SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
MCNEIL PACIFIC INVESTORS FUND 1972 MCNEIL REAL ESTATE FUND XIV, LTD.
MCNEIL REAL ESTATE FUND V, LTD. MCNEIL REAL ESTATE FUND XV, LTD.
MCNEIL REAL ESTATE FUND IX, LTD. MCNEIL REAL ESTATE FUND XX, L.P.
MCNEIL REAL ESTATE FUND X, LTD. MCNEIL REAL ESTATE FUND XXIV, L.P.
MCNEIL REAL ESTATE FUND XI, LTD. MCNEIL REAL ESTATE FUND XXV, L.P.
(NAME OF SUBJECT COMPANY)
MCNEIL PARTNERS, L.P.
(NAME OF PERSON FILING STATEMENT)
Limited Partnership Units
(TITLE OF CLASS OF SECURITIES)
582566 10 5 582568 88 7
582568 20 0 582568 50 7
582568 10 1 None
582568 20 0 582568 88 7
582568 30 9 582568 87 9
(CUSIP NUMBERS OF CLASSES OF SECURITIES)
Donald K. Reed
MCNEIL PARTNERS, L.P.
13760 Noel Road, Suite 700, LB70
Dallas, Texas 75240
(214) 448-5800
(NAME, ADDRESS, AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S)
FILING STATEMENT)
Copy to:
Patrick J. Foye, Esq.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 Third Avenue
New York, New York 10022
(212) 735-2274
ITEM 1. SECURITY AND SUBJECT COMPANY
The subject companies are McNeil Pacific Investors Fund
1972, McNeil Real Estate Fund V, Ltd., McNeil Real Estate Fund
IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate
Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real
Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil
Real Estate Fund XXIV, L.P. and McNeil Real Estate Fund XXV,
L.P., each a California limited partnership (individually, a
"Partnership" and collectively, the "Partnerships"). The address
of the principal executive offices of each Partnership and
McNeil Partners, L.P., a Delaware limited partnership and the
general partner of each Partnership ("McNeil Partners"), is 13760
Noel Road, Suite 700, LB70, Dallas, Texas 75240. The title of
the class of equity securities to which this statement relates is
the outstanding limited partnership units (the "Units") of each
Partnership.
ITEM 2. TENDER OFFER OF THE BIDDER
This statement relates to the unsolicited tender offers
being made by High River Limited Partnership, a Delaware limited
partnership ("High River"), Riverdale Investors Corp., Inc., a
Delaware corporation ("Riverdale"), and Carl C. Icahn ("Mr.
Icahn" and together with High River and Riverdale, the "Bidders")
disclosed in ten Tender Offer Statements on Schedule 14D-1, each
dated August 3, 1995, as amended (the "Schedules 14D-1"), to
purchase from holders of Units ("Unitholders") up to
approximately 45% of the outstanding Units of each Partnership,
upon the terms and subject to the conditions set forth in the
Offers to Purchase dated August 3, 1995, as amended (the "Offers
to Purchase"), and the related Assignments of Partnership
Interest (collectively with the Offers to Purchase, the "HR
Offers"). The Partnerships did not solicit the HR Offers and did
not know of the HR Offers or their terms until commencement of
the HR Offers. The Schedules 14D-1 state that the business
address of Mr. Icahn is c/o Icahn Associates Corp., 114 West 47th
Street, 19th Floor, New York, NY 10036 and the address of the
principal offices of High River and Riverdale is 100 South
Bedford Road, Mount Kisco, New York 10549.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of McNeil Partners,
which is the person filing this statement, are set forth in Item
1 above.
(b)(1) The sole general partner responsible for the
management of each Partnership's business is McNeil Partners.
McNeil Investors, Inc., a Delaware corporation ("McNeil
Investors"), is the sole general partner of McNeil Partners.
Robert A. McNeil ("Mr. McNeil") is the sole stockholder of McNeil
Investors. Except as described below, there are no material
contracts, agreements, arrangements and understandings or any
actual or potential conflicts of interest between McNeil Partners
or its affiliates and the Partnerships, their executive officers,
directors or affiliates. Neither the Partnerships nor McNeil
Partners has any directors or executive officers.
