SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
-----------------------
DE ANZA PROPERTIES - XII, LTD.
(Name of Subject Company)
MORAGA GOLD, LLC
MORAGA FUND 1, L.P.
ACCELERATED HIGH YIELD INCOME FUND I, L.P.
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, L.P.
CAL KAN, INC.
STEVEN GOLD
(Bidders)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
-----------------------
Copy to:
C.E. Patterson Paul J. Derenthal, Esq.
Moraga Partners, Inc. Derenthal & Dannhauser
1640 School Street, Suite 100 455 Market Street, Suite 1600
Moraga, California 94556 San Francisco, California 94105
(510) 631-9100 (415) 243-8070
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications on Behalf of Bidder)
Calculation of Filing Fee
-----------------------------------------------------------------
Transaction Amount of
Valuation Filing Fee
$1,453,760 $290.75
-----------------------------------------------------------------
* For purposes of calculating the filing fee only. This amount assumes the
purchase of 4,543 Units of Limited Partnership Interest ("Units") of the subject
company at $320.00 in cash per Unit.
[ ] 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 Number:
Filing Party:
Date Filed:
<PAGE>
CUSIP NO. None 14D-1 Page 2 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
MORAGA GOLD, LLC
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) __
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC, AF
5. Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 3,761
8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 16.55%
10. Type of Reporting Person (See Instructions)
OO
dax-3/14d2.1
<PAGE>
CUSIP NO. None 14D-1 Page 3 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
MORAGA FUND 1, L.P.
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) __
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC, AF
5. Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 3,761
8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 16.55%
10. Type of Reporting Person (See Instructions)
PN
<PAGE>
CUSIP NO. None 14D-1 Page 4 of _ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
ACCELERATED HIGH YIELD INCOME FUND I, L.P.
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) __
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC, AF
5. Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 3,761
8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 16.55%
10. Type of Reporting Person (See Instructions)
PN
<PAGE>
CUSIP NO. None 14D-1 Page 5 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, L.P.
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) __
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC, AF
5. Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 3,761
8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 16.55%
10. Type of Reporting Person (See Instructions)
PN
<PAGE>
CUSIP NO. None 14D-1 Page 6 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
CAL KAN, INC.
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) __
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC, AF
5. Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 3,761
--
8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 16.55%
10. Type of Reporting Person (See Instructions)
CO
<PAGE>
CUSIP NO. None 14D-1 Page 7 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
STEVEN GOLD
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) __
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC, AF
5. Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 2,139
8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 9.44%
10. Type of Reporting Person (See Instructions)
IN
<PAGE>
Item 1. Security and Subject Company.
(a) This Schedule relates to units of limited partnership interest (the
"Units") of De Anza Properties - XII, Ltd. (the "Issuer"), the subject company.
The address of the Issuer's principal executive offices is: 9171 Wilshire
Boulevard, Beverly Hills, California 90210.
(b) This Schedule relates to the offer by Moraga Gold, LLC, a California
limited liability company, Moraga Fund I, L.P., a California limited
partnership, Accelerated High Yield Income Fund I, L.P., a California limited
partnership, Accelerated High Yield Institutional Investors, L.P., a California
limited partnership, Cal Kan, Inc., a California corporation and Steven Gold,
(together the "Purchasers"), to purchase up to 4,543 Units for cash at a price
equal to $320 per Unit less the amount of any distributions made or declared
with respect to the Units between November 27, 1996 and December 31, 1996, or
such later date to which the Purchasers may extend the offer, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated November 27,
1996 (the "Offer to Purchase") and the related Letter of Transmittal, copies of
which are attached hereto as Exhibits (a)(1) and (a)(2), respectively. The
Issuer had 22,719 Units outstanding as of December 31, 1995, according to its
annual report on Form 10-K for the year then ended.
(c) The information set forth under the captions "Introduction
Establishment of the Offer Price" and "Effects of the Offer" in the Offer to
Purchase is incorporated herein by reference.
Item 2. Identity and Background.
(a)-(d) The information set forth in "Introduction," "Certain Information
Concerning the Purchasers" and in Schedule I of the Offer to Purchase is
incorporated herein by reference.
(e)-(g) The information set forth in "Certain Information Concerning the
Purchasers" and Schedule I in the Offer to Purchase is incorporated herein by
reference. Other than as set forth in the Offer to Purchase, during the last
five years, neither the Purchasers nor, to the best of the knowledge of the
Purchasers, any person named on Schedule I to the Offer to Purchase nor any
affiliate of the Purchasers (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) was a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding were or are subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, Federal or state securities laws or finding any violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations with the Subject Company.
(a)-(b) See the Offer to Purchase for information concerning purchases of
Units by certain of the Purchasers and their affiliates. Also, see the
discussion under "Introduction" in the Offer to Purchase for information
concerning discussions between the Issuer and an affilate of the Purchasers.
Other than, the foregoing, since January 1, 1992, there have been no
transactions between any of the persons identified in Item 2 and the Issuer or,
to the knowledge of the Purchasers, any of the Issuer's affiliates or general
partners, or any directors or executive officers of any such affiliates or
general partners.
Item 4. Source and Amount of Funds or Other Consideration.
(a) The information set forth under the caption "Source of Funds" of the
Offer to Purchase is incorporated herein by reference.
(b)-(c) Not applicable.
8
<PAGE>
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
(a)-(e) and (g) The information set forth under the caption "Future
Plans" in the Offer to Purchase is incorporated herein by reference.
(f) Not applicable.
Item 6. Interest in Securities of the Subject Company.
(a) and (b) The information set forth in "Certain Information
Concerning the Purchasers" of the Offer to Purchase is incorporated herein by
reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with
Respect to the Subject Company's Securities.
The information set forth in "Certain Information Concerning the
Purchasers" of the Offer to Purchase is incorporated herein by reference.
Item 8. Persons Retained, Employed or To Be Compensated.
None.
Item 9. Financial Statements of Certain Bidders.
Not applicable.
Item 10. Additional Information.
(a) None.
(b)-(c) The information set forth in "Certain Legal Matters" of the
Offer to Purchase is incorporated herein by reference.
(d) None.
(e) None.
(f) Reference is hereby made to the Offer to Purchase and the
related Letter of Transmittal, copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively, and which are incorporated herein in their
entirety by reference.
Item 11. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase dated November 27, 1996
(a)(2) Letter of Transmittal.
(a)(3) Form of Letter to Unitholders dated November 27, 1996
(b)-(f) Not applicable.
9
<PAGE>
SIGNATURES
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.
Dated: November 27, 1996
MORAGA GOLD, LLC
BY ITS MEMBERS:
MORAGA PARTNERS, INC.
By: /s/ C. E. Patterson November 27, 1996
C. E. Patterson, President Date
DAVID B. GOLD TRUST
By: /s/ STEVEN GOLD November 27, 1996
Steven Gold, Adviser Date
to the David B. Gold Trust
MORAGA FUND 1, L.P.
BY: MORAGA PARTNERS, INC.,
GENERAL PARTNER
By: /s/ C. E. Patterson November 27, 1996
C. E. Patterson, Date
President
ACCELERATED HIGH YIELD INCOME FUND I, L.P.
BY: MacKENZIE PATTERSON, INC.,
GENERAL PARTNER
By: /s/ C. E. Patterson November 27, 1996
C. E. Patterson, Date
President
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, L.P.
BY: MacKENZIE PATTERSON, INC.,
GENERAL PARTNER
By: /s/ C. E. Patterson November 27, 1996
C. E. Patterson, Date
President
<PAGE>
CAL KAN, INC.
By: /s/ C. E. Patterson November 27, 1996
C. E. Patterson Date
President
STEVEN GOLD
By: /s/ Steven Gold November 27, 1996
Steven Gold Date
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
(a)(1) Offer to Purchase dated November 27, 1996
(a)(2) Letter of Transmittal
(a)(3) Form of Letter to Unitholders dated November 27, 1996
<PAGE>
Exhibit (a)(1)
<PAGE>
OFFER TO PURCHASE FOR CASH UP TO 4,543
UNITS OF LIMITED PARTNERSHIP INTEREST
OF
DE ANZA PROPERTIES - XII, LTD.
(a California Limited Partnership)
at
$320 Per Unit
by
MORAGA GOLD, LLC
MORAGA FUND 1, L.P.
ACCELERATED HIGH YIELD INCOME FUND I, L.P.
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, L.P.
CAL KAN, INC.
STEVEN GOLD
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00 MIDNIGHT,
PACIFIC STANDARD TIME, ON DECEMBER 31, 1996, UNLESS THE OFFER IS EXTENDED.
Moraga Gold, LLC, Moraga Fund I, L.P., Accelerated High Yield Income
Fund I, L.P., Accelerated High Yield Institutional Investors, L.P., Cal Kan,
Inc. and Steven Gold (together the "Purchasers") hereby seek to acquire Units of
limited partnership interest (the "Units") in De Anza Properties - XII, Ltd., a
California limited partnership (the "Partnership"). The Purchasers are not
affiliated with the Partnership. The Purchasers hereby offer to purchase up to
4,543 Units at a purchase price equal to $320 per Unit, less the amount of any
distributions declared or made with respect to the Units between November 27,
1996 (the "Offer Date") and December 31, 1996, or such other date to which this
Offer may be extended (the "Expiration Date"), in cash, without interest, upon
the terms and subject to the conditions set forth in this Offer to Purchase (the
"Offer to Purchase") and in the related Letter of Transmittal, as each may be
supplemented or amended from time to time (which together constitute the
"Offer"). The 4,543 Units sought pursuant to the Offer represent approximately
20% of the Units outstanding as of December 31, 1995.
Holders of Units ("Unitholders") are urged to consider the following
factors:
- Unitholders who tender their Units will give up the
opportunity to participate in any future benefits from the
ownership of Units, including potential future distributions
by the Partnership, and the purchase price per Unit payable to
a tendering Unitholder by the Purchasers may be less than the
total amount which might otherwise be received by the
Unitholder with respect to the Unit over the remaining term of
the Partnership.
- The purchase price offered by the Purchasers is less than the
$419 per Unit estimated by the Purchasers to be the estimated
liquidation value of the underlying assets of the Partnership
as of September 30, 1996.
<PAGE>
- The Purchasers is making the Offer for investment purposes and
with the intention of making a profit from the ownership of
the Units. In establishing the purchase price of $320 per
Unit, the Purchasers was motivated to establish the lowest
price which might be acceptable to Unitholders consistent with
the Purchasers' objectives.
