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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
CENTURY PROPERTIES FUND XV,
A CALIFORNIA LIMITED PARTNERSHIP
(Name of Subject Company)
CENTURY PROPERTIES FUND XV,
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
FOX CAPITAL MANAGEMENT CORPORATION
ONE INSIGNIA FINANCIAL PLAZA
P.O. BOX 19059
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 Century Properties Fund XV, 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 36,000 of the outstanding Units at a purchase price of $120 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 17, 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) Fox Capital Management Corporation, a California
corporation ("FCMC"), is the managing general partner of the Partnership, and
Fox Realty Investors, a California general partnership ("FRI"), is the other
general partner of the Partnership (FCMC and FRI hereinafter are collectively
referred to as the "General Partner").
FCMC is organized as a California corporation, and FRI, the
other general partner, is organized as a California general partnership. The
managing general partner of FRI is NPI Equity Investments II, Inc. ("NPI
Equity"), which (prior to December 1996) was a wholly-owned subsidiary of
National Property Investors, Inc. ("NPI"). In January 1996, IFGP Corporation,
which is a wholly-owned subsidiary of Insignia, acquired all of the
outstanding stock of NPI (and thus all of the outstanding stock of NPI Equity
and the managing general partner interest in FRI). In June 1996, Insignia
Properties Corporation ("IPC"), which at the time was a wholly-owned
subsidiary of Insignia, acquired all of the outstanding stock of FCMC. In
December 1996, as part of the formation of IPT, NPI contributed all of the
outstanding stock of NPI Equity to IPT and IPC was merged with and into IPT.
As a result of the foregoing transactions, each of FCMC and NPI Equity is now
a wholly-owned subsidiary of IPT, and IPT controls FCMC and FRI. The Purchaser
is a newly formed, wholly-owned subsidiary of IPLP, which is the operating
partnership of IPT. IPT is the sole general partner of IPLP (owning
approximately 66% of the total equity interests in IPLP), and Insignia is the
sole limited partner of IPLP (owning approximately 34% of the total equity
interests in IPLP). Insignia and its affiliates also own approximately 67% of
the outstanding common shares of IPT. NPI-AP Management, L.P. ("NPI-AP"),
which is the property manager for the Partnership's properties, is currently
an indirect, wholly-owned subsidiary of Insignia. Insignia acquired NPI-AP in
January 1996 in connection
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with the foregoing transactions. By reason of these relationships, the General
Partner has conflicts of interest in considering the Offer.
Between October 1994 and June 1995, DeForest Ventures I, L.P.
("DeForest") acquired 35,473.17 (or approximately 39.4%) of the outstanding
Units, at a purchase price of $132 per Unit, pursuant to a series of tender
offers (the "DeForest Tender Offers"). At the time, DeForest was affiliated
with the General Partner but was not an affiliate of the Purchaser, IPT or
Insignia. As a result of litigation instituted in connection with the DeForest
Tender Offers, in March 1995 the General Partner (and certain of its
affiliates at the time) entered into an Amended Stipulation of Settlement (the
"Stipulation") which, among other things, (i) requires the General Partner to
prohibit the Partnership from entering into a "roll-up" transaction involving
the General Partner or any of its affiliates prior to January 1, 2000 unless
such "roll-up" transaction is approved by Limited Partners holding at least a
majority of the outstanding Units owned by persons who are unaffiliated with
the General Partner, and (ii) prohibited DeForest and its affiliates from
initiating or participating in any tender offer for Units for a period of 24
months following the completion of the DeForest Tender Offers (which period
has now expired). In January 1996, in connection with the transactions
described in the preceding paragraph, Insignia NPI L.L.C. ("Insignia NPI"),
which at the time was a wholly-owned subsidiary of Insignia, acquired from
DeForest all of the Units it acquired pursuant to the DeForest Tender Offers.
In December 1996, in connection with the formation of IPT, Insignia NPI was
merged with and into IPLP. As a result, IPLP now owns all of those Units.