Through 1999, the Partnerships pay an asset or partnership
management fee to McNeil Partners calculated as 1% of each Partnership's
tangible asset value (the "MID") (except in respect of McNeil Pacific
Investors Fund 1972 and McNeil Real Estate Fund V, Ltd., which receive
9.5% and 5%, respectively, of cash distributions from operations),
however, with regard to McNeil Real Estate Fund, IX, Ltd., McNeil
Real Estate Fund, X, Ltd., McNeil Real Estate Fund, XI, Ltd., McNeil
Real Estate Fund, XIV, Ltd. and McNeil Real Estate Fund, XV, Ltd. the
MID is payable only to the extent of the lesser of each Partnership's
excess cash flow or 1% of tangible asset value. Tangible asset value
is determined by using the greater of (i) an amount calculated by
applying a capitalization rate of 9 percent to the annualized net
operating income of each property or (ii) a value of $10,000 per
apartment unit for residential properties and $50 per gross
square foot for commercial properties to arrive at the property
tangible asset value. The property tangible asset value is then
added to the book value of all other assets excluding intangible
items. The MID percentage decreases subsequent to 1999.
The Partnerships pay property management fees equal to
5% of gross rental receipts of residential properties and 5% (6%
in respect of McNeil Real Estate Fund XXIV, L.P. and McNeil Real
Estate Fund XXV, L.P.) for commercial properties to McNeil Real
Estate Management, Inc. ("McREMI"), an affiliate of McNeil
Partners, for providing property management services.
Additionally, the Partnerships reimburse McREMI for its costs,
including overhead, of administering the Partnerships' affairs.
Pursuant to the Partnerships' partnership agreements,
McNeil Partners or McREMI, as applicable, is entitled to receive
upon the removal of McNeil Partners as the general partner of
each such partnership: (i) a terminating distribution in cash
equal to the aggregate amount of the MID distributed during the
12 months preceding the effective date of such removal (except in
respect of McNeil Pacific Investors Fund 1972, McNeil Real Estate
Fund V, Ltd. and McNeil Real Estate Fund XX, L.P.) (ii) a terminating
distribution equal to the aggregate amount of the property management
fee for the preceding twelve months in respect of McNeil Real Estate
Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate
Fund XI, Ltd., McNeil Real Estate Fund XIV, Ltd., and McNeil Real
Estate Fund XV, Ltd., (iii) within 30 days of removal as stated in
a written notice of removal, any portion of the property management
fee or MID which is then accrued and due, but not yet paid, and
(iv) within 30 days of removal as stated in a written notice of
removal, any unpaid loans or advances (together with accrued, but unpaid
interest). As of August 18, 1995, such amounts were in aggregate
approximately $12,260, $16,514, $2,137,338, $3,828,431, $4,770,988,
$1,961,391, $968,714, $188,350, $1,001,847 and $683,188 for McNeil
Pacific Investors Fund 1972, McNeil Real Estate Fund V, Ltd.,
McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X,
Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund
XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate
Fund XX, L.P., McNeil Real Estate Fund XXIV, L.P., and McNeil Real
Estate Fund XXV, L.P., respectively.
McNeil Partners, as general partner of each
Partnership, is entitled to indemnification under certain
circumstances from the Partnerships.
Certain of the directors and executive officers of
McNeil Investors and McREMI have employment agreements with such
entities that contain provisions granting such directors and
executive officers the right to terminate their employment
agreements and receive three years annual compensation upon a
change of control of such entities. Although no determination
can be made at this time, it is possible that a transaction of
the type discussed in Item 7 might result in a change of control
of McNeil Investors or McREMI. Any compensation payable to such
directors or executive officers upon a change of control is not
payable from funds of the Partnerships and such agreements are
not obligations of the Partnerships.
(b)(2) To the best knowledge of the Partnerships,
there are no material contracts, agreements, arrangements and
understandings or any actual or potential conflicts of interest
between the Partnership or its affiliates and the Bidders, their
executive officers, directors or affiliates.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) The Partnerships' management met following the
announcement of the HR Offers to review and consider the HR
Offers and to explore various possible alternative courses of
action which might be available to the Partnerships in response
to the HR Offers. At such meetings, the Partnerships' management
determined that each of the HR Offers is inadequate and not in
the best interests of the Partnership to which it relates or of
such Partnership's Unitholders. Each Partnership recommends that
Unitholders reject the HR Offer made with respect to such
Partnership and not tender their Units pursuant to such HR Offer.
(b) The Partnerships reached the conclusion set forth
in Item 4(a) after considering a variety of factors, including,
but not limited to, the following:
(i) No active trading market exists for the Units.
Because the Units are not listed on an exchange they are
essentially illiquid. The Partnerships believe that such
trading prices do not reflect the values inherent in the
Units. The prices per Unit offered by High River are lower
than the aggregate net asset values per Unit estimated by
High River.
(ii) McNeil Partners has been engaged in discussions
and negotiations with other parties which are considering
joining with McNeil Partners or its affiliates in making
tender offers for the Units of each Partnership at prices
per Unit in excess of the respective prices offered by High
River. There can be no assurance that any such offers will
be commenced or, if commenced, consummated.