- As a result of consummation of the Offer, the Purchasers may
be in a position to significantly influence all Partnership
decisions on which Unitholders may vote. The Purchasers will
vote the Units acquired in the Offer in its own interest,
which may be different from or in conflict with the interests
of the remaining Unitholders. See Section 7 below.
- The Purchasers may accept only a portion of the Units tendered
by a Unitholder in the event a total of more than 4,543 Units
are tendered.
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. IF MORE THAN 4,543 UNITS ARE VALIDLY TENDERED AND NOT WITHDRAWN, THE
PURCHASERS WILL ACCEPT FOR PURCHASE 4,543 UNITS FROM TENDERING UNITHOLDERS ON A
PRO RATA BASIS, SUBJECT TO THE TERMS AND CONDITIONS HEREIN.
A UNITHOLDER MAY TENDER ANY OR ALL UNITS OWNED BY SUCH UNITHOLDER.
The Purchasers expressly reserves the right, in its sole discretion, at
any time and from time to time, (i) to extend the period of time during which
the Offer is open and thereby delay acceptance for payment of, and the payment
for, any Units, (ii) to terminate the Offer and not accept for payment any Units
not theretofore accepted for payment or paid for, (iii) upon the occurrence of
any of the conditions specified in Section 13 of this Offer to Purchase, to
delay the acceptance for payment of, or payment for, any Units not theretofore
accepted for payment or paid for, and (iv) to amend the Offer in any respect.
Notice of any such extension, termination or amendment will promptly be
disseminated to Unitholders in a manner reasonably designed to inform
Unitholders of such change in compliance with Rule 14d-4(c) under the Securities
Exchange Act of 1934 (the "Exchange Act"). In the case of an extension of the
Offer, such extension will be followed by a press release or public announcement
which will be issued no later than 9:00 a.m., Eastern Standard Time, on the next
business day after the scheduled Expiration Date, in accordance with Rule 14e-
1(d) under the Exchange Act.
November 27, 1996
2
<PAGE>
IMPORTANT
Any Unitholder desiring to tender any or all of such Unitholder's Units should
complete and sign the Letter of Transmittal (a copy of which is printed on
yellow paper and enclosed with this Offer to Purchase) in accordance with the
instructions in the Letter of Transmittal and mail, deliver or telecopy the
Letter of Transmittal and any other required documents to MacKenzie Patterson,
Inc. (the "Depositary"), an affiliate of the Purchasers, at the address or
facsimile number set forth below.
MacKenzie Patterson, Inc.
1640 School Street, Suite 100
Moraga, California 94556
Telephone: 800-854-8357
Facsimile Transmission: 510-631-9119
Questions or requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to the Purchasers at
1-800-854-8357.
---------------------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY
REPRESENTATION ON BEHALF OF THE PURCHASERS OR TO PROVIDE ANY INFORMATION
OTHER THAN AS CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH
RECOMMENDATION, INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING
BEEN AUTHORIZED.
---------------------------
The Partnership is subject to the information and reporting
requirements of the Exchange Act and in accordance therewith is required to file
reports and other information with the Commission relating to its business,
financial condition and other matters. Such reports and other information may be
inspected at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
is available for inspection and copying at the regional offices of the
Commission located in Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and at 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of such material can also be obtained from the Public
Reference Room of the Commission in Washington, D.C. at prescribed rates.
The Purchasers has filed with the Commission a Tender Offer Statement
on Schedule 14D-1 (including exhibits) pursuant to Rule 14d-3 of the General
Rules and Regulations under the Exchange Act, furnishing certain additional
information with respect to the Offer. Such statement and any amendments
thereto, including exhibits, may be inspected and copies may be obtained from
the offices of the Commission in the manner specified above.
3
<PAGE>
TABLE OF CONTENTS
Page
INTRODUCTION............................................................ 5
TENDER OFFER............................................................ 9
Section 1. Terms of the Offer.......................................... 9
Section 2. Proration; Acceptance for Payment and Payment for Units..... 9
Section 3. Procedures for Tendering Units................................ 10
Section 4. Withdrawal Rights............................................. 12
Section 5. Extension of Tender Period; Termination; Amendment............ 12
Section 6. Certain Federal Income Tax Consequences....................... 13
Section 7. Effects of the Offer.......................................... 15
Section 8. Future Plans.................................................. 16
Section 9. The Business of the Partnership............................... 16
Section 10. Conflicts of Interest......................................... 19
Section 11. Certain Information Concerning the Purchasers................. 19
Section 12. Source of Funds............................................... 20
Section 13. Conditions of the Offer....................................... 20
Section 14. Certain Legal Matters......................................... 21
Section 15. Fees and Expenses............................................. 22
Section 16. Miscellaneous................................................. 23
Schedule I - The Purchasers and Their Respective Principals
4
<PAGE>
To the Holders of Units of Limited Partnership Interest of De Anza Properties -
XII, Ltd.
INTRODUCTION
The Purchasers hereby offers to purchase up to 4,543 Units of the
Partnership at a purchase price of $320 per Unit, less the amount of any
distributions declared or paid with respect to the Units between the Offer Date
and the Expiration Date ("Offer Price"), in cash, without interest, upon the
terms and subject to the conditions set forth in the Offer. Unitholders who
tender their Units will not be obligated to pay any Partnership transfer fees,
or any other fees, expenses or commissions in connection with the tender of
Units. The Purchasers will pay all such costs and all charges and expenses of
the Depositary, an affiliate of certain of the Purchasers, as depositary in
connection with the Offer.
For further information concerning the Purchasers, see Section 11 below
and Schedule I.
None of the Purchasers nor the Depositary is affiliated with the DeAnza
Corporation; the Partnership's operating general partner (the "General Partner")
or with any of the individual general partners of the Partnership or any
affiliate of such persons.
Unitholders are urged to consider the following factors:
- Unitholders who tender their Units will give up the
opportunity to participate in any future benefits from the
ownership of Units, including potential future distributions
by the Partnership, and the purchase price per Unit payable to
a tendering Unitholder by the Purchasers may be less than the
total amount which might otherwise be received by the
Unitholder with respect to the Unit over the remaining term of
the Partnership.
- The purchase price offered by the Purchasers is less than the
$419 per Unit estimated by the Purchasers to be the estimated
liquidation value of the underlying assets of the Partnership
as of September 30, 1996.
- The Purchasers are making the Offer for investment purposes
and with the intention of making a profit from the ownership
of the Units. In establishing the purchase price of $320 per
Unit, the Purchasers are motivated to establish the lowest
price which might be acceptable to Unitholders consistent with
the Purchasers' objectives.
- As a result of consummation of the Offer, the Purchasers may
be in a position to significantly influence all Partnership
decisions on which Unitholders may vote. The Purchasers will
vote the Units acquired in the Offer in its own interest,
which may be different from or in conflict with the interests
of the remaining Unitholders. See Section 7 below.
- The Purchasers may accept only a portion of the Units tendered
by a Unitholder in the event a total of more than 4,543 Units
are tendered.
The Offer will provide Unitholders with an opportunity to liquidate their
investment without the usual transaction costs associated with market sales.
Unitholders may no longer wish to continue with their investment in the
Partnership for a number of reasons, including the following:
5
<PAGE>
- the absence of a formal trading market for the Units and the difficulty
in selling units in secondary market transactions;
- general disenchantment with real estate investments, particularly
long-term investments in limited partnerships;
- the continuing administrative costs and resultant negative financial
impact on the value of the Units of a publicly registered limited partnership;
(The Partnership has only one significant remaining property, but must still
comply with all of the Partnership accounting, tax reporting, limited partner
reporting and public company reporting requirements that it has been subject to
throughout its 15-year history. During substantially all of its prior operating
period, the Partnership had a much larger real property portfolio to offset and
justify its ongoing administrative costs. According to the Partnership's public
reports, the costs borne by the Partnership for salaries and professional fees
and services, not including management fees, for the twelve months ended
December 31, 1994 were $669,925 and for the twelve months ended December 31,
1995 were $391,093. These administrative costs constituted an amount equal to
45% and 51%, respectively, of distributions to limited partners of approximately
$1,487,000 for 1994 and $767,000 in 1995. For the nine months ended September
30, 1996, such administrative costs increased by 9% to $418,197, compared to
$382,580 for the nine months ended September 30, 1995. Administrative costs
borne by the Partnership directly reduce the amount of cash from property
operations otherwise available to be distributed to the Unitholders. Unitholders
may wish to dispose of their Units by accepting the Offer and thereby avoid
indirectly bearing such administrative expenses for an indefinite period.)
- a more immediate need to use the cash now tied up in an investment in the
Units;
- a desire to eliminate the need for compliance with complicated and costly
tax return requirements and associated expenses which may result from an
investment in the Units; and
- no termination or liquidation date has been fixed for the Partnership
other than the Partnership Agreement provision for the term of the Partnership
to extend until December 31, 2030 (unless dissolved earlier). In discussions
between the General Partner and MacKenzie Patterson, Inc. in late spring 1996,
the General Partner stated that the Partnership had no plans to liquidate its
property and reiterated its statement to Partners made May 2, 1996 wherein it
stated, "A further delay in marketing the property for sale would be advisable".
The Offer is not conditioned upon any minimum number of Units being
tendered. If more than 4,543 Units are validly tendered and not withdrawn, the
Purchasers will accept for purchase a total of 4,543 Units from tendering
Unitholders on a pro rata basis, subject to the terms and conditions herein. See
"Tender Offer - Section 13. Conditions of the Offer" for certain conditions of
the Offer. The Purchasers expressly reserve the right, in its sole discretion
and for any reason, to waive any or all of the conditions of the Offer, although
the Purchasers do not presently intend to waive any such conditions.
Establishment of the Offer Price
The Purchasers have set the Offer Price at $320 per Unit, less the amount
of any distributions declared or made with respect to the Units between the
6
<PAGE>
Offer Date and Expiration Date. In determining the Offer Price, the
Purchasers analyzed a number of quantitative and qualitative factors, including:
(i) the prices of recent secondary market resales of the Units; (ii) the lack of
liquidity of an investment in the Partnership; (iii) an estimate of the
liquidation value of the Partnership's assets; (iv) the costs to the Purchasers
associated with acquiring the Units; and (v) the administrative costs of
continuing to own the Partnership's assets through a publicly registered limited
partnership.
