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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
AUGUSTA PARTNERS, L.P.
(Name of Issuer)
AUGUSTA PARTNERS, L.P.
(Name of Person(s) Filing Statement)
PARTNERSHIP INTERESTS
(Title of Class of Securities)
Mr. Mitchell A. Tanzman
Augusta Management, L.L.C.
CIBC Oppenheimer Tower
One World Financial Center, 33rd Floor
200 Liberty Street
New York, NY 10281
(212) 667-7649
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person(s) Filing Statement)
With a copy to:
Kenneth S. Gerstein, Esq.
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
(212) 756-2533
November __, 1997
(Date Tender Offer First Published,
Sent or Given to Security Holders)
Calculation of Filing Fee
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Transaction Valuation: $50,000,000 (a) Amount of Filing Fee: $10,000 (b)
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(a) Calculated as the aggregate maximum purchase price for partnership
interests.
(b) Calculated a 1/50th of 1% of the Transaction Valuation.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid:_________________________________________________________
Form or Registration No.:_______________________________________________________
Filing Party:___________________________________________________________________
Date of Filing:_________________________________________________________________
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ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Augusta Partners, L.P. (the
"Partnership"). The Partnership is registered under the Investment Company Act
of 1940, as amended (the "1940 Act") as a closed-end, non-diversified,
management investment company and is organized as a Delaware limited
partnership. The principal executive office of the Partnership is located at
CIBC Oppenheimer Tower, One World Financial Center, 33rd Floor, 200 Liberty
Street, New York, New York 10281.
(b) The title of the securities which are the subject of the offer
to purchase ("Offer to Purchase") is partnership interests or portions thereof
in the Partnership. (As used herein, the term "Interest" or "Interests", as the
context requires, shall refer to the partnership interests in the Partnership
and portions thereof which constitute the class of security which is the subject
of this tender offer or the partnership interests in the Partnership or portions
thereof which are tendered by partners to the Partnership pursuant to the Offer
to Purchase.) As of the close of business on October 1, 1997, there was
approximately $146,818,188 outstanding in capital of the Partnership held in
Interests. Subject to the conditions set forth in the Offer to Purchase, the
Partnership will purchase up to $50,000,000 of Interests which are tendered by
and not withdrawn prior to 12:00 Midnight, New York time, on December 31, 1997,
subject to any extension of the Offer to Purchase. The purchase price of
Interests tendered to the Partnership will be their net asset value as of the
close of business on December 31, 1997, if the Offer to Purchase expires on the
initial expiration date of December 31, 1997, and otherwise, at net asset value
as of the close of business on such later date as corresponds to any extension
of the Offer to Purchase. Payment of the purchase price will consist of: (1)
cash and/or marketable securities (valued in accordance with the Partnership's
First Amended and Restated Limited Partnership Agreement dated as of July 16,
1997 (the "L.P. Agreement")) in an aggregate amount equal to 95 percent of the
estimated unaudited net asset value of Interests tendered and accepted by the
Partnership, determined as of the expiration date, which is expected to be 12:00
Midnight, December 31, 1997, payable within five business days after the
expiration date (the "Cash Payment"); and (2) a promissory note (the "Note")
entitling the holder thereof to a contingent payment equal to the excess, if
any, of (a) the net asset value of Interests tendered and accepted by the
Partnership as of the expiration date, determined based on audited financial
statements of the Partnership, over (b) the Cash Payment. The Note will be
delivered to the tendering partner in the manner set forth in the Letter of
Transmittal, attached hereto as Exhibit C within five business days after
expiration of the Offer to Purchase, will not bear interest or be transferable
and will be payable in cash within five business days after completion of the
audit of the financial statements of the Partnership. The audit of the
Partnership's 1997 financial statements will be completed within 60 days after
the end of the year. Although the Partnership has retained the option to pay all
or a portion of the purchase price by distributing marketable securities, the
purchase price will be paid entirely in cash except in the unlikely event that
the Partnership's Individual General Partners determine that the distribution of
securities is necessary to avoid or mitigate any adverse effect of the Offer to
Purchase on the remaining partners of the Partnership. A copy of the cover
letter to the Offer to Purchase and Letter of Transmittal and the Offer to
Purchase are attached hereto as Exhibits A and B, respectively.
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(c) Interests are not traded in any market, and any transfer thereof
is strictly limited by the terms of the L.P. Agreement.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The purchase price for Interests acquired pursuant to the Offer
to Purchase, which will not exceed $50,000,000, will be derived from: (1) cash
on hand; and (2) the proceeds of the sale of and/or delivery of securities and
portfolio assets held by the Partnership. The Partnership will segregate with
its custodian cash or U.S. government securities or other liquid securities
equal to the value of the amount estimated to be paid under any Notes as
described above. The purchase price for Interests acquired pursuant to the Offer
to Purchase shall not be derived from any of the General Partners.
(b) Neither the Partnership nor the General Partners expect to
borrow funds to purchase Interests in connection with the Offer to Purchase.
ITEM 3. PURPOSE OF THIS TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER
OR AFFILIATE.
The purpose of the Offer to Purchase is to provide liquidity to
limited partners who hold Interests as contemplated by and in accordance with
the procedures set forth in the Partnership's Confidential Memorandum dated July
16, 1996 (the "Confidential Memorandum") and the L.P. Agreement. Interests that
are tendered to the Partnership in connection with the Offer to Purchase will be
retired, although the Partnership may issue Interests from time to time in
transactions not involving any public offering conducted pursuant to Rule 506 of
Regulation D promulgated under the Securities Act of 1933, as amended. The
Partnership presently intends to accept subscriptions for Interests commencing
on January 2, 1998. Neither the Partnership nor the General Partners have plans
to offer for sale any other additional Interests, but may do so in the future.
Neither the Partnership nor the General Partners have any plans or
proposals which relate to or would result in: (a) the acquisition by any person
of additional Interests in the Partnership (other than the ability to make
additional Interests available for subscription from time to time in the
discretion of the Partnership), or the disposition of Interests in the
Partnership; (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Partnership; (c) a sale or transfer
of a material amount of assets of the Partnership (other than in connection with
ordinary portfolio transactions of the Partnership); (d) any change of the
identity of the general partners of the Partnership, or in the management of the
Partnership including, but not limited to, any plans or proposals to change the
number or the term of the Individual General Partners of the Partnership, to
fill any existing vacancy for an Individual General Partner of the Partnership
or to change any material term of the investment advisory arrangements with
Augusta Management, L.L.C., the manager (the "Manager") of the Partnership; (e)
any material change in the present distribution policy or indebtedness or
capitalization of the Partnership; (f) any other material change in the
Partnership's structure or business, including any plans or proposals to make
any changes in its fundamental investment
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policy, as amended, for which a vote would be required by Section 13 of the 1940
Act; or (g) any changes in the L.P. Agreement or other actions which may impede
the acquisition of control of the Partnership by any person. Items (h) through
(j) of this Item 3 are not applicable to the Partnership.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
There have not been any transactions involving the Interests that
were effected during the past 40 business days by the Partnership, any general
partner of the Partnership any person controlling the Partnership or any general
partner of the Partnership.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE ISSUER'S SECURITIES.
The Confidential Memorandum of the Partnership and the L.P.
Agreement, which were provided to each limited partner in advance of subscribing
for Interests, provide that the Individual General Partners have the discretion
to determine whether the Partnership will purchase Interests from time to time
from partners pursuant to written tenders. The Confidential Memorandum also
states that the Manager of the Partnership expects that generally it will
recommend to the Individual General Partners that the Partnership purchase
Interests from partners once in each year (other than 1996) effective as of the
end of each such year. At the end of 1996, the Partnership did not offer to
purchase Interests from partners pursuant to a written tender. The Partnership
is not aware of any contract, arrangement, understanding or relationship
relating, directly or indirectly, to this tender offer (whether or not legally
enforceable) between: (i) the Partnership and any general partner of the
Partnership or any person controlling the Partnership or any general partner of
the Partnership; and (ii) any person with respect to Interests.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
No persons have been employed, retained or are to be compensated by
the Partnership to make solicitations or recommendations in connection with the
Offer to Purchase.
ITEM 7. FINANCIAL INFORMATION.
(a) Reference is hereby made to the financial statements attached as
part of Exhibit A hereto, which are incorporated herein by reference. Audited
financial statements for 1996 are included. No financial statements for the
Partnership exist prior to 1996. The Partnership does not file quarterly
unaudited financial statements under the Securities Exchange Act of 1934, as
amended. Also included are the unaudited financial statements of the Partnership
for the six month period ended June 30, 1997, which the Partnership has prepared
and furnished to limited partners pursuant to Rule 30d-1 under the 1940 Act, and
filed with the Securities and Exchange Commission pursuant to Rule 30b2-1 under
the 1940 Act. The Partnership does not have shares, and consequently does not
have earnings or book value per share information available.
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(b) The Partnership's assets would be reduced by the amount of the
tendered Interests, but income relative to assets may be affected by the tender
offer. The Partnership does not have shares and consequently does not have
earnings or book value per share information available.
ITEM 8. ADDITIONAL INFORMATION.
(a) None
(b) None
(c) Not Applicable
(d) None
(e) Reference is hereby made to the information contained in the
Offer of Purchase attached as Exhibit A, which is incorporated
herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
A. Cover letter to Offer to Purchase and Letter of Transmittal.
B. Offer to Purchase (including Financial Statements).
C. Form of Letter of Transmittal.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
AUGUSTA PARTNERS, L.P.
By: Augusta Management, L.L.C.
Manager
By: CIBC Oppenheimer Corp.
Managing Member
By: /s/ Mitchell A. Tanzman
------------------------------
Name: Mitchell A. Tanzman
Title: Managing Director
November , 1997
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EXHIBIT INDEX
EXHIBIT PAGE NUMBER
A Cover letter to Offer to Purchase
and Letter of Transmittal 7
B Offer to Purchase
(including Financial Statements) 8
C Letter of Transmittal 59
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CIBC OPPENHEIMER
A CIBC World Markets Company
CIBC Oppenheimer Corp.
CIBC Oppenheimer Tower
World Financial Center
New York, New York 10281
Tel: 212-667-7000
Tel: 800-999-6726
November , 1997
Dear Limited Partner:
As we originally indicated in the offering material, Augusta Partners, L.P.
provides investors with the opportunity to redeem some or all of their
investment by means of a tender offer. Accordingly, enclosed please find the
documentation necessary to tender interests in the Partnership. If you wish to
maintain your investment and withdraw nothing from your account, you do not have
to do anything.
We hope you are pleased with your investment to date and elect to remain
invested in the Partnership. If you have any questions or require further
information, please contact your Account Executive.
Sincerely,
/s/ Mitchell A. Tanzman
--------------------------------------
Mitchell A. Tanzman
Individual General Partner
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AUGUSTA PARTNERS, L.P.
CIBC Oppenheimer Tower
One World Financial Center, 33rd Floor
200 Liberty Street
New York, New York 10281
OFFER TO PURCHASE $50,000,000 OF OUTSTANDING
PARTNERSHIP INTERESTS
AT NET ASSET VALUE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME,
ON WEDNESDAY, DECEMBER 31, 1997, UNLESS THE OFFER IS EXTENDED
To the Partners of
Augusta Partners, L.P.:
Augusta Partners, L.P., a closed-end, non-diversified, management
investment company organized as a Delaware limited partnership (the
"Partnership"), is offering to purchase for cash upon the terms and conditions
set forth in this offer to purchase ("Offer to Purchase") and the related letter
of transmittal ("Letter of Transmittal," which together with the Offer to
Purchase constitutes the "Offer") up to $50,000,000 of interests in the
Partnership or portions thereof pursuant to tenders by partners at a price equal
to their unaudited net asset value as of December 31, 1997, if the Offer expires
on December 31, 1997, and otherwise, their unaudited net asset value on such
later date as corresponds to any extension of the Offer. (As used in this Offer,
the term "Interest" or "Interests", as the context requires, shall refer to the
interests in the Partnership and portions thereof representing beneficial
interests in the Partnership.) This Offer is being made to all partners of the
Partnership and is not conditioned upon any minimum amount of Interests being
tendered, but is subject to certain conditions described below. Interests are
not traded on any established trading market and are subject to strict
restrictions on transferability pursuant to the Partnership's First Amended and
Restated Limited Partnership Agreement dated as of July 16, 1996 (the "L.P.