(iii) The Bidders are making the HR Offers with a
view to making a profit. Accordingly, there is a conflict
of interest between their desire to purchase the Units at a
low price and Unitholders' desire to sell their Units at a
high price.
(iv) The HR Offers do not fully disclose Mr. Icahn's
intentions to seek control of the Partnerships. Mr. Icahn
commenced the HR Offers only after McNeil Partners rejected
his proposal to acquire the general partner interest of
McNeil Partners in the Partnerships and thereby control the
Partnerships.
(v) As stated in the Offers to Purchase, if any of the
HR Offers is successful, High River may "be in a position to
influence voting decisions with respect to [such]
Partnership, including, without limitation, decisions
concerning amendments to the Partnership Agreement and
removal and replacement of [such] Partnership's general
partner." In considering the possibility of High River
influencing voting decisions with respect to the
Partnerships and whether High River or one of its affiliates
would be suitable in such a role, the Partnerships further
considered the following:
(A) McNeil Partners and McREMI presently manage
the businesses of the Partnerships. McREMI is a fully
integrated real estate service organization performing
property management, asset management, investor
services, partnership administration and a wide range
of other real estate-related services for 21 limited
partnerships with more than 86,000 limited partners.
McNeil Investors, with its affiliates and subsidiaries,
is one of the largest managers of multifamily
residential properties in the United States and a large
manager of commercial properties.
McNeil Partners continually explores potential
avenues to enhance the value of the Units. McNeil
Partners also continually explores other transactions
such as asset sales, financing of Partnership
properties followed by distributions or a tender offer
for Units. There can be no assurance that any such
plans will be developed or that any such transactions
will be successfully consummated.
(B) The Offers to Purchase do not adequately
disclose High River's or its affiliates' experience and
level of expertise in the management of partnerships
similar to the Partnerships. Furthermore, High River
has not provided any information regarding its plans in
the event that it acquires control of the businesses of
the Partnerships. As a result, the Partnerships cannot
fully evaluate High River's past performance record and
experience.
(C) The Partnerships could be liable for large
accelerated mortgage payments, prepayment interest
penalties, or substantial yield maintenance payments in
the event that High River takes control of the
Partnerships and replaces McNeil Partners. Such
payments or penalties would have a negative impact on
the Partnerships. Pursuant to the terms of such
indebtedness, the consent of the lenders would be
required in respect of any transaction in which High
River removes McNeil Partners as the general partner.
(vi) Carl C. Icahn controls High River. The
Partnerships considered the background of Mr. Icahn, his
past investment practices, his reputation in the investment
and business communities, and various lawsuits and
proceedings, both private and by government agencies,
involving Mr. Icahn and affiliated companies. The
Partnerships have learned that the strategy Mr. Icahn has
employed in the High River Offers is similar to strategies
he has repeated in numerous previous unsolicited offers for
corporate and partnership securities.
(vii) The Partnerships considered the advice of
counsel for the Partnerships that the HR Offers raise legal
questions under federal securities and other laws.
Specifically, Mr. Icahn and High River have refused to sign
a certificate stating that the Offers to Purchase do not
contain or reflect and are not based on any confidential
proprietary information about or confidences or secrets
concerning the Partnerships, McNeil Partners, Mr. McNeil or
Carole J. McNeil or any of their respective assets,
properties, business, tax status or attributes, past,
present or future plans, proposals or thoughts. The
Partnerships believe that the HR Offers contain or reflect
or are based on such non-public, confidential and
proprietary material information, confidences or secrets
obtained by the Bidders from former counsel to the
Partnerships and McNeil Partners.
(viii) The HR Offers are conditioned upon McNeil
Partners consenting in writing to the admission of High
River as a substitute limited partner of each of the
Partnerships; however, each of the HR Offers fails to
disclose that McNeil Partners may, in its sole discretion
under certain circumstances set forth in each Partnership's
partnership agreement, refuse such admission. McNeil
Partners has not determined whether or not to admit High
River as a substitute limited partner. Any such
determination will be made depending on a number of factors
including the effect of such admission on the tax status of
the Partnership.
(ix) Pursuant to the Partnerships' partnership
agreements, McNeil Partners is required to start liquidating
the Partnerships between on or about August 8, 1998 and March 30,
1999. The Partnerships believe that, based upon current market
conditions, Unitholders would receive an aggregate amount of
liquidating distributions in excess of the prices offered in
the HR Offers. There can be no assurance that Unitholders
will receive an amount in excess of the prices offered in
the HR Offers if the Partnerships were so liquidated.