The Offer Price represents the price at which the Purchasers are
willing to purchase Units. No independent person has been retained to evaluate
or render any opinion with respect to the fairness of the Offer Price and no
representation is made by the Purchasers or any affiliate of the Purchasers as
to such fairness. Other measures of the value of the Units may be relevant to
Unitholders. Unitholders are urged to consider carefully all of the information
contained herein and consult with their own advisors, tax, financial or
otherwise, in evaluating the terms of the Offer before deciding whether to
tender Units.
According to reports published by Robert A. Stanger & Co., Inc. and
Partnership Spectrum, independent, third-party sources, the low and high sales
prices of Units during the period from May 1, 1996 through August 30, 1996 were
$295 and $365 per Unit, respectively. The gross sales prices reported also do
not necessarily reflect the net sales proceeds received by sellers of Units,
which typically are reduced by commissions and other secondary market
transaction costs to amounts less than the reported prices. In addition, the
information published by these independent sources is the product of their
market research and does not constitute the comprehensive transaction reporting
of a securities exchange. Accordingly, the Purchasers do not know whether the
foregoing sales price information is accurate or complete.
During the period from May 22, 1996 through the date hereof, affiliates
of the Purchasers acquired 32 Units in privately negotiated transactions with
unrelated parties for $305 per Unit. During the period from April 18, 1996
through May 18, 1996, Moraga Gold, LLC, one of the Purchasers, acquired a total
of 2,139 Units at a price of $305 per Unit pursuant to a tender offer.
The Purchasers are offering to purchase Units which are a relatively
illiquid investment and are not offering to purchase the Partnership's
underlying assets. Consequently, the Purchasers do not believe that the
underlying asset value of the Partnership is determinative in arriving at the
Offer Price. Nevertheless, using publicly available information concerning the
Partnership contained in the Partnership's Form 10-K for the fiscal year ended
December 31, 1995, and Form 10-Q for the three quarters ended September 30,
1996, the Purchasers derived an estimated liquidation value (the "Estimated
Liquidation Value") for the Partnership's assets.
In determining the Estimated Liquidation Value, the Purchasers first
calculated the "Estimated Net Sales Value" of the Partnership's sole remaining
property. The Estimated Net Sales Value was determined by calculating an
annualized net operating income ("NOI") for 1996 based on the operations through
September 30, 1996, ($1,412,000) and dividing this annualized NOI by a 10%
capitalization rate (the "Cap Rate") and reducing the result by (i) 3%
($424,000) to take into account the estimated closing costs which would be
incurred upon the sale by the Partnership of the property, including brokerage
commissions, title costs, surveys, appraisals, legal fees and transfer taxes,
and (ii) the $4,234,000 of mortgage debt encumbering the property as of
September 30, 1996. The resulting Estimated Net Sales Value of the property was
approximately $9,462,000.
The Purchasers believe that the Cap Rate utilized by it is within a
range of capitalization rates currently employed in the marketplace. The
utilization of different capitalization rates, however, could also be
appropriate. In this regard, Unitholders should be aware that the use of lower
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capitalization rates would result in a higher Estimated Net Sales Value for the
Partnership's property, and the use of a higher capitalization rate would result
in a lower Estimated Net Sales Value.
To determine the Estimated Liquidation Value of the Partnership's
assets, the Purchasers added to the Estimated Net Sales Value of the
Partnership's property the Partnership's $291,000 of net current assets and a
note receivable in the amount of $342,000 as reported in the Partnership's Form
10-Q for the quarter ended as of September 30, 1996. The resulting Estimated
Liquidation Value of the Partnership's assets as of September 30, 1996 was
approximately $9,513,000 or $419 per Unit (based upon the percentage of capital
distributions which the Purchasers believe Unitholders are entitled under the
Partnership's partnership agreement (the "Partnership Agreement") after
deducting amounts which the General Partner of the Partnership is entitled to
receive). This is $14 higher than MacKenzie Patterson, Inc.'s earlier valuation
of $405 and accordingly, the Purchasers have increased the offer to Purchase to
$320 from $305.
Under the Partnership Agreement, the Partnership is not required to
sell its sole remaining property until the earlier of the date Unitholders
holding a majority of the Units vote to liquidate the Partnership or December
31, 2030. In discussions with MacKenzie Patterson, Inc. during late spring 1996,
the General Partner advised that the General Partner had made no change in its
plans to wait indefinitely for a better marketing environment. The General
Partner did indicate that upon further study conversion to and sale of the
property as condominiums no longer appeared feasible. Accordingly, the timing of
the sale of the Partnership's remaining property and resulting liquidation of
the Partnership remains uncertain, and, consequently, the timing of amounts to
be received by Unitholders in respect of such sale and liquidation (whether in
excess of or less than the Estimated Liquidation Value per Unit) cannot be
determined.
As indicated above, the Offer Price represents the price at which the
Purchasers are willing to purchase Units. No independent person has been
retained to evaluate or render any opinion with respect to the fairness of the
Offer Price and no representation is made by the Purchasers or any affiliate of
the Purchasers as to such fairness. Other measures of the value of the Units may
be relevant to Unitholders. Unitholders are urged to consider carefully all of
the information contained herein and consult with their own advisors, tax,
financial or otherwise, in evaluating the terms of the Offer before deciding
whether to tender Units.
General Background Information
Certain information contained in this Offer to Purchase which relates
to, or represents, statements made by the Partnership or the General Partner,
has been derived from information provided in reports filed by the Partnership
with the Securities and Exchange Commission.
According to publicly available information, there were 22,719 Units
issued and outstanding at December 31, 1995, held by approximately 1,876
Unitholders. The Purchasers and Affiliates currently beneficially own an
aggregate of 3,761 Units or approximately 16.55% of the outstanding Units (see
"Certain Information Concerning the Purchasers" below).
Tendering Unitholders will not be obligated to pay transfer fees,
brokerage fees or commissions on the sale of the Units to the Purchasers
pursuant to the Offer. The Purchasers will pay all charges and expenses incurred
in connection with the Offer. The Purchasers desire to purchase all Units
tendered by each Unitholder.
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If, prior to the Expiration Date, the Purchasers increase the
consideration offered to Unitholders pursuant to the Offer, such increased
consideration will be paid with respect to all Units that are purchased pursuant
to the Offer, whether or not such Units were tendered prior to such increase in
consideration.
Unitholders are urged to read this Offer to Purchase and the
accompanying Letter of Transmittal carefully before deciding whether to tender
their Units.
TENDER OFFER
Section 1. Terms of the Offer. Upon the terms and subject to the
conditions of the Offer, the Purchasers will accept for payment and pay for
Units validly tendered on or prior to the Expiration Date and not withdrawn in
accordance with Section 4 of this Offer to Purchase. The term "Expiration Date"
shall mean 12:00 midnight, Pacific Standard Time, on December 31, 1996, unless
and until the Purchasers shall have extended the period of time for which the
Offer is open, in which event the term "Expiration Date" shall mean the latest
time and date on which the Offer, as so extended by the Purchasers, shall
expire.
The Offer is conditioned on satisfaction of certain conditions. See
Section 13, which sets forth in full the conditions of the Offer. The Purchasers
reserve the right (but shall not be obligated), in its sole discretion and for
any reason, to waive any or all of such conditions. If, by the Expiration Date,
any or all of such conditions have not been satisfied or waived, the Purchasers
reserve the right (but shall not be obligated) to (i) decline to purchase any of
the Units tendered, terminate the Offer and return all tendered Units to
tendering Unitholders, (ii) waive all the unsatisfied conditions and, subject to
complying with applicable rules and regulations of the Commission, purchase all
Units validly tendered, (iii) extend the Offer and, subject to the right of
Unitholders to withdraw Units until the Expiration Date, retain the Units that
have been tendered during the period or periods for which the Offer is extended
or (iv) to amend the Offer.
The Purchasers do not anticipate and has no reason to believe that any
condition or event will occur that would prevent the Purchasers from purchasing
tendered Units as offered herein.
Section 2. Proration; Acceptance for Payment and Payment for Units. If
the number of Units validly tendered prior to the Expiration Date and not
withdrawn is 4,543 or less, the Purchasers, upon the terms and subject to the
conditions of the Offer, will accept for payment all Units so tendered.
If the number of Units validly tendered prior to the Expiration Date
and not withdrawn exceeds 4,543, the Purchasers, upon the terms and subject to
the conditions of the Offer, will accept for payment Units so tendered on a pro
rata basis.
In the event that proration is required, because of the difficulty of
immediately determining the precise number of Units to be accepted, the
Purchasers will announce the final results of proration as soon as practicable,
but in no event later than five business days following the Expiration Date. The
Purchasers will not pay for any Units tendered until after the final proration
factor has been determined.
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any extension
or amendment), the Purchasers will accept
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for payment, and will pay for, Units validly tendered and not withdrawn in
accordance with Section 4, as promptly as practicable following the Expiration
Date. In all cases, payment for Units purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) and any other
documents required by the Letter of Transmittal.
For purposes of the Offer, the Purchasers shall be deemed to have
accepted for payment (and thereby purchased) tendered Units when, as and if the
Purchasers give oral or written notice to the Depositary of the Purchasers'
acceptance for payment of such Units pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Units purchased pursuant to
the Offer will in all cases be made by deposit of the Offer Price with the
Depositary, which will act as agent for the tendering Unitholders for the
purpose of receiving payment from the Purchasers and transmitting payment to
tendering Unitholders. Under no circumstances will interest be paid on the Offer
Price by reason of any delay in making such payment.
If any tendered Units are not purchased for any reason, the Letter of
Transmittal with respect to such Units not purchased will be of no force or
effect. If, for any reason whatsoever, acceptance for payment of, or payment
for, any Units tendered pursuant to the Offer is delayed or the Purchasers are
unable to accept for payment, purchase or pay for Units tendered pursuant to the
Offer, then, without prejudice to the Purchasers' rights under Section 13 (but
subject to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary
may, nevertheless, on behalf of the Purchasers, retain tendered Units, subject
to any limitations of applicable law, and such Units may not be withdrawn except
to the extent that the tendering Unitholders are entitled to withdrawal rights
as described in Section 4.
