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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)*
MISSION WEST PROPERTIES
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(Name of Issuer)
Common Stock, no par value
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(Title of Class of Securities)
60520010
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(CUSIP Number)
Michael E. Tennenbaum
1999 Avenue of the Stars
32nd Floor
Los Angeles, CA 90067
(310) 201-7882
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 9, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the box [_].
Check the following box if a fee is being paid with the statement [_]. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
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CUSIP NO. 60520010
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Michael E. Tennenbaum
SS No. ###-##-####
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4
PF
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(d) OR 2(e) [_]
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
UNITED STATES
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SOLE VOTING POWER
7
NUMBER OF
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
157,300 SHARES
OWNED BY
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EACH SOLE DISPOSITIVE POWER
9
REPORTING
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
157,300 SHARES
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
157,300 shares
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [_]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
11.5%
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TYPE OF REPORTING PERSON*
14
IN
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SCHEDULE 13D
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CUSIP NO. 60520010
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
TENNENBAUM & CO., LLC
95-4587347
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4
WC
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(d) OR 2(e) [_]
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
DELAWARE
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SOLE VOTING POWER
7
NUMBER OF 157,300 SHARES
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY
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EACH SOLE DISPOSITIVE POWER
9
REPORTING 157,300 SHARES
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
157,300 SHARES
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [_]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
11.5%
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TYPE OF REPORTING PERSON*
14
CO
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PRELIMINARY NOTE
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The persons filing this Amendment No. 3 are (i) Michael E. Tennenbaum
and (ii) Tennenbaum & Co., LLC, a Delaware limited liability company.
This Amendment No. 3 amends a Statement on Schedule 13D filed by Mr.
Tennenbaum and Tennenbaum & Co., LLC on July 11, 1996 (the "Original
Statement"). The filing of this Amendment No. 3 should not be deemed
an admission that Mr. Tennenbaum and Tennenbaum & Co., LLC comprise a
group within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended.
This Amendment No. 3 relates to the common stock, no par value (the
"Common Stock"), of Mission West Properties (the "Company"), which, to
the best knowledge of the persons filing this Amendment No. 3, is a
company organized under the laws of the State of California, with its
principal executive offices located at 6815 Flanders Drive, Suite 250,
San Diego, California 92121-3914.
Other than as set forth below, to the best knowledge of Mr. Tennenbaum
and Tennenbaum & Co., LLC, there has been no material change in the
information set forth in response to Items 1, 2 and 6 of the Original
Statement, as amended. Accordingly, those Items are omitted from this
Amendment No. 3.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
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The shares of Common Stock of the Company purchased by Tennenbaum &
Co., LLC since the date of the reporting persons' most recent filing
on Schedule 13D were purchased with funds, aggregating $39,125.00,
which were provided from working capital of Tennenbaum & Co., LLC.
ITEM 4. PURPOSE OF TRANSACTION
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On July 1, 1996, the Company announced an agreement for the sale of
substantially all of its assets to DMB/SVP California Investments, LLC
("DMB/SVP"). Tennenbaum & Co., LLC has taken a position opposed to
the sale of the Company's assets to DMB/SVP and has communicated such
opposition to the Company and to Triton Group Ltd. ("Triton"). The
reporting persons believe, based on the Company's most recent
available filing with the Securities and Exchange Commission, that
Triton holds 49.3% of the outstanding shares of Common Stock of the
Company. Tennenbaum & Co., LLC has communicated and may in the future
communicate with the Company and Triton in an effort to resolve the
differences between them and has made a conditional proposal to
purchase Triton's shares of Common Stock of the Company at a price of
$8 per share. In furtherance of the foregoing, Tennenbaum & Co., LLC
had executed a confidentiality agreement to permit Tennenbaum & Co.,
LLC access to nonpublic information of the Company. However, the
Company refused to agree to the terms of the confidentiality agreement
as proposed, which prompted Tennenbaum & Co., LLC to withdraw its
offer to enter into such agreement.
By letter dated August 9, 1996, Tennenbaum & Co., LLC demanded that
the Company exercise its rights pursuant to the agreement with DMB/SVP
not to proceed with the proposed sale of the Company's assets to
DMB/SVP. A copy of such letter is attached hereto as Exhibit B.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
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(a) As of the date hereof, Tennenbaum & Co., LLC may be deemed to be
the beneficial owner of an aggregate of 157,300 shares of Common
Stock of the Company, which constitutes approximately 11.5% of
the outstanding shares of
Page 4
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Common Stock of the Company, based upon the Company's most recent
available filing with the Securities and Exchange Commission.
By reason of his position as managing member of Tennenbaum & Co.,
LLC, Mr. Tennenbaum, as of the date hereof, may be deemed to be
the beneficial owner of an aggregate of 157,300 shares of Common
Stock of the Company, which constitutes approximately 11.5% of
the outstanding shares of Common Stock of the Company, based upon
the Company's most recent available filing with the Securities
and Exchange Commission.
(b) Tennenbaum & Co., LLC has the sole power of voting and
disposition with respect to 157,300 shares of Common Stock of the
Company.