Agreement").
If you desire to tender all or any portion of your Interest in the
Partnership in accordance with the terms of the Offer, you should complete and
sign the attached Letter of Transmittal and send or deliver it to the
Partnership in the manner set forth below.
IMPORTANT
NEITHER THE PARTNERSHIP NOR ITS GENERAL PARTNERS MAKE ANY
RECOMMENDATION TO ANY LIMITED PARTNER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING INTERESTS. LIMITED PARTNERS MUST MAKE THEIR OWN DECISIONS WHETHER TO
TENDER INTERESTS, AND IF SO, THE PORTION OF THEIR INTERESTS TO TENDER.
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NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF
OF THE PARTNERSHIP AS TO WHETHER LIMITED PARTNERS SHOULD TENDER INTERESTS
PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE
CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH
RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE PARTNERSHIP.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF SUCH TRANSACTION OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Questions and requests for assistance and requests for additional
copies of the Offer may be directed to the Partnership's service agent:
PFPC Inc.
P.O. Box 576
Claymont, Delaware 19703
Phone: (888) 520-3277
Fax: (302) 791-2387
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TABLE OF CONTENTS
1. Background and Purpose of the Offer............................... 4
2. Offer to Purchase and Price ...................................... 4
3. Amount of Tender ................................................. 5
4. Procedure for Tenders ............................................ 5
5. Withdrawal Rights ................................................ 6
6. Purchases and Payment ............................................ 6
7. Certain Conditions of the Offer .................................. 7
8. Certain Information About the Partnership ........................ 8
9. Certain Federal Income Tax Consequences .......................... 8
10. Miscellaneous .................................................... 9
Annex A Financial Statements
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1. BACKGROUND AND PURPOSE OF THE OFFER. The purpose of the Offer is
to provide liquidity to limited partners for Interests as contemplated by and in
accordance with the procedures set forth in the Partnership's Confidential
Memorandum dated July 16, 1996 (the "Confidential Memorandum") and the L.P.
Agreement. The Confidential Memorandum and the L.P. Agreement, which were
provided to each partner in advance of subscribing for Interests, provide that
the Individual General Partners have the discretion to determine whether the
Partnership will purchase Interests from time to time from partners pursuant to
written tenders. The Confidential Memorandum also states that Augusta
Management, L.L.C., the manager of the Partnership (the "Manager"), expects that
generally it will recommend to the Individual General Partners that the
Partnership purchase Interests from limited partners at the end of each year. In
light of the fact that there is no secondary trading market for Interests and
transfers of Interests are prohibited without prior approval of the Partnership,
the Individual General Partners of the Partnership have determined that the
Offer is in the best interests of limited partners of the Partnership in order
to provide liquidity for Interests as contemplated in the Confidential
Memorandum and the L.P. Agreement. The Individual General Partners intend to
consider the continued desirability of the Partnership making an offer to
purchase Interests at the end of each year, but the Partnership will at no time
be required to make any such offer. This is the first such tender offer made by
the Partnership.
The purchase of Interests pursuant to the Offer will have the effect of
increasing the proportionate interest in the Partnership of partners who do not
tender Interests. Partners who retain their Interests may be subject to
increased risks that may possibly result from the reduction in the Partnership's
aggregate assets resulting from payment for the Interests tendered. These risks
include the potential for greater volatility due to decreased diversification
and higher expenses. However, the Partnership believes that these results are
unlikely given the nature of the Partnership's assets. Interests that are
tendered to the Partnership in connection with this Offer will be retired,
although the Partnership may issue new Interests from time to time in
transactions not involving any public offering conducted pursuant to Rule 506 of
Regulation D promulgated under the Securities Act of 1933, as amended. The
Partnership presently intends to accept subscriptions for Interests commencing
on January 2, 1998. The Partnership has no plans to offer for sale any other
additional Interests, but may do so in the future.
2. OFFER TO PURCHASE AND PRICE. The Partnership will, upon the terms
and subject to the conditions of the Offer, purchase up to $50,000,000 of
outstanding Interests which are properly tendered by and not withdrawn (in
accordance with Section 5 below) prior to 12:00 Midnight, New York City time, on
Wednesday, December 31, 1997 (such time and date being hereinafter called the
"Initial Expiration Date"), or such later date as corresponds to any extension
of the Offer. The later of the Initial Expiration Date or the latest time and
date to which the Offer is extended is hereinafter called the "Expiration Date."
The Partnership reserves the right to extend, amend or cancel the Offer as
described in Sections 3 and 7 below. The purchase price of an Interest tendered
will be its net asset value as of the close of business on the Expiration Date,
payable as set forth in Section 6. As of the close of business on September 30,
1997, the estimated unaudited net asset values of an Interest corresponding to
an initial capital contribution of $150,000 on September 4, 1996 and October 1,
1996, the initial closing dates of the Partnership, were approximately $205,085
and $189,250 respectively. As of the close of business on October 1, 1997,
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there was approximately $146,818,188 outstanding in capital of the Partnership
held in Interests. Partners may obtain weekly current net asset value
information until the expiration of the Offer, and daily net asset value
information during the last five business days of the Offer, by contacting PFPC
Inc. ("PFPC"), at the telephone number or address set forth on page 2 above,
Monday through Friday, except holidays, during normal business hours of 9:00
a.m. to 5:00 p.m. Eastern standard time.
3. AMOUNT OF TENDER. Subject to the limitations set forth below,
limited partners may tender their entire Interest or a portion of their
Interest, defined as a specific dollar value. A limited partner who tenders for
repurchase a portion of such limited partner's Interest, however, shall be
required to maintain a capital account balance equal to $150,000. The Offer is
being made to all partners of the Partnership and is not conditioned upon any
minimum amount of Interests being tendered. The Partnership has been informed by
its general partners and affiliates that they may tender to the Partnership all
or any Interests held by them, including the portion of the Manager's Interest
attributable to the incentive allocations credited to the Manager's capital
account from the capital accounts of limited partners.
If the amount of the Interests that are properly tendered pursuant
to the Offer, and not withdrawn pursuant to Section 5 below, is less than or
equal to $50,000,000 (or such greater amount as the Partnership may elect to
purchase pursuant to the Offer), the Partnership will, upon the terms and
subject to the conditions of the Offer, purchase all of the Interests so
tendered unless the Partnership elects to cancel or amend the Offer or postpone
acceptance of tenders made pursuant to the Offer, as provided in Section 7
below. If more than $50,000,000 of Interests are duly tendered to the
Partnership prior to the expiration of the Offer, and not withdrawn pursuant to
Section 5 below, the Partnership will, in its sole discretion (a) accept the
additional Interests permitted to be accepted pursuant to Rule 13e-4(f)(1)
promulgated under the Securities Exchange Act of 1934, as amended; (b) extend
the Offer, if necessary, and increase the amount of Interests that the
Partnership is offering to purchase to an amount it believes sufficient to
accommodate the excess Interests tendered as well as any Interests tendered
during the extended Offer; or (c) accept Interests tendered prior to or on the
Expiration Date for payment on a pro rata basis based on their net asset value.
The Offer may be extended, amended or canceled in various other circumstances
described in Section 7 below.
4. PROCEDURE FOR TENDERS. Limited partners wishing to tender
Interests pursuant to the Offer should send or deliver a completed and executed
Letter of Transmittal to PFPC, to the attention of Karen Castagna, at the
address set forth on page 2 above, or fax a completed and executed Letter of
Transmittal to PFPC, also to the attention of Karen Castagna, at the fax number
set forth on page 2 above. The completed and executed Letter of Transmittal must
be received by PFPC no later than the Expiration Date.
The Partnership recommends that all documents be submitted to PFPC via
registered mail, return receipt requested or by facsimile transmission. A
Limited Partner choosing to fax to PFPC such Letter of Transmittal should also
send or deliver the original completed and executed Letter of Transmittal to
PFPC. Limited Partners wishing to confirm receipt of a Letter of Transmittal may
contact PFPC at the address and phone number set forth on page 2 above. The
method of delivery of any documents is at the election and complete risk of the
partner tendering an Interest including, but not limited to, the failure of PFPC
to receive any Letter of Transmittal or other document submitted by facsimile
transmission. All questions as to the validity, form, eligibility (including
time of receipt) and acceptance of tenders will be determined by the
Partnership, in its sole discretion, and such determination shall be final and
binding. The Partnership reserves the absolute right to reject any or all
tenders determined by it not to be in appropriate form or the acceptance of or
payment for which would, in the opinion of counsel for the Partnership, be
unlawful. The Partnership also reserves the absolute
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right to waive any of the conditions of the Offer or any defect in any tender
with respect to any particular Interest or any particular partner, and the
Partnership's interpretations of the terms and conditions of the Offer will be
final and binding. Unless waived, any defects or irregularities in connection
with tenders must be cured within such time as the Partnership shall determine.
Tenders will not be deemed to have been made until the defects or irregularities
have been cured or waived. Neither the Partnership nor any general partner of
the Partnership shall be obligated to give notice of any defects or
irregularities in tenders, nor shall any of them incur any liability for failure
to give such notice.
5. WITHDRAWAL RIGHTS. Any partner tendering an Interest pursuant to
this Offer may withdraw such tender at any time prior to or on the Expiration
Date and, if Interests are not accepted by the Partnership at the close of the
Expiration Date, at any time after 40 business days after the commencement of
the Offer. To be effective, any notice of withdrawal must be timely received by
PFPC at the address set forth on page 2 above. Any notice of withdrawal must
specify the name of the person withdrawing a tender and the amount of the
Interest previously tendered which is being withdrawn. All questions as to the
form and validity (including time of receipt) of notices of withdrawal will be
determined by the Partnership in its sole discretion, and such determination
shall be final and binding. Interests properly withdrawn shall not thereafter be
deemed to be tendered for purposes of the Offer. However, withdrawn Interests
may be retendered by following the procedures described in Section 4 prior to
the Expiration Date.
6. PURCHASES AND PAYMENT. For purposes of the Offer, the Partnership
will be deemed to have accepted (and thereby purchased) Interests which are
tendered as, if and when it gives oral or written notice to the tendering
partner of its election to purchase such Interest. As stated in Section 2 above,
the purchase price of an Interest tendered by any partner will be the net asset
value thereof as of the close of business on December 31, 1997, if the Offer
expires on the Initial Expiration Date, and otherwise on such later date as
corresponds to any extension of the Offer. The net asset value will be
determined after all allocations to capital accounts of the partners required to
be made by the L.P. Agreement have been made.
Payment of the purchase price will consist of: (1) cash and/or
marketable securities (valued in accordance with the Partnership's L.P.
Agreement) in an aggregate amount equal to 95% of the estimated unaudited net
asset value of the Interests tendered and accepted by the Partnership,
determined as of the Expiration Date, which is expected to be 12:00 Midnight,
New York City time, on Wednesday, December 31, 1997, payable within five
business days after the Expiration Date (the "Cash Payment") in the manner set
forth below; and (2) a promissory note (the "Note") entitling the holder thereof
to a contingent payment equal to the excess, if any, of (a) the net asset value
of the Interests tendered and accepted by the Partnership as of the Expiration
Date, determined based on the audited financial statements of the Partnership,
over (b) the Cash Payment. The Note will be delivered to the tendering partner
in the manner set forth below within five business days after the Expiration
Date, will not bear interest or be transferable, and will be payable in cash (in
the manner set forth below) within five business days after completion of the
audit of the financial statements of the Partnership. It is anticipated that the
audit of the Partnership's 1997 financial statements will be completed within 60
days after the end of the year. Although the Partnership has retained the option
to pay all or a portion of the
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purchase price by distributing marketable securities, the purchase price will be
paid entirely in cash except in the unlikely event that the Partnership's
Individual General Partners determine that the distribution of securities is
necessary to avoid or mitigate any adverse effect of the Offer on the remaining
partners of the Partnership.