ITEM 5. PERSONS RETAINED, EMPLOYED, OR TO BE COMPENSATED
The Partnerships have retained The Herman Group, Inc.
to assist with communications with Unitholders with respect to,
and to provide other services to the Partnership in connection
with, the HR Offers. The Partnerships will pay The Herman Group,
Inc. reasonable and customary fees for its services, reimburse it
for reasonable expenses, and provide customary indemnities.
Neither the Partnerships nor any person acting on their behalf
has employed, retained, or compensated or intends to employ,
retain, or compensate any other person or class of persons to
make solicitations or recommendations to Unitholders on its
behalf concerning the HR Offers.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) Except as described below, neither the
Partnerships, McNeil Partners nor McNeil Investors has effected
any transactions in the Units during the past 60 days. Except as
described below, the Partnerships are not aware of any other
transactions in the Units during the past 60 days by any of
McNeil Investors's executive officers, directors, affiliates, or
subsidiaries. On June 30, 1995, McNeil Partners purchased 5,000
Units of McNeil Real Estate Fund XXV, L.P.at $.15 per Unit in a private
transaction and Robert C. Irvine, an executive officer of McNeil
Investors, purchased 16 Units of McNeil Real Estate Fund XX, L.P.
at $50 per Unit from Unitholders in market transactions. On August 2,
1995, in the ordinary course of business, McNeil Partners purchased
4.5 Units of McNeil Real Estate Fund XX, L.P. at $50 per Unit from a
Unitholder pursuant to an understanding reached on June 14, 1995.
(b) Neither the Partnerships nor, to the knowledge of
the Partnerships, any of McNeil Partners' executive officers,
directors, affiliates, or subsidiaries intends to tender Units
owned by them in the HR Offers.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Since the announcement of the HR Offers, the
Partnerships have received from a number of parties inquiries
regarding possible alternative transactions involving the
Partnerships. In addition, since the commencement of the HR
Offers, the Partnerships' management have been actively
considering various possible alternatives to the HR Offers,
including (i) a tender offer for or other acquisition of Units of
one or more of the Partnerships or (ii) distributions in respect
of the Units of one or more of the Partnerships. McNeil Partners
has been engaged in discussions with other parties which are
considering joining with McNeil Partners or its affiliates in
making tender offers for less than all of the Units at prices per
Unit in excess of the respective prices offered by High River.
The Partnerships expect that such process will involve, among
other things, furnishing non-public information to certain
parties, entering into confidentiality agreements in connection
therewith and responding to due diligence inquiries.
(b) McNeil Partners has determined that public
disclosure with respect to the parties to, and the possible terms
of any proposals made in connection with, or agreements that may
result from, any discussions or negotiations referred to above in
this Item 7 might jeopardize the continuation of such discussions
or negotiations and, accordingly, authorized and directed
management not to make any such public disclosure unless and
until an agreement in principle is reached.
There can be no assurance that any of the foregoing
will result in any transaction being recommended to the
Partnerships or that any transaction that may be recommended,
will be authorized or consummated, or that a transaction other
than those described herein will not be proposed, authorized or
consummated. The initiation or continuation of any of the
foregoing may be dependent upon the future actions of High River
with respect to the HR Offers. The proposal, authorization,
announcement or consummation of any transaction of the type
referred to in this Item 7 could adversely effect or result in
the withdrawal of the HR Offers.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
Carl Icahn Claims Temporary Hardship.
On Wednesday, August 2, 1995, the Bidders announced
that they would commence the HR Offers on Thursday, August 3,
1995 and that such offers would expire on August 30, 1995. On
August 3, 1995, the Bidders published a tombstone advertisement
in the New York Times announcing that the HR Offers had in fact
commenced on that date. As a result, the Bidders were thereby
required by Rule 14d-3 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), to file on such date with the
Securities and Exchange Commission (the "SEC") and to hand
deliver to the Partnerships their Schedules 14D-1, but failed to
do so. On August 4, 1995, the Bidders claimed that they had
encountered technical problems and filed with the SEC a request
for a temporary hardship exemption from the filing requirements
of the Exchange Act with respect to the Partnerships. On that
date, the Bidders filed amendments to their Schedules 14D-1
disclosing that the HR Offers would expire on August 31, 1995.
High River Lowers Offer Price.
After announcing on August 2 and August 3, 1995 an
offer price of $92 per Unit for 60,791 Units (approximately 45%)
of McNeil Real Estate Fund X, Ltd., the Bidders filed an
amendment to their offer on August 4, 1995 lowering the purchase
price to $72 per Unit, a decrease of approximately 22% from their
original offer. The Bidders did not provide any reason or
explanation for the reduction of $20 per Unit in the offering
price.
