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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
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SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
CONSOLIDATED CAPITAL GROWTH FUND,
A CALIFORNIA LIMITED PARTNERSHIP
(Name of Subject Company)
CONSOLIDATED CAPITAL GROWTH FUND,
A CALIFORNIA LIMITED PARTNERSHIP
(Name of Person(s) Filing Statement)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
N/A
(Cusip Number of Class of Securities)
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WILLIAM H. JARRARD, JR.
PRESIDENT
CONCAP EQUITIES, INC.
ONE INSIGNIA FINANCIAL PLAZA
GREENVILLE, SOUTH CAROLINA 29602
(864) 239-1300
(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications on Behalf of
the person(s) filing statement)
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Consolidated Capital Growth
Fund, a California limited partnership (the "Partnership"), and the address of
the principal executive offices of the Partnership is One Insignia Financial
Plaza, Greenville, South Carolina 29602. The title of the class of equity
securities to which this statement relates is the units of limited partnership
interest ("Units") of the Partnership.
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to an offer by Madison River Properties,
L.L.C., a Delaware limited liability company (the "Purchaser"), to purchase up
to 15,000 of the outstanding Units at a purchase price of $300 per Unit, net to
the seller in cash, without interest, upon the terms and subject to the
conditions set forth in an Offer to Purchase dated December 19, 1997 (the
"Offer to Purchase") and related Assignment of Partnership Interest (which
collectively constitute the "Offer"). A Tender Offer Statement on Schedule
14D-1 with respect to the Offer has been filed by the Purchaser, Insignia
Properties, L.P., a Delaware limited partnership ("IPLP"), Insignia Properties
Trust, a Maryland real estate investment trust ("IPT") and Insignia Financial
Group, Inc., a Delaware corporation ("Insignia") (collectively, the "Bidders").
The address of the Purchaser's principal executive offices is One
Insignia Financial Plaza, P.O. Box 19059, Greenville, South Carolina 29602.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Partnership, which is
the person filing this statement, are set forth in Item 1 above.
(b)(1) The Partnership's general partner is ConCap Equities,
Inc., a Delaware corporation and an affiliate of the Purchaser (the "General
Partner").
Upon the Partnership's formation in 1976, five individuals were
the general partners of the Partnership. These individuals were all
shareholders of Consolidated Capital Equities Corporation, a Colorado
corporation ("CCEC"). As a result of a succession of agreements, CCEC became
the Partnership's Managing Agent. In 1988, through a series of transactions,
Southmark Corporation acquired control of CCEC. In December 1988, CCEC filed
for reorganization under Chapter 11 of the United States Bankruptcy Code. In
1990, as part of CCEC's reorganization plan, the General Partner acquired
CCEC's interest as Managing Agent in the Partnership and its general partner
interests in 15 other affiliated public limited partnerships (the "Affiliated
Partnerships") and the General Partner replaced CCEC as the managing general
partner of the Partnership (and as the managing general partner of each of the
Affiliated Partnerships). The selection of the General Partner as the general
partner of the Partnership (and of each of the Affiliated Partnerships) was
approved by a majority of the Limited Partners in the Partnership (and by a
majority of the limited partners in each of the Affiliated Partnerships)
pursuant to solicitations commenced in August 1990. Insignia acquired the stock
of the General Partner through two transactions in December 1994 and October
1995, and contributed that stock to IPT in December 1996 in connection with
IPT's formation. By reason of these relationships, the General Partner has
conflicts of interest in considering the Offer.
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In 1992, LP Acceptance Corporation ("LP Corporation") acquired
19,112 (or approximately 39%) of the outstanding Units, at a purchase price of
$200 per Unit, pursuant to a tender offer commenced in November, 1992. LP
Corporation was affiliated with the General Partner at the time, but was not an
affiliate of the Purchaser, IPT or Insignia. Insignia acquired, as a result of
a transaction that occurred in December 1994, those Units and contributed such
Units to IPLP following the formation of IPT in December 1996.
