<PAGE>
EXHIBIT 1
Littlejohn Fund II, L.P. Quilvest American Equity Ltd.
155 East Putnam Avenue c/o Three Cities Research, Inc.
Greenwich, CT 06830 650 Madison Avenue
New York, NY 10022
January 16, 2001
Board of Directors of
Pameco Corporation
651 Corporate Circle
Suite 200
Golden, CO 80401
Gentlemen:
On behalf of Littlejohn Fund II, L.P. ("Littlejohn") and Quilvest American
Equity Ltd. ("Quilvest" and together with Littlejohn, the "Buyers"), we are
pleased to make the following proposal to acquire all of the outstanding shares
of common stock of Pameco Corporation (the "Company").
1. Price and Structure. The Buyers are prepared to acquire all of the
-------------------
outstanding shares of common stock of the Company for a cash purchase price of
$0.40 per share. The terms and conditions of the proposed transaction will be
set forth in the Definitive Agreement (as defined below). It is currently
contemplated that the transaction will be structured as a merger of a newly-
formed wholly-owned subsidiary of the Buyers with and into the Company.
2. Principal Conditions. The Buyers' proposal is conditioned upon your
--------------------
acceptance thereof not later than 5:00 p.m. New York City time on February 7,
2001. Consummation of the transaction would be further conditioned upon the
following:
a. Negotiation and execution of a definitive purchase agreement with
respect to the transaction in form and substance satisfactory to the Buyers (the
"Definitive Agreement") and the satisfaction of the conditions set forth
therein;
b. Approval by a special committee of the board of directors of the
Company consisting solely of directors who are not affiliated with either
Littlejohn or Quilvest;
c. Approval by the investment committees and boards of directors of
Littlejohn and Quilvest, respectively;
d. Receipt of necessary consents from the Company's existing senior
and subordinated lenders such that such indebtedness will remain outstanding
after the closing on substantially the same terms and conditions as presently in
effect; and
<PAGE>
e. The absence of any material adverse change in the financial
condition, results of operation, assets, liabilities or business of the Company.
This proposal is not conditioned upon, nor will the Definitive
Agreement include a condition relating to, the Buyers' obtaining financing for
the transaction.
3. Legal Effect. Neither we nor you shall have any legal obligation to
------------
each other arising out of this letter, and neither this letter nor your
acceptance of our proposal shall constitute an obligation or commitment of any
party to negotiate or enter into the Definitive Agreement.
As you are aware, we have a Schedule 13D on file with the SEC disclosing
our investment in the Company. We plan to amend such Schedule 13D to disclose
that we have made a proposal to purchase all of the outstanding shares of common
stock of the Company. We will attach a copy of this letter to such amendment.
We anticipate filing such amended Schedule 13D promptly after the date hereof.
We look forward to your response and to working with you on this
transaction. Any questions concerning this letter should be directed to Angus
C. Littlejohn, Jr. at (203) 552-3505.
Very truly yours,
LITTLEJOHN FUND II, L.P.
By: Littlejohn Associates II, L.L.C.,
General Partner
By:______________________________
Name: Angus C. Littlejohn, Jr.
Title: Manager
QUILVEST AMERICAN EQUITY LTD.
By:___________________________
Name: Willem F.P. de Vogel
Title: Attorney-in-Fact