Litigation
On August 10, 1995, the Bidders filed an action in the
United States District Court for the Southern District of New
York against McNeil Partners, McNeil Investors and Mr. and Mrs.
McNeil requesting, among other things, names and addresses of the
Partnerships' limited partners. The District Court issued a
preliminary injunction against the Partnerships requiring them to
commence mailing the Bidders' tender offer materials on August
14, 1995.
On August 18, 1995, McNeil Partners, McNeil Investors,
the Partnerships, and Mr. and Mrs. McNeil filed an Answer and
Counterclaim. The Counterclaim principally asserts (1) that the
HR Offers have been undertaken in violation of the federal
securities laws, on the basis of material, non-public, and
confidential information, and (2) that the HR Offers documents
omit and/or misrepresent certain material information about the
HR Offers. The Counterclaim seeks a preliminary and permanent
injunction against the continuation of the HR Offers and,
alternatively, ordering corrective disclosure with respect to
allegedly false and misleading statements contained in the tender
offer documents.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
(a)(1) Form of letter from the Partnerships to
limited partners, dated August 18, 1995.
(a)(2) Form of Press Release issued by McNeil
Partners on August 18, 1995.
(c)(1) Letter from McNeil Partners to High
River Limited Partnership and Carl C.
Icahn dated August 8, 1995.
(c)(2) Letter from Peter Fass, Esq. to Mr. and
Mrs. Robert A. McNeil dated August 9,
1995.
(c)(3) Letter from Mark Weitzen, Esq. to
Patrick J. Foye, Esq. dated August 9,
1995.
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth in
this statement is true, complete and correct.
Dated: August 18, 1995
MCNEIL PARTNERS, L.P.
General Partner of each of the Partnerships
By: McNeil Investors, Inc.
General Partner
By: /s/ Donald K. Reed
Donald K. Reed
President
_____________________________________________________________________________
August 18, 1995
To Our Partners:
As communicated to you in our letter of August 11, 1995,
High River Limited Partnership, a Delaware limited
partnership controlled by Carl C. Icahn, Riverdale
Investors Corp. Inc., a Delaware corporation and Carl C.
Icahn, individually, have made offers to purchase up to
45% of the units of limited partnership interests
("Units") in McNeil Partnership _________ (the
"Partnership") for which McNeil Partners, L.P. ("McNeil
Partners") serves as the general partner (the "HR
Offer"). It is important for you to know that the HR
Offer was not solicited by the Partnership and that
management was not aware of the terms until the offer had
already commenced.
The attached Schedule 14D-9, which is being filed today
with the Securities and Exchange Commission (the "14D-9
Filing") discusses in greater detail the recommendations
and responses of the Partnership with respect to the HR
Offer. We believe that the 14D-9 Filing contains very
important information which you should consider before
you reach a decision with respect to the offer.
Since August 3, 1995, when the offer was made public, the
Partnership's management and its advisors have conducted
an exhaustive review of the terms of the HR Offer and
have also explored various possible alternatives which
might be (or become) available to the Partnership and/or
the Limited Partners. As a result of these examinations,
the Partnership has reached the conclusion that THE OFFER
MADE BY HIGH RIVER IS NOT IN THE BEST INTERESTS OF EITHER
THE PARTNERSHIP OR THE LIMITED PARTNERS AND THE
PARTNERSHIP STRONGLY RECOMMENDS THAT THE OFFER SHOULD BE
REJECTED. Some of the factors which caused the
Partnership to reach these conclusions are summarized
below and were considered along with other factors in
reaching the recommendation, all of which are discussed
in more detail in Item 4 of the 14D-9 Filing.
The decision whether to accept the HR Offer is solely at
the discretion of each investor. YOU SHOULD KNOW THAT MCNEIL
PARTNERS AND OTHERS ARE CONTEMPLATING TENDER OFFERS FOR UNITS
AT A HIGHER PRICE THAN THE HIGH RIVER OFFER. YOU NEED TAKE
NO ACTION WHATSOEVER IF YOU DO NOT WISH TO ACCEPT THE OFFER
MADE BY HIGH RIVER.
With respect to the determination by the Partnership that
the HR Offer is NOT in the best interests of the Limited
Partners, the Partnership and its advisors considered,
among other reasons, the following:
(X) THE PRICE PER UNIT OFFERED BY HIGH RIVER DOES NOT
ADEQUATELY REFLECT THE VALUES INHERENT IN THE UNITS.
No active trading market exists for the Units.