The Cash Payment will be made by wire transfer directly to the
tendering partner's brokerage account with CIBC Oppenheimer Corp. ("CIBC Opco")
unless, pursuant to the Letter of Transmittal, the tendering partner elects to
receive the Cash Payment by check mailed first class (at the sole risk of the
tendering partner) to the address set forth in the Letter of Transmittal.
Partners who do not elect to have the Cash Payment mailed to them should note
that Cash Payments wired directly to brokerage accounts will be subject upon
withdrawal to any fees the CIBC Opco would customarily assess upon the
withdrawal of cash from a brokerage account.
The Note will be deposited directly to a tendering partner's
brokerage account with CIBC Opco unless, pursuant to the Letter of Transmittal,
the tendering partner elects to have the Note delivered directly to the
tendering partner at the address set forth in the Letter of Transmittal. Any
amounts payable under the Note will be paid to the tendering partner in the same
manner designated in the Letter of Transmittal for payment of the Cash Payment.
Cash Payments for Interests acquired pursuant to the Offer will be
derived from: (a) cash on hand; and (b) the proceeds of the sale of securities
and portfolio assets held by the Partnership. The Partnership will segregate
with its custodian cash or U.S. government securities or other liquid securities
equal to the value of the amount estimated to be paid under any Notes, as
described above. The Partnership does not expect to borrow funds to purchase
Interests tendered in connection with the Offer.
7. CERTAIN CONDITIONS OF THE OFFER. The Partnership reserves the
right, at any time and from time to time, to extend the period of time during
which the Offer is pending by notifying partners of such extension. In the event
that the Partnership so elects to extend the tender period, the net asset value
of Interests tendered will be determined as of a date after December 31, 1997,
corresponding to any extension of the Offer. During any such extension, all
Interests previously tendered and not withdrawn will remain subject to the
Offer. The Partnership also reserves the right, at any time and from time to
time, up to and including acceptance of tenders pursuant to the Offer, to: (a)
cancel the Offer in the circumstances set forth in the following paragraph and
in the event of such cancellation not to purchase or pay for any Interests
tendered pursuant to the Offer; (b) amend the Offer; and (c) postpone the
acceptance of Interests. If the Partnership determines to amend the Offer or to
postpone the acceptance of Interests tendered, it will, to the extent necessary,
extend the period of time during which the Offer is open as provided above and
will promptly notify partners.
The Partnership may cancel the Offer, or amend the Offer, or
postpone the acceptance of tenders made pursuant to the Offer, if: (a) the
Partnership would not be able to liquidate portfolio securities in a manner
which is orderly and consistent with the Partnership's investment objectives and
policies in order to purchase Interests tendered pursuant to the Offer; (b)
there is, in the Individual General Partners' judgment, any (i) legal action or
proceeding instituted or threatened challenging the Offer or otherwise
materially adversely affecting the Partnership, (ii) declaration of a banking
moratorium by Federal or state authorities or any suspension of payment by banks
in the United States or New York State, which is material to the Partnership,
(iii) limitation imposed by Federal or state authorities on the extension of
credit by lending institutions, (iv) suspension of trading on any organized
exchange or over-the-counter market where the Partnership has a material
investment, (v) commencement of war, armed hostilities or other international or
national calamity directly or indirectly involving the United States which is
material to the Partnership, (vi) material decrease in the net asset value of
the Partnership from the net asset value of the Partnership as of commencement
of the Offer, or (vii) other event or condition which would have a material
adverse effect on the Partnership or its partners if Interests tendered pursuant
to the Offer were purchased; or (c) the Independent Individual General Partners
of the Partnership determine that it is not in the best interest of the
Partnership to purchase Interests pursuant to the Offer. However, there can be
no assurance that
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<PAGE> 8
the Partnership will exercise its right to extend, amend or cancel the Offer or
to postpone acceptance of tenders pursuant to the Offer.
8. CERTAIN INFORMATION ABOUT THE PARTNERSHIP. The Partnership is a
closed-end, non-diversified, management investment company organized as a
Delaware limited partnership. The principal office of the Partnership is located
at CIBC Oppenheimer Tower, One World Financial Center, 33rd Floor, 200 Liberty
Street, New York, New York 10281. Interests are not traded on any established
trading market and are subject to strict restrictions on transferability
pursuant to the L.P. Agreement.
The Partnership does not have any plans or proposals which relate to
or would result in: (a) the acquisition by any person of additional Interests
(other then the Partnership's present intention to accept subscriptions for
Interests commencing on January 2, 1998 and other than the ability to make
additional Interests available for other subscriptions from time to time in the
discretion of the Partnership), or the disposition of Interests; (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Partnership; (c) a sale or transfer of a material
amount of assets of the Partnership (other than in connection with ordinary
portfolio transactions of the Partnership); (d) any change of the identity of
the general partners of the Partnership, or in the management of the Partnership
including, but not limited to, any plans or proposals to change the number or
the term of the Individual General Partners of the Partnership, to fill any
existing vacancy for an Individual General Partner of the Partnership or to
change any material term of the investment advisory arrangements with the
Manager of the Partnership; (e) any material change in the present distribution
policy or indebtedness or capitalization of the Partnership; (f) any other
material change in the Partnership's structure or business, including any plans
or proposals to make any changes in its fundamental investment policy for which
a vote would be required by Section 13 of the Investment Company Act of 1940, as
amended; or (g) any changes in the L.P. Agreement or other actions which may
impede the acquisition of control of the Partnership by any person.
The Manager of the Partnership is entitled under the terms of the
L.P. Agreement to receive, subject to certain limitations, an incentive
allocation, as described in the L.P. Agreement.
9. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following discussion
is a general summary of the federal income tax consequences of the purchase by
the Partnership from partners of Interests pursuant to the Offer. Partners
should consult their own tax adviser for a complete description of the tax
consequences to them of a purchase by the Partnership of Interests pursuant to
the Offer.
In general, a partner from whom an Interest is purchased by the
Partnership will be treated as receiving a distribution from the Partnership.
Such partner generally will not recognize income or gain as a result of the
purchase, except to the extent (if any) that the amount of consideration
received by the partner exceeds such partner's then adjusted tax basis in such
partner's Interest. A partner's basis in such partner's Interest will be reduced
(but not below zero) by the amount of consideration received by the partner from
the Partnership in connection with
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<PAGE> 9
the purchase of such Interest. A partner's basis in such partner's Interest will
be adjusted for income, gain or loss allocated (for tax purposes) to such
partner for periods prior to the purchase of such Interest. Cash distributed to
a partner in excess of the adjusted tax basis of such partner's Interest is
taxable as capital gain or ordinary income, depending on the circumstances. A
partner whose entire Interest is purchased by the Partnership may recognize a
loss, but only to the extent that the amount of consideration received from the
Partnership is less than the partner's then adjusted tax basis in such partner's
Interest.
10. MISCELLANEOUS. The Offer is not being made to, nor will tenders
be accepted from, partners in any jurisdiction in which the Offer or its
acceptance would not comply with the securities or Blue Sky laws of such
jurisdiction. The Partnership is not aware of any jurisdiction in which the
Offer or tenders pursuant thereto would not be in compliance with the laws of
such jurisdiction. However, the Partnership reserves the right to exclude
partners from the Offer in any jurisdiction in which it is asserted that the
Offer cannot lawfully be made. The Partnership believes such exclusion is
permissible under applicable laws and regulations, provided the Partnership
makes a good faith effort to comply with any state law deemed applicable to the
Offer.
The Partnership has filed an Issuer Tender Offer Statement on
Schedule 13E-4 with the Securities and Exchange Commission which includes
certain information relating to the Offer summarized herein. A copy of such
statement may be obtained from the Partnership by contacting PFPC at the address
and phone numbers set forth on page 2 above, or from the public reference office
of the Securities and Exchange Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington D.C. 20549.
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<PAGE> 10
ANNEX A
Financial Statements
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<PAGE> 11
Augusta Partners, L.P
Financial Staements
For the Six Months Ended
June 30, 1997
(Unaudited)
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<PAGE> 12
Augusta Partners, L.P.
Financial Statements
For the Six Months Ended
June 30, 1997
(Unaudited)
Contents
Statement of Assets, Liabilities and Partners Capital 2
Statement of Operations 3
Statement of Changes in Partners Capital - Net Assets 4
Notes to Financial Statements 5
Schedule of Portfolio Investments 13
Schedule of Securities Sold, Not Yet Purchased 19
Schedule of Written Options 20
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<PAGE> 13
Augusta Partners, L.P.
Statement of Assets, Liabilities and Partners' Capital (in thousands)
June 30, 1997
(Unaudited)
Assets
Cash $ 5
Investments in securities, at market
(identified cost - $117,989) 127,276
Due from broker 18,774
Interest receivable 109
Dividends receivable 4
Organizational costs(net of accumulated amortization of $114) 578
Other assets 11
Total assets 146,757
Liabilities
Due to broker 9,952
Loan payable 3,097
Securities sold, not yet purchased - at market
(proceeds of sales - $11,533) 10,209
Management fee payable 98
Accrued expenses 354
Total liabilities 23,710
Net Assets $ 123,047
Partners' Capital
Represented by:
Capital contributions, (net of syndication costs of $50) $ 100,005
Accumulated net investment loss (588)
Accumulated net realized gain on investments 13,019
Net unrealized appreciation on investments and foreign
currency transactions 10,611
Partners' Capital - Net Assets $ 123,047
The accompanying notes are an integral part of these financial statements.
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<PAGE> 14
Augusta Partners, L.P.
Statement of Operations ( in thousands)
Six Months Ended
June 30, 1997
(Unaudited)
Investment Income
Dividends $170
Interest 625
795
Operating expenses
Management fee 580
Professional fees 139
Administration fees 83
Amortization of organizational costs 69
Dividends on securities sold, not yet purchased 61
Interest expense 57
Insurance expense 44
Custodian fees 29
Individual General Partners' fees and expenses 11
Miscellaneous 6
1,079
Net investment loss (284)
Realized and unrealized gain on investments
Realized gain (loss) on investments
Investment securities 4,851
Futures transactions (285)
Purchased options 1,101
Written options (1,558)
Short sales 358
Net realized gain on investments 4,467
Unrealized appreciation on investments
and foreign currency transactions:
Beginning of period 8,792
End of period 10,611
Net unrealized appreciation on investments and
foreign currency transactions 1,819
Net realized and unrealized gain on investments 6,286
Increase in partners' capital derived
from investment activities $ 6,002
The accompanying notes are an integral part of these financial statements.
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<PAGE> 15
Augusta Partners, L.P.
Statement of Changes in Partners' Capital - Net Assets (in thousands)
Six Months Ended Period From
June 30, 1997 September 4,1997
(Unaudited) (Commencement of
Operations) to
December 31, 1997
Investment activities
Net investment loss $ (284) $ (304)
Net realized gain on investments 4,467 8,552
Change in unrealized appreciation on
investments and foreign currency transactions 1,819 8,792
Increase in partners' capital derived
from investment activities 6,002 17,040
Partners' capital transactions
Capital contributions - 100,055
Syndication costs - (50)
Increase in partners' capital derived
from capital transactions 0 100,005
Partners' capital at beginning of period 117,045 -
Partners' capital at end of period $ 123,047 $ 117,045
The accompanying notes are an integral part of these financial statements.
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<PAGE> 16
Augusta Partners, L.P.
