As filed with the Securities and Exchange Commission on December 22, 2000
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement / / Confidential, for Use of
the Commission Only
/ / Definitive Proxy Statement (as permitted by Rule
14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MERRILL LYNCH KECALP L.P. 1999
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(Name of Registrant as Specified in Its Charter)
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Payment of filing fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined.):
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/ / Fee paid previously with preliminary materials.
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/ / Check box if any part of the fee is offset as provided by Exchange Act
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paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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<PAGE>
[KECALP INC. LETTERHEAD]
Dear Limited Partner,
You are cordially invited to attend a Special Meeting of Limited Partners
of Merrill Lynch KECALP L.P. 1999 (the "Partnership") to be held at the
offices of Merrill Lynch & Co., Inc. in Conference Room [o] on the [o] floor
of 2 World Financial Center, New York, New York on [o].
Detailed information concerning the business of the meeting is set forth
in the following Notice of Special Meeting and Proxy Statement. The meeting
has been called to consider a proposal to amend investment restrictions for
the Partnership that will authorize engaging in certain hedging transactions
to the extent that entering into such transactions will be for non-speculative
purposes.
The Board of Directors and the Advisory Committee have considered
engaging in certain hedging transactions in order to protect the Partnership
from fluctuations in the market value of securities held or expected to be
acquired by the Partnership ("Proposed Hedging Transactions"). The Board of
Directors and the Advisory Committee believe that the Proposed Hedging
Transactions may represent attractive investment protection opportunities that
are consistent with the Partnership's objective of seeking long-term capital
appreciation.
The Proposed Hedging Transactions could involve the Partnership entering
into swap and forward agreements, making short sales of securities, purchasing
or selling options and collars, or entering into similar transactions. Certain
of these transactions were not contemplated at the time of the Partnership's
initial offering. The investment restrictions of the Partnership state that
the Partnership may not make short sales of securities or write put or call
options. The Proposed Hedging Transactions could include these activities.
The Board of Directors determined that it would be advisable to hold this
Special Meeting to provide the Limited Partners of the Partnership with an
opportunity to review and vote upon the Partnership's investment restrictions
as they relate to such Proposed Hedging Transactions. The Board of Directors
and the Advisory Committee members recommend that the Limited Partners of the
Partnership vote FOR the proposal.
Limited Partners are urged to carefully review the enclosed Proxy
Statement and to attend the Special Meeting. Whether or not you plan to attend
the Meeting in person, please complete, date and sign the enclosed proxy form
and return it promptly in the enclosed envelope provided for that purpose. You
may revoke your proxy at any time before it is exercised at the Meeting. If
you plan to attend the Meeting, please call Robert Tully at (212) 236-7304.
Respectfully,
Matthias B. Bowman
President
KECALP Inc.
General Partner
<PAGE>
MERRILL LYNCH KECALP L.P. 1999
NOTICE OF SPECIAL MEETING OF LIMITED PARTNERS
[DATE]
To the Limited Partners of
Merrill Lynch KECALP L.P. 1999
Notice is hereby given that a Special Meeting of Limited Partners (the
"Meeting") of Merrill Lynch KECALP L.P. 1999 (the "Partnership") will be held
at the offices of Merrill Lynch & Co., Inc. on the [o] floor of 2 World
Financial Center, New York, New York on [o] at [o] for the following purposes:
(1) To consider and act upon a proposal to amend the Partnership
investment restrictions to eliminate the restrictions on making
short sales of securities and writing put or call options.
(2) To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The General Partner of the Partnership, KECALP Inc. (the "General
Partner"), has fixed the close of business on [o] as the record date for the
determination of limited partners entitled to notice of and to vote at the
Meeting or any adjournment thereof.
A complete list of the limited partners of the Partnership entitled to
vote at the Meeting will be available and open to the examination of any
limited partner of the Partnership for any purpose germane to the Meeting
during ordinary business hours from and after [o] at the office of KECALP
Inc., 2 World Financial Center, 31st Floor, New York, New York 10281.
