Hampshire Group, Limited today announced that it is in receipt of a letter from NAF Holdings II, LLC (“Parent”) and NAF Acquisition Corp. (“Purchaser”) purporting to terminate the Agreement and Plan of Merger, dated as of February 23, 2009, as amended (the “Merger Agreement”), by and among Parent, Purchaser and Hampshire. In response, Hampshire delivered the following letter to Parent and Purchaser:

[HAMPSHIRE LETTERHEAD]

April 27, 2009

VIA FACSIMILE c/o Day Pitney LLP – (973) 966-1015

 
NAF Holdings II, LLC
NAF Acquisition Corp.
111 North Market -- Suite 1300
Wilmington, DE 19809
 
Attention: Efrem Gerszberg, President/Manager
Scott W. Goodman, Esq.
 
Re: NAF Acquisition Corp./Hampshire Group, Limited

Dear Messrs. Gerszberg and Goodman:

Hampshire Group, Limited (the “Company”) is in receipt of your letter, dated April 26, 2009, that states that NAF Acquisition Corp. (“Purchaser”) is terminating the Agreement and Plan of Merger, dated as of February 23, 2009, as amended (the “Merger Agreement”), by and among NAF Holdings II, LLC (“Parent”), Purchaser and the Company. The letter alleges that the basis for such attempted termination is that the Company has breached its obligations under the Merger Agreement. We believe the allegations are, in fact, without basis. We believe that your attempt to terminate the Merger Agreement has occurred because Parent and Purchaser do not have the financing in place necessary to consummate the tender offer and the merger on the terms agreed.

After giving effect to the amendment to the Merger Agreement that was entered into one week ago, all conditions to the tender offer were satisfied. In particular, shares representing more than 93% of our shares outstanding were validly tendered and not withdrawn, and the Company’s obligation to have a minimum of $37 million in cash available was satisfied. Purchaser and Parent have breached their obligation to close the tender offer and their representation to the Company one week ago that they had the financing in place necessary to consummate the tender offer and the merger.

No circumstances exist giving Purchaser or Parent the right to terminate the Merger Agreement. Hampshire Group, Limited hereby terminates the Merger Agreement pursuant to Sections 8.2(a) and 8.4(a).

The Company reserves all rights it has against Purchaser, Parent and their affiliates, including Mr. Efrem Gerszberg under his personal guarantee.

Sincerely,

HAMPSHIRE GROUP, LIMITED

By: /s/ Richard Mandell
Name: Richard Mandell
Title: Chief Executive Officer
 
cc: Day Pitney LLP (Facsimile No. (212) 916-2940
Attention: Frank E. Lawatsch, Jr., Esq.
Scott W. Goodman, Esq.

About Hampshire Group, Limited

Hampshire Group, Limited is a leading U.S. provider of women’s and men’s sweaters, wovens and knits, and a growing designer and marketer of branded apparel. Its customers include leading retailers such as Macy’s, Kohl’s, JC Penney, Dillard’s, Bloomingdale’s and Nordstrom, for whom it provides trend-right, branded apparel. Hampshire’s owned brands include Spring+Mercer, its newly-launched “better” apparel line, Designers Originals, the Company’s first brand and still a top-seller in department stores, as well as Mercer Street Studio, Requirements, and RQT. The Company also licenses the Geoffrey Beene and Dockers labels for men’s sweaters, both of which are market leaders in their categories, and recently acquired licenses for classification labels of the Joseph Abboud and Alexander Julian brands for men’s tops and bottoms.

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