Notes to Financial Statements - June 30, 1997 (Unaudited)
1. Organization
Augusta Partners, L.P. (the "Partnership") was organized under the Delaware
Revised Uniform Limited Partnership Act on May 30, 1996. The Partnership is
registered under the Investment Company Act of 1940 (the "Act") as a
closed-end, non-diversified management investment company. The Partnership
will operate until December 31, 2021 unless further extended or sooner
terminated as provided for in the Limited Partnership Agreement (the
"Agreement"), as amended and restated on July 16, 1996. The Partnership's
investment objective is to achieve capital appreciation. The Partnership
pursues this objective by investing principally in equity securities of
publicly-traded U.S. companies. The Partnership may also invest in equity
securities of foreign issuers and in bonds and other fixed-income securities
of U.S. and foreign issuers.
There are five "Individual General Partners" and a "Manager." The Manager
is Augusta Management, L.L.C. whose principal members are Oppenheimer & Co.,
Inc. ("Opco") and Ardsley Advisory Partners ("Ardsley"). Investment
professionals at Ardsley manage the Partnership's investment portfolio on
behalf of the Manager under Opco's supervision.
The acceptance of initial and additional contributions, as well as the
repurchase of Partnership interests, are subject to approval by the Manager.
The Partnership may from time to time offer to repurchase interests pursuant
to written tenders by Partners. Such repurchases will be made at such times
and on such terms as may be determined by the Individual General Partners,
in their complete and exclusive discretion. The Manager expects that
generally it will recommend to the Individual General Partners that the
Partnership repurchase interests from Partners once in each year effective
as of the end of each such year.
2. Significant Accounting Policies
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Manager to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. The Manager believes that the estimates utilized in
preparing the Partnership's financial statements are reasonable and prudent;
however, actual results could differ from these estimates.
a. Portfolio Valuation
Securities and commodities transactions, including related revenue and
expenses, are recorded on a trade-date basis and dividends are recorded on
an ex-dividend date basis. Interest income is recorded on the accrual basis.
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<PAGE> 17
Augusta Partners, L.P.
Notes to Financial Statements-June 30, 1997 (Unaudited) (Continued)
Domestic exchange traded or NASDAQ listed equity securities will be valued at
their last composite sale prices as reported on the exchanges where such
securities are traded. If no sales of such securities are reported on a
particular day, the securities will be valued based upon their composite bid
prices for securities held long, or their composite ask prices for
securities held short, as reported by such exchanges. Securities traded on
a foreign securities exchange will be valued at their last sale prices on
the exchange where such securities are primarily traded, or in the absence
of a reported sale on a particular day, at their bid prices (in the case of
securities held long) or ask prices (in the case of securities held short)
as reported by such exchange. Listed options will be valued using last sales
prices as reported by the exchange with the highest reported daily volume for
such options or, in the absence of any sales on a particular day, at their
bid prices as reported by the exchange with the highest volume on the last
day a trade was reported. Other securities for which market quotations are
readily available will be valued at their bid prices (or ask prices in the
case of securities held short) as obtained from one or more dealers making
markets for such securities. If market quotations are not readily
available, securities and other assets will be valued at fair value as
determined in good faith by, or under the supervision of, the Individual
General Partners.
Debt securities will be valued in accordance with the procedures described
above, which with respect to such securities may include the use of
valuations furnished by a pricing service which employs a matrix to
determine valuation for normal institutional size trading units or
consultation with brokers and dealers in such securities. The Individual
General Partners will periodically monitor the reasonableness of valuations
provided by any such pricing service. Debt securities with remaining
maturities of 60 days or less will, absent unusual circumstances, be valued
at amortized cost, so long as such valuation is determined by the Individual
General Partners to represent fair value.
Futures contracts and options thereon, which are traded on commodities
exchanges, are valued at their settlement value as of the close of such
exchanges.
All assets and liabilities initially expressed in foreign currencies will be
converted into U.S. dollars using foreign exchange rates provided by a
pricing service compiled as of 4:00 p.m. London time. Trading in foreign
securities generally is completed, and the values of such securities are
determined, prior to the close of securities markets in the U.S. Foreign
exchange rates are also determined prior to such close. On occasion, the
values of such securities and exchange rates may be affected by events
occurring between the time as of which determination of such values or
exchange rates are made and the time as of which the net asset value of the
Partnership is determined. When such events materially affect the values of
securities held by the Partnership or its liabilities, such securities and
liabilities will be valued at fair value as determined in good faith by, or
under the supervision of, the Individual General Partners.
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<PAGE> 18
Augusta Partners, L.P.
Notes to Financial Staements-June 30, 1997 (Unaudited) (Continued)
b. Partnership Expenses
The expenses incurred by the Partnership in connection with its organization
are being amortized over a 60 month period beginning with the commencement
of operations, September 4, 1996.
Syndication costs totaling $50,000 related to the Partnership's initial
offering have been charged directly to the capital accounts of the limited
and general partners.
c. Income Taxes
No federal, state or local income taxes will be provided on the profits of
the Partnership since the partners are individually liable for their share
of the Partnership's income.
3. Management Fee, Related Party Transactions and Other
Opco provides certain management and administrative services to the
Partnership including, among other things, providing office space and other
support services to the Partnership. In exchange for such services, the
Partnership pays Opco a monthly management fee of .08333% (1% on an
annualized basis) of the Partnership's net assets determined as of the
beginning of the month, excluding assets attributable to the Manager's capital
account.
During the six months ended June 30, 1997, Opco earned $3,060 in brokerage
commissions from portfolio transactions executed on behalf of the
Partnership.
At the end of the twelve month period following the admission of a limited
partner to the Partnership, and generally at the end of each fiscal year
thereafter, the Manager is entitled to an incentive allocation of 20% of net
profits, if any, that have been credited to the capital account of such
limited partner during such period. The incentive allocation will be
charged to a limited
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<PAGE> 19
Augusta Partners, L.P.
Notes to Financial Statements-June 30, 1997 (Unaudited) (Continued)
partner only to the extent that cumulative net profits
with respect to such limited partner through the close of any period exceeds
the highest level of cumulative net profits with respect to such limited
partner through the close of any prior period. As of June 30, 1997, there
was no incentive allocation.
Each Independent Individual General Partner, who is not an "interested
person" of the Partnership as defined by the Act, receives an annual retainer
of $5,000 plus a fee for each meeting attended. The other Individual General
Partners do not receive any annual or other fees. All Individual General
Partners are reimbursed by the Partnership for all reasonable out-of-pocket
expenses incurred by them in performing their duties. For the six months
ended June 30, 1997, these fees (including meeting fees and a pro-rata
portion of the annual retainer) and expenses totaled $11,257. One Individual
General Partner, who is an "interested person" of the Partnership, as
defined by the Act, holds a limited partnership interest in the Partnership.
Morgan Stanley Trust Company serves as Custodian of the Partnership's assets.
PFPC Inc. serves as Administrator and Accounting Agent to the Partnership,
and in that capacity provides certain accounting, recordkeeping, tax and
investor services.
4. Securities Transactions
Aggregate purchases and sales of investment securities, excluding short-term
securities, for the six months ended June 30, 1997, amounted to $358,519,455
and $337,512,264, respectively.
At June 30, 1997, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes.
At June 30, 1997, accumulated net unrealized appreciation on investments,
options, and securities sold, not yet purchased, was $10,611,343, consisting
of $15,073,567 gross unrealized appreciation and $4,462,224 gross
unrealized depreciation.
Due from broker primarily represents proceeds from unsettled trades and
short sales. Due to broker primarily represents liabilities from unsettled
security purchases.
5. Financial Instruments with Off-Balance Sheet Risk or
Concentrations of Credit Risk
In the normal course of business, the Partnership may trade various
financial instruments and enter into various investment activities with
off-balance sheet risk. These financial instruments include forward and
futures contracts, options and sales of securities not yet purchased.
Generally, these financial instruments represent future commitments to
purchase
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<PAGE> 20
Augusta Partners, L.P.
Notes to Financial Statements-June 30, 1997 (Unaudited) (Continued)
or sell other financial instruments at specific terms at specified
future dates. Each of these financial instruments contain varying degrees
of off-balance sheet risk whereby changes in the market value of the
securities underlying the financial instruments may be in excess of the
amounts recognized in the statement of assets, liabilities and partners'
capital.
The Partnership's foreign exchange trading activities involve the purchase
and sale (writing) of foreign exchange options having various maturity
dates. The Partnership may seek to limit its exposure to foreign exchange
rate movements by hedging such option positions with foreign exchange
positions in spot currency, futures and forward contracts. At June 30,
1997, the Partnership had no spot currency, futures or forward contracts
outstanding.
Securities sold, not yet purchased, represent obligations of the Partnership
to deliver the specified security and thereby creates a liability to
purchase the security in the market at prevailing prices. Accordingly,
these transactions result in off-balance sheet risk as the Partnership's
ultimate obligation to satisfy the sale of securities sold, not yet
purchased, may exceed the amount recognized in the statement of assets,
liabilities and partners' capital.
The risk associated with purchasing an option is that the Partnership pays
a premium whether or not the option is exercised. Additionally, the
Partnership bears the risk of loss of premium and change in market value
should the counterparty not perform under the contract. Put and call options
purchased are accounted for in the same manner as investment securities.
When the Partnership writes an option, the premium received by the
Partnership is recorded as a liability and is subsequently adjusted to the
current market value of the option written. If a call option is exercised,
the premium is added to the proceeds from the sale of the underlying
security or currency in determining whether the Partnership has realized a
gain or loss. In writing an option, the Partnership bears the market risk
of an unfavorable change in the price of the security or currency
underlying the written option. Exercise of an option written by the
Partnership could result in the Partnership selling or buying a security or
currency at a price different from the current market value.
A summary of the notional amounts of open purchased option contracts as of
June 30, 1997, is as follows:
Notional Amounts
Equity Options $12,005,000
Equity Index Options $43,650,900
Foreign Exchange Options 85,000,000 CHF
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<PAGE> 21
Augusta Partners, L.P.
Notes to Financial Statements-June 30, 1997 (Unaudited) (Continued)
Transactions in written options were as follows:
Call Options Put Options
Number Amount Number Amount
of Contracts of Premium of Contracts of Premium
Beginning balance - $ 0 - $ 0
Options written 8,855 4,994,836 140,825 4,416,262
Options closed (7,025) (4,556,603) (76,325) (2,766,183)
Expired options (2,305) (438,233) - 0
Written options split 475 0 - 0
Options outstanding at
June 30, 1997 - $ 0 64,500 $1,650,079
6. Financial Instruments Held or Issued for Trading Purposes
The Partnership maintains positions in a variety of financial instruments.
The following table summarizes the components of net realized and unrealized
gains from investment transactions:
Net Gains / (Losses)
for the Six Months Ended
June 30, 1997
Equity securities $ 7,757,175
Equity options (429,094)
Fixed income transactions 223,596
Foreign exchange
(including realized gains of $1,224,714) (177,178)
Futures transactions (285,959)
Index options (628,463)
Written options (174,298)
Net Gain from investment transactions $ 6,285,779
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<PAGE> 22
Augusta Partners, L.P.
Notes to Financial Statements-June 30, 1997 (Unaudited) (Continued)
The following table presents the fair values of derivative financial
instruments and the average fair values of those instruments:
Average Fair Value for
Fair Value at the Six Months Ended
June 30, 1997 June 30, 1997
Assets:
Equity options $1,091,813 $1,956,447
Futures 0 0
Foreign exchange 863,014 335,557
Index 4,629 1,200,352
Written options 0 (102,740)
Average fair values presented above are based upon each type's month-end
fair value during the six months ended June 30, 1997.
7. Short-Term Borrowings
The Partnership has the ability to trade on margin and, in that connection,
borrow funds from brokers and banks for the purchase of equity and fixed
income securities. Trading in equity securities on margin involves an
initial cash requirement representing at least 50% of the underlying
security's value with respect to transactions in U.S. markets and varying
percentages with respect to transactions in foreign markets. The Act
requires the Partnership to satisfy an asset coverage requirement of 300%
of its indebtedness, including amounts borrowed, measured at the time the
Partnership incurs the indebtedness. As of June 30, 1997, the Partnership
had margin borrowings outstanding of $3,097,176. For the six months ended
June 30, 1997, the average daily amount of such borrowings was $1,979,139.
