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
(AMENDMENT NO. 6)
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
This Amendment No. 6 amends and supplements the
following Items of the Solicitation/Recommendation Statements on
Schedule 14D-9 (the "Schedules 14D-9") of McNeil Partners, L.P.,
a Delaware limited partnership ("McNeil Partners"), filed with
the Securities and Exchange Commission (the "Commission") on
August 18, 1995, Amendment No. 1 to the Schedules 14D-9 filed
with the Commission on August 25, 1995, Amendment No. 2 to the
Schedules 14D-9 filed with the Commission on September 8, 1995,
Amendment No. 3 to the Schedules 14D-9 filed with the Commission
on September 13, 1995, Amendment No. 4 to the Schedules 14D-9
filed with the Commission on September 18, 1995 and Amendment No.
5 to the Schedules 14D-9 filed with the Commission on September
20, 1995. Unless otherwise indicated, all capitalized terms used
but not defined in this Amendment No. 6 have the meanings set
forth in the Schedules 14D-9, as amended.
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, and Carl C. Ichan ("Mr. Ichan") disclosed
in ten Tender Offer Statements on Schedules 14D-1, each dated
August 3, 1995, as amended (the "Schedules 14D-1"), to purchase
from holders ("Limited Partners") of units of limited partnership
interest ("Units") 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 the terms of the HR Offers until
commencement of the HR Offers.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
Item 4 is hereby supplemented by adding the following:
As previously disclosed, 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 Limited Partners. Each
Partnership recommends that Limited Partners reject the HR Offer
made with respect to such Partnership and not tender their Units
pursuant to such HR Offer.
Furthermore, it was previously disclosed that the
Partnerships pay an asset or partnership management fee to McNeil
Partners and a property management fee to McNeil Real Estate
Management, Inc., an affiliate of McNeil Partners ("McREMI"), for
providing property management services. If any of the HR Offers
is successful, High River may be in a position to cause the
amendment of the applicable Partnership's partnership agreement
and the removal of McNeil Partners as the general partner of such
Partnership. If McNeil Partners is removed by High River as the
general partner of any Partnership, the respective asset or
partnership management fee and property management fee payable to
McNeil Partners and McREMI will no longer be received by McNeil
Partners or McREMI, as the case may be, and therefore, the
management of McNeil Partners has a conflict of interest in
recommending that Limited Partners reject the HR Offers.
Estimated Net Asset Values.
McNeil Partners prepared estimates of the Partnerships'
net asset value per Unit for 1994. The estimates of net asset
value (the "NAV Estimates") prepared by McNeil Partners do not
purport to be estimates of the fair market value of the Units
themselves, and McNeil Partners believes they should not be
viewed as necessarily reflecting the fair value of Units.
Furthermore, as explained below, the NAV Estimates do not purport
to reflect the amounts the Limited Partners might actually
receive upon a hypothetical liquidation of the Partnerships,
because they do not take into account transactional and other
costs that would be incurred in a liquidation. McNeil Partners
prepared the NAV Estimates based on its own estimates of the
values of the Partnerships' properties and not on the basis of
third party appraisals. Also, McNeil Partners does not solicit
offers or inquiries from prospective buyers of the Partnership
properties in connection with its preparation of the NAV
Estimates. McNeil Partners derives its estimates of the values
of the Partnerships' properties principally from capitalizing the
net operating income derived from the Partnerships' properties.
As used herein, "net operating income" includes reserves for
replacements and is calculated before depreciation, debt service
payments and certain capital expenditure items. McNeil Partners'
NAV Estimates based on its estimates of the aggregate values of
the Partnerships' properties for the fiscal year ended December
31, 1994 are set forth below.
Partnership 1994 Net Asset Value Estimate
(Per Unit)
McNeil Pacific Investors Fund 1972 $271.70
McNeil Real Estate Fund V, Ltd. $584.77
McNeil Real Estate Fund IX, Ltd. $229.35
McNeil Real Estate Fund X, Ltd. $165.16
McNeil Real Estate Fund XI, Ltd. $113.00
McNeil Real Estate Fund XIV, Ltd. $174.36
McNeil Real Estate Fund XV, Ltd. $169.55
McNeil Real Estate Fund XX, L.P. $286.59
McNeil Real Estate Fund XXIV, L.P. $405.00
McNeil Real Estate Fund XXV, L.P. $0.44
In estimating the aggregate value of the Partnership
properties for 1994, McNeil Partners first calculated the net
operating income for that year. McNeil Partners then capitalized
the net operating income amount at a 10% rate for apartments, 11%
for retail and self storage properties and 12% for office
buildings, which McNeil Partners believes represent appropriate
capitalization rates for similar real estate portfolios. The
value of the properties have not been adjusted for any specific
market conditions.(1) Based on McNeil Partners' estimates of the
aggregate values of the Partnerships' properties for the fiscal
year ended December 31, 1994, set forth below are approximations
of net operating income and estimated aggregate value of the
Partnerships' properties for 1994 (the "1994 Aggregate Value
Estimate").
