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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report: December 10, 1998
(Date of earliest event reported)
ENSTAR INCOME PROGRAM II-1, L.P.,
a Georgia limited partnership
(Exact name of registrant as specified in its charter)
Georgia Commission File: 58-1628877
(State or other jurisdiction 0-14508 (I.R.S. Employer
of incorporation or organization) identification No.)
10900 Wilshire Boulevard, 15th Floor
Los Angeles, California 90024
(Address of principal executive offices, including zip code)
(310) 824-9990
(Registrant's phone number, including area code)
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Item 5. Other Events
On November 23, 1998, Sierra Fund 4, L.L.C. disseminated
a letter stating its interest in acquiring up to 4.9% of the
outstanding units of limited partnership interests in Enstar
Income Program II-1, L.P. (the "Registrant") for a price of $200
per unit. This offer was made without the consent or involvement
of the Registrant's Corporate General Partner. The Corporate
General Partner has considered the offer, concluded that it is
inadequate and, accordingly, recommended that limited partners
not accept the offer. Pursuant to Rule 14e-2 promulgated under
the Securities Exchange Act of 1934, as amended, this
recommendation and the Corporate General Partner's bases therefor
were conveyed to limited partners in a letter dated December 10,
1998 which is filed as an exhibit hereto and incorporated herein
by this reference.
Forward-looking statements contained or referred to in
this report are made pursuant to the safe harbor provisions of
Section 21E of the Securities Exchange Act of 1934, as amended.
Investors are cautioned that such forward-looking statements
involve risks and uncertainties including, without limitation,
the effects of legislative and regulatory changes; the potential
of increased levels of competition for the Partnership;
technological changes; the Partnership's dependence upon
third-party programming; the absence of unitholder participation
in the governance and management of the Partnership; the
management fees payable to the Corporate General Partner; the
exoneration and indemnification provisions contained in the
Partnership agreement relating to the Corporate General Partner;
other potential conflicts of interest involving the Corporate
General Partner and its affiliate; and other risks detailed from
time to time in the Partnership's Annual Report on Form 10-K and
other periodic reports filed with the Commission.
Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits
(c) Exhibits
5.1 Letter to Limited Partners dated December 10, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Enstar Income Program II-1, L.P.
a Georgia limited partnership
Date: December 10, 1998. By: /s/ Michael K. Menerey
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Michael K. Menerey
Executive Vice President,
Chief Financial Officer and
Secretary
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Sequentially
Numbered
Exhibit Description Page
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5.1 Letter to Limited 5
Partners dated
December 10, 1998
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(Enstar Letterhead)
December 10, 1998
Dear Limited Partner:
Enstar Income Program II-1, L.P. (the "Partnership") has become aware
that an unsolicited offer for up to 4.9% of the outstanding Units in the
Partnership, at a price of $200 per Unit, was commenced by Sierra Fund 4, LLC
("Sierra Fund"). This offer was made without the consent or the involvement of
the Corporate General Partner.
Pursuant to rule 14e-2 under the Securities Exchange Act of 1934, we
are required to furnish you with our position with respect to the Sierra Fund
offer. We have considered this offer and, based on the very limited information
made available by Sierra Fund, believe that it is inadequate, not representative
of the inherent value of the Partnership's cable systems and not in your best
interest to accept. Accordingly, the Corporate General Partner's recommendation
is that you reject the offer. We urge you not to sign the Agreement of
Assignment and Transfer that Sierra Fund sent to you and not to tender your
Units to Sierra Fund. In evaluating the offer, the Corporate General Partner
believes that its limited partners should consider the following information:
o The offering price for each limited partnership Unit during the offering
period was $250 per Unit. Cash distributions of approximately $172.04 per
Unit were paid from formation through September 30, 1998. The Partnership
expects to continue to pay quarterly distributions to Unitholders during
1998 at the annualized rate of five percent. Sierra Fund's offer is only
$200 per Unit. If Sierra Fund is successful in buying Units at the price in
its offer, it will own Units, in our view, for much less than they are
worth. Limited partners should note that the Partnership's cash flow
(operating income before depreciation and amortization) for the trailing
twelve months ended September 30, 1998 was approximately $45.89 per Unit.
The Sierra Fund offer represents a valuation of only approximately 3.14
times said cash flow (after adjustment for the excess of current assets
over total liabilities as of September 30, 1998).
o As of the date of this letter, the Corporate General Partner believes that
a reasonable range of valuation per limited partnership Unit is between
$350 and $430 based on the factors noted below. The Corporate General
Partner believes that the Sierra Fund offer is inadequate because it does
not even approach the $350 low end of the range provided. The Corporate
General Partner did not retain a third party to conduct an evaluation of
the Partnership's assets or otherwise obtain any appraisals. Rather, the
per Unit valuations provided were derived by attributing a range of
multiples to the Partnership's cash flow (operating income before
depreciation and amortization) for the trailing twelve months ended
September 30, 1998, adjusted for the excess of current assets over total
liabilities. The Corporate General Partner has selected market multiples
based on, among other things, its understanding of the multiples placed on
other transactions involving comparable cable television properties and the
securities of companies in that industry. The Corporate General Partner's
belief as to the valuation range provided is necessarily based on economic,
industry and financial market conditions as they exist as of the date of
this letter, all of which are subject to change, and there can be no
assurance that the Partnership's cable properties could actually be sold at
a price within this range. Additionally, the valuations provided do not
give effect to any brokerage or other transaction fees that might be
incurred by the Partnership in any actual sale of the Partnership's system.
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Furthermore, one of the obligations of the Corporate General Partner is
to endeavor to preserve the status of the Partnership as a partnership under
Federal income tax laws. Failure to maintain this status could have a material
adverse effect on the Partnership and its partners. Among the related legal
requirements imposed upon the Partnership is that its partnership interests not
be traded in an established securities market. As it believes is customary, the
Partnership complies with this requirement by adhering to a safe harbor
provision contained in the Federal income tax regulations which limits most
sales of limited partnership interests to five percent of the outstanding units
in any given year. After five percent of the outstanding Units have been
transferred in 1998, no further resales of Units, including any attempted sales
related to the Sierra Fund offer, will be recognized by the Partnership for the
balance of 1998.
For the reasons discussed above, the Corporate General Partner believes
that the Sierra Fund offer is not in the best interest of the limited partners
and recommends that you NOT transfer, agree to transfer, or tender any Units in
response to the Sierra Fund offer.
If you have any questions regarding these matters or your investment,
please call our Investor Services Department at (800) 433-4287.
Sincerely,
Enstar Income Program II-1, L.P.
A Georgia Limited Partnership
cc: Account Representative
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