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<PAGE> 23
Augusta Partners, L.P.
Notes to Financial Statements-June 30, 1997 (Unaudited) (Continued)
8. Selected Financial Ratios and Other Supplemental Information
The following represents the ratios to average net assets and other
supplemental information for the period:
September 4, 1996
Six Months (commencement of
Ended operations) to
June 30, 1997 December 31, 1996
(Unaudited)
Investment loss (0.49%)* (0.83%)*
Operating expenses 1.84%* 2.34%*
Dividends on securities
sold, not yet purchased .05%* .06%*
Portfolio turnover 306% 215%
Average commission rate $.0554** $.0569**
Total return 5.13%*** 17.20%***
Average debt ratio 1.85% .28%
* Annualized.
** Average commission rate per share on purchases and sales of investment
securities.
*** Total return assumes a purchase of a Limited Partnership interest in the
Partnership on the first day and a sale of the Partnership interest on
the last day of the period noted, before incentive allocation to the
General Partner, if any. Total returns for a period of less than a full
year are not annualized.
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<PAGE> 24
Augusta Partners, L.P.
Schedule of Portfolio Investments (Unaudited)
June 30, 1997
Shares Market Value
Common Stocks - 94.72%
Advertising Sales - 1.14%
55,000 Lamar Advertising Co., Class A* $1,402,500
Airlines - 3.02%
25,000 AMR Corp. * 2,312,500
40,000 US Airways Group, Inc. * 1,400,000
3,712,500
Cable TV - 3.10%
65,000 Comcast UK Cable Partners Ltd. * 780,000
55,000 HSN, Inc. * 1,718,750
65,000 U.S. West Media Group * 1,316,250
3,815,000
Cellular Telecommunications - 2.33%
60,000 Millicom International Cellular S.A. * 2,865,000
Commercial Banking - 1.27%
45,000 Magna Group, Inc. 1,563,750
Computers - Integrated Systems - 3.60%
125,000 Digital Equipment Corp. * 4,429,750
Computers - Micro - 1.21%
40,000 Sun Microsystems, Inc. * 1,488,750
Computer Software - 4.62%
35,000 Autodesk, Inc. 1,340,955
40,000 Cognos, Inc. * 1,245,000
65,000 Compuware Corp. * 3,103,750
5,689,705
Consulting Services - 1.31%
90,000 Maximus, Inc. * 1,608,750
Data Processing/Management - 1.02%
25,000 Oracle Systems Corp. * 1,259,375
Electronic Components/Semiconductors - 1.82%
70,000 LSI Logic Corp. * 2,240,000
* Non-income producing security
The accompanying notes are an integral part of these financial statements.
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<PAGE> 25
Augusta Partners, L.P.
Schedule of Portfolio Investments (Unaudited) (continued)
June 30, 1997
Shares Market Value
Common Stocks - 94.72% - (continued)
Electronic Parts Distribution - 1.79%
60,000 Kent Electronics Corp. * $ 2,201,280
Financial Savings & Loans/Thrifts - 4.95%
75,000 Dime Bancorp, Inc. 1,312,500
100,000 Empire Federal Bancorp, Inc. * 1,437,500
100,000 FirstFed America Bancorp, Inc. * 1,775,000
25,000 First Federal Bancshares of AK, Inc. 503,125
30,000 Ocean Financial Corp. * 1,057,500
6,085,625
Healthcare Cost Containment - 1.10%
55,000 Access Health, Inc. * 1,347,500
Healthcare Services & Management - 0.82%
60,000 American Oncology Resources, Inc. * 1,012,500
Hotels & Motels - 1.20%
100,000 Servico, Inc. * 1,475,000
Human Resources - 2.23%
75,000 Emcare Holdings, Inc. * 2,746,875
Life/Health Insurance - 2.29%
40,000 Conseco, Inc. 1,480,000
50,000 Western National Corp. 1,340,650
2,820,650
Machines/Tools & Related Products - 1.05%
50,000 Cincinnati Milacron, Inc. 1,296,900
Manufacturing - 0.75%
70,000 Foamex International, Inc. * 918,750
Medical - Biomedical - 5.96%
150,000 Alpha Beta Tech, Inc. * 1,368,750
55,000 Biochem Pharmaceutical, Inc. * 1,223,750
50,000 Centocor, Inc. * 1,553,150
85,000 Liposome Co., Inc. * 759,730
90,000 Myriad Genetics, Inc. * 2,430,000
7,335,380
Medical - Drugs - 2.71%
140,000 Vivus, Inc. * 3,333,820
* Non-income producing security
The accompanying notes are an integral part of these financial statements.
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<PAGE> 26
Augusta Partners, L.P.
Schedule of Portfolio Investments (Unaudited) (continued)
June 30, 1997
Shares Market Value
Common Stocks - 94.72% - (continued)
Medical - Hospitals - 1.20%
50,000 Magellan Health Services,Inc. * $ 1,475,000
Medical Instruments - 3.25%
65,000 Boston Scientific Corp. * 3,993,470
Medical Sterilization Products - 0.46%
15,000 Steris Corp. * 560,625
Metal - Aluminum - 1.24%
40,000 Alumax, Inc. * 1,525,000
Multi-Line Insurance - 0%
1 Aegon N.V. 36
Networking Products - 2.18%
40,000 Cisco Systems, Inc. * 2,685,000
Oil/Field Machinery & Equipment - 3.22%
60,000 Baker Hughes, Inc. 2,321,280
35,000 Cooper Cameron Corp. * 1,636,250
3,957,530
Oil/Field Services - 1.09%
25,000 BJ Services Co. * 1,340,625
Oil/Gas Drilling - 3.81%
35,000 ENSCO International, Inc. * 1,846,250
125,000 Parker Drilling Co. * 1,390,625
30,000 Precision Drilling Corp. * 1,451,250
4,688,125
Oil/Gas Equipment & Services - 6.55%
70,000 Louisiana Land & Exploration Co. 3,998,750
80,000 Reading & Bates Corp. * 2,140,000
50,000 Weatherford Enterra, Inc. * 1,925,000
8,063,750
Paper & Related Products - 2.25%
50,000 Champion International Corp. 2,762,500
* Non-income producing security
The accompanying notes are an integral part of these financial statements.
-33-
<PAGE> 27
Augusta Partners, L.P.
Schedule of Portfolio Investments (Unaudited) (continued)
June 30, 1997
Shares Market Value
Common Stocks - 94.72% - (continued)
Pharmacy Services - 1.57%
100,000 Covance, Inc. * $ 1,931,300
Radio - 3.92%
25,000 American Radio Systems Corp., Class A * 996,875
45,000 Jacor Communication, Inc. * 1,721,250
50,000 SFX Broadcasting, Inc., Class A * 2,109,400
4,827,525
Real Estate Investment Trust - 0.96%
70,000 Westfield America, Inc. * 1,181,250
Retail - Apparel/Shoes - 1.27%
60,000 Stage Stores, Inc. * 1,567,500
Retail - Building Products - 0.75%
25,000 Lowe's Companies, Inc. 928,125
Retail - Jewelry - 1.21%
84,800 Claire's Stores, Inc. 1,484,000
Retail - Restaurants - 0.98%
50,000 Outback Steakhouse, Inc. * 1,209,375
Retirement/Aged Care - 0.89%
100,000 ARV Assisted Living, Inc. * 1,100,000
Telecommunications Equipment - 1.10%
35,000 Associated Group, Inc., Class B * 1,356,250
Telecommunications Equipment &
Long Distance Service - 2.60%
100,000 WorldCom, Inc. * 3,200,000
Telecommunications Services - 0.55%
25,000 Qwest Communications International, Inc. * 681,250
Therapeutics - 1.32%
20,000 Agouron Pharmaceuticals, Inc. * 1,617,500
* Non-income producing security
The accompanying notes are an integral part of these financial statements.
-34-
<PAGE> 28
Augusta Partners, L.P.
Schedule of Portfolio Investments (Unaudited) (continued)
June 30, 1997
Shares Market Value
Common Stocks - 94.72% - (continued)
Transportation - Marine - 1.26%
45,000 Teekay Shipping Corp. $ 1,555,335
Transportation - Truck - 1.80%
135,000 Consolidated Freightways Corp. * 2,210,625
Total Common Stocks (Cost $107,582,834) 116,551,056
Preferred Stocks - 2.36%
Telecommunications Equipment &
Long Distance Service
50,000 Globalstar Telecommunications. Ltd., 6.5%,
03/01/06, PRF Conv. 144A, $30.80 2,900,000
Total Preferred Stocks (Cost $2,125,000) 2,900,000
Face
Amount
Bonds - 4.36%
Broadcasting - 1.29%
1,500,000 Comcast Corp., 3.375%, 9/09/05, Conv., $24.50 1,578,750
Cable TV - 3.07%
3,500,000 NTL Inc., 7.25%, 04/15/05, Conv. 144A, $27.56 3,780,000
Total Bonds (Cost $5,027,605) 5,358,750
Number of
Contracts
Call Options - 0 .60%
Medical - Drugs - 0.15%
500 Vivus, Inc., 09/20/97, $50.00 181,250
Networking Products - 0.12%
750 3Com Corp., 07/19/97, $45.00 150,000
Telecommunications Equipment &
Long Distance Service - 0.33%
500 WorldCom, Inc., 01/17/98, $25.00 406,250
Total Call Options (Cost $1,045,317) 737,500
* Non-income producing security
The accompanying notes are an integral part of these financial statements.
-35-
<PAGE> 29
Augusta Partners, L.P.
Schedule of Portfolio Investments (Unaudited) (continued)
Number of June 30, 1997
Contracts Market Value
Put Options - 1.40%
Computers - Micro - 0.07%
255 Gateway 2000, Inc., 07/19/97, $35.00 $ 92,437
Chemicals - Diversified - 0.12%
500 Union Carbide Corp., 07/19/97,$50.00 143,750
Cross Currency - 1.11%
25,000 OTC ITL Call/CHF Put, 09/27/97,Strike-1210 ITL/CHF 506,849
Notional 25,000,000 CHF
60,000 OTC ITL Call/CHF Put, 06/19/98,Strike-1231 ITL/CHF 863,014
Notional 60,000,000 CHF
1,369,863
Electronic Components/Semiconductors - .10%
350 Micron Technology, Inc. 07/19/97, $42.50 118,125
Index - 0%
10,000 OTC SPX KO 07/02/97, $752.73/94.75 0
Notional $10,000,000
1,948 OTC SPX KO 07/02/97, $830/94.75 4
Notional $1,948,400
19,500 OTC SPX KO 07/09/97, $753.75/94.82 0
Notional $19,500,000
10,000 OTC SPX KO 07/16/97, $752.73/94.91 0
Notional $10,000,000
2,203 OTC SPX KO 07/16/97, $830/94.91 4,625
Notional $2,202,500
4,629
Total Put Options (Cost $2,207,746) 1,728,804
Total Investments (Cost $117,988,502) - 103.44%$ 127,276,110
Other Assets, Less Liabilities - (3.44%) (4,229,174)
Net Assets - 100.00% $ 123,046,936
* Non-income producing security
The accompanying notes are an integral part of these financial statements.
-36-
<PAGE> 30
Augusta Partners, L.P.