If, prior to the Expiration Date, the Purchasers shall increase the
consideration offered to Unitholders pursuant to the Offer, such increased
consideration shall be paid for all Units accepted for payment pursuant to the
Offer, whether or not such Units were tendered prior to such increase.
Section 3. Procedures for Tendering Units.
Valid Tender. For Units to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (a copy of which is
enclosed and printed on blue paper) with any other documents required by the
Letter of Transmittal must be received by the Depositary at its address set
forth on the back cover of this Offer to Purchase on or prior to the Expiration
Date.
A Unitholder may tender any or all Units owned by such Unitholder.
In order for a tendering Unitholder to participate in the Offer, Units
must be validly tendered and not withdrawn prior to the Expiration Date, which
is 12:00 midnight, Pacific Standard Time, on December 31, 1996, or such date to
which the Offer may be extended.
The method of delivery of the Letter of Transmittal and all other
required documents is at the option and risk of the tendering Unitholder and
delivery will be deemed made only when actually received by the Depositary.
Backup Federal Income Tax Withholding. To prevent the possible
application of 31% backup federal income tax withholding with respect to payment
of the Offer Price for Units purchased pursuant to the Offer, a tendering
Unitholder must provide the Depositary with such Unitholder's correct taxpayer
identification number and make certain certifications that such Unitholder is
not subject to backup federal income tax withholding. Each tendering Unitholder
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must insert in the Letter of Transmittal the Unitholder's taxpayer
identification number or social security number in the space provided on the
front of the Letter of Transmittal. The Letter of Transmittal also includes a
substitute Form W-9, which contains the certifications referred to above. (See
the Instructions to the Letter of Transmittal.)
FIRPTA Withholding. To prevent the withholding of federal income tax in
an amount equal to 10% of the sum of the Offer Price plus the amount of
Partnership liabilities allocable to each Unit tendered, each Unitholder must
complete the FIRPTA Affidavit included in the Letter of Transmittal certifying
such Unitholder's taxpayer identification number and address and that the
Unitholder is not a foreign person. (See the Instructions to the Letter of
Transmittal and "Section 6.
Certain Federal Income Tax Consequences.")
Other Requirements. By executing a Letter of Transmittal as set forth
above, a tendering Unitholder irrevocably appoints the designees of the
Purchasers as such Unitholder's proxies, in the manner set forth in the Letter
of Transmittal, each with full power of substitution, to the full extent of such
Unitholder's rights with respect to the Units tendered by such Unitholder and
accepted for payment by the Purchasers. Such appointment will be effective when,
and only to the extent that, the Purchasers accepts such Units for payment. Upon
such acceptance for payment, all prior proxies given by such Unitholder with
respect to such Units will, without further action, be revoked, and no
subsequent proxies may be given (and if given will not be effective). The
designees of the Purchasers will, with respect to such Units, be empowered to
exercise all voting and other rights of such Unitholder as they in their sole
discretion may deem proper at any meeting of Unitholders, by written consent or
otherwise. In addition, by executing a Letter of Transmittal, a Unitholder also
assigns to the Purchasers all of the Unitholder's rights to receive
distributions from the Partnership with respect to Units which are accepted for
payment and purchased pursuant to the Offer, other than those distributions
declared or paid during the period commencing on the Offer Date and terminating
on the Expiration Date.
Determination of Validity; Rejection of Units; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Units pursuant to the procedures described above will be determined by the
Purchasers, in its sole discretion, which determination shall be final and
binding. The Purchasers reserve the absolute right to reject any or all tenders
if not in proper form or if the acceptance of, or payment for, the absolute
right to reject any or all tenders if not in proper form or if the acceptance
of, or payment for, the Units tendered may, in the opinion of the Purchasers'
counsel, be unlawful. The Purchasers also reserve the right to waive any defect
or irregularity in any tender with respect to any particular Units of any
particular Unitholder, and the Purchasers' interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
Instructions thereto) will be final and binding. Neither the Purchasers, the
Depositary, nor any other person will be under any duty to give notification of
any defects or irregularities in the tender of any Units or will incur any
liability for failure to give any such notification.
A tender of Units pursuant to any of the procedures described above
will constitute a binding agreement between the tendering Unitholder and the
Purchasers upon the terms and subject to the conditions of the Offer, including
the tendering Unitholder's representation and warranty that (i) such Unitholder
owns the Units being tendered within the meaning of Rule 14e-4 under the
Exchange Act and (ii) the tender of such Unit complies with Rule 14e-4. Rule
14e-4 requires, in general, that a tendering security holder actually be able to
deliver the security subject to the tender offer, and is of concern particularly
to any Unitholders who have granted options to sell or purchase the Units, hold
option rights to acquire such securities, maintain "short" positions in the
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Units (i.e. have borrowed the Units) or have loaned the Units to a short
seller. Because of the nature of limited partnership interests, the Purchasers
believe it is unlikely that any option trading or short selling activity exists
with respect to the Units. In any event, a Unit holder will be deemed to tender
Units in compliance with Rule 14e-4 and the Offer if the holder is the record
owner of the Units and the holder (i) delivers the Units pursuant to the terms
of the Offer, (ii) causes such delivery to be made, (iii) guarantees such
delivery, (iv) causes a guaranty of such delivery, or (v) uses any other method
permitted in the Offer (such as facsimile delivery of the Transmittal Letter).
Section 4. Withdrawal Rights. Except as otherwise provided in this
Section 4, all tenders of Units pursuant to the Offer are irrevocable, provided
that Units tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date and, unless theretofore accepted for payment as provided in
this Offer to Purchase, may also be withdrawn at any time after January 27, 1997
(or such later date as may apply in the event the Offer is extended).
For withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at the address or
the facsimile number set forth in the attached Letter of Transmittal. Any such
notice of withdrawal must specify the name of the person who tendered the Units
to be withdrawn and must be signed by the person(s) who signed the Letter of
Transmittal in the same manner as the Letter of Transmittal was signed.
If purchase of, or payment for, Units is delayed for any reason or if
the Purchasers are unable to purchase or pay for Units for any reason, then,
without prejudice to the Purchasers' rights under the Offer, tendered Units may
be retained by the Depositary on behalf of the Purchasers and may not be
withdrawn except to the extent that tendering Unitholders are entitled to
withdrawal rights as set forth in this Section 4, subject to Rule 14e-1(c) under
the Exchange Act, which provides that no person who makes a tender offer shall
fail to pay the consideration offered or return the securities deposited by or
on behalf of security holders promptly after the termination or withdrawal of
the tender offer.
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Purchasers, in its sole
discretion, which determination shall be final and binding. Neither the
Purchasers, the Depositary, nor any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
will incur any liability for failure to give any such notification.
Any Units properly withdrawn will be deemed not to be validly tendered
for purposes of the Offer. Withdrawn Units may be re-tendered, however, by
following the procedures described in Section 3 at any time prior to the
Expiration Date.
Section 5. Extension of Tender Period; Termination; Amendment. The
Purchasers expressly reserve the right, in its sole discretion, at any time and
from time to time, (i) to extend the period of time during which the Offer is
open and thereby delay acceptance for payment of, and the payment for, any Units
by giving oral or written notice of such extension to the Depositary, (ii) to
terminate the Offer and not accept for payment any Units not theretofore
accepted for payment or paid for, by giving oral or written notice of such
termination to the Depositary, (iii) upon the occurrence or failure to occur of
any of the conditions specified in Section 13, to delay the acceptance for
payment of, or payment for, any Units not heretofore accepted for payment or
paid for, by giving oral or written notice of such termination or delay to the
Depositary, and (iv) to amend the Offer in any respect (including, without
limitation, by increasing or decreasing the consideration offered or the number
of Units being sought in the Offer or both or changing the type of
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consideration) by giving oral or written notice of such amendment to the
Depositary. Any extension, termination or amendment will be followed as promptly
as practicable by public announcement, the announcement in the case of an
extension to be issued no later than 9:00 a.m., Eastern Standard Time, on the
next business day after the previously scheduled Expiration Date, in accordance
with the public announcement requirement of Rule 14d-4(c) under the Exchange
Act. Without limiting the manner in which the Purchasers may choose to make any
public announcement, except as provided by applicable law (including Rule
14d-4(c) under the Exchange Act), the Purchasers will have no obligation to
publish, advertise or otherwise communicate any such public announcement, other
than by issuing a release to the Dow Jones News Service. The Purchasers may also
be required by applicable law to disseminate to Unitholders certain information
concerning the extensions of the Offer and any material changes in the terms of
the Offer.
If the Purchasers extend the Offer, or if the Purchasers (whether
before or after its acceptance for payment of Units) are delayed in its payment
for Units or is unable to pay for Units pursuant to the Offer for any reason,
then, without prejudice to the Purchasers' rights under the Offer, the
Depositary may retain tendered Units on behalf of the Purchasers, and such Units
may not be withdrawn except to the extent tendering Unitholders are entitled to
withdrawal rights as described in Section 4. However, the ability of the
Purchasers to delay payment for Units that the Purchasers have accepted for
payment is limited by Rule 14e-1 under the Exchange Act, which requires that the
Purchasers pay the consideration offered or return the securities deposited by
or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer.
If the Purchasers make a material change in the terms of the Offer or
the information concerning the Offer or waives a material condition of the
Offer, the Purchasers will extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during
which an offer must remain open following a material change in the terms of the
offer or information concerning the offer, other than a change in price or a
change in percentage of securities sought, will depend upon the facts and
circumstances, including the relative materiality of the change in the terms or
information. With respect to a change in price or a change in percentage of
securities sought (other than an increase of not more than 2% of the securities
sought), however, a minimum ten business day period is generally required to
allow for adequate dissemination to security holders and for investor response.
As used in this Offer to Purchase, "business day" means any day other than a
Saturday, Sunday or a federal holiday, and consists of the time period from
12:01 a.m. through 12:00 midnight, Pacific Standard Time.
Section 6. Certain Federal Income Tax Consequences. THE FEDERAL INCOME
TAX DISCUSSION SET FORTH BELOW IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY
AND DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF TAXATION THAT MAY BE RELEVANT TO
A PARTICULAR UNITHOLDER. For example, this discussion does not address the
effect of any applicable foreign, state, local or other tax laws other than
federal income tax laws. Certain Unitholders (including trusts, foreign persons,
tax-exempt organizations or corporations subject to special rules, such as life
insurance companies or S corporations) may be subject to special rules not
discussed below. This discussion is based on the Internal Revenue Code of 1986,
as amended (the "Code"), existing regulations, court decisions and Internal
Revenue Service ("IRS") rulings and other pronouncements. EACH UNITHOLDER
TENDERING UNITS SHOULD CONSULT SUCH UNITHOLDER'S OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH UNITHOLDER OF ACCEPTING THE OFFER, INCLUDING
THE APPLICATION OF THE ALTERNATIVE MINIMUM TAX AND FEDERAL, FOREIGN, STATE,
LOCAL AND OTHER TAX LAWS.