You are cordially invited to attend the Meeting. Whether or not you plan
to attend the meeting in person please complete, date and sign the enclosed
form of proxy and return it promptly in the envelope provided for that
purpose. You may revoke your proxy at any time before it is exercised at the
Meeting. If you plan to attend the meeting, please call Robert Tully at (212)
236-7304. The enclosed proxy is being solicited by the General Partner of the
Partnership.
By Order of the General Partner
KECALP Inc.
General Partner
By:
New York, New York
Dated: January , 2001
<PAGE>
PROXY STATEMENT
MERRILL LYNCH KECALP L.P. 1999
2 World Financial Center
31st Floor
New York, New York 10281
Special Meeting of Limited Partners
[DATE]
Merrill Lynch KECALP L.P. 1999 (the "Partnership"), a limited partnership
organized under Delaware law, is a registered closed-end investment company
that is an employees' securities company under the Investment Company Act of
1940 (the "Investment Company Act"). The Partnership closed its public
offering of units of limited partnership interest ("Units") on March 1, 1999,
realizing proceeds of $226,030,000 from the sale of 226,030 Units. KECALP
Inc., an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), is the General Partner of the Partnership and as such manages and
controls the business and affairs of the Partnership and invests the
Partnership's funds. The Board of Directors of the General Partner has
established an advisory committee (the "Advisory Committee") to assist the
directors and principal officers in evaluating investment opportunities for
the Partnership.
This Proxy Statement is furnished in connection with the solicitation of
proxies to be voted at the Special Meeting of Limited Partners of the
Partnership (the "Meeting"), to be held at the offices of ML & Co. on the [o]
floor of 2 World Financial Center, New York, New York on [o] at [o]. The
enclosed proxy is being solicited on behalf of the General Partner of the
Partnership. The approximate mailing date of this Proxy Statement is January
o, 2001.
All properly executed proxies received prior to the Meeting will be voted
at the Meeting in accordance with the instructions marked thereon or otherwise
as provided therein. Unless instructions to the contrary are marked, proxies
will be voted for the proposal to amend the investment restrictions described
below which allow the Partnership to engage in certain hedging transactions,
to the extent that such transactions are for non-speculative purposes. Any
proxy may be revoked at any time prior to the exercise thereof by giving
notice to the Partnership at its principal office.
The General Partner has fixed the close of business on [o] as the record
date for the determination of Limited Partners entitled to notice of and to
vote at the meeting and at any adjournment thereof. Limited Partners on the
record date will be entitled to one vote for each Unit held in the Partnership
(which represents a $1,000 initial capital contribution to the Partnership).
BACKGROUND
The investment objective of the Partnership is to seek long-term capital
appreciation. As indicated in the Partnership's prospectus with respect to the
offering of Units, dated September 3, 1998 (the "Prospectus"), it was expected
that a substantial portion of the Partnership's assets would be invested in
privately-offered equity investments in leveraged buyout transactions and in
transactions involving financial restructurings or recapitalizations of
operating companies. The Prospectus also indicated that the Partnership could
make other investments in equity and fixed income securities that the General
Partner deemed appropriate in terms of their potential for capital
appreciation.
Based upon its ongoing review of developments affecting investments held
by the Partnership, the General Partner believes that there are effective
hedging transactions in which the Partnership may engage consistent with its
investment objective of seeking long-term capital appreciation. In particular,
the General Partner and the Advisory Committee have determined that they may
wish to enter into swap or forward agreements, make short sales of securities,
write or buy put or call options or collars, or enter into similar
transactions. Certain of these transactions were not contemplated at the time
of the Partnership's initial offering. As a result, the investment
restrictions provide that the Partnership may not make short sales of
securities or write put or call options. The proposed hedging transactions
could involve such activities. The General Partner has determined that it
would be advisable for the Limited Partners to consider at the Meeting an
amendment to the investment restrictions to permit such transactions.