By reason of his position as managing member of Tennenbaum & Co.,
LLC, Mr. Tennenbaum may be deemed to share powers of voting and
disposition with respect to 157,300 shares of Common Stock of the
Company.
(c) Set forth on Exhibit A, attached hereto, is information
concerning all transactions in the Company's Common Stock by
Tennenbaum & Co., LLC that were effected since the filing
persons' most recent filing on Schedule 13D and ended on the date
hereof. No transactions in the Company's Common Stock were
effected by Mr. Tennenbaum individually since the filing persons'
most recent filing on Schedule 13D.
(d) Not applicable.
(e) Not applicable.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
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Exhibit A Transactions in Common Stock of the Company.
Exhibit B Letter from Tennenbaum & Co., LLC to Mission West
Properties dated August 9, 1996.
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SIGNATURE
Each of Michael E. Tennenbaum and Tennenbaum & Co., LLC, after
reasonable inquiry and to the best of each's knowledge and belief, hereby
certifies that the information set forth in this statement is true, complete and
correct.
August 9, 1996
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Date
/s/ MICHAEL E. TENNENBAUM
-----------------------------------
Michael E. Tennenbaum
TENNENBAUM & CO., LLC
By: /s/ MICHAEL E. TENNENBAUM
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Michael E. Tennenbaum
Managing Member
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EXHIBIT A
Transactions by Tennenbaum & Co., LLC in Common Stock of Mission West
Properties since July 26, 1996
<TABLE>
<CAPTION>
NUMBER OF
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SHARES
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DATE PURCHASED PRICE PER SHARE COST
---- --------- --------------- ----------
<S> <C> <C> <C>
July 30, 1996 1,000 $7-7/8 $ 7,925.00
1,000 7-3/4 7,800.00
July 31, 1996 3,000 7-7/8 23,400.00
TOTAL 5,000 $39,125.00
</TABLE>
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Exhibit B
Tennenbaum & Co., LLC
1999 Avenue of the Stars
Los Angeles, California 90067
______
(310) 201-7882
Facsimile (310) 201-2752
August 9, 1996
Board of Directors
Mission West Properties
6815 Flanders Drive
Suite 250
San Diego, California 92121-3914
Re: Proposed Sale of Assets to DMB/SVP California Investments
Gentlemen:
This letter is our formal demand that the Company exercise its rights not
to proceed with the proposed sale of the Company's real estate assets to DMB/SVP
California Investments. The obligations of the Company are subject to the
receipt of stockholder approval for this transaction on or before August 14,
1996 or such later date as may be approved by the parties. Stockholder approval
will not and cannot be obtained by August 14, as notice of the meeting has not
even been mailed. Under the present circumstances agreement to an extension of
this deadline would be manifestly improper. Further, the Agreement with DMB/SVP
contains no obligation on the part of the Company to proceed with a meeting at
any time. To do so would be a dereliction of the duties of directors unless the
board were satisfied that this transaction is the best available alternative for
the stockholders -- a determination which could not be made under present
---
circumstances.
Decisions of the Delaware Supreme Court clearly establish that a board of
directors approving a sale of substantially all of the assets of a corporation,
in addition to the normal prerequisites of the business judgement rule: due
care, lack of conflicting interests, good faith and loyalty, must be prepared to
bear the burden of demonstrating
. that the directors have obtained and considered all material
information reasonably available to them and
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Board of Directors
Mission West Properties
August 9, 1996
Page 2
. that they have acted reasonably in determining that the transaction
affords the highest value to stockholders reasonably attainable.
We are aware that the Company is a California, not a Delaware, corporation.
Not only is it likely that the California courts will follow the Delaware rule,
however, but we cannot imagine that the directors of the Company would assert
that they are bound to follow any but the highest standards of corporate
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conduct.
Whatever may have been the directors' belief when the DMB/SVP Agreement was
entered into, it is clear that a decision to proceed at this time could not
possibly satisfy the applicable legal standards. Tennenbaum & Co., has
instructed its counsel to take all appropriate actions to enforce its rights,
and those of the other public stockholders, against any director who does not
fulfill his legal responsibilities.
As a holder of over 10% of the Company's stock, Tennenbaum & Co. has no
interest in this matter other than maximization of the value of the
shareholders' interests. It is clear to us that this cannot be accomplished by
the proposed transaction and that the procedures followed by the Company could
not stand the test of legal scrutiny. The following are only some of the
glaring defects in the proposal, as reflected in the Company's preliminary proxy
statement:
Director Conflicts. It is obvious that a majority of the board of
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directors has seriously conflicting interests and fiduciary obligations in this
matter. Three of the directors (Messrs. Early, Foletta and Tartre) are also
officers and/or directors of the Company's 49% stockholder, Triton Group, and
owe a fiduciary duty to that corporation. Triton Group has only recently
emerged from bankruptcy and is committed to the liquidation of its assets. Its
interests are plainly not the same as the public stockholders of the Company;
and the Triton directors have acknowledged as much in stating that they are
leaving the decision as to whether to proceed with the DMB/SVP Agreement in the
hands of the other directors of the Company. A fourth director (Mr. Kasun) is
married to an employee of an affiliate of the purchaser, and the preliminary
proxy statement acknowledges the resulting conflict of interest on Mr. Kasun's
part. That leaves only two directors who appear to be independent in the
matter; and one of them is opposed to the transaction!