Schedule of Securities Sold, not yet Purchased (Unaudited)
June 30, 1997
Shares Market Value
Short Common Stock - (7.88%)
Commercial Services - (1.81%)
(15,000) Pharmaceutical Product Development, Inc. $ (330,000)
(72,500) Teletech Holdings, Inc. (1,903,125)
(2,233,125)
Computers-Micro - (2.11%)
(80,000) Gateway 2000, Inc. (2,600,000)
Computer Services - (0.43%)
(25,000) National TechTeam, Inc. (534,375)
Cosmetics & Toiletries - (0.69%)
(60,000) Thermolase Corp. (843,750)
Finance/Credit Cards - (0.46%)
(15,000) Capital One Financial Corp. (566,250)
Medical - HMO - (0.32%)
(30,000) PHP Healthcare Corp. (393,750)
Medical Instruments - (0.53%)
(25,000) Thermo Cardiosystems, Inc. (650,000)
Resorts/Theme Parks - (0.84%)
(30,000) Signature Resorts, Inc. (1,036,890)
Telecommunications Equipment &
Long Distance Service - (0.69%)
(35,000) Deutsche Telekom AG (844,375)
Total Short Common Stock Proceeds ($9,883,019)$(9,702,515)
The accompanying notes are an integral part of these financial statements.
-37-
<PAGE> 31
Augusta Partners, L.P.
Schedule of Written Options (Unaudited)
Number of June 30, 1997
Contracts Market Value
Written Put Options - (0.41%)
Cross Currency - (0.41%)
(25,000) OTC ITL Call/CHF Put, 09/27/97, Strike 1210 ITL/CHF
Notional (25,000,000) CHF $ (506,849)
Index - (0%)
(10,000) OTC SPX KO, 07/02/97, $752.73/94.75 0
Notional ($10,000,000)
(19,500) OTC SPX KO, 07/09/97, $753.75/94.82 0
Notional ($19,500,000)
(10,000) OTC SPX KO, 07/16/97, $752.73/94.91 0
Notional ($10,000,000)
0
Total Written Put Options Proceeds ($1,650,079) (506,849)
Total Options Written Proceeds ($1,650,079) $ (506,849)
The accompanying notes are an integral part of these financial statements.
-38-
<PAGE> 32
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT AUDITORS
AUGUSTA PARTNERS, L.P.
PERIOD FROM SEPTEMBER 4, 1996
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1996
-39-
<PAGE> 33
AUGUSTA PARTNERS, L.P.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT AUDITORS
PERIOD FROM SEPTEMBER 4, 1996 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1996
CONTENTS
Report of Independent Auditors............................................. 1
Statement of Assets, Liabilities and Partners' Capital..................... 2
Statement of Operations.................................................... 3
Statement of Changes in Partners' Capital - Net Assets..................... 4
Notes to Financial Statements.............................................. 5
Schedule of Portfolio Investments.......................................... 13
Schedule of Securities Sold, Not Yet Purchased............................. 18
-40-
<PAGE> 34
Report of Independent Auditors
To the Partners of
Augusta Partners, L.P.
We have audited the accompanying statement of assets, liabilities and partners'
capital of Augusta Partners, L.P., including the schedules of portfolio
investments and securities sold, not yet purchased, as of December 31, 1996, and
the related statements of operations and changes in partners' capital - net
assets for the period from September 4, 1996 (commencement of operations) to
December 31, 1996. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1996, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Augusta Partners, L.P. at
December 31, 1996, the results of its operations, the changes in partners'
capital - net assets, for the period from September 4, 1996 to December 31,
1996, in conformity with generally accepted accounting principles.
New York, New York
February 5, 1997 /s/ ERNST & YOUNG LLP
-41-
<PAGE> 35
AUGUSTA PARTNERS, L.P.
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL (IN THOUSANDS)
- --------------------------------------------------------------------------------
DECEMBER 31, 1996
ASSETS
Cash $ 2,758
Investments in securities, at market
(identified cost of $92,000) 100,349
Due from broker 20,931
Dividends receivable 23
Interest receivable 120
Organizational costs (net of accumulated amortization of $45) 646
Other assets 48
--------
TOTAL ASSETS $124,875
========
LIABILITIES
Due to broker 951
Securities sold, not yet purchased - at market 6,395
(proceeds of sales - $6,839)
Due to affiliate 4
Management fee payable 97
Accrued expenses 383
--------
TOTAL LIABILITIES 7,830
--------
Net Assets $117,045
========
PARTNERS' CAPITAL
Represented by:
Capital contributions, (net of syndications costs of $50) $100,005
Accumulated net investment loss (304)
Accumulated net realized gain on investments 8,552
Net unrealized appreciation on investments and foreign
currency transactions 8,792
--------
PARTNERS' CAPITAL - NET ASSETS $117,045
========
The accompanying notes are an integral part of these financial statements.
-42-
<PAGE> 36
AUGUSTA PARTNERS, L.P.
STATEMENT OF OPERATIONS (IN THOUSANDS)
- --------------------------------------------------------------------------------
PERIOD FROM SEPTEMBER 4, 1996
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1996
INVESTMENT INCOME
Dividends $ 142
Interest 414
------
556
------
OPERATING EXPENSES
Management fee 350
Professional fees 295
Administration fees 71
Amortization of organizational costs 45
Custodian fees 16
Dividends on securities sold, not yet purchased 20
Individual General Partners' fees & expenses 14
Miscellaneous 49
------
860
------
NET INVESTMENT LOSS (304)
------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
REALIZED GAIN (LOSS) ON INVESTMENTS
Investment securities 9,747
Futures transactions (84)
Purchased options (341)
Written options (64)
Short sales (706)
------
NET REALIZED GAIN ON INVESTMENTS 8,552
------
UNREALIZED APPRECIATION ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Beginning of period --
End of period 8,792
-------
8,792
-------
NET REALIZED AND UNREALIZED GAIN 17,344
-------
INCREASE IN PARTNERS' CAPITAL DERIVED
FROM INVESTMENT ACTIVITIES $17,040
=======
The accompanying notes are an integral part of these financial statements.
-43-
<PAGE> 37
AUGUSTA PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL - NET ASSETS (IN THOUSANDS)
- --------------------------------------------------------------------------------
PERIOD FROM SEPTEMBER 4, 1996
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1996
INVESTMENT ACTIVITIES
Net investment loss $ (304)
Net realized gain on investments 8,552
Change in unrealized appreciation on
investments and foreign currency transactions 8,792
--------
INCREASE IN PARTNERS' CAPITAL DERIVED
FROM INVESTMENT ACTIVITIES 17,040
PARTNERS' CAPITAL TRANSACTIONS
Capital contributions 100,055
Syndication costs (50)
--------
INCREASE IN PARTNERS' CAPITAL DERIVED
FROM CAPITAL TRANSACTIONS 100,005
PARTNERS' CAPITAL AT BEGINNING OF PERIOD -
--------
PARTNERS' CAPITAL AT END OF PERIOD $117,045
========
The accompanying notes are an integral part of these financial statements.
-44-
<PAGE> 38
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION
Augusta Partners, L.P. (the "Partnership") was organized under the
Delaware Revised Uniform Limited Partnership Act on May 30, 1996. The
Partnership is registered under the Investment Company Act of 1940 (the
"Act") as a closed-end, non-diversified management investment company.
The Partnership will operate until December 31, 2021 unless further
extended or sooner terminated as provided for in the Limited
Partnership Agreement (the "Agreement"), as amended and restated on
July 16, 1996. The Partnership's investment objective is to achieve
capital appreciation. The Partnership pursues this objective by
investing principally in equity securities of publicly-traded U.S.
companies. The Partnership will also invest in equity securities of
foreign issuers and in bonds and other fixed-income securities of U.S.
and foreign issuers.
The Agreement provides for five "Individual General Partners" and a
"Manager." The Manager is Augusta Management, L.L.C. whose principal
members are Oppenheimer & Co., Inc. ("Opco") and Ardsley Advisory
Partners ("Ardsley"). Investment professionals employed by Ardsley will
manage the Partnership's investment portfolio on behalf of the Manager
under Opco's supervision.
The acceptance of initial and additional contributions, as well as the
repurchase of Partnership interests, are subject to approval by the
Manager. The Partnership may from time to time offer to repurchase
interests pursuant to written tenders by Partners. Such repurchases
will be made at such times and on such terms as may be determined by
the Individual General Partners, in their complete and exclusive
discretion. The Manager expects that generally it will recommend to the
Individual General Partners that the Partnership repurchase interests
from Partners once in each year (other than in 1996) effective as of
the end of each such year.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Manager to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. The Manager believes that the
estimates utilized in preparing the Partnership's financial
statements are reasonable and prudent; however, actual results could
differ from these estimates.
a. PORTFOLIO VALUATION
Securities and commodities transactions, including related revenue
and expenses, are recorded on a trade-date basis and dividends are
recorded on an ex-dividend date basis. Interest income is recorded
on the accrual basis.
-45-
<PAGE> 39
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Domestic exchange traded or NASDAQ listed equity securities will
be valued at their last composite sale prices as reported on the
exchanges where such securities are traded. If no sales of such
securities are reported on a particular day, the securities will
be valued based upon their composite bid prices for securities
held long, or their composite ask prices for securities held
short, as reported by such exchanges. Securities traded on a
foreign securities exchange will be valued at their last sale
prices on the exchange where such securities are primarily traded,
or in the absence of a reported sale on a particular day, at their
bid prices (in the case of securities held long) or ask prices (in
the case of securities sold short) as reported by such exchange.
Listed options will be valued using last sales prices as reported
by the exchange with the highest reported daily volume for such
options or, in the absence of any sales on a particular day, at
their bid prices as reported by the exchange with the highest
volume on the last day a trade was reported. Other securities for
which market quotations are readily available will be valued at
their bid prices (or ask prices in the case of securities sold
short) as obtained from one or more dealers making markets for
such securities. If market quotations are not readily available,
securities and other assets will be valued at fair value as
determined in good faith by, or under the supervision of, the
Individual General Partners.
Debt securities will be valued in accordance with the procedures
described above, which with respect to such securities may include
the use of valuations furnished by a pricing service which employs
a matrix to determine valuation for normal institutional size
trading units. The Individual General Partners will periodically
monitor the reasonableness of valuations provided by any such
pricing service. Debt securities with remaining maturities of 60
days or less will, absent unusual circumstances, be valued at
amortized cost, so long as such valuation is determined by the
Individual General Partners to represent fair value.
Futures contracts and options thereon, which are traded on
commodities exchanges, are valued at their settlement value as of
the close of such exchanges.
All assets and liabilities initially expressed in foreign
currencies will be converted into U.S. dollars using foreign
exchange rates provided by a pricing service compiled as of 4:00
p.m. London time. Trading in foreign securities generally is
completed, and the values of such securities are determined, prior
to the close of securities markets in the U.S. Foreign exchange
rates are also determined prior to such close. On occasion, the
values of such securities and exchange rates may be affected by
events occurring between the time as of which determination of
such values or exchange rates are made and the time as of which
the net asset value of the Partnership is determined. When such
events materially affect the values of securities held by the
Partnership or its liabilities, such securities and liabilities
will be valued at fair value as determined in good faith by, or
under the supervision of, the Individual General Partners.
The Partnership may enter into transactions in financial futures,
foreign exchange options and foreign currency forward contracts
that are used for hedging and nonhedging purposes. These contracts
are valued at fair value with the resulting gains and losses
included in net gain from investment transactions.
Morgan Stanley Trust Company serves as custodian of the
Partnership's assets.
-46-
<PAGE> 40
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
b. PARTNERSHIP EXPENSES
The expenses incurred by the Partnership in connection with its
organization are being amortized over a 60 month period
beginning with the commencement of operations.
Syndication costs totaling $50,000 related to the Partnership's
initial offering have been charged directly to the capital
accounts of the limited and general partners.
c. INCOME TAXES
No federal, state or local income taxes will be provided on the
profits of the Partnership since the partners are individually
liable for their share of the Partnership's income.
3. RELATED PARTY TRANSACTIONS
Opco provides certain management and administrative services to the
Partnership including, among other things, providing office space and
other support services to the Partnership. In exchange for such
services the Partnership pays Opco a monthly management fee of
.08333% (1% on an annualized basis) of the Partnership's net assets for
the month, excluding assets attributable to the Manager's capital
account.
During the period ended December 31, 1996, Opco earned $19,106 in
brokerage commissions from portfolio transactions executed on behalf of
the Partnership.