PROPOSAL ONE: INVESTMENT RESTRICTION REGARDING HEDGING TRANSACTIONS
One of the Partnership's investment restrictions states that, without the
consent of a majority-in-interest of the Limited Partners, the General Partner
shall not have the authority to "...(iv) make short sales of securities,
purchase securities on margin, except for use of short-term credit necessary
for the clearance of transactions, or write put or call options..."
It is proposed that the Limited Partners consider and act upon a proposal
to amend this investment restriction by deleting the italicized words cited
above so that the Partnership may make short sales of securities or write put
or call options or collars. The Partnership intends to enter into such
transactions to the extent that the transactions, directly or in combination
with related transactions, are entered into for non-speculative purposes.
It is currently contemplated that, among other circumstances, such
transactions would be utilized in instances where the Partnership is
restricted from selling a portfolio security that has appreciated in value but
where the Partnership believes a hedging opportunity is desirable. The
Partnership may also wish to hedge securities it expects to receive in
exchange for portfolio securities held by the Partnership.
Description of Transactions. If the foregoing proposal regarding the
investment restrictions of the Partnership is approved at the Meeting, the
Partnership may make short sales of securities or write put and call options.
The Partnership intends to use these transactions as hedges and not as
speculative investments and will not engage in such transactions where it does
not own or expect to own (as in connection with an acquisition of securities
owned by the Partnership in exchange for securities of a successor company)
the securities to cover the transaction.
When the Partnership writes (i.e., sells) a call option on a security
held or expected to be held in its portfolio, the Partnership gives another
party the right to buy the security at the agreed upon exercise or strike
price on or before the expiration date of the option. By writing a call
option, the Partnership limits its ability to sell the underlying securities,
and gives up the opportunity to profit from any increase in the value of the
underlying securities beyond the strike price, while the option remains
outstanding. When the Partnership writes a put option, the Partnership gives
another party the right to sell to the Partnership a specified security at the
agreed upon exercise or strike price on or before the expiration date of the
option. By writing a put option, the Partnership will be obligated to purchase
the underlying security at a price that may be higher than the market value of
the security at the time of exercise as long as the put option is outstanding.
Accordingly, when the Partnership writes a put option it is exposed to a risk
of loss in the event the value of the underlying securities falls below the
strike price, which loss potentially may substantially exceed the amount of
option premium received by the Partnership for writing the put option. The
Partnership expects normally to write a put option on a security only if the
Partnership would be willing to purchase the security at the strike price for
investment purposes or is writing the put in connection with trading
strategies involving combinations of options -- for example, the sale and
purchase of options with identical expiration dates on the same security but
different strike prices (a technique called a "spread").
When the Partnership writes a collar, it simultaneously writes a call
option and buys a put option on a security at two different prices: a higher
call strike price and a lower put strike price. If the market price of the
security on or before the expiration date of the collar is less than the put
strike price, then the Partnership can exercise the put option and sell the
security at the agreed upon put strike price. If the market price is greater
than the call strike price, then the counterparty to the collar can exercise
the call option and buy the security from the Partnership at the agreed upon
call strike price. If the market price is between the two strike prices,
neither party to the collar can exercise its respective option.
The Partnership may also write call or put options or collars in
connection with closing out put or call options or collars it has previously
purchased. The General Partner currently has the authority to purchase options
on behalf of the Partnership.
The proposed hedging transactions may also involve the Partnership
entering into swap or forward agreements, which the General Partner also
currently has the authority to effect on behalf of the Partnership. Swap
agreements are OTC contracts in which one party agrees to make periodic
payments based on the change in market value of a specified equity security in
return for periodic payments based on a fixed or variable interest rate or the
change in market value of a different equity security. Forward agreements are
OTC contracts in which one party sells a security for delivery on a future
date in exchange for payment of a fixed or variable price either on the date
the contract is entered into or on one or more dates between that date and the
delivery date. Swap and forward agreements may be used to obtain exposure to
an equity security or market without owning or taking immediate physical
custody of securities in circumstances in which direct investment is
restricted by local law or is otherwise impractical, or to diminish exposure
to an equity security or market without immediately delivering any securities
if this is similarly limited. Swap and forward agreements entail the risk that
a party will default on its payment obligations to the Partnership thereunder.
