy and detailed discussion of value and options to successfully reach a
determination of fairness. It was not prepared by Brooks, Houghton with a view
toward general publication, which would have been replete in every instance with
caveats and detailed resource citations. It contains stock charts and Excel
spreadsheets and data in landscape that will not fit and cannot be easily
formatted to fit or which are otherwise not readily suited to edgarizing.
With the newly added detailed tables on comparable public
companies, comparable transactions and projected financials abstracted from this
material and included within Amendment No. 1, we believe that appropriate
disclosure for investors has been made.
15. On page 13, in the second paragraph under "Merger
Consideration in relation to prices of comparable publicly traded stocks",
additional disclosure has been made to explain why the selected company
comparison does not detract from the results of this analysis.
16. As requested, the results in this section have been
presented in tabular form on pages 13-14.
17. An additional table has been presented on page 15 to
disclose information regarding the transactions used in comparing the Merger
Consideration to comparable M&A transactions.
18. A table has been added on pages 16-17 under "Value of
Gristede's implied by the net present value of future cash flows" to disclose
the projections that
Securities and Exchange Commission
October 11, 2004
Page 4
were supplied to Brooks, Houghton and highlights the adjustments that were made
to the projections by Brooks, Houghton. A sentence has been added in the first
paragraph of this section to discuss Mr. Catsimatidis' involvement in reviewing
the projections and his conflict of interest.
19. On page 18, additional disclosure as to the ability of the
Company to utilize the net operating loss carryforwards has been made in the
third paragraph under "Benefits and Other Impacts of the Merger".
20. On page 18, under "Interest of Certain Persons in the
Merger; Certain Relationships", additional disclosure has been made concerning
the conflict of interest of Mr. Catsimatidis.
21. On page 19, under "Certain Effects of the Merger" in the
second paragraph, the dollar amounts of interest in the net book value and net
earnings of the Company have been added.
22. On page 31, under "Available Information", the reference
to the Chicago regional office has been deleted.
In addition to the foregoing, we are providing a letter from
the Company making the requested acknowledgements.
If you have any questions, please call the undersigned at
(212) 278-1736.
Very truly yours,
/s/ Martin R. Bring
-------------------
MRB:mf