Because the Units are not traded on an exchange they
are essentially illiquid. The Partnership believes
that such trading prices do not reflect the values
inherent in the Units. The price per Unit offered
by High River is even lower than the net asset value
per Unit estimated by High River.
(X) MCNEIL PARTNERS AND OTHER PARTIES ARE CONTEMPLATING
TENDER OFFERS FOR THE UNITS AT A HIGHER PRICE THAN
THE HR OFFER. McNeil Partners has been engaged in
discussions and negotiations with other parties
which are considering joining with McNeil Partners
or its affiliates in making a tender offer for the
Units of the Partnership at a price per Unit in
excess of the price offered by High River. There
can be no assurance that any such offer will be
commenced or, if commenced, consummated.
(X) ICAHN'S INTENTIONS ARE TO TAKE CONTROL OF THE
PARTNERSHIP. The HR Offer does not fully disclose
Mr. Icahn's intentions to seek control of the
Partnership. Mr. Icahn commenced the HR Offer only
after McNeil Partners rejected his proposal to
acquire the general partner interest of McNeil
Partners in the Partnership and thereby control the
Partnership. It is the Partnership's belief that it
is now Mr. Icahn's intention to gain control of the
Partnership by acquiring Units.
(X) ICAHN'S SUITABILITY/INTENTIONS. If the HR Offer is
successful, Icahn could be in a position to
influence voting decisions with respect to the
Partnership and thereby control Partnership
operations directly by removal of the general
partner, or indirectly through a controlling vote on
Partnership matters, including amendments to the
Partnership Agreement. The HR Offer does not
disclose whether High River or one of its affiliates
has expertise in the management of partnerships
similar to the Partnership. Furthermore, High River
has not provided any information regarding its plans
in the event that it acquires control of the
business of the Partnership. As a result, the
Partnership cannot fully evaluate High River's past
performance record, expertise or intentions.
(X) ICAHN'S BACKGROUND AND INVESTMENT PRACTICES. The
Partnerships considered the background of Mr. Icahn
and his affiliated companies, his past investment
practices, his reputation in the investment and
business communities and various lawsuits and
proceedings, both private and by government
agencies. Mr. Icahn is notorious for employing a
strategy in which he and/or his affiliates position
themselves in a company's securities through an
unsolicited tender offer such as the current HR
Offer.
(X) CONTINUED MCNEIL MANAGEMENT. McNeil Partners, the
general partner of the Partnership is an affiliate
of McNeil Real Estate Management, Inc. ("McREMI"),
which presently manages the business of the
Partnership. McREMI is a fully integrated real
estate service organization performing property
management, asset management, investor services,
partnership administration and a wide range of other
real estate-related services for 21 limited
partnerships with more than 86,000 limited partners.
McREMI, with its affiliates and subsidiaries, is one
of the largest managers of multifamily residential
properties in the United States and a large manager
of commercial properties. These credentials are
strong qualifications for the continued management
of the Partnership's operations.
The decision whether to accept the HR Offer is
an individual decision by each limited partner. No
action taken by High River or any other investor or group
of investors will affect your current ownership of Units
in the Partnership, unless you elect to sell your
interest in the Partnership. If you have already
accepted the HR Offer and wish to change your mind and
rescind your tender you may do so by written or facsimile
notification to the Depositary at IBJ Schroeder Bank,
P.O. Box 84, Bowling Green Station, New York, NY, 10274-
0084. Attention: Reorganization Operations Department
(or by facsimile at (212) 858-2611). The withdrawal
notice must be signed by the person(s) who signed the
Assignment of Partnership Interest in the same manner as
the Assignment of Partnership Interest was signed.
Tenders may be withdrawn in this manner at any time prior
to the Expiration Date of the HR Offer.
We will stay in communication with you during
this process and keep you appraised of further
developments both with respect to the HR Offer and/or the
possible tender offer from McNeil Partners.
In the meantime, the Partnership has enlisted
the services of The Herman Group, Inc. as an Information
Agent to respond to your questions or concerns regarding
the HR Offer or the Partnership's response. A toll free
number (800)658-2007 has been installed and will be
answered by informed representatives Monday--Thursday
8:00 a.m.--10:00 p.m.; Friday 8:00 a.m.--6:00 p.m. and
Saturdays from 9:00 a.m.--3:00 p.m., Central Daylight
Time.
Sincerely,
MCNEIL PARTNERS, L.P.
General Partner
By: MCNEIL INVESTORS, INC.
