EXHIBIT 1
[LETTERHEAD OF THREE CITIES RESEARCH, INC.]
January 12, 2001
Mr. John J. Pomerantz
Chairman of the Board
Leslie Fay Company, Inc.
1412 Broadway
2nd Floor
New York, New York 10018
Dear John:
Three Cities Research, Inc., Three Cities Fund II, L.P. and Three
Cities Offshore II, C.V. (collectively, "THREE CITIES FUNDS") is pleased to make
a proposal to acquire all of the outstanding shares of common stock, par value
$.01 per share ("COMMON STOCK") of The Leslie Fay Company, Inc. ("LESLIE FAY")
not currently owned by Three Cities Funds for a cash price per share of $3.50.
Three Cities Funds believes that this proposal is a fair one that will benefit
the public stockholders of Leslie Fay. The price represents a 24% premium over
the closing market price on January 11, 2001 of $2.81 per share and enables the
public stockholders to receive cash for their shares.
We expect that all Funds necessary to consummate the transaction would
be provided by the Three Cities Funds from available cash reserves.
Consummation of the transaction would be subject to approval by the
Board of Directors and stockholders of Leslie Fay in accordance with Leslie
Fay's Amended and Restated Certificate of Incorporation, as well as to other
conditions customary in a transaction of this type. It is possible that other
stockholder of Leslie Fay (including members of management) may be invited to
invest in the acquisition vehicle to be organized by Three Cities Funds. Three
Cities Funds anticipates that upon the completion of the acquisition, the shares
of Leslie Fay will cease to be quoted on the Nasdaq National Market System and
that the Common Stock will be de-registered under the Securities Exchange of
1934, as amended.
Three Cities Funds expects that the Board of Directors of Leslie Fay
will form a special committee of directors who are not affiliated with Three
Cities Funds, and that the special committee will engage legal and financial
advisors to represent both them and the public shareholders and to provide a
fairness opinion with respect to the proposed transaction. When the special
committee is selected, Three Cities Funds is prepared to
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Mr. John Pomerantz
January 12, 2001
Page 2
meet with the special committee and its advisors to provide them with any
information they may require.
We wish to make it clear that Three Cities Funds is not interested in
selling its interest in Leslie Fay.
Three Cities Funds is prepared to proceed expeditiously to complete
this proposal. We anticipate performing only a limited due diligence
investigation of the Company, which will consist primarily of updating our
understanding of the operations of the Company, its business and financial
condition. We are also prepared to instruct our attorneys to prepare a draft of
a proposed merger agreement promptly. Nothing in this letter shall be binding
upon Three Cities, and we reserve the right to withdraw or modify this proposal
at any time.
Thank you for your consideration of this proposal. We look forward to
your prompt response.
Sincerely,
/s/ W. Robert Wright
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W. Robert Wright
cc: Board of Directors
The Leslie Fay Company, Inc.