Partnership Net Operating 1994
Income Aggregate
Value
Estimate
McNeil Pacific Investors Fund 1972 $500,000(2) $5,000,000
McNeil Real Estate Fund V, Ltd. $2,042,058 $20,420,580
McNeil Real Estate Fund IX, Ltd. $7,390,430 $73,904,300
McNeil Real Estate Fund X, Ltd. $8,001,787 $76,753,164
McNeil Real Estate Fund XI, Ltd. $5,866,533 $58,665,330
McNeil Real Estate Fund XIV, Ltd. $4,393,173 $42,786,186
McNeil Real Estate Fund XV, Ltd. $4,032,276 $40,322,760
McNeil Real Estate Fund XX, L.P. $469,720 $8,934,190
McNeil Real Estate Fund XXIV, L.P. $2,202,482 $20,400,415
McNeil Real Estate Fund XXV, L.P. $4,560,566 $40,138,189
________________
1 In McNeil Real Estate Fund XX, L.P., the value of
1130 Sacramento is reflected at a 1992 appraisal value of $4.24
million because capitalized net operating income does not
adequately report the properties' values.
2 Based on a stabilized occupancy level of 90%. Palm Bay
Appartments has recently undergone a renovation which resulted
in the net operating income for 1994 being understated due to
low occupancy levels during the renovation and subsequent lease-
up period. The actual net operating income for 1994 was
$295,863.
McNeil Partners prepares its NAV Estimates based on a
hypothetical sale (without taking into account any transaction
costs) of all of the Partnerships' properties at their estimated
aggregate value and the distribution to the partners of the gross
proceeds of that sale, net of related indebtedness, together with
the Partnership's cash, proceeds from temporary investments, and
all other assets that are believed to have liquidation value,
after provision in full for all the Partnerships' other known
liabilities. The NAV Estimates prepared by McNeil Partners do
not take into account (i) real estate transactional costs that
would be incurred on a sale of the Partnerships' properties, such
as brokerage commissions and other selling and closing expenses,
(ii) timing considerations or (iii) costs associated with winding
up the Partnerships. Therefore, McNeil Partners believes that
the NAV Estimates do not necessarily represent either the fair
market value of a Unit or the amount a Limited Partner reasonably
could expect to receive if the Partnerships' properties were sold
and the Partnerships were liquidated. McNeil Partners' most
recent NAV Estimate of $584.77 per Unit for McNeil Real Estate
Fund V, Ltd. and $286.59 per Unit for McNeil Real Estate Fund XX,
L.P. do not reflect the 1995 cash distributions to Limited
Partners of $41.71 and $5.05 per Unit, respectively. For these
reasons, McNeil Partners considers the NAV Estimates to be less
meaningful in determining whether to recommend to Limited
Partners the Purchase Prices offered by High River than the pro
forma liquidation analysis described below.
Pro Forma Liquidation Analysis.
High River is offering to purchase Units, which are
relatively illiquid investments, and is not offering to purchase
the Partnerships' underlying assets or assume any of its
liabilities. Although McNeil Partners does not believe that the
per Unit amount which might be distributed to Limited Partners
following a future sale of all the Partnerships' properties
necessarily reflects the present fair value of a Unit, the
realizable value of the Partnerships' assets clearly is a
relevant factor in determining the price a prudent purchaser
would offer for Units. In considering this factor, McNeil
Partners made a pro forma calculation of the amount each Limited
Partner might receive in a theoretical orderly liquidation (which
may not be realistically possible, particularly in the near term,
due to real estate market conditions, the general difficulty of
disposing of real estate in a short period of time, and other
general economic factors), based on (i) the 1994 Aggregate Value
Estimate calculated by McNeil Partners in preparing its most
recent NAV Estimate, (ii) other financial information regarding
the Partnerships' properties available to McNeil Partners and
(iii) the other considerations described below.