Its General Partner
Robert A. McNeil
Chairman of the Board
Carole J. McNeil
Co-Chairman of the Board
___________________________________________________________________________
DRAFT PRESS RELEASE
For Immediate Release Contact:
Sheri M. Herman
The Herman Group
(800) 658-2007
MCNEIL PARTNERS RECOMMENDS REJECTION
OF ICAHN TENDER OFFERS
DALLAS, TEXAS, August 18, 1995 - McNeil Partners, L.P.
today announced that it recommends that unitholders of
ten McNeil Partnerships, of which McNeil Partners is the
general partner, reject the unsolicited tender offers of
High River Limited Partnership and Carl C. Icahn and not
tender their units of limited partnership interests
pursuant to the offers.
The Partnerships' Schedules 14D-9 filed today
with the Securities and Exchange Commission concluded,
among other things, that:
No active trading market exists for the units.
Because the units are not listed on an exchange they
are essentially illiquid. The Partnerships believe
that such trading prices do not reflect the values
inherent in the units. The prices per unit offered
by High River are lower than the aggregate net asset
values per unit estimated by High River.
McNeil Partners has been engaged in discussions and
negotiations with other parties which are
considering joining with McNeil Partners or its
affiliates in making tender offers for the units of
each Partnership at prices per unit in excess of the
respective prices offered by High River. There can
be no assurance that any such offers will be
commenced or, if commenced, consummated.
The Partnership today commenced litigation
against High River and Mr. Icahn alleging, among other
things, that the offers contain or reflect or are based
on confidential proprietary information about or
confidences or secrets concerning the Partnerships and
McNeil Partners improperly disclosed by a former attorney
for the Partnerships and McNeil Partners and were made in
violation of the federal securities laws.
___________________________________________________________________________
August 8, 1995
Mr. Carl C. Icahn
High River Limited Partnership
c/o Riverdale Investors Corp., Inc.
100 South Bedford Road
Mount Kisco, New York 10549
Dear Mr.Icahn:
We have received your letters dated August 3,
1995 with respect to dissemination of tender offer
documents for units of ten limited partnerships (the
"Partnerships") controlled by McNeil Partners, L.P. (the
"General Partner"). We have determined that the offers
of High River Limited Partnership ("High River") reflect
and are based on certain non-public, confidential and
proprietary material information, confidences or secrets
of the Partnerships, the General Partners and Robert A.
McNeil and Carole J. McNeil (the "McNeils") obtained from
an attorney who for over twenty-five years represented
the Partnerships, the General Partner and the McNeils,
individually. The duties owed as a result of that prior
representation were shattered in a telephone conversation
with our counsel in which Mr. Icahn stated that the
former attorney had called Mr. Icahn to "broker a deal"
relating to the Partnerships. That conversation preceded
commencement of the High River offer by two days.
In telephone discussions with a representative
of the McNeils, such former attorney has, with Mr. Icahn
on the line, referred to confidential information about
the McNeils' personal tax situation. Any disclosure or
use of such information by the Partnership's former
attorney would constitute a violation of New York State's
Canons of Legal Ethics and New York law; any disclosure
or use in any way of such information by High River or
Mr. Icahn would be unlawful, especially in light of the
fact that High River and Mr. Icahn were aware such
information had been provided by a former attorney under
professional, legal and contractual obligations not to
disclose it.
Accordingly, in light of the foregoing and past
disputes between such former attorney and the
Partnerships, we are demanding the execution by High
River and Mr. Icahn and return of the attached
certificate prior to distributing and mailing the tender
offer materials.
Very truly yours,
MCNEIL PARTNERS, L.P.
General Partner
By: MCNEIL INVESTORS, INC.,
its General Partner
Robert A. McNeil
Carole J. McNeil
CERTIFICATE
The undersigned, Carl C. Icahn and High River Limited
Partnership, a Delaware limited partnership ("High River"), in
connection with tender offers commenced on August , 1995
by High River for units of limited partnership interests of ten
limited partnerships (the "Partnerships") controlled by McNeil
Partners, L.P. (the "General Partner") each hereby certifies to
each of the Partnerships, the General Partner, Robert A. McNeil
and Carole J. McNeil that:
1. Mr. Icahn and High River have not engaged the
former attorney (referred to in the attached letter ) of the
Partnerships, the General Partner, Robert A. McNeil or Carole J.
McNeil to represent either of them;
2. Such former attorney has not furnished, directly
or indirectly, to Mr. Icahn or High River any confidential
proprietary information about or confidences or secrets
concerning the Partnerships, the General Partner, Robert A.