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The following discussion is based on the assumption that the
Partnership is treated as a partnership for federal income tax purposes and is
not a "publicly traded partnership" as that term is defined in the Code.
Gain or Loss. A taxable Unitholder will recognize a gain or loss on the
sale of such Unitholder's Units in an amount equal to the difference between (i)
the amount realized by such Unitholder on the sale and (ii) such Unitholder's
adjusted tax basis in the Units sold. The amount realized by a Unitholder will
include the Unitholder's share of the Partnership's liabilities, if any (as
determined under Code section 752 and the regulations thereunder). If the
Unitholder reports a loss on the sale, such loss generally could not be
currently deducted by such Unitholder except against such Unitholder's capital
gains from other investments. In addition, such loss would be treated as a
passive activity loss. (See "Suspended Passive Activity Losses" below.)
The adjusted tax basis in the Units of a Unitholder will depend upon
individual circumstances. (See also "Partnership Allocations in Year of Sale"
below.) Each Unitholder who plans to tender hereunder should consult with the
Unitholder's own tax advisor as to the Unitholder's adjusted tax basis in the
Unitholder's Units and the resulting tax consequences of a sale.
If any portion of the amount realized by a Unitholder is attributable
to such Unitholder's share of "unrealized receivables" or "substantially
appreciated inventory items" as defined in Code section 751, a corresponding
portion of such Unitholder's gain or loss will be treated as ordinary gain or
loss. It is possible that the basis allocation rules of Code Section 751 may
result in a Unitholder's recognizing ordinary income with respect to the portion
of the Unitholder's amount realized on the sale of a Unit that is attributable
to such items while recognizing a capital loss with respect to the remainder of
the Unit.
A tax-exempt Unitholder (other than an organization described in Code
Section 501(c)(7) (social club), 501(c)(9) (voluntary employee benefit
association), 501(c)(17) (supplementary unemployment benefit trust), or
501(c)(20) (qualified group legal services plan)) should not be required to
recognize unrelated trade or business income upon the sale of its Units pursuant
to the Offer, assuming that such Unitholder does not hold its Units as a
"dealer" and has not acquired such Units with debt financed proceeds.
Partnership Allocations in Year of Sale. A tendering Unitholder will be
allocated the Unitholder's pro rata share of the annual taxable income and
losses from the Partnership with respect to the Units sold for the period
through the date of sale, even though such Unitholder will assign to the
Purchasers their rights to receive certain cash distributions with respect to
such Units. Such allocations and any Partnership distributions for such period
would affect a Unitholder's adjusted tax basis in the tendered Units and,
therefore, the amount of gain or loss recognized by the Unitholder on the sale
of the Units.
Possible Tax Termination. The Code provides that if 50% or more of the
capital and profits interests in a partnership are sold or exchanged within a
single 12-month period, such partnership generally will terminate for federal
income tax purposes. It is possible, although deemed by the Purchasers to be
unlikely (given the limited number of Units subject to the Offer and the limited
secondary market for the Units), that the Partnership could terminate for
federal income tax purposes as a result of consummation of the Offer. If so, the
Partnership will be treated as having made a liquidating distribution of an
undivided interest in all of its assets to the Unitholders, the partners of the
Partnership after consummation of the Offer (i.e., the nontendering Unitholders
and the Purchasers) would be treated as having recontributed their interests in
Partnership assets to the
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Partnership, and the capital accounts of all partners would be restated. A
Unitholder would recognize gain on the liquidating distribution only to the
extent that the amount of cash deemed distributed to the Unitholder exceeded the
Unitholder's basis in the Units. Depending on the Unitholders' bases in their
Units and the Partnership's tax basis in its property, a tax termination could
affect, perhaps adversely, the amount of depreciation deductions reported by the
Partnership for the period following the date of such termination. A tax
termination of the Partnership also could have the adverse effect on Unitholders
whose tax year is not the calendar year, of the inclusion of more than one year
of Partnership tax items in one tax return of such Unitholders, resulting in a
"bunching" of income. In addition, a tax termination could have the adverse
effect on non-tendering Unitholders who subsequently dispose of their Units at a
gain of requiring them to treat a greater portion of such gain as ordinary
income (due to the application of Code Section 735) than would otherwise be
required absent a tax termination of the Partnership.
Suspended "Passive Activity Losses". A Unitholder who sells all of the
Unitholder's Units would be able to deduct "suspended" passive activity losses
from the Partnership, if any, in the year of sale free of the passive activity
loss limitation. As a limited partner of the Partnership, which was engaged in
real estate activities, the ability of a Unitholder, who or which is subject to
the passive activity loss rules, to claim tax losses from the Partnership was
limited. Upon sale of all of the Unitholder's Units, such Unitholder would be
able to use any "suspended" passive activity losses first against gain, if any,
on sale of the Unitholder's Units and then against income from any other source.
Foreign Unitholders. Gain realized by a foreign Unitholder on a sale of
a Unit pursuant to the Offer will be subject to federal income tax. Under
Section 1445 of the Code, the transferee of a partnership interest held by a
foreign person is generally required to deduct and withhold a tax equal to 10%
of the amount realized on the disposition. The Purchasers will withhold 10% of
the amount realized by a tendering Unitholder from the purchase price payment to
be made to such Unitholder unless the Unitholder properly completes and signs
the FIRPTA Affidavit included as part of the Letter of Transmittal certifying
the Unitholder's TIN, that such Unitholder is not a foreign person and the
Unitholder's address. Amounts withheld would be creditable against a foreign
Unitholder's federal income tax liability and, if in excess thereof, a refund
could be obtained from the Internal Revenue Service by filing a U.S. income tax
return.
Section 7. Effects of the Offer.
Limitations on Resales. The Partnership Agreement does not restrict
transfers of Units, provided a transfer results in an assignee holding at least
five Units and complies with any applicable state securities laws (such as the
California consent to transfer rules). As the Purchasers are currently a
beneficial owner of Units, it should be deemed exempt from any California
consent to transfer requirements. Accordingly, the Purchasers neither anticipate
any limitation on its right to acquire the Units, nor that such acquisitions
will have the effect of limiting any further resales of Units.
Effect on Trading Market. There is no established public trading market
for the Units and, therefore, a reduction in the number of Unitholders should
not materially further restrict the Unitholders' ability to find purchasers for
their Units on any secondary market.
Voting Power of Purchasers. Depending on the number of Units acquired
by the Purchasers pursuant to the Offer, the Purchasers may have the ability to
exert certain influence on matters subject to the vote of Unitholders, though
the maximum number of Units sought hereunder would not give the Purchasers a
controlling voting interest.
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The Units are registered under the Exchange Act, which requires, among
other things that the Partnership furnish certain information to its Unitholders
and to the Commission and comply with the Commission's proxy rules in connection
with meetings of, and solicitation of consents from, Unitholders. The Purchasers
do not believe that the purchase of Units pursuant to the Offer will result in
the Units becoming eligible for deregistration under the Exchange Act.
Section 8. Future Plans. Following the completion of the Offer, the
Purchasers, or its affiliates, may acquire additional Units. Any such
acquisition may be made through private purchases, through one or more future
tender offers or by any other means deemed advisable. Any such acquisition may
be at a consideration higher or lower than the consideration to be paid for the
Units purchased pursuant to the Offer.
The Purchasers are acquiring the Units pursuant to the Offer solely for
investment purposes. Although the Purchasers have no present intention to seek
control of the Partnership or to change the management or operations of the
Partnership, the Purchasers reserve the right, at an appropriate time, to
exercise its rights as a limited partner to vote on matters subject to a limited
partner vote, including a vote to cause the sale of the Partnership's remaining
property and the liquidation and dissolution of the Partnership.
Section 9. The Business of the Partnership. Information included herein
concerning the Partnership is derived from the Partnership's publicly-filed
reports. Additional information concerning the Partnership, its assets,
operations and management is contained in its Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q and other filings with the Securities and
Exchange Commission. Such reports and filings are available for inspection at
the Commission's principal office in Washington, D.C. and at its regional
offices in New York, New York and Chicago, Illinois. The Purchasers expressly
disclaim any responsibility for the information included in such reports and
extracted in this discussion.
The Partnership was organized in 1980 as a California limited
partnership for the purpose of acquiring, developing, maintaining and operating
income-producing residential real properties for the benefit of its limited
partners. The Partnership currently owns one apartment complex and two spaces in
a mobile home park (the "Properties"). The Operating General Partner of the
partnership is De Anza Corporation. As of December 31, 1995, there were 22,719
Units outstanding held by approximately 1,876 Unitholders.
Selected Financial Data. Set forth below is a summary of certain
financial data for the Partnership which has been excerpted from the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1995
and its Quarterly Report on Form 10-Q for the quarters ended September 30, 1996.
16
<PAGE>
The following table sets forth in comparative tabular form a summary of selected
financial data for each of the Partnership's last five full years:
<TABLE>
Three Quarters ended Years Ended December 31,
September 30, 1996 1995 1994 1993 1992 1991
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues: $1,766,149 $2,344,863 $2,925,056 $3,028,062 $3,244,548 $3,821,491
Gain (loss) on Sale of Property and Equipment 29,001 42,000 (67,041) 153,751 74,951 4,822,182
Net income (loss) from continuing operations 153,771 196,633 (491,194) (827,239) (349,948) 4,588,125
Net income (loss) from continuing operations
per limited partner interest (1) 6.70 8.57 (18.38) (30.95) (13.09) 99.93
Total assets: 9,252,433 9,540,441 10,341,663 15,724,774 15,953,844 16,410,578
Long-term obligations 4,233,885 4,261,943 4,278,706 8,319,038 7,818,477 7,779,254
Cash distributions per partnership interest:
1. Limited Partner (2) 23.11 33.76 65.45 - 15.84 151.86
2. General Partner - - - - - -
Assets have been disposed of during the periods presented above which materially
affect the comparability reflected in the selected financial data.
