EXHIBIT 1
June 21, 2000
Nabisco Group Holdings Corp.
c/o Mr. Blair Effron
Managing Director
UBS Warburg LLC
299 Park Avenue
New York, NY 10171
Nabisco Group Holdings Corp.
c/o Mr. Raymond McGuire
Managing Director
Morgan Stanley & Co. Incorporated
1585 Broadway - 35th Fl.
New York, New York 10036
Gentlemen:
In connection with your consideration of proposed business combinations of
Nabisco Group Holdings Corp. ("NGH") and Nabisco Group Corp. ("NA") with third
party bidders, we herewith submit the following offer pursuant to which existing
stockholders of NGH will receive in cancellation of their NGH stock $19 per
share in cash and a two year 14% note of new NGH in principal amount of $9 for
each share of NGH which they now own:
1. We will create a newly formed Delaware corporation ("Newco") which,
at the closing of our proposed transaction, will be funded with all of
the shares of common stock of NGH which we now own and with
approximately $3 billion in cash funded by Icahn Entities. The balance
of the cash needed for the merger will be supplied by a dividend from
NA out of the net proceeds (after repayment by NA of its existing
indebtedness) of proposed borrowings of senior secured debt in the
amount of $5.5 billion and subordinated debt in the amount of $2
billion. We have supplied you with a copy of a letter from The
Industrial Bank of Japan, Limited ("IBJ") indicating that they are
highly confident that they can raise the senior secured debt and that
the $2 billion subordinated debt can be accommodated by NA.
<PAGE>
Nabisco Group Holdings Corp.
June 21, 2000
Page 2
2. Entities controlled by Carl C. Icahn will own all of the outstanding
equity of Newco and of Parent. Newco will merge into NGH and the
stockholders of NGH would receive cash in the amount of $19 per NGH
share and two-year notes ("Notes") of new NGH in the face amount of $9
per old NGH share, which will pay interest at maturity at the rate of
14% per annum and would be secured by the NA shares owned by NGH. Any
stockholders of NGH who are controlled by Carl Icahn will receive no
consideration from NGH but the stockholders of Newco will receive all
of the outstanding equity of the Surviving Entity at the closing of the
merger.
3. Newco is willing, on or prior to July 21, 2000, unless earlier rejected
by NGH, to enter into an Agreement and Plan of Merger with NGH, in the
form which accompanies this letter or in any other form which is
acceptable to NGH and Newco ("Merger Agreement").
4. The proposed Merger Agreement, is a mark-up of the proposed agreement
which you circulated to prospective bidders.
5. As indicated above, the Merger Agreement contemplates that as a
condition to closing, NA will have borrowed, net of repayment of
existing debt, no less than $3.5 billion, which as stated above, is to
come from the NA borrowings which IBJ is highly confident can be raised
by them above subordinated debt which they believe NA can accomodate .
It also provides that as a condition to closing, NA will have declared
a dividend to its stockholders, including NGH, in the aggregate amount
of $3.5 billion, payable simultaneously with the closing of the Merger.
The dividend amount and the cash in Newco will be used to pay the $19
per share in cash to the public shareholders of NGH.
6. In order to facilitate the borrowings by NA, IBJ has indicated that it
is highly confident that it will be able to syndicate $5.5 billion of
NA debt to be used in part to repay outstanding indebtedness, and
further indicating that $2 billion additional debt could be
accommodated on a subordinated basis at NA. Their letter contemplates
that the amount of the borrowings less the repayment of the NA debt
will be dividended out of NA and to its stockholders and would then be
used as part of the cash portion of the merger consideration. Should
IBJ be asked to raise the debt, it would require a payment at that time
of no less than $25 million, which we are prepared to pay as soon as
you notify us that you have accepted our offer. The fee charged by IBJ,
should the loan be taken down would be consummated, would be no less
than 1.5% of the loan amount.
<PAGE>
Nabisco Group Holdings Corp.
June 21, 2000
Page 3
7. You will note that our proposed agreement does not require the payment
of a break-up fee in the event of a termination of the agreement as a
result of a Superior Offer or other condition calling for a break-up
fee in your proposed agreement; provided, however, that in the event of
a Superior Offer or other such condition, NGH would be required to pay
all of our costs and expenses of the transaction, including applicable
bank fees.
8. As indicated above, we have enclosed, as requested by you, a marked
copy of the proposed agreement and plan of merger. Obviously, we are
prepared to discuss with you or your representatives any of the
provisions of the proposed agreement and to attempt to come to a
satisfactory conclusion regarding the exact provisions thereof. Please
contact either Carl Icahn, Robert J. Mitchell or Marc Weitzen at Icahn
Associates. Please be aware, as we have informed you earlier, we have
not reviewed the disclosure materials but will do so should you wish to
proceed accept our offer.
We would appreciate your prompt attention to this matter.
Very truly yours,
/s/ Carl C. Icahn
Carl C. Icahn
[Letter to NGH re offer to merge]