At the end of the twelve month period following the admission of a
limited partner to the Partnership, and generally at the end of each
fiscal year thereafter, the Manager is entitled to an incentive
allocation of 20% of net profits, if any, that have been credited to
the capital account of such limited partner during such period. The
incentive allocation will be charged to a limited partner only to the
extent that cumulative net profits with respect to such limited partner
through the close of any period exceeds the highest level of cumulative
net profits with respect to such limited partner through the close of
any prior period. As of December 31, 1996, there was no incentive
allocation.
Each Independent General Partner receives an annual retainer of $5,000
plus a fee for each meeting attended. The other Individual General
Partners do not receive any annual
-47-
<PAGE> 41
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
or other fees. All Individual General Partners are reimbursed by the
Partnership for all reasonable out-of-pocket expenses incurred by them
in performing their duties. For the period from September 4, 1996 to
December 31, 1996, these fees (including meeting fees and a pro-rata
portion of the annual retainer) and expenses totaled $13,517. One
Individual General Partner, who is as an "interested person," as
defined by the Act, holds a limited partnership interest in the
Partnership.
4. SECURITIES TRANSACTIONS
Aggregate purchases and sales of investment securities, excluding
short-term debt securities, for the period from September 4, 1996 to
December 31, 1996, amounted to $296,890,226 and $215,761,834,
respectively.
At December 31, 1996, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes. At December 31, 1996, accumulated net unrealized appreciation
on investments in securities, and securities sold, not yet purchased,
was $8,792,156, consisting of $11,254,994 gross unrealized appreciation
and $2,462,838 gross unrealized depreciation.
Due from broker primarily represents proceeds from unsettled trades and
short sales. Due to broker primarily represents liabilities from
unsettled security purchases.
5. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK OR
CONCENTRATIONS OF CREDIT RISK
In the normal course of business, the Partnership may trade various
financial instruments and enter into various investment activities with
off-balance sheet risk. These financial instruments include forward and
futures contracts, options and sales of securities not yet purchased.
Generally, these financial instruments represent future commitments to
purchase or sell other financial instruments at specific terms at
specified future dates. Each of these financial instruments contain
varying degrees of off-balance sheet risk whereby changes in the market
value of the securities underlying the financial instruments may be in
excess of the amounts recognized in the statement of assets,
liabilities and partners' capital.
The Partnership's foreign exchange trading activities involve the
purchase and sale (writing) of foreign exchange options having various
maturity dates. The Partnership may seek to limit its exposure to
foreign exchange rate movements by hedging such option positions with
foreign exchange positions in spot currency, futures and forward
contracts.
-48-
<PAGE> 42
At December 31, 1996, the Partnership had no spot currency, futures or
forward contracts outstanding.
Securities sold, not yet purchased, represent obligations of the
Partnership to deliver the specified security and thereby creates a
liability to purchase the security in the market at prevailing prices.
Accordingly, these transactions result in off-balance sheet risk as the
Partnership's ultimate obligation to satisfy the sale of securities
sold, not yet purchased, may exceed the amount recognized in the
statement of assets, liabilities and partners' capital.
The risk associated with purchasing an option is that the Partnership
pays a premium whether or not the option is exercised. Additionally,
the Partnership bears the risk of loss of premium and change in market
value should the counterparty not perform under the contract. Put and
call options purchased are accounted for in the same manner as
investment securities.
When the Partnership writes an option, the premium received by the
Partnership is recorded as a liability and is subsequently adjusted to
the current market value of the option written. If a call option is
exercised, the premium is added to the proceeds from the sale of the
underlying security or currency in determining whether the Partnership
has realized a gain or loss. In writing an option, the Partnership
bears the market risk of an unfavorable change in the price of the
security or currency underlying the written option. Exercise of an
option written by the Partnership could result in the Partnership
selling or buying a security or currency at a price different from the
current market value.
A summary of the notional amount of open purchased option contracts as
of December 31, 1996, is as follows:
NOTIONAL AMOUNTS
---------------
Equity Options $ 7,078,750
Equity Index Options 8,750,000
Foreign Exchange Options 49,514,200
-49-
<PAGE> 43
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Transactions in written options were as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
---------------------------- --------------------------------
NUMBER AMOUNT NUMBER AMOUNT
OF CONTRACTS OF PREMIUM OF CONTRACTS OF PREMIUM
------------ ---------- ------------ -----------
<S> <C> <C> <C> <C>
Beginning balance - $ 0 - $ 0
Options written 2,680 890,170 1,000 61,498
Options closed (2,680) (890,170) (1,000) (61,498)
------ --------- ------ --------
Options outstanding at
December 31, 1996 - $ 0 - $ 0
====== ========= ====== ========
</TABLE>
6. FINANCIAL INSTRUMENTS HELD OR ISSUED FOR TRADING PURPOSES
The Partnership maintains positions in a variety of financial
instruments. The following table summarizes the components of net
realized and unrealized gain from investment transactions:
<TABLE>
<CAPTION>
NET GAINS
(LOSSES)
FOR 1996
--------------
<S> <C>
Equity transactions $15,263,691
Fixed income 135,175
Foreign Exchange (including realized gains of $566,945) 1,945,522
-----------
Net Gain from investment transactions $17,344,388
===========
</TABLE>
-50-
<PAGE> 44
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following table presents the year-end fair values of derivative
financial instruments and the average fair values during the year of those
instruments:
FAIR VALUE AT AVERAGE FAIR
DECEMBER 31, VALUE FOR
1996 1996
------------- ---------------
ASSETS:
Equity $1,745,438 $1,234,430
Fixed Income - -
Foreign Exchange 2,024,103 1,311,029
Average fair values presented above are based upon each type's
month-end fair value during the period ended December 31, 1996.
7. SHORT-TERM BORROWINGS
The Partnership has the ability to trade on margin, and, in that
connection, borrow funds from brokers and banks for the purchase of
equity and fixed income securities. Trading in equity securities on
margin involves an initial cash requirement representing at least 50%
of the underlying security's value with respect to transactions in U.S.
markets and varying percentages with respect to transactions in foreign
markets. The Act requires the Partnership to satisfy an asset coverage
requirement of 300% of its indebtedness, including amounts borrowed,
measured at the time the Partnership incurs the indebtedness. As of
December 31, 1996, the Partnership had no outstanding borrowings.
During the period ended December 31, 1996, the average daily amount of
short term debt was not material the Partnership's total net assets.
-51-
<PAGE> 45
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
8. SELECTED FINANCIAL RATIOS AND OTHER SUPPLEMENTAL INFORMATION
The following represents the ratios to average net assets and other
supplemental information for the period:
SEPTEMBER 4, 1996
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1996
-----------------
Investment loss (.83%)*
Operating expenses 2.34%*
Dividends on securities
sold, not yet purchased .06%*
Portfolio turnover 215%
Average Commission Rate $.0569**
Total return 17.20%***
* Annualized.
** Average commission rate per share on purchases of investment
securities.
*** Total return assumes a purchase of a limited Partnership interest
in the Partnership on the first day and a sale of the Partnership
interest on the last day of the period noted, before incentive
allocation to the General Partner, if any. Total returns for a
period of less than a full year are not annualized.
-52-
<PAGE> 46
AUGUSTA PARTNERS, L.P.
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS
- -------------------------------------------------------------------------------------------
DECEMBER 31, 1996
SHARES MARKET VALUE
<S> <C> <C>
COMMON STOCKS - 74.38%
AGRICULTURAL OPERATIONS - 1.23%
45,000 Delta & Pine Land Co. $ 1,440,000
------------
AIRLINES - 1.57%
65,000 Continental Airlines, Inc., Class B * 1,836,250
------------
COMMERCIAL SERVICES - 3.11%
150,000 CUC International, Inc. * 3,637,500
------------
COMPUTER SERVICES & SOFTWARE - 3.96%
50,000 BMC Software, Inc. * 2,068,750
10,000 Computer Associates Int'l, Inc. 497,500
75,000 Jetform Corp. * 1,387,500
50,000 Platinum Technology, Inc. * 681,250
------------
4,635,000
------------
COMPUTER HARDWARE - 1.31%
40,000 Interphase Corp. * 400,000
20,000 Western Digital Corp. * 1,137,500
------------
1,537,500
------------
DIVERSIFIED OPERATIONS - .99%
25,000 Corning, Inc. 1,156,250
------------
ELECTRONICS - 3.55%
85,000 Kent Electronics Corp. * 2,188,750
60,000 Sheldahl, Inc. * 1,125,000
27,500 Ultrak, Inc. * 838,750
------------
4,152,500
------------
FINANCIAL SERVICES - 5.09%
50,000 Big Foot Financial Corp. * 650,000
33,000 Chase Manhattan Corp. 2,949,375
75,000 Lehman Brothers Holdings, Inc. 2,353,125
------------
5,952,500
============
HEALTHCARE SERVICES & MANAGEMENT - 1.18%
135,000 American Oncology Resources, Inc. * 1,383,750
------------
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of these financial statements.
-53-
<PAGE> 47
AUGUSTA PARTNERS, L.P.
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- -------------------------------------------------------------------------------------------
DECEMBER 31, 1996
SHARES MARKET VALUE
<S> <C> <C>
HOTELS & MOTELS - 1.52%
110,000 Prime Hospitality Corp. * $ 1,773,750
------------
HOUSEHOLD PRODUCTS/WARES - .98%
70,000 AJL Peps Trust 1,146,250
------------
HUMAN RESOURCES - 1.19%
60,000 Emcare Holdings, Inc. * 1,395,000
------------
MANUFACTURING - 1.06%
75,000 Foamex Int'l, Inc. * 1,237,500
------------
MEDICAL / BIOMEDICAL - 9.85%
150,000 Alpha-Beta Tech., Inc. * 1,584,375
30,000 Biochem Pharmaceuticals, Inc. * 1,507,500
100,000 Cellpro, Inc. * 1,250,000
20,000 Centocor, Inc. * 715,000
200,000 Liposome Co., Inc. * 3,825,000
80,000 Myriad Genetics, Inc.* 2,020,000
150,000 NeoRx Corp. * 618,750
------------
11,520,625
------------
MEDICAL INSTRUMENTS & PRODUCTS - 12.21%
80,500 Boston Scientific Corp. * 4,830,000
100,000 Cytyc Corp. * 2,700,000
45,000 Interneuron Pharmaceuticals, Inc. * 1,170,000
60,000 OccuSystems, Inc. * 1,620,000
31,000 Sabratek Corp. * 492,125
75,000 Ventritex, Inc. * 1,846,875
45,000 Vivus, Inc. * 1,631,258
------------
14,290,258
============
NETWORKING PRODUCTS - 1.90%
35,000 Cisco Systems, Inc. * 2,226,875
------------
OFFICE SUPPLIES & FORMS - 2.26%
25,000 Alco Standard Corp. * 1,290,625
75,000 Staples, Inc. * 1,354,688
------------
2,645,313
============
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of these financial statements.
-54-
<PAGE> 48
AUGUSTA PARTNERS, L.P.