<FN>
(1) Net income (loss) from continuing operations per limited partner
interest is based on the aggregate number of such interests outstanding
(22,719 Units) during each year.
(2) Cash distributions per limited partner interest are based on the
aggregate number of such interests outstanding (22,719 Units) during
each year.
</FN>
</TABLE>
17
<PAGE>
Accumulated Depreciation Schedule. Set forth below is a table showing initial
cost, gross carrying value, accumulated depreciation and other information for
the principal remaining real property as of December 31, 1995 (the two mobile
home spaces are deemed not material here).
Initial Cost to Partnership
<TABLE>
Buildings, Cost
Improvements Capitalized
Date of Date of and Subsequent to
Property Construction Acquisition Encumbrances Land Equipment Acquisition
- -----------------------------------------------------------------------------------------------------------------------------------
Warner Oaks Apartments
<S> <C> <C> <C> <C> <C> <C>
Woodland Hills, California 1979 2/9/82 $4,261,943 $1,168,747 $9,962,170 $3,608,232
Gross Amount Carried at Close
of Period Ended December 31, 1995
------------------------------------------------------------ Life on Which
Depreciation
Buildings, in Latest Income
Improvements Statement Is
and Accumulated Computed
Property Land Equipment Total Depreciation (Years)
Warner Oaks Apartments
Woodland Hills, California $1,175,163 $13,563,986 $14,739,149 (1) $6,517,162 5 to 30
(1) Aggregate cost for federal income tax purposes is $14,558,102.
</TABLE>
18
<PAGE>
Section 10. Conflicts of Interest. The Depositary is affiliated with
certain Purchasers. Therefore, by virtue of this affiliation, the Depositary may
have inherent conflicts of interest in acting as Depositary for the Offer.
Section 11. Certain Information Concerning the Purchasers. The Purchasers
are Moraga Gold, LLC, Moraga Fund 1, L.P., Accelerated High Yield Income Fund I,
L.P., Accelerated High Yield Institutional Investors, L.P., Cal Kan, Inc. and
Steven Gold. For information concerning the Purchasers and their respective
principals, please refer to Schedule I attached hereto.
Certain Purchasers acquired five Units in April, 1995, at $305 per
Unit, in a privately negotiated transaction. In addition, during the period from
September 1, 1995 through the date hereof, affiliates of the Purchasers acquired
528 Units in privately negotiated transactions with unrelated parties for prices
ranging from $275 to $305 per Unit and, in a tender offer which terminated in
September 1995, such affiliates acquired a total of 941 Units for a purchase
price of $305 per Unit. In a tender offer which terminated in May 1996, Moraga
Gold, LLC, purchased a total of 2,139 Units for $305 per Unit. Since May 1996,
the Purchasers and their affiliates have acquired additional Units at $305 per
Unit. Other than the foregoing, neither the Purchasers nor any of their
affiliates has purchased any Units since September 1, 1995. The Purchasers and
their affiliates currently hold an aggregate of 1,589 Units, or approximately
6.99% of the outstanding Units, as follows:
Unitholder Units
Moraga Gold, LLC 2,139
Accelerated High Yield Growth Fund II, L.P. 257
MacKenzie Fund V, A California Limited Partnership 10
MacKenzie Fund VI, A California Limited Partnership 5
MacKenzie Specified Income Fund, A California Limited Partnership 316
CFS Secondary Market Fund, L.P. 35
MacKenzie Fund 10, L.P. 407
Moraga Fund 1, L.P. 575
Cal-Kan, Inc. 17
The principal business address of the Unitholders identified in the
foregoing table is 1640 School Street, Suite 100, Moraga, California 94556.
MacKenzie Patterson, Inc. is a general partner or administrator of each of the
foregoing purchasers other than Moraga Gold, LLC, Moraga Fund I, L.P. and Cal
Kan, Inc.
The Purchasers have executed binding commitments to contribute amounts
sufficient to fund the acquisition of all Units subject to the Offer, the
expenses to be incurred in connection with the Offer, and all organization and
operating costs of the Purchasers. The Purchasers are not public companies and
have not prepared audited financial statements. The Purchasers and their general
partners have an aggregate net worth in excess of $ 5 million, including net
liquid assets of more than $ 5 million.
Except as otherwise set forth herein, (i) neither the Purchasers nor,
to the best knowledge of the Purchasers, the persons listed on Schedule I nor
any affiliate of the Purchasers beneficially owns or has a right to acquire any
Units, (ii) neither the Purchasers nor, to the best knowledge of the Purchasers,
the persons listed on Schedule I nor any affiliate of the Purchasers, or any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Units within the past 60 days, (iii) neither the
Purchasers nor, to the best knowledge of the Purchasers, the persons listed on
Schedule I nor any affiliate of the Purchasers has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Partnership, including but not limited to, contracts,
19
<PAGE>
arrangements, understandings or relationships concerning the transfer or voting
thereof, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies,
consents or authorizations, (iv) there have been no transactions or business
relationships which would be required to be disclosed under the rules and
regulations of the Commission between any of the Purchasers or, to the best
knowledge of the Purchasers, the persons listed on Schedule I, or any affiliate
of the Purchasers on the one hand, and the Partnership or its affiliates, on the
other hand, and (v) there have been no contracts, negotiations or transactions
between the Purchasers, or to the best knowledge of the Purchasers any affiliate
of the Purchasers on the one hand, the persons listed on Schedule I, and the
Partnership or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets.
Section 12. Source of Funds. The Purchasers expect that approximately
$1,453,760 would be required to purchase 4,543 Units, if tendered, and an
additional $50,000 would be required to pay related fees and expenses. The
Purchasers anticipate funding all of the purchase price and related expenses
through capital contributions from its members.
Section 13. Conditions of the Offer. Notwithstanding any other term of
the Offer, the Purchasers shall not be required to accept for payment or to pay
for any Units tendered if all authorizations, consents, orders or approvals of,
or declarations or filings with, or expirations of waiting periods imposed by,
any court, administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign, necessary for the consummation of the
transactions contemplated by the Offer shall not have been filed, occurred or
been obtained.
The Purchasers shall not be required to accept for payment or pay for
any Units not theretofore accepted for payment or paid for and may terminate or
amend the Offer as to such Units if, at any time on or after the date of the
Offer and before the acceptance of such Units for payment or the payment
therefor, any of the following conditions exists:
(a) a preliminary or permanent injunction or other order of any federal
or state court, government or governmental authority or agency shall
have been issued and shall remain in effect which (i) makes illegal,
delays or otherwise directly or indirectly restrains or prohibits the
making of the Offer or the acceptance for payment of or payment for any
Units by the Purchasers, (ii) imposes or confirms limitations on the
ability of the Purchasers effectively to exercise full rights of
ownership of any Units, including, without limitation, the right to
vote any Units acquired by the Purchasers pursuant to the Offer or
otherwise on all matters properly presented to the Partnership's
Unitholders, (iii) requires divestiture by the Purchasers of any Units,
(iv) causes any material diminution of the benefits to be derived by
the Purchasers as a result of the transactions contemplated by the
Offer or (v) might materially adversely affect the business,
properties, assets, liabilities, financial condition, operations,
results of operations or prospectus of the Purchasers or the
Partnership;
(b) there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed
applicable to the Offer by any federal or state court, government or
governmental authority or agency, other than the application of the
waiting period provisions of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, which might, directly or
indirectly, result in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
20
<PAGE>
(c) any change or development shall have occurred or been threatened
since the date hereof, in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Partnership, which, in the reasonable judgment of the
Purchasers, is or may be materially adverse to the Partnership, or the
Purchasers shall have become aware of any fact that, in the reasonable
judgment of the Purchasers, does or may have a material adverse effect
on the value of the Units;
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any limitation by any
governmental authority on, or other event which might affect, the
extension of credit by lending institutions or result in any imposition
of currency controls in the United States, (iv) a commencement of a war
or armed hostilities or other national or international calamity
directly or indirectly involving the United States, (v) a material
change in United States or other currency exchange rates or a
suspension of a limitation on the markets thereof, or (vi) in the case
of any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof; or
(e) it shall have been publicly disclosed or the Purchasers shall have
otherwise learned that (i) more than fifty percent of the outstanding
Units have been or are proposed to be acquired by another person
(including a "group" within the meaning of Section 13(d)(3) of the
Exchange Act), or (ii) any person or group that prior to such date had
filed a Statement with the Commission pursuant to Sections 13(d) or (g)
of the Exchange Act has increased or proposes to increase the number of
Units beneficially owned by such person or group as disclosed in such
Statement by two percent or more of the outstanding Units.
The foregoing conditions are for the sole benefit of the Purchasers and
may be asserted by the Purchasers regardless of the circumstances giving rise to
such conditions or may be waived by the Purchasers in whole or in part at any
time and from time to time in their sole discretion. Any termination by the
Purchasers concerning the events described above will be final and binding upon
all parties.
Section 14. Certain Legal Matters.
General. Except as set forth in this Section 14, the Purchasers are not
aware of any filings, approvals or other actions by any domestic or foreign
governmental or administrative agency that would be required prior to the
acquisition of Units by the Purchasers pursuant to the Offer. Should any such
approval or other action be required, it is the Purchasers' present intention
that such additional approval or action would be sought. While there is no
present intent to delay the purchase of Units tendered pursuant to the Offer
pending receipt of any such additional approval or the taking of any such
action, there can be no assurance that any such additional approval or action,
if needed, would be obtained without substantial conditions or that adverse
consequences might not result to the Partnership's business, or that certain
parts of the Partnership's business might not have to be disposed of or held
separate or other substantial conditions complied with in order to obtain such
approval or action, any of which could cause the Purchasers to elect to
terminate the Offer without purchasing Units thereunder. The Purchasers'
obligation to purchase and pay for Units is subject to certain conditions,
including conditions related to the legal matters discussed in this Section 14.
Antitrust. The Purchasers do not believe that the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, is applicable to the acquisition
of Units pursuant to the Offer.
21
<PAGE>
Margin Requirements. The Units are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, such regulations are not applicable to the Offer.
State Takeover Laws. A number of states have adopted anti-takeover laws
which purport, to varying degrees, to be applicable to attempts to acquire
securities of corporations which are incorporated in such states or which have
substantial assets, security holders, principal executive offices or principal
places of business therein. These laws are directed at the acquisition of
corporations and not partnerships. The Purchasers, therefore, do not believe
that any anti-takeover laws apply to the transactions contemplated by the Offer.