NPI-AP, which since January 1996 has been an affiliate of
Insignia and is an affiliate of IPT, the General Partner and the Purchaser,
provides property management services to the Partnership, and since January
1996 Insignia (directly or through affiliates) has performed asset management,
partnership administration and investor relations services for the
Partnership.
The Partnership, the General Partner and NPI-AP (which is the
property manger for the Partnership) were not affiliates of Insignia prior to
January 1996. Accordingly, this section only discusses transactions between
the Partnership, on the one hand, and Insignia and its affiliates (including
the General Partner and NPI-AP), on the other hand, which have occurred since
January 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 $58,000 to date in 1997 and $111,000 in
1996. The Partnership paid NPI-AP property management fees for property
management services in the aggregate amounts of $415,000 for the year ended
December 31, 1996 and $321,000 for the nine-month period ended September 30,
1997. Insignia and its affiliates do not receive any fees from the Partnership
for the asset management or partnership administration services they provide,
although, pursuant to the Limited Partnership Agreement, the General Partner
and its affiliates are entitled to be reimbursed by the Partnership for the
expenses they incur in connection with providing those services. The
Partnership reimbursed the General Partner and its affiliates for expenses
incurred in connection with asset management and partnership administration
services performed by them for the Partnership in the amounts of $165,000 for
the year ended December 31, 1996 and $138,000 during the first nine months of
1997. The amount of reimbursements for 1996 and during the first nine months
of 1997 include $22,000 and $21,000, respectively, for costs incurred in
connection with construction oversight services. During the year ended
December 31, 1996, the Partnership paid approximately $8,000 to an affiliate
of the General Partner for expense reimbursements in connection with the
refinancing of Preston Creek
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Apartments. Pursuant to the Limited Partnership Agreement, the General Partner
is entitled to receive a partnership management fee equal to 10% of the
Partnership's adjusted cash from operations, as and when cash from operations
is distributed to the Limited Partners. The fee paid to the General Partner
pursuant to this provision was approximately $3,000 for the nine-month period
ended September 30, 1997. On January 19, 1996, 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.
As described above, the Purchaser and the General Partner are
affiliates of and controlled by IPT, which is controlled by Insignia. The
General Partner has conflicts of interest in considering the Offer, including
(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) the fact that as a consequence
of the Purchaser's ownership of Units, 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.
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. 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 9,465.83
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 almost 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 not involving a "roll-up." Even if the Purchaser
acquires a lesser number of Units pursuant to the Offer, however, because IPT
already owns (through IPLP) approximately 39.5% of the outstanding Units it
will be able to significantly influence the outcome of almost all voting
decisions with respect to the Partnership. This means that, other than with
respect to "roll-up" transactions, (i) non-tendering Limited Partners could be
prevented from taking action they desire but that IPT (which is an affiliate
of
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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. However, as a result of litigation instituted in connection with
tender offers by DeForest, an entity affiliated at the time with the General
Partner but not with the Purchaser, IPT or Insignia, under the terms of an
Amended Stipulation of Settlement entered into in March 1995, the General
Partner is required to prohibit the Partnership from entering into a "roll-up"
transaction involving the General Partner or any of its affiliates prior to
January 1, 2000 unless such "roll-up" transaction is approved by Limited
Partners holding at least a majority of the outstanding Units not held by
persons affiliated with the General Partner. 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 interests 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.
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.
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) 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.
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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 17, 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 17, 1997
CENTURY PROPERTIES FUND XV,
a California limited partnership
By: Fox Capital Management Corporation
Its Managing General Partner
By: /s/ William H. Jarrard, Jr.
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William H. Jarrard, Jr.
President
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
(a) Form of cover letter to Limited Partners from the
Partnership, dated December 17, 1997.
(b) None.
(c) None.
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Exhibit (a)
Century Properties Fund XV
December 17, 1997
Dear Limited Partner:
Enclosed is the Schedule 14D-9 which was filed by Century
Properties Fund XV (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 general partners (collectively, the "General
Partner") are Fox Capital Management Corporation and Fox Realty Investors,
which are affiliates 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.
Century Properties Fund XV