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- -------------------------------------------------------------------------------------------
DECEMBER 31, 1996
SHARES MARKET VALUE
OIL/GAS EQUIPMENT & SERVICES - 15.16%
<S> <C> <C>
80,000 Baker Hughes, Inc. $ 2,760,000
15,000 Callon Petroleum Co. * 285,000
70,000 Global Industries, Ltd. * 1,303,750
115,000 Input / Output, Inc. * 2,127,500
65,000 Marine Drilling Companies, Inc. * 1,279,688
100,000 Nabors Industries, Inc. * 1,925,000
35,000 Noble Drilling Corp. * 695,625
30,000 Nuevo Energy Co. * 1,560,000
50,000 Reading & Bates Corp. * 1,325,000
80,000 Texas Meridian Resources Corp. * 1,370,000
30,000 Union Pacific Resources Group Inc. 870,000
75,000 Weatherford Enterra, Inc.* 2,250,000
------------
17,751,563
------------
RESTAURANTS - .86%
50,000 Dave & Busters, Inc. * 1,006,250
------------
RETAIL & MERCHANDISING - 1.38%
20,000 Home Depot, Inc. 1,002,500
52,500 Micro Warehouse, Inc. * 616,875
------------
1,619,375
------------
RETIREMENT / AGED CARE - .45%
45,000 ARV Assisted Living, Inc. * 523,125
------------
TELECOMMUNICATIONS EQUIPMENT &
LONG DISTANCE SERVICE - 2.42%
50,000 ACC Corp. * 1,512,500
75,000 ICG Communications, Inc. * 1,321,875
------------
2,834,375
------------
THERAPEUTICS - 1.16%
20,000 Agouron Pharmaceuticals, Inc. * 1,355,000
------------
TOTAL COMMON STOCKS (COST $80,910,903) 87,056,509
============
PREFERRED STOCKS - 2.29%
TELECOMMUNICATIONS EQUIPMENT &
LONG DISTANCE SERVICE
50,000 Globalstar Telecom. Ltd., PRF, Conv. 6.50%, 144A $ 2,675,000
------------
TOTAL PREFERRED STOCKS (COST $2,125,000) $ 2,675,000
============
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of these financial statements.
-55-
<PAGE> 49
AUGUSTA PARTNERS, L.P.
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1996
FACE MARKET VALUE
AMOUNT
<S> <C> <C>
BONDS - 5.85%
BROADCASTING - 1.19%
$1,500,000 Comcast Corp., 3.375%, 09/09/05, Conv. $ 1,391,250
------------
CABLE & OTHER PAY TELEVISION SERVICES - 3.90%
4,250,000 International Cabletel, Inc., 7.25%, 04/15/05, Conv., 144A 4,568,750
------------
RETIREMENT / AGED CARE - .76%
1,250,000 Sterling House Corp., 6.75%, 06/30/06, Conv., 144A 887,500
------------
TOTAL BONDS (COST $6,712,325) $ 6,847,500
============
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS
<S> <C> <C>
CALL OPTIONS - 1.39%
COMPUTER SERVICES & SOFTWARE - .19%
500 Platinum Technology, Inc., 06/21/97, $10.00 $ 218,750
------------
MEDICAL / BIOMEDICAL - .68%
500 Autoimmune, Inc., 04/19/97, $12.50 193,750
1,000 Autoimmune, Inc., 07/19/97, $12.50 475,000
400 Liposome Co., Inc., 02/22/97, $17.50 125,000
------------
793,750
------------
OIL/GAS EQUIPMENT & SERVICES - .06%
150 Ashland, Inc., 01/18/97, $40.00 58,125
300 Ashland, Inc., 01/18/97, $45.00 13,125
------------
71,250
------------
TELECOMMUNICATIONS EQUIPMENT &
LONG DISTANCE SERVICE - .46%
180 WorldCom, Inc., 01/98, $20.00 162,000
175 WorldCom, Inc., 01/98, $22.50 122,500
400 WorldCom, Inc., 01/98, $25.00 255,000
------------
539,500
------------
TOTAL CALL OPTIONS (COST $1,322,627) $ 1,623,250
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-56-
<PAGE> 50
AUGUSTA PARTNERS, L.P.
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1996
NUMBER OF MARKET VALUE
CONTRACTS
<S> <C> <C>
PUT OPTIONS - 1.83%
CROSS CURRENCY - 1.73%
2 OTC ITL Call/ CHF Put, 09/27/97, strike 1210 ITL/CHF,
Notional 66,250,000 CHF $ 2,024,103
------------
LEISURE & RECREATION / GAMING - .02%
100 Callaway Golf Co., 01/18/97, $30.00 20,000
------------
STOCK INDEX - .08%
250 S & P 400 Midcap, 01/18/97, $250 60,937
100 S & P 400 Midcap, 01/18/97, $255 41,250
------------
102,187
------------
TOTAL PUT OPTIONS (COST $929,256) $ 2,146,290
============
TOTAL INVESTMENTS (COST $92,000,111) - 85.74% $100,348,549
============
OTHER ASSETS, LESS LIABILITIES - 14.26% 16,696,523
------------
NET ASSETS - 100.00% $117,045,072
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-57-
<PAGE> 51
AUGUSTA PARTNERS, L.P.
<TABLE>
<CAPTION>
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED
- -------------------------------------------------------------------------------------------
DECEMBER 31, 1996
SHARES MARKET VALUE
<S> <C> <C>
SHORT COMMON STOCK - (5.46%)
COMMERCIAL SERVICES - (.67%)
(30,000) TeleTech Holdings, Inc. ($780,000)
-----------
COSMETICS & TOILETRIES - (.17%)
(12,500) Thermolase Corp. (196,875)
-----------
CONSULTING SERVICES - (.30%)
(7,500) Registry, Inc. (345,938)
-----------
FOOD - (1.96%)
(35,000) Kellogg Co. (2,296,875)
-----------
MEDICAL INSTRUMENTS & PRODUCTS - (.44%)
(15,000) Henry Schein, Inc. (515,625)
-----------
NETWORKING PRODUCTS - (.54%)
(30,000) Bay Networks, Inc. (630,000)
-----------
TELECOMMUNICATIONS EQUIPMENT &
LONG DISTANCE SERVICE - (1.38%)
(80,000) Deutsche Telekom AG-Sponsored ADR (1,630,000)
-----------
TOTAL SHORT COMMON STOCK - PROCEEDS ($6,839,031) ($6,395,313)
===========
</TABLE>
The accompanying notes are an integral part of these financial statements
-58-
<PAGE> 1
LETTER OF TRANSMITTAL
Regarding the
Interests
in
AUGUSTA PARTNERS, L.P.
Tendered Pursuant to the Offer to Purchase
Dated November ___, 1997
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT, AND THIS LETTER OF TRANSMITTAL MUST BE RECEIVED
BY THE PARTNERSHIP BY, 12:00 MIDNIGHT NEW YORK CITY TIME,
ON WEDNESDAY, DECEMBER 31, 1997, UNLESS THE OFFER IS EXTENDED
Complete This Letter Of Transmittal And Return Or Deliver To:
PFPC Inc.
P.O. Box 576
Claymont, Delaware 19703
Attn: Karen Castagna
For additional information call:
Phone: (888) 520-3277
Fax: (302) 791-2387
Ladies and Gentlemen:
The undersigned hereby tenders to Augusta Partners, L.P., a
closed-end, non-diversified, management investment company organized under the
laws of the State of Delaware (the "Partnership"), the partnership interest in
the Partnership or portion thereof held by the undersigned, described and
specified below, upon the terms and conditions set forth in the offer to
purchase, dated November ___, 1997 ("Offer to Purchase"), receipt of which is
hereby acknowledged, and in this letter of transmittal (which together
constituted the "Offer"). The tender and this Letter of Transmittal are subject
to all the terms and conditions set forth in the Offer to Purchase, including,
but not limited to, the absolute right of the Partnership to reject any and all
tenders determined by it, in its sole discretion, not to be in the appropriate
form.
-59-
<PAGE> 2
The undersigned hereby sells to the Partnership the partnership
interest in the Partnership or portion thereof tendered hereby pursuant to the
Offer. The undersigned hereby warrants the undersigned has full authority to
sell the partnership interest in the Partnership or portion thereof tendered
hereby and that the Partnership will acquire good title thereto, free and clear
of all liens, charges, encumbrances, conditional sales agreements or other
obligations relating to the sale thereof, and not subject to any adverse claim,
when and to the extent the same are purchased by it. Upon request, the
undersigned will execute and deliver any additional documents necessary to
complete the sale in accordance with the terms of the Offer.
The undersigned recognizes that under certain circumstances set
forth in the Offer, the Partnership may not be required to purchase any of the
partnership interests in the Partnership or portions thereof tendered hereby.
Payment of the cash portion of the purchase price for the
partnership interest in the Partnership or portion thereof of the undersigned
(the "Cash Payment") shall be sent to the undersigned by wire transfer to the
undersigned's brokerage account at CIBC Oppenheimer Corp. ("CIBC Opco") unless
the undersigned elects to receive such payment by check posted first class (at
the sole risk of addressee) as based on the direction of the undersigned as
indicated below. (The undersigned hereby represents and warrants that the
undersigned understands that, for cash payments wired directly to a partner's
brokerage account, upon a withdrawal of such cash payment, CIBC Opco will
subject such withdrawal to any fees the CIBC Opco would customarily assess upon
the withdrawal of cash from a brokerage account.) (Any payment in the form of
marketable securities would be made by means of special arrangement with the
tendering partner.) A promissory note reflecting the contingent payment portion
of the purchase price will be deposited directly to the undersigned's brokerage
account with CIBC Opco unless the undersigned elects below to have the
promissory note delivered directly to the undersigned at the address set forth
below. (Any amounts payable under this promissory note shall be paid to the
undersigned in the same manner designated in this Letter of Transmittal for the
Cash Payment.) The undersigned recognizes that payment of the portion of the
purchase price which is subject to immediate payment is based on the unaudited
net asset value as of December 31, 1997, of the partnership interest of the
Partnership or portion thereof tendered, and that the contingent payment portion
of the purchase price shall be determined upon completion of the audit of the
Partnership's financial statements for 1997, and shall be paid within five
business days thereafter in cash, anticipated to be completed not later than 60
days after the Partnership's fiscal year end.
All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and the obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in Section 5 of the
Offer to Purchase, this tender is irrevocable.
PART 1. NAME AND ADDRESS:
Name of partner: ______________________________________________
Address: ______________________________________________
______________________________________________
______________________________________________
Social Security No.
or Taxpayer
Identification No.: __________________________
Telephone Number: ( )_____________________
-60-
<PAGE> 3
PART 2. AMOUNT OF PARTNERSHIP INTEREST IN THE PARTNERSHIP TENDERED:
[ ] Entire partnership interest
[ ] Portion of partnership interest expressed in dollar value
(a minimum interest of $150,000 must be maintained)
$________________
PART 3. PAYMENT INSTRUCTIONS.
CASH PAYMENT.
Cash payments will be wire transferred directly to the undersigned's
brokerage account at CIBC Opco unless the undersigned elects (by
checking the box below) to receive such cash payment by check. (The
undersigned hereby represents and warrants that the undersigned
understands that for cash payments wired directly to a partner's
brokerage account, upon a withdrawal of such cash payment, CIBC Opco
will subject such withdrawal to any fees that CIBC Opco would
customarily assess upon the withdrawal of cash from a brokerage
account.)
[ ] Remit cash payments by check mailed first class (at the sole
risk of addressee) to the address set forth above.
(Any payment in the form of marketable securities would be
made by means of special arrangements with the tendering
partner.)
PROMISSORY NOTE.
The promissory note reflecting the contingent payment portion of
the purchase price, if applicable, will be deposited directly to
the undersigned's brokerage account at CIBC Opco unless the
undersigned elects (by checking the box below) to have the
promissory note delivered by first class mail directly to the
undersigned at the address set forth above.
[ ] Deliver promissory note to the address set forth above.
-61-
<PAGE> 4
PART 4. SIGNATURE.
FOR INDIVIDUAL INVESTORS: FOR INVESTORS OTHER THAN INDIVIDUALS:
_________________________________ ____________________________________
Signature Print Name of Investor
(SIGNATURE OF OWNER(S) EXACTLY
AS APPEARED ON SUBSCRIPTION AGREEMENT)
_________________________________ ____________________________________
Print Name of Investor Signature
(SIGNATURE OF OWNER(S) EXACTLY
AS APPEARED ON SUBSCRIPTION AGREEMENT)
____________________________________
Print Name of Signatory and Title
____________________________________
Co-signatory (or Joint Tenant
Signature) if necessary
(SIGNATURE OF OWNER(S) EXACTLY
AS APPEARED ON SUBSCRIPTION AGREEMENT)
____________________________________
Print Name of Co-signatory (or
Joint Tenant)
Dated: December __, 1997
-62-