McNeil Partners began its pro forma liquidation
analysis by seeking to estimate the aggregate fair market value
of the Partnerships' properties. To do this, McNeil Partners
compared the 1994 Aggregate Value Estimate calculated by McNeil
Partners based on the 1994 net operating income of the
Partnerships with an estimate of the aggregate value of the
Partnerships' properties based on the Partnerships' net operating
income for the first eight months of 1995. There can be no
assurance that the actual net operating income for 1995 will not
be materially different from the annualized net operating income
based on the first eight months of 1995. Based on each of the
Partnerships' first eight months of 1995 and employing the same
method of estimating the aggregate value of the Partnerships'
properties as McNeil Partners used in calculating the 1994
Aggregate Value Estimate, it is estimated that the Partnerships
will produce net operating income and have the estimated
aggregate value of the Partnerships' properties for 1995 in
approximately the amounts set forth below (the "1995 Aggregate
Value Estimate").
Partnership Net Operating 1995
Income Aggregate
(YTD Annualized) Value
Estimate
McNeil Pacific Investors Fund 1972 $500,000(3) $5,000,000
McNeil Real Estate Fund V, Ltd. $2,160,939 $21,609,390
McNeil Real Estate Fund IX, Ltd. $7,817,439 $78,174,390
McNeil Real Estate Fund X, Ltd. $7,376,341 $71,007,287
McNeil Real Estate Fund XI, Ltd. $6,342,679 $63,426,795
McNeil Real Estate Fund XIV, Ltd. $4,612,141 $44,880,248
McNeil Real Estate Fund XV, Ltd. $4,238,948 $42,398,475
McNeil Real Estate Fund XX, L.P. $623,129 $9,751,945
McNeil Real Estate Fund XXIV, L.P. $2,068,161 $19,239,975
McNeil Real Estate Fund XXV, L.P. $4,651,587 $41,174,984
___________
3 Based on a stabilized occupancy level of 90%. The property
has recently undergone a renovation which resulted in the
net operating income for the first eight months of 1995
being understated due to low occupancy levels during the
renovation and subsequent lease-up period. The actual net
operating income annualized for 1995 is $246,255.
Although there are several other methods of estimating
the value of real estate of this type, McNeil Partners believes
that this approach represents a reasonable method of estimating
the aggregate value of the Partnerships' properties (without
taking into account the costs of disposing of the properties),
subject to the substantial uncertainties inherent in any estimate
of value. The use of other assumptions, however, particularly as
to the applicable capitalization rate, could produce
substantially different results. McNeil Partners has not
solicited any offers or inquiries from prospective buyers of the
Partnerships' properties in preparing its estimates of fair
market value, and the actual amounts for which the Partnerships'
properties might be sold could be significantly higher or
significantly lower than these estimates.
In the next stage of its pro forma liquidation
analysis, McNeil Partners adjusted the 1995 Aggregate Value
Estimates to reflect the Partnerships' other assets and
liabilities. Specifically, McNeil Partners added the amounts of
cash, escrows and other investments (without discounting the
values of any restricted reserve accounts held pursuant to loan
agreements) shown on the Partnerships' unaudited balance sheet at
June 30, 1995 and subtracted all liabilities (except unamortized
debt discounts) shown on that balance sheet and reflected in the
notes to the Partnerships' unaudited financial statements for the
six month period ended June 30, 1995. McNeil Partners did not
deduct any amounts in respect of the legal and other costs which
McNeil Partners expects would be incurred in a liquidation,
including costs of negotiating purchase and sale contracts,
possibly conducting a consent solicitation in order to obtain the
Limited Partners' approvals for the sales as may be required by
the partnership agreements, and winding up the Partnerships,
because of the difficulty of estimating those amounts. The
result approximated the net liquidation proceeds (before
provision for the costs described in the preceding sentence)
which McNeil Partners estimates could be realized on an orderly
liquidation of the Partnerships, based on the assumptions
implicit in the calculations described above.
To complete its estimate of the amount of the
theoretical liquidation proceeds that would be distributable per
Unit (without taking into account the amount of such proceeds
that may be payable to McNeil Partners under the terms of the
partnership agreements), McNeil Partners divided the amount of
those proceeds by the number of Units now outstanding. The
resulting estimated pro forma liquidation values per Unit are set
forth below, before provision for the legal and other costs of
liquidating the Partnership described in the preceding paragraph.