Under the Limited Partnership Agreement, the General Partner
holds an interest in the Partnership and is entitled to participate in certain
cash distributions made by the Partnership to its partners. The General Partner
received from the Partnership in respect of its interest in the Partnership
cash distributions of $933,000 to date in 1997, $82,000 in 1996 and $2,665,000
in 1995. In late December 1994, IRG (which is an affiliate of the Purchaser and
the General Partner) assumed day-to-day property management responsibilities
for the Partnership's properties. The Partnership paid IRG property management
fees for property management services in the amounts of approximately $554,000
and $536,000 for the years ended December 31, 1996 and 1995, respectively, and
has paid IRG property management fees equal to $423,000 during the first nine
months of 1997. The Partnership reimbursed the General Partner and its
affiliates (including Insignia) for expenses incurred in connection with asset
management and partnership administration services performed by them for the
Partnership during 1996 and 1995 in the amounts of $269,000 (including
reimbursement of $15,000 paid to an affiliate of the General Partner for costs
incurred in connection with construction oversight services) and $227,000,
respectively, and has reimbursed them for such services in the amount of
$141,000 through September 30, 1997. Pursuant to the Limited Partnership
Agreement, the General Partner is entitled to receive a partnership management
fee equal to 9% of the Partnership's adjusted cash from operations, as and when
cash from operations is distributed to the Limited Partners. The fees paid to
the General Partner pursuant to this provision were $82,000 for the nine months
ended September 30, 1997, $213,000 in 1996 and $613,000 in 1995. On July 1,
1995, the Partnership began insuring its properties under a master policy
through an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The current agent
assumed the financial obligations to the affiliate of the General Partner who
receives payments on these obligations from the agent. Insignia and the General
Partner believe that the aggregate financial benefit derived by Insignia and
its affiliates from the arrangement described in the three preceding sentences
has been immaterial.
The General Partner has conflicts of interest with respect to the
Offer, including conflicts resulting from its affiliation with IPT and the
Purchaser. The General Partner also would have a conflict of interest (i) as a
result of the fact that a sale or liquidation of the Partnership's assets would
result in a decrease or elimination of the fees paid to the General Partner
and/or its affiliates and (ii) as a consequence of the Purchaser's ownership of
Units, because the Purchaser (which is an affiliate of the General Partner) may
have incentives to seek to maximize the value of its ownership of Units, which
in turn may result in a conflict for the General Partner in attempting to
reconcile the interests of the Purchaser (which is an affiliate of the General
Partner) with the interests of the other Limited Partners. In addition, the
Purchaser (which is an affiliate of the General Partner) is making the Offer
with a view to making a profit. Accordingly, there is a conflict between the
desire of the Purchaser (which is an affiliate of the General Partner) to
purchase Units at a low price and the desire of the Limited Partners to sell
their Units at a high price.
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As described in the Offer to Purchase, the Purchaser (which is an
affiliate of the General Partner) expects to pay for the Units it purchases
pursuant to the Offer with funds provided by IPLP as capital contributions.
IPLP in turn intends to use its cash on hand to make such contributions. See
Section 12. It is possible, however, that in connection with its future
financing activities, IPT or IPLP may cause or request the Purchaser (which is
an affiliate of the General Partner) to pledge the Units as collateral for
loans, or otherwise agree to terms which provide IPT, IPLP and the Purchaser
with incentives to generate substantial near-term cash flow from the
Purchaser's investment in the Units. This could be the case, for example, if a
loan has a "balloon" maturity after a relatively short time or bears a high or
increasing interest rate. In such a situation, the General Partner may
experience a conflict of interest in seeking to reconcile the best interests of
the Partnership with the need of its affiliates for cash flow from the
Partnership's activities.
If the Purchaser is successful in acquiring more than 5,292.35
Units pursuant to the Offer, IPT (which is an affiliate of the General Partner)
will own in excess of 50% of the total Units outstanding and, accordingly, will
be able to control the outcome of all voting decisions with respect to the
Partnership, including decisions concerning liquidation, amendments to the
Limited Partnership Agreement, removal and replacement of the General Partner
and mergers, consolidations and other extraordinary transactions. Even if the
Purchaser acquires a lesser number of Units pursuant to the Offer, however,
because IPT already owns (through IPLP) approximately 39.2% of the outstanding
Units it will be able to significantly influence the outcome of all voting
decisions with respect to the Partnership. This means that (i) non- tendering
Limited Partners could be prevented from taking action they desire but that IPT
(which is an affiliate of the General Partner) opposes and (ii) IPT (which is
an affiliate of the General Partner) may be able to take action desired by IPT
but opposed by the non-tendering Limited Partners.
