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CRONOS GLOBAL INCOME FUND XVI, L.P.
SUPPLEMENT DATED FEBRUARY 6, 1997
TO THE PROSPECTUS DATED DECEMBER 28, 1995
As Supplemented December 27, 1996
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On February 3, 1997, Arthur Andersen, London, England, resigned as
auditors of The Cronos Group, a Luxembourg corporation headquartered in Orchard
Lea, England (the "Parent Company"). The Parent Company is the indirect
corporate parent of Cronos Capital Corp., the General Partner of Cronos Global
Income Fund IV, L.P. (the "Partnership"). In its letter of resignation, Arthur
Andersen states that it was unable to obtain adequate information in response to
inquiries it had made in connection with its audit of the Parent Company for the
year ended December 31, 1996. In connection with its resignation, Arthur
Andersen also prepared a report pursuant to the provisions of Section 10A(b)(2)
of the Securities Exchange Act of 1934, as amended, for filing by the Parent
Company with the SEC. In this report, Arthur Andersen explains, based upon the
information it then had available, that:
(i) A disbursement of $1.5 million by the Parent Company and
subsequent correspondence from the Parent Company's bank concerning the
repayment of the disbursement to the Parent Company may have violated laws and
regulations to which the Parent Company is subject, including U.S. securities
laws, and that these matters may have a material effect upon the 1996
financial statements of the Parent Company;
(ii) Senior management of the Parent Company had not taken, and the
Board of Directors of the Parent Company had not caused senior management to
take, timely and appropriate remedial actions with respect to these matters;
and
(iii) The circumstances of these matters and failure to take remedial
action warranted Arthur Andersen's resignation as outside auditors of the
Parent Company.
In its letter of resignation to the Parent Company, Arthur Andersen
states that it is resigning as auditors of the Parent Company and of all other
entities affiliated with the Parent Company. While its letter of resignation
is not addressed to the General Partner, Cronos Securities Corp., or the
Partnership, Arthur Andersen has confirmed to the General Partner that its
resignation as auditors of the entities referred to in its letter of
resignation includes Cronos Capital Corp., Cronos Securities Corp., and the
Partnership.
The General Partner also understands that the three outside directors
on the Parent Company's six-member Board of Directors have resigned.
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The disbursement referred to in Arthur Andersen's letter of resignation was not
made by the General Partner, Cronos Securities Corp., or by the Partnership.
The General Partner does not believe that Arthur Andersen's resignation was due
to any concern by Arthur Andersen over the accounting policies and procedures
followed by the General Partner, Cronos Securities Corp., or the Partnership.
Nevertheless, pending clarification of the concerns expressed by Arthur
Andersen in its letter of resignation, clarification of the corporate
governance of the Parent Company, and the appointment of new auditors for the
General Partner, Cronos Securities Corp., and the Partnership, the General
Partner is suspending the offer and sale of Units in the Partnership, effective
February 3, 1997.