Partnership Pro Forma Pro Forma
Liquidation Liquidation
Values Values (Per
Unit)
McNeil Pacific Investors Fund 1972 $3,568,324 $259.46
McNeil Real Estate Fund V, Ltd. $12,160,205 $667.30
McNeil Real Estate Fund IX, Ltd. $29,356,691 $266.47
McNeil Real Estate Fund X, Ltd. $24,388,574 $180.62
McNeil Real Estate Fund XI, Ltd. $22,878,860 $143.16
McNeil Real Estate Fund XIV, Ltd. $17,071,735 $197.28
McNeil Real Estate Fund XV, Ltd. $19,879,617 $193.31
McNeil Real Estate Fund XX, L.P. $14,992,058 $302.72
McNeil Real Estate Fund XXIV, L.P. $15,483,623 $387.09
McNeil Real Estate Fund XXV, L.P. $38,426,618 $0.46
L.P.
The pro forma liquidation analysis described above is
merely theoretical and does not itself reflect the value of the
Units because (i) there is no assurance any such liquidation in
fact will occur in the immediate future and (ii) any liquidation
in which the estimated fair market values described above might
be realized would take an extended period of time (at least a
year, and quite possibly significantly longer), during which time
the Partnerships and their partners would continue to be exposed
to the risk of fluctuations in asset values because of changing
market conditions and other factors. For any property sale in
which the Partnerships are required to indemnify the buyer for
matters arising after the closing, a portion of the sales
proceeds could be held by such Partnership until all possible
claims were satisfied, further extending the delay in the receipt
by the Limited Partners of liquidation proceeds. Because of
these factors, McNeil Partners believes the actual current value
of the Units is substantially less than the hypothetical
liquidating distribution. Conversely, there is a substantial
likelihood that the value realized in an orderly liquidation
could be higher than the numbers referred to above. A reduction
in either operating expenses or capital expenditures from the
levels reflected in the property operating statements for the
fiscal year ended December 31, 1994 or the eight month period
ended August 31, 1995 would result in a higher liquidation value
under the method described above. Similarly, a high liquidation
value would result if a buyer applied a lower capitalization rate
to the applicable net operating income, reflecting a willingness
to accept a lower rate of return on its investment. An increase
or decrease in the value of the Partnerships' properties would
produce a corresponding increase or decrease in the liquidating
distribution to Limited Partners. Furthermore, the analysis
described above is based on a series of assumptions, some of
which may not be correct. Accordingly, this analysis should be
viewed merely as indicative of McNeil Partners approach to
valuing Units and not as in any way predictive of the likely
result of any future transactions.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT
COMPANY.
Items 7(a)-(b) are hereby supplemented by adding the
following:
Certain Negotiations and Discussions with Icahn and High River
On August 23, 1995, in connection with the action
commenced by High River against McNeil Partners in the United
States District Court of the Southern District of New York on
August 10, 1995, Robert A. McNeil and Carl C. Icahn met during
the course of Mr. McNeil's deposition at the offices of the High
River's counsel in New York. During such encounter, Mr. Icahn
and Mr. McNeil agreed to meet to discuss their differences and to
attempt to settle the outstanding litigation between the parties
and their affiliates.
As previously disclosed, late in the evening of August
24, 1995, Mr. Icahn, High River and McNeil Partners entered into
the letter agreement dated August 24, 1995 (as amended, the
"Letter Agreement"). The terms of the Letter Agreement provide,
among other things, that McNeil Partners was to facilitate and
allow High River to conduct customary and reasonable due
diligence in respect of McNeil Partners, the Partnerships and
their affiliates. In addition, High River and its affiliates
agreed (i) to use their best efforts to complete such due
diligence as promptly as practicable and, (ii) unless otherwise
required by law, rule or regulation, not to disclose any
documents or materials furnished to High River in respect of such
due diligence relating to or concerning McNeil Partners, the
Partnerships or their affiliates to any third party. Until
September 7, 1995, McNeil Partners and High River were to hold in
abeyance (i) all proceedings in the litigation between the
parties and their affiliates and (ii) any demands made by High
River or its affiliates for lists of limited partners, related
information and/or transfers of Units of the Partnerships.