Under the Limited Partnership Agreement, Limited Partners holding
a majority of the Units are entitled to take action with respect to a variety
of matters, including: removal of a general partner and in certain
circumstances election of new or successor general partners; dissolution of the
Partnership; the sale of all or substantially all of the assets of the
Partnership; and most types of amendments to the Limited Partnership Agreement.
In general, IPLP and the Purchaser (which are affiliates of the General
Partner) will vote the Units owned by them in whatever manner they deem to be
in the best interest of IPT, which, because of their relationship with the
General Partner, also may be in the interest of the General Partner, but may
not be in the interest of other Limited Partners. This could (i) prevent
non-tendering Limited Partners from taking action they desire but that IPT
opposes and (ii) enable IPT to take action desired by IPT but opposed by
non-tendering Limited Partners.
To the best knowledge of the General Partner, except as described
in this Schedule 14D-9, there are no other material agreements, arrangements,
understandings or any actual or potential conflicts of interest between the
Partnership, the General Partner and their affiliates and the Bidders, their
executive officers, directors or affiliates.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Because of the existing and potential future conflicts of
interest described in Item 3 above, the Partnership and the General Partner are
remaining neutral and making no recommendation as to whether Limited Partners
should tender their Units in response to the Offer.
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ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Neither the Partnership nor any person acting on its behalf has
employed, retained or compensated, or intends to employ, retain or compensate,
any person or class of person to make solicitations or recommendation to
Limited Partners on its behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTEREST WITH RESPECT TO SECURITIES.
(a) Except as described in Schedule I attached hereto, no
transactions in the Units have been effected during the past 60 days by the
Partnership or the General Partner or, to the knowledge of the General Partner,
by any of its current or former executive officers, directors or affiliates.
(b) To the knowledge of the Partnership, neither the General
Partner nor any of its current or former executive officers, directors or
affiliates intends to tender pursuant to the Offer any Units beneficially owned
by them.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
None.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) Form of cover letter to Limited Partners of the
Partnership dated December 19, 1997.
(b) None.
(c) None.
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SIGNATURE
After reasonable 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.
Dated: December 19, 1997
CONSOLIDATED CAPITAL GROWTH FUND,
a California limited partnership
By: ConCap Equities, Inc.
Its General Partner
By: /s/ William H. Jarrard, Jr.
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William H. Jarrard, Jr.
President
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SCHEDULE I
TRANSACTIONS IN THE UNITS
EFFECTED BY IPLP WITHIN THE PAST 60 DAYS
Number of Price
DATE Units Purchased Per Unit
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11/01/97 10 245.00
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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(a) Form of cover letter to Limited Partners from the Partnership
dated December 19, 1997.
(b) None.
(c) None.
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Exhibit (a)
Consolidated Capital Growth Fund
December 19, 1997
Dear Limited Partner:
Enclosed is the Schedule 14D-9 which was filed by Consolidated
Capital Growth Fund (the "Partnership") with the Securities and Exchange
Commission in connection with an offer (the "Offer") by Madison River
Properties, L.L.C., a Delaware limited liability company (the "Purchaser"),
Insignia Properties, L.P., a Delaware limited partnership ("IPLP"), Insignia
Properties Trust, a Maryland real estate investment trust ("IPT"), and Insignia
Financial Group, Inc., a Delaware corporation ("Insignia," and together with
IPLP, IPT and the Purchaser, the "Bidders"), to purchase units of limited
partnership interest ("Units") in the Partnership.
The Partnership's sole general partner (the "General Partner") is
ConCap Equities, Inc., which is an affiliate of the Bidders. Due to the
affiliation between the General Partner of the Partnership and the Bidders, the
General Partner is subject to certain conflicts of interest in connection with
the response to the Offer.
AS A RESULT OF THE EXISTING AND POTENTIAL CONFLICTS OF INTEREST,
NEITHER THE PARTNERSHIP NOR THE GENERAL PARTNER EXPRESSES ANY OPINION AS TO THE
OFFER AND EACH IS REMAINING NEUTRAL AND MAKING NO RECOMMENDATION AS TO WHETHER
LIMITED PARTNERS SHOULD TENDER THEIR UNITS IN RESPONSE TO THE OFFER.
Limited Partners are advised to carefully read the enclosed
Schedule 14D-9.
Consolidated Capital Growth Fund