Although the Purchasers have not attempted to comply with any state
anti-takeover statutes in connection with the Offer, the Purchasers reserve the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer nor any action taken in
connection herewith is intended as a waiver of such right. If any state
anti-takeover statute is applicable to the Offer, the Purchasers might be unable
to accept for payment or purchase Units tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer. In such case, the Purchasers
may not be obligated to accept for purchase or pay for any Units tendered.
Section 15. Fees and Expenses. The Purchasers have retained MacKenzie
Patterson, Inc., an affiliate of certain Purchasers, to act as Depositary in
connection with the Offer. The Purchasers will pay the Depositary reasonable and
customary compensation for its services in connection with the Offer, plus
reimbursement for out-of-pocket expenses, and will indemnify the Depositary
against certain liabilities and expenses in connection therewith, including
liabilities under the federal securities laws. The Purchasers will also pay all
costs and expenses of printing, publication and mailing of the Offer.
Section 16. Miscellaneous. THE OFFER IS NOT BEING MADE TO (NOR WILL
TENDERS BE ACCEPTED FROM OR ON BEHALF OF) UNITHOLDERS IN ANY JURISDICTION IN
WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN
COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. THE PURCHASERS ARE NOT AWARE OF
ANY JURISDICTION WITHIN THE UNITED STATES IN WHICH THE MAKING OF THE OFFER OR
THE ACCEPTANCE THEREOF WOULD BE ILLEGAL.
22
<PAGE>
No person has been authorized to give any information or to make any
representation on behalf of the Purchasers not contained herein or in the Letter
of Transmittal and, if given or made, such information or representation must
not be relied upon as having been authorized.
November 27, 1996 MORAGA GOLD, LLC
MORAGA FUND I, L.P.
ACCELERATED HIGH YIELD INCOME FUND I, L.P.
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, L.P.
CAL KAN, INC.
STEVEN GOLD
23
<PAGE>
SCHEDULE I
THE PURCHASERS AND THEIR RESPECTIVE PRINCIPALS
The General Partner of Moraga Fund 1, L.P. is Moraga Partners, Inc. The
members of Moraga Gold, LLC are Moraga Partners, Inc. and the David B. Gold
Trust. The General Partner of Accelerated High Yield Income Fund I, L.P. and
Accelerated High Yield Institutional Investors, L.P. is MacKenzie Patterson,
Inc. The owners, executive officers and directors of Cal Kan, Inc. are C. E.
Patterson and Thomas Frame. The names of the directors and executive officers of
Moraga Partners, Inc., MacKenzie Patterson, Inc. and Cal Kan, Inc. and the
Trustee and advisor of the David B. Gold Trust, and the present principal
occupations and five year employment histories of each such person are set forth
below. Each individual is a citizen of the United States of America. The
principal place of business of all of the above, other than the David B. Gold
Trust and Steven Gold is 1640 School Street, Suite 100, Moraga, California
94556.
MacKenzie Patterson, Inc.
MacKenzie Patterson, Inc., is the controlling administrator of Moraga. C.E.
Patterson is the principal shareholder and principal officer of MacKenzie
Patterson, Inc.
C.E. Patterson is President of MacKenzie Patterson, Inc. He is the
co-founder and President of Patterson Financial Services, Inc. In 1981, Mr.
Patterson founded PFS with Berniece A. Patterson, as a financial planning firm.
Patterson Real Estate Services, a licensed California Real Estate Broker, was
founded in 1982. As President of PFS, Mr. Patterson is responsible for all
investment counseling activities. He supervises the analysis of investment
opportunities for the clients of the firm. He is a trustee of Consolidated
Capital Properties Trust, a liquidating trust formed out of the bankruptcy court
proceedings involving Consolidated Capital Properties, Ltd. Mr. Patterson is
also an officer and controlling shareholder of Cal-Kan, Inc., an executive
officer and controlling shareholder of Moraga Partners, Inc. general partner of
Moraga Partners 1, L.P. Mr. Patterson, through his affiliates, manages a number
of investment and real estate partnerships.
Berniece A. Patterson is a director of MacKenzie Patterson, Inc. In 1981,
Ms. Patterson and C.E. Patterson established Patterson Financial Services, Inc.
She serves as Chair of the Board and Vice President of PFS. Her responsibilities
with PFS include oversight of administrative matters and monitoring of past
projects underwritten by PFS. Ms. Patterson is Chief Executive Officer of an
affiliate, Pioneer Health Care Services, Inc., and is responsible for the
day-to-day operations of three nursing homes and over 250 employees.
Victoriaann Tacheira is vice president of MacKenzie Patterson, Inc.,
which she joined in 1988. Ms. Tacheira has eleven years of experience with the
NASD broker/dealer business and is experienced in all phases of broker/dealer
operations. She is licensed with the NASD as a General Securities Principal. She
is president and owner of North Coast Securities Corporation. Ms. Tacheira has
been certified by the College of Financial Planning in Denver, Colorado, as a
Financial ParaPlanner.
Moraga Partners, Inc. and Cal Kan, Inc.
Moraga Partners, Inc. is a California corporation and Cal Kan, Inc. is a
Kansas corporation. Each owned by C.E. Patterson and Thomas A. Frame. Mr.
Patterson and Mr. Frame are also each an executive officer and director of both
Moraga Partners, Inc. and Cal Kan, Inc. Information regarding Mr. Patterson is
set forth above.
Thomas A. Frame has been the president of Paradigm Investment Corporation,
a real estate limited partnership secondary market firm, since 1986. In 1973,
Mr. Frame was a co-founder of Transcentury Real
<PAGE>
Estate Masters, Oakland, California, a residential and commercial real estate
brokerage firm. In 1973 he also co-founded, and has since then been a partner
in, Transcentury Property Management Company, which has syndicated
privately-placed real estate limited partnerships owning multi-family
residential properties. He is a trustee of Consolidated Capital Properties
Trust, a liquidating trust formed out of the bankruptcy court proceedings
involving Consolidated Capital Properties, Ltd. Mr. Frame is co-owner and an
executive officer and director of Cal-Kan, Inc., and co-owner and an officer of
Moraga Partners, Inc., general partner of Moraga Fund 1, L.P. Mr. Frame, through
his affiliates, manages over $6 million dollars in investor capital and is
currently managing a total of 1,150 residential units in four states.
Moraga Gold, LLC and Steven Gold
The members of Moraga Gold, LLC are Moraga Partners, Inc. and the David
B. Gold Trust. Information concerning Moraga Partners, Inc. is set forth above.
The David B. Gold Trust is a private trust of which Barbara Lurie is the trustee
and Steven Gold is responsible for certain investments. The sole beneficiary of
the trust is a nonprofit charitable foundation. The business address of the
trust is One Maritime Plaza, Suite 725, San Francisco, California 94111. Barbara
Lurie has been employed for the last five years as a physician by the University
of California, San Francisco and the University of Minnesota. Steven Gold, a
California attorney, has been self-employed during the last five years analyzing
investments for his own account and for that of the trust. In addition, he has
participated in starting a number of business ventures, including T/O Devices,
an import/export company.
<PAGE>
Exhibit (a)(2)
<PAGE>
LETTER OF TRANSMITTAL
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL
EXPIRE AT 12:00 MIDNIGHT, PACIFIC STANDARD TIME, ON DECEMBER
31, 1996 (the "Expiration Date") UNLESS EXTENDED
Deliver to: MacKenzie Patterson, Inc.
1640 School Street, Suite 100
Moraga, California 94556
(PLEASE INDICATE CHANGES Facsimile: (510) 631-9119
OR CORRECTIONS TO THE
ADDRESS PRINTED ABOVE) For assistance: (800) 854-8357
To participate in the Offer, a duly executed copy of this Letter of
Transmittal and any other documents required by this Letter of Transmittal must
be received by the Depositary on or prior to the Expiration Date. Delivery of
this Letter of Transmittal or any other required documents to an address other
than as set forth above does not constitute valid delivery. The method of
delivery of all documents is at the election and risk of the tendering
Unitholder. Please use the pre-addressed, postage-paid envelope provided.
This Letter of Transmittal is to be completed by Unitholders of DeAnza
Properties XII, L.P. (the "Partnership"), pursuant to the
procedures set forth in the Offer to Purchase (as defined below). Capitalized
terms used herein and not defined herein have the meanings ascribed to such
terms in the Offer to Purchase.
PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS
Gentlemen:
The undersigned hereby tenders to Moraga Gold, LLC, Moraga Fund 1, L.P.,
Accelerated High Yield Income Fund I, L.P., Accelerated High Yield Institutional
Investors, L.P., Cal Kan, Inc. and Steven Gold (together the "Purchasers") all
of the limited partnership units ("Units") in the Partnership held by the
undersigned as set forth above (or, if less than all such Units, the number set
forth below in the signature box) at $320 per Unit, (the "Offer Price") less the
amount of any distributions made or declared with respect to the Units between
the Offer Date and the Expiration Date, and upon the other terms and subject to
the conditions set forth in the Offer to Purchase, dated November 27, 1996 (the
"Offer to Purchase"), and this Letter of Transmittal (which together constitute
the "Offer"). Receipt of the Offer to Purchase is hereby acknowledged.
The undersigned recognizes that, if more than 4,543 Units are validly
tendered prior to or on the Expiration Date and not properly withdrawn, the
Purchasers will, upon the terms of the Offer, accept for payment from among
those Units tendered prior to or on the Expiration Date 4,543 Units on a pro
rata basis, with adjustments to avoid purchases of certain fractional Units,
based upon the number of Units validly tendered prior to the Expiration Date and
not withdrawn.