McNeil or Carole J. McNeil or any of their respective assets,
properties, businesses, tax status or attributes, past, present
or future plans, proposals or thoughts ("Confidential
Information");
3. The Offers to Purchase dated August , 1995
prepared and reviewed by Mr. Icahn and High River do not contain
or reflect and are not based on any Confidential Information);
and
4. The plans and proposals of Mr. Icahn and High
River with regard to the Partnerships are not derived from or
based on disclosure or receipt of any Confidential Information.
Dated: August , 1995
Carl C. Icahn
HIGH RIVER LIMITED PARTNERSHIP
By: Riverdale Investors Corp Inc.,
General Partner
By:
____________________________________________________________________________
PETER M. FASS
75 East 55th Street
New York, New York 10022
August 9, 1995
Mr. and Mrs. Robert A. McNeil
c/o McNeil Partners
13760 Noel Road
Dallas, Texas 75240
Dear Carol and Bob:
It has come to my attention that a letter has
been sent to Carl Icahn which indicates that in the
telephone conversation with Scott Wallace in which Mr.
Icahn was on the line, you state that I disclosed certain
non-public confidential and proprietary material
information regarding your business. I am outraged by
such accusations. The letter is filled with half truths
and misstatements. Anything discussed in the
conversation was a matter of public record.
In connection with a prior transaction
involving Mr. Icahn and Insignia Financial Corporation
regarding the Shelter partnerships, I received a call
from the Icahn interests asking me to handle a hostile
tender offer relating to the Shelter partnerships. I
told Mr. Icahn that because of my relationship with
Insignia Financial, I could not represent Mr. Icahn in a
hostile transaction but would introduce him to Andrew
Farkas with the possibility of them doing a joint
friendly transaction. I made the introduction and there
were several meetings but the transaction, on a friendly
basis, did not occur until after Mr. Icahn commenced a
hostile bid in excess of Insignia's offer.
Subsequently, in late July, I received a call
from Carl Icahn and Martin Hirsch in which they asked me
to represent the Icahn interest in connection with an
offer for certain of the McNeil partnerships. I told Mr.
Icahn and Mr. Hirsch that because of my prior
representation of the McNeil interests, I could not do
anything involving a hostile nature and only could do a
transaction which is friendly and consented to by the
McNeil interests. It was agreed that I would make a call
to you which I subsequently made, in an attempt to do a
friendly transaction. Thereafter, you called me directly
to facilitate a call with Mr. Icahn.
In a subsequent telephone conversation with
Carl Icahn and Scott Wallace, the structure for a
friendly transaction was discussed. In that
conversation, I discussed, in layman's terms, the tax
consequences from information contained in public
financial statements of various McNeil public
partnerships (i.e., the fact that the general partner in
many of the partnerships has a significant negative
capital account). In addition, the prospectus of
National Realty L.P. dated August 5, 1987, discusses the
initial Southmark/McNeil transaction and the subsequent
National Realty rollup wherein Robert McNeil entered into
an agreement with Southmark to assist in his avoiding
certain unintended adverse financial consequences arising
from his participation in National Realty rollup under
the terms of his prior agreement with Southmark.
Moreover, your counsel, Scott Wallace, did not once in
the conversation make any statement about the
confidential nature of the information being discussed.
I have never informed the Icahn interests of any
information relating to you which was not a matter of
public record.
Very truly yours,
PETER M. FASS
PMF/mj
cc: Patrick Foye, Esq.
Carl Icahn
____________________________________________________________________________
August 9, 1995
VIA TELECOPIER
Patrick J. Foye, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Re: McNeil Limited Partnerships
Dear Mr. Foye:
We are in receipt of correspondence from McNeil
Partners, L.P. concerning an alleged disclosure by an
attorney of allegedly privileged information and the use
of such information in connection with tender offers
commenced by our clients.
With respect to the allegations, please be
advised that:
(a) we have been advised by the attorney
referred to in your letter that he did not breach any
privilege owed by him to any of your clients, nor did he
disseminate any confidential information to the bidder or
its affiliates and that he is sending to McNeil a letter
to that effect;
(b) the attorney has not been retained to
represent the bidder or its affiliates with respect to
any matters concerning your clients;
(c) the representatives of your clients who
participated in the telephone conversations to which you
refer did not at any time in such conversations raise any
question of privilege or confidentiality or object on
such basis to anything being said in such conversations;
(d) it is quite apparent from the financials
issued by several of the partnerships that the general
partner has potential recapture problems in the event of
a sale of the properties or a disposition of its
interest; and
(e) in any event, the bidder and its
affiliates were not aware that any information received
from the attorney is or was non-public, confidential,
privileged or proprietary.
I trust that the foregoing satisfies any
concerns which you have with respect to the subject
matter raised in the correspondence.
Very truly yours,
Marc Weitzen