Furthermore, pursuant to the Letter Agreement, McNeil Partners
had the absolute right, from time to time through the close of
business on September 6, 1995, to require High River to extend
and, upon receipt of written notice from McNeil Partners, High
River was to unconditionally extend, effective at 9:00 a.m. on
the next business day, the expiration date of the HR Offers and
High River was to, upon receipt of such notice, issue a press
release no later than the next business day announcing such
extension; provided, however, under no circumstances was McNeil
Partners to have the right to require High River to extend the
expiration date of the HR Offers beyond September 20, 1995.
Between August 24, 1995 and September 6, 1995,
representatives of Mr. Icahn and McNeil Partners held settlement
discussions regarding the outstanding litigation between High
River and the Partnerships. The representatives also engaged in
negotiations regarding possible transactions between the parties
and their affiliates, including McNeil Partners, McNeil Investors
and McREMI. The parties proposed transactions with different
structures and terms which, among other things, included the
sale of all of the outstanding stock of McNeil Investors and
McREMI, the sale by McNeil Investors of its general partner
interest in McNeil Partners, the sale by McNeil Partners and
McREMI of their advances and/or account receivables and the sale
by Mr. McNeil of certain of his limited partnership interests in
McNeil Partners. The proposed transactions would have resulted
in Mr. Icahn gaining control of McNeil Partners and, in turn, the
Partnerships.
On September 6, 1995, the discussions having continued
without resolution, McNeil Partners sent notice to High River
exercising its right set forth in the Letter Agreement to require
High River to extend the expiration date of each of the HR Offers
until September 20, 1995.
On September 7, 1995, High River issued a press release
announcing the extension of the HR Offers until September 20,
1995. In addition, the parties amended the Letter Agreement to
provide, among other things, that until September 11, 1995,
McNeil Partners had the absolute right to require High River to
extend, and High River was unconditionally obligated to extend,
the expiration date of each of the HR Offers until September 25,
1995.
The parties' representatives once again engaged in
negotiations and discussions regarding the proposed transaction
until September 11, 1995 when McNeil Partners sent a second
notice to High River exercising its right set forth in the Letter
Agreement to require High River to extend the expiration date of
each of the HR Offers until September 25, 1995. Late in the
evening of September 11, 1995, Mr. Icahn and his representatives
met with Mr. McNeils and their representatives at the offices of
Mr. Icahn's attorneys in New York in an attempt to facilitate the
negotiations and to discuss the terms of the proposed
transaction. The parties engaged in a constructive dialogue and
decided to have their representatives continue to have
discussions regarding the proposed transaction.
On September 12, 1995, High River issued a press
release announcing the extension of the HR Offers until September
25, 1995. In addition, the parties amended the Letter Agreement
to provide, among other things, that until September 14, 1995,
McNeil Partners had the absolute right to require High River to
extend, and High River was unconditionally obligated to extend,
the expiration date of each of the HR Offers until September 28,
1995.
The parties' representatives continued to engage in
negotiations and discussions until September 14, 1995 when McNeil
Partners sent a third notice to High River exercising its right
set forth in the Letter Agreement to require High River to extend
the expiration date of each of the HR Offers until September 28,
1995.
On September 15, 1995, High River issued a press
release announcing the extension of the HR Offers until September
28, 1995. In addition, the parties amended the Letter Agreement
to provide, among other things, that until September 18, 1995,
McNeil Partners had the absolute right to require High River to
extend, and High River was unconditionally obligated to extend,
the expiration date of each of the HR Offers until October 2,
1995.
The parties representatives continued to engage in
negotiations and discussions regarding the proposed transaction
until September 17, 1995 when McNeil Partners sent a fourth
notice to High River exercising its right set forth in the Letter
Agreement to require High River to extend the expiration date of
each of the HR Offers until October 2, 1995.
On September 19, 1995, High River issued a press
release announcing the extension of the HR Offers until October
2, 1995. In addition, the parties agreed, in the interest of
completing the negotiations without another extension of the
expiration date of the HR Offers, not to amend the terms of the
Letter Agreement, but to work continuously throughout the next
few days and nights to complete the proposed transaction.
Late in the evening on September 19, 1995, the parties
having not reached any resolution on the terms of the proposed
transaction, McNeil Partners terminated the parties' discussions.
On September 20, 1995, McNeil Partners issued a press release
announcing the termination of the discussions and that, as of
September 15, 1995, approximately six weeks after the HR Offers
were commenced, few units had been tendered to Mr. Icahn. McNeil
Partners also announced that it was contemplating making tender
offers at prices higher than offered by High River and Mr. Icahn.
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: September 29, 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