Subject to and effective upon acceptance for payment of any of the Units
tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon
the order of, Purchasers all right, title and interest in and to such Units
which are purchased pursuant to the Offer. The undersigned hereby irrevocably
constitutes and appoints the Purchasers as the true and lawful agent and
attorney-in-fact and proxies of the undersigned with respect to such Units, with
full power of substitution (such power of attorney and proxy being deemed to be
an irrevocable power and proxy coupled with an interest), to deliver such Units
and transfer ownership of such Units, on the books of the Partnership, together
with all accompanying evidences of transfer and authenticity, to or upon the
order of the Purchasers and, upon payment of the purchase price in respect of
such Units by the Purchasers, to exercise all voting rights and to receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Units all in accordance with the terms of the Offer. Subject to and effective
upon the purchase of any Units tendered hereby, the undersigned hereby requests
that each of the Purchasers be admitted to the Partnership as a "substitute
Limited Partner" under the terms of the Partnership Agreement of the
Partnership. Upon the purchase of Units pursuant to the Offer, all prior proxies
and consents given by the undersigned with respect to such Units will be revoked
and no subsequent proxies or consents may be given (and if given will not be
deemed effective). In addition, by executing this Letter of Transmittal, the
undersigned assigns to the Purchasers all of the undersigned's rights to receive
distributions from the Partnership with respect to Units which are purchased
pursuant to the Offer, other than distributions declared or paid on or after the
Offer Date and through the Expiration Date.
The undersigned hereby represents and warrants that the undersigned owns
the Units tendered hereby within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, and has full power and authority to validly
tender, sell, assign and transfer the Units tendered hereby, and that when any
such Units are purchased by the Purchasers, the Purchasers will acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges, encumbrances, conditional sales agreements or other
obligations relating to the sale or transfer thereof, and such Units will not be
subject to any adverse claim. Upon request, the undersigned will execute and
deliver any additional documents deemed by the Purchasers to be necessary or
desirable to complete the assignment, transfer and purchase of Units tendered
hereby.
The undersigned understands that a tender of Units to the Purchasers will
constitute a binding agreement between the undersigned and the Purchasers upon
the terms and subject to the conditions of the Offer. The undersigned recognizes
the right of the Purchasers to effect a change of distribution address to
MacKenzie Patterson, Inc. at 1640 School Street, Suite 100, Moraga, California
94556. The undersigned recognizes that under certain circumstances set forth in
the Offer to Purchase, the Purchasers may not be required to accept for payment
any of the Units tendered hereby. In such event, the undersigned understands
that any Letter of Transmittal for Units not accepted for payment will be
destroyed by the Purchasers. All authority herein conferred or agreed to be
conferred shall survive the death or incapacity of the undersigned and any
obligations of the undersigned shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned. Except as stated in
the Offer to Purchase, this tender is irrevocable.
===============================================================================
SIGNATURE BOX
(Please complete Boxes A, B, C and D on the following page as necessary)
===============================================================================
- -------------------------------------------------------------------------------
Please sign exactly as your name is printed (or corrected) above, and
insert your Taxpayer Identification Number or Social Security Number in the
space provided below your signature. For joint owners, each joint owner must
sign. (See Instructions 1) The signatory hereto hereby
certifies under penalties of perjury the statements in Box B, Box C and, if
applicable, Box D. If the undersigned is tendering
less than all Units held, the
number of Units tendered is set forth below. Otherwise, all Units held
by the undersigned are tendered hereby. ________ Units
X________________________________________________________________
(Signature of Owner) (Date)
X________________________________________________________________
(Signature of Owner) (Date)
Taxpayer I.D. or Social Security #_______________________________
Telephone No. (day) ___________ (eve.) _________________
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<PAGE>
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BOX A
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Additional Information
If signing as a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information and see
Instruction 1.
Name and Capacity ___________________________________________________________
Address ____________________________________________________________________
Area Code and Telephone No. __________________________________________________
Notarization of Signature
(If required. See Instruction 1)
STATE OF ____________________)
) ss.:
COUNTY OF __________________)
On this ________ day of _______________, 199__, before me came personally
___________________________, to me known to be the person who executed the
foregoing Letter of Transmittal.
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Notary Public
OR
Signature Guarantee
(If required. See Instruction 1)
Name and Address of Eligible Institution: _________________________________
Authorized Signature _______________________ Title _____________________
Name _______________________________________ Date _____________, 199____
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BOX B
SUBSTITUTE FORM W-9
(See Instruction 3 - Box B)
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The person signing this Letter of Transmittal hereby certifies the
following to the Purchasers under penalties of perjury:
(i) The TIN set forth in the signature box on the front of
this Letter of Transmittal is the correct TIN of the Unitholder, or if this box
[ ] is checked, the Unitholder has applied for a TIN. If the Unitholder has
applied for a TIN, a TIN has not been issued to the Unitholder, and either: (a)
the Unitholder has mailed or delivered an application to receive a TIN to the
appropriate IRS Center or Social Security Administration Office, or (b) the
Unitholder intends to mail or deliver an application in the near future (it
being understood that if the Unitholder does not provide a TIN to the Purchasers
within sixty (60) days, 31% of all reportable payments made to the Unitholder
thereafter will be withheld until a TIN is provided to the Purchasers); and
(ii) Unless this box [ ] is checked, the Unitholder is not
subject to backup withholding either because the Unitholder: (a) is exempt from
backup withholding, (b) has not been notified by the IRS that the Unitholder is
subject to backup withholding a sa result of a failure to report all interest or
dividends, or (c) has been notified by the IRS that such Unitholder is no longer
subject to backup withholding.
Note: Place an "X" in the box in (ii) if you are unable to certify that the
Unitholder is not subject to backup withholding.
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BOX C
FIRPTA AFFIDAVIT
(See Instruction 3 - Box C)
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Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg.
1.1445-11T(d), a transferee must withhold tax equal to 10% of the amount
realized with respect to certain transfers of an interest in a partnership if
50% or more of the value of its gross assets consists of U.S. real property
interests and 90% or more of the value of its gross assets consists of U.S. real
property interests plus cash equivalents, and the holder of the partnership
interest is a foreign person. To inform the Purchasers that no withholding is
required with respect to the Unitholder's interest in the Partnership, the
person signing this Letter of Transmittal hereby certifies the following under
penalties of perjury;
(i) Unless this box [ ] is checked, the Unitholder, if an
individual, is a U.S. citizen or a resident alien for purposes of U.S. income
taxation, and if other than an individual, is not a foreign corporation, foreign
partnership, foreign estate or foreign trust (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations); (ii) the Unitholder's U.S.
social security number (for individuals) or employer identification number (for
non-individuals) is correctly printed in the signature box on the front of this
Letter of Transmittal; and (iii) the Unitholder's home address (for
individuals), or office address (for non-individuals), is correctly printed (or
corrected) on the front of this Letter of Transmittal. If a corporation, the
jurisdiction of incorporation is __________.
The person signing this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchasers and that any false
statements contained herein could be punished by fine, imprisonment, or both.
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BOX D
SUBSTITUTE FORM W-8
(See Instruction 4 - Box D)
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By checking this box [ ], the person signing this Letter of
Transmittal hereby certifies under penalties of perjury that the Unitholder is
an "exempt foreign person" for purposes of the backup withholding rules under
the U.S. federal income tax laws, because the Unitholder:
(i) Is a nonresident alien individual or a foreign corporation,
partnership, estate or trust;
(ii) If an individual, has not been and plans not to be present in the U.S.
for a total of 183 days or more during the calendar year; and
(iii) Neither engages, nor plans to engage, in a U.S. trade or business
that has effectively connected gains from transactions with a broker or barter
exchange.
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<PAGE>
Exhibit (a)(3)
<PAGE>
November 27, 1996
To: De Anza Properties VII, Ltd. Limited Partners
Subject: Offer to Purchase Units Increased to $320 per Unit
Dear Fellow Limited Partner:
Enclosed with this letter is an offer to pay you $320 per Unit for any and all
Units you own in De Anza Properties XII ("De Anza XII"). Partners whose units
are purchased pursuant to this offer (assuming no pro ration of units which
would occur in the unlikely event of tenders in excess of the offer) will
terminate their investment in the Partnership in 1996, will receive their last
K-1 for the Partnership for 1996, and, if you are an original investor will
likely recognize a tax deduction for 1996. You must respond by December s to
recognize these benefits! The Purchasers will NOT extend the offer.
You will recall that an offer for $305 per unit was made to you in April, 1996
by Moraga Gold, LLC through which offering 2,139 units, or 9.4% of the
Partnership, were purchased. Moraga Gold, LLC has now joined with five other
investors identified in the attached Offer to Purchase, (the "Purchasers") to
make this second offer at the higher price of $320 per unit. The offer is for a
maximum of 4,543 units. Affiliates of the Purchasers have purchased over 3,761
Units for prices ranging from $275 to $320 per Unit, and the affiliates of the
Purchasers now hold the single largest block of De Anza XII Units. Based upon
communications with Unitholders, the Purchasers believes that many more
investors are looking for an opportunity to sell their Units and close their
investment without waiting for the liquidation of the partnership as a whole,
particularly given the fact that the general partner has reiterated its
intention to hold the Property for an indefinite period until there is a better
marketing environment.
The Purchasers and their affiliates manage investor capital committed to the
purchase of limited partnership units of existing partnerships, particularly of
those which have not liquidated within the time frame originally intended at the
time of the original offering The Purchasers and their affiliates offer an
alternative for investors who have held their investment in the limited
partnership for much longer than they wished. To date, the General Partner has
not indicated any time table by which liquidation might occur except to say, in
August, 1995, that "now is definitely not the best time to sell the property"
and stating in its May 2, 1996 letter in opposition to Moraga Gold's earlier
offer that "a further delay in marketing the Property for sale would be
advisable."
The original investors in De Anza XII have not yet received a return of capital
and, if the Purchasers are correct in their analysis of the remaining value of
the assets, partners are not likely to receive sales distributions in the future
which will result in a 100% return of capital. Because many investors have found
their investment in De Anza XII disappointing, many have wished to terminate
their investment prior to liquidation, and now that the general partner has made
it clear that there are no new plans to accelerate the liquidation of the
<PAGE>
Partnership, the Purchasers believe many more investors may wish to liquidate
prior to the end of the year. Possible reasons for which investors might choose
to accept the Purchasers' offer of $320 per unit are listed in the documents
which detail the offer.
A formal Offer to Purchase is enclosed, which provides more details. Our offer
will expire on December 31, 1996; accordingly, we encourage you to review our
offer and act promptly.
A transmittal letter (in yellow) is also enclosed which you can use for
accepting the offer. Please execute this document and return it in the enclosed
envelope.
Please call us at (800) 854-8357 if you have any questions.
Respectfully submitted,
/s/ C. E Patterson
C. E. Patterson
President of Moraga Partners, Inc.
Member of Moraga Gold, LLC
<PAGE>