Swap and forward agreements also bear the risk that the Partnership will not
be able to meet its obligations to the counterparty.
The Board of Directors and the Advisory Committee believe that the
proposed hedging transactions may represent attractive investment protection
opportunities that are consistent with the Partnership's objective of seeking
long-term capital appreciation. The Board of Directors and the Advisory
Committee members recommend that the Limited Partners of the Partnership vote
FOR the proposal.
ADDITIONAL INFORMATION
As of December 15, 2000, the Partnership had outstanding 226,030 Units.
To the knowledge of the General Partner, no person owned beneficially more
than 5% of its outstanding Units at such date, except for ML & Co., which
owned 179,326, or 79.3%, of the Units and Matthias B. Bowman, who owned
15,381, or 6.8%, of the Units. The address of both ML & Co. and Mr. Bowman is
World Financial Center, New York, New York 10281. ML & Co. has agreed to vote
its Units in the same proportion as the votes of other Limited Partners in
respect of the proposal presented herein.
The expenses of preparation printing and mailing of this proxy statement,
the enclosed form of proxy and accompanying Notice of Proxy Statement will be
borne by the Partnership.
In accordance with Delaware law and the Partnership's partnership
agreement, the proposal regarding the Partnership's investment restrictions
will be adopted only upon the vote of a majority-in-interest of the
outstanding Units. Supplementary solicitation may be made by mail, telephone,
telegraph or personal interview. It is anticipated that the cost of such
supplementary solicitation, if any, will be nominal. The Meeting may be
adjourned from time to time without notice to Limited Partners.
Annual Report
The Partnership will furnish, without charge, a copy of its annual report
for the fiscal year ended December 31, 1999, to any Limited Partner upon
request. Such requests should be directed to Merrill Lynch KECALP L.P. 1999,
c/o KECALP Inc., 2 World Financial Center, New York, New York 10281,
Attention: Robert Tully.
Proposals of Limited Partners
It is not presently anticipated that there will be any subsequent
meetings of Limited Partners and thus Limited Partners will likely not have an
opportunity to present proposals in the future. However, Limited Partners may
call special meeting of Limited Partners in accordance with the terms of the
Partnership Agreement.
By Order of the General Partner
KECALP Inc.
General Partner
By:
Dated: January , 2001
<PAGE>
MERRILL LYNCH KECALP L.P. 1999
2 World Financial Center
31st Floor
New York, New York 10281
PROXY
This proxy is solicited on behalf of the General Partner of the Partnership
The undersigned hereby appoints ______________ as proxies, each with the
power to appoint his or her substitute, and hereby authorizes each of them to
represent and to vote, as designated on the reverse hereof, all of the Units
of Merrill Lynch KECALP L.P. 1999 (the "Partnership") held of record by the
undersigned on [o] at the Special Meeting of Limited Partners of the
Partnership to be held on [o] or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned limited partner. If no direction is
made, this proxy will be voted for the Proposal.
By signing and dating the reverse side of this card, you authorize the
proxies to vote the proposal as marked, or if not marked, to vote "FOR" the
proposal, and to use their discretion to vote for any other matter as may
properly come before the meeting, of any adjournment thereof. If you do not
intend to personally attend the meeting, please complete and return this card
at once in the enclosed envelope.
(Continued and to be signed on the reverse side)
Please mark boxes | | or |X| in blue or black ink.
1. Proposal to amend the Partnership investment restrictions to eliminate the
restrictions on making short sales of securities and writing put or call
options.
FOR |_| AGAINST |_| ABSTAIN |_|
2. In the discretion of such proxies, upon such other business as may properly
come before the meeting or any adjournment thereof.
Please sign exactly as name appears
hereon. When Units are held by joint
tenants, both should sign. When
signing as attorney or as executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by president or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
Dated: ________________________________
X______________________________________
Signature
X______________________________________
Signature, if held jointly
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