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Absence of Qualified Expert Advice. Notwithstanding the pervasive
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conflicts of interest on the part of the Company's directors, the Company did
not obtain the assistance of a qualified real estate expert in connection with
this transaction, and the opinion obtained from Slusser Associates (whose
qualifications are not disclosed in the preliminary proxy statement, but which
we believe is not a real estate firm) is fatally flawed. The Slusser opinion
states that that firm performed no appraisal of the Company's assets. While
this may be acceptable in a typical investment banking opinion on a transaction
in which real estate comprises only a fraction of the
<PAGE>
Board of Directors
Mission West Properties
August 9, 1996
Page 3
assets involved, it is completely unacceptable in the case of a company whose
only assets are real estate. Further, the opinion is expressly premised on the
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understanding that "substantially all of the proceeds ... will be distributed to
the Shareholders of Mission West", an understanding that is directly
contradictory to the disclosure in the preliminary proxy statement that the
Company only intends to "consider" making a distribution to stockholders.
Finally, the preliminary proxy statement discloses that the fee to Slusser is
partly contingent upon the closing of the DMB/SVP transaction; clearly Slusser
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has a financial interest in completion of the transaction.
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Failure to Consider all Qualifed Proposals. Information which has come to
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our attention leads us to believe that the Company refused to discuss a
potential transaction with at least two well-qualified potential buyers who had
an interest in doing so. Please see the enclosed letter from FGH Investments as
one example.
The Sale Price is Unfair. The form of the transaction, i.e., a bulk sale,
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unfairly discounts the value that could be realized if the properties are sold
one-by-one. In addition, the timing of the transaction for non-Triton
shareholders is poor. Leasing activity and rental rates are improving in the
Company's markets and several institutional real estate buyers are bidding up
valuations. The Company is clearly selling in front of recovering markets,
before it has had a chance to fully lease its buildings and capture additional
value.
Absence of Independent Counsel. It seems evident from the preliminary
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proxy statement that the independent directors of the Company did not have the
benefit of independent counsel.
As we have advised the directors, based upon our extensive real estate
experience and specific knowledge of the Company's properties, we strongly
believe that substantially higher values for shareholders can be achieved if the
Company disposes of its assets in individual transactions through an orderly
process over time, while aggressively managing them to be certain that their
value is maximized. The proposed wholesale liquidation will result in a
significant discount to intrinsic value.
We wish to be constructive in proposing a method to resolve our differences
without the necessity of legal action; and to that end, we would propose the
following to you: Tennenbaurm & Co. is willing to participate with the Company
in submitting to a mutually acceptable, independent, qualified, firm with
genuine real estate expertise all relevant information concerning the proposed
transaction and the value of the Company's properties. If such firm determines
that the proposed transaction is consistent with the objective of maximizing
stockholder value, we will accept that conclusion. If, however, the firm
determines that stockholder value would better be maximized by not proceeding
with this transaction, we would expect the Company to promptly exercise its
legal rights not to proceed with the DMB/SVP transaction.
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Board of Directors
Mission West Properties
August 9, 1996
Page 4
We look forward to your response at the earliest practicable time.
Sincerely yours,
TENNENBAUM & CO., LLC
By: /s/ MICHAEL E. TENNENBAUM
-----------------------------------------
Michael E. Tennenbaum
Managing Member
MET/gsf
Encl.
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[LETTERHEAD OF FGH INVESTMENTS]
August 6, 1996
Mr. Michael Tennenbaum
Tennenbaum & Co., LLC
1999 Avenue of the Stars
Los Angeles, Ca. 90067
Dear Mr. Tennenbaum,
As we discussed, set forth below is a brief summary of our involvement with
Mission West Properties Inc.
In December 1995, I was introduced to Gregory Kasun by telephone from the
offices of Rogers & Wells. In that conversation I expressed an interest in the
acquisition of the assets of or a merger with Mission West Properties. Mr. Kasun
forwarded public materials to me but did not return numerous follow up calls.
Later in December I spoke to Peter Slusser of Slusser Associates with the same
result and concluded that the company must not be interested in a sale.
On June 25, 1996, I made an offer to purchase the shares of Mission West
Properties held by Triton Group Ltd., which offer was declined.
I was shocked to later learn that the company's assets were being sold at what
appears to be a favorable price to a purchaser who hired Kasun's wife as its
Chief Financial Officer. Based on the above and subsequent conversations with
Byron Webb and Peter Slusser I can only draw the conclusion that little if any
effort was made to maximize the value to the shareholders.
I own 10,100 shares of Mission West stock and continue to be interested in the
purchase of the assets or potentially the company. I have received the
confidentiality agreement and am evaluating my alternatives.
Sincerely,
/s/ W. Monsees Stubbs, Jr.
W. Monsees Stubbs, Jr.
WMS/kss
