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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: November 15, 1996
(Date of earliest event reported)
ENSTAR INCOME PROGRAM II-2, L.P.,
A GEORGIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
GEORGIA COMMISSION FILE: 58-1628872
(State or other jurisdiction 0-14505 (I.R.S. Employer identification No.)
of incorporation or
organization)
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 or about November 6, 1996, JJJ Group, L.L.C.
disseminated a letter stating their interest in acquiring up to
1,464 units of limited partnership interests in Enstar Income
II-2, L.P. (the "Registrant") for a price of $180 per unit, less
certain transaction costs. This offer was made without the
consent or involvement of the Registrant's Corporate General
Partner. The Corporate General Partner has considered this
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 November 15, 1996 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 AFFILIATES; 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 November 15, 1996.
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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-2, L.P.
a Georgia limited partnership
By: Enstar Communications Corporation
General Partner
Date: November 15, 1996. By: /s/ Michael K. Menerey
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Michael K. Menerey
Chief Financial Officer
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<TABLE>
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Sequentially
Numbered
Exhibit Description Page
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<S> <C> <C>
5.1 Letter to Limited 5
Partners dated
November 15, 1996
</TABLE>
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(Enstar Letterhead)
November 15, 1996
Dear Limited Partner:
Enstar Income Program II-2, Ltd. (the "Partnership") has become aware
that an unsolicited offer for up to 1,464 units (representing approximately
4.9% of the outstanding Units in the Partnership), at a price of $180 per Unit,
was commenced by JJJ Group, L.L.C. ("JJJ Group") in a letter dated November 6,
1996. This offer is in addition to a similar offer made by Everest Cable
Investors, L.L.C. ("Everest") commenced October 31, 1996. Neither the JJJ Group
offer nor the Everest offer was made with the consent or the involvement of the
Corporate General Partner.
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 interest to five percent of the outstanding units in any given
year. That limitation was reached during October 1996. ACCORDINGLY, NO FURTHER
RESALES OF UNITS, INCLUDING ANY ATTEMPTED SALES RELATED TO THE JJJ GROUP OFFER
OR THE EVEREST OFFER, WILL BE RECOGNIZED BY THE PARTNERSHIP FOR THE BALANCE OF
1996.
Notwithstanding the fact that no further resales of limited
partnership interests may be made in 1996, we are required to furnish you with
our position with respect to the JJJ Group offer pursuant to Rule 14e-2 under
the Securities Exchange Act of 1934. Accordingly, we have considered this
offer and, based on the very limited information made available by JJJ Group,
believe that it is inadequate and not representative of the inherent value of
the Partnership's cable systems. We previously wrote to you on November 7, 1996
advising you that the Corporate General Partner had reached the same conclusion
regarding the Everest offer.
In evaluating the JJJ Group offer, the Corporate General Partner
believes that its limited partners should consider the following information:
- - As discussed above, as of October 1, 1996 the Partnership informed its
Transfer Agent that, in order to protect its tax status as a
partnership for Federal income tax purposes, it will not recognize any
additional resales of limited partnership assignee units for the
remainder of 1996 in order to remain in compliance with applicable
Federal income tax regulations. Transfers to which the above trading
limit DOES NOT apply include (i) carryover basis transactions, (ii)
transfers at death, (iii) transfers between siblings, spouses,
ancestors or lineal descendants and (iv) distributions from a
qualified retirement plan.
- - The offering price for each limited partnership unit during the
offering period was $250 per unit. Cash distributions of approximately
$79 per unit were paid from formation through January 31, 1990, at
which time distributions were terminated to preserve cash resources. In
contrast, JJJ Group's offer is only $180 per unit. If JJJ Group is
successful in buying Units at the price in its offer, JJJ Group will
own units at much lower prices than virtually all of the current
partners and, 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)
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for the twelve months ended September 30, 1996 was approximately $48
per unit. The JJJ Group offer represents a valuation of only
approximately 2.6 times said cash flow (after adjustment for the excess
of current assets over total liabilities as of September 30, 1996).
- - This offer represents the second unsolicited offer to buy Partnership
Units. The prior offer to buy Units made on October 31, 1996 by a
different unaffiliated third party (Everest), was at a price of $150.
- - As of the date of this letter, the Corporate General Partner believes
that a reasonable range