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EXHIBIT (a)(3)
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BFX HOSPITALITY GROUP, INC.
226 Bailey Avenue, Suite 101
Fort Worth, Texas 76107
(817) 332-4761
Dear Fellow Stockholder,
You are cordially invited to attend a special meeting of stockholders of
BFX Hospitality Group, Inc., a Delaware corporation (the "Company"), to be held
in the Longhorn Room of the Stockyards Hotel, 109 East Exchange Avenue, Fort
Worth, Texas, on ___________, 2000 at 10:00 o'clock a.m. (C.S.T.) (including
any adjournment or postponement, the "Special Meeting").
Throughout the Special Meeting, you will be asked to consider and vote upon
a proposal to approve the merger (the "Merger") of the Company with and into
American Hospitality, LLC, a Delaware limited liability company ("American"),
with American continuing as the Surviving Company (the "Surviving Company"),
pursuant to an Agreement and Plan of Merger dated as of August 11, 2000 (the
"Merger Agreement"), by and between the Company, American and Hospitality
Concepts, LLC, a Delaware limited liability company ("Hospitality"), which owns
all of the outstanding units of American. A copy of the Merger Agreement is
attached to the accompanying proxy statement as Appendix I.
Subject to the terms and conditions of the Merger Agreement, at the
effective time of the Merger (the "Effective Time"), each share of common stock,
$.05 par value, of the Company ("Common Stock") outstanding immediately before
the Effective Time, including each associated right to purchase shares upon
certain events occurring under the Company's Rights Agreement (other than shares
held by the Company or any of its subsidiaries as treasury stock and shares held
by dissenting stockholders who have validly exercised and perfected their rights
under Delaware law) will be converted into the right to receive $2.25 in cash
(the "Merger Consideration"). All of the outstanding ownership units of
American are presently owned, and after the Effective Time will continue to be
owned, by Hospitality.
As of ___________, 2000 (the "Record Date"), Robert H. McLean and the
other management members of the Company who constitute the owners of Hospitality
(the "Management Group") beneficially owned 1,141,914 shares of Common Stock,
(representing approximately 25.95% of the outstanding Common Stock).
Pursuant to the Delaware General Corporation Law, the affirmative vote of
holders of a majority of the issued and outstanding shares of Common Stock is
required to approve the Merger Agreement. Each share of Common Stock is entitled
to one vote on each matter to be acted upon or which may properly come before
the Special Meeting. It is anticipated that the members of the Management Group
and their spouses will vote the 1,141,914 shares of Common Stock held of record
by them, representing approximately 25.95% of the outstanding Common Stock, in
favor of the Merger. In addition, it is anticipated that the members of the
board of directors of the Company (the "Board") who are not members of the
Management Group will vote the 285,805 shares of
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Common Stock held of record by them, representing approximately 6.49% of the
outstanding Common Stock, in favor of the Merger.
Hospitality was formed to enable members of the Management Group to acquire
indirectly, through the Merger, the Company. At the Effective Time, the members
of the Management Group will own beneficially and of record all outstanding
units of Hospitality, which owns all of the outstanding units of American, as
the Surviving Company.
If the Merger is consummated, the Board will take all actions necessary to
vest and make exercisable as of the Effective Time all outstanding options,
whether vested or not, and the Company shall give written notice to the holder
of each option of the acceleration and exercisability of the options as of the
Effective Time in accordance with the relevant plan. Each option holder shall be
paid by Hospitality at the Effective Time the difference between $2.25 and the
exercise price for such options.
Due to the inherent conflicts of interest related to the Merger, the Board
appointed an independent committee of the Board (the "Independent Committee")
comprised of three of the directors of the Company, John M. Edgar, Bruno
D'Agostino and Russell J. Sarno, who are neither officers of the Company nor
members of the Management Group, to review, evaluate and negotiate the terms of
the proposed Merger and to make a recommendation to the Board concerning the
proposed Merger. The Independent Committee retained two financial advisors,
Sanders Morris Harris, Inc. of Houston, Texas and George K. Baum & Company of
Kansas City, Missouri ("the Financial Advisors") to render fairness opinions. On
August 11, 2000, each of the Financial Advisors delivered its written opinion to
the Board, after having already delivered its written opinion to the Independent
Committee, to the effect that the Merger Consideration of $2.25 in cash per
share of Common Stock to be received in the Merger by the Company's stockholders
was, as of that date, fair, from a financial point of view, to the stockholders
of the Company who are not members of the Management Group. Copies of the
Financial Advisors' written opinions are attached as Appendix II and Appendix
III, to the accompanying proxy statement. You are urged to read the opinions in
their entirety for a description of the assumptions made, the matters considered
and the procedures followed by the Financial Advisors.
For the reasons set forth in the attached proxy statement, upon the
recommendation of the Independent Committee, the Company's seven member Board
(not including the three interested directors who excused themselves from the
meeting) has unanimously determined that the proposed Merger is in the best
interests of the Company and its stockholders, approved the terms of the Merger
Agreement and recommended that the Merger Agreement be approved and adopted by
the stockholders of the Company. THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
Attached is a Notice of Special Meeting of Stockholders and a proxy
statement containing a discussion of the background of, reasons for and terms of
the Merger. You are urged to read this material carefully. WHETHER OR NOT YOU
PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED
PROXY CARD AND MAIL IT PROMPTLY USING THE ENCLOSED PRE-ADDRESSED, POSTAGE-PAID,
RETURN ENVELOPE. FAILURE TO VOTE WILL HAVE THE SAME EFFECT AS A VOTE AGAINST
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THE MERGER AGREEMENT. If you attend the Special Meeting, you may vote in person
if you wish, even if you have previously returned your proxy card. Your prompt
cooperation will be greatly appreciated.
Very truly yours,
Robert H. McLean
Chairman of the Board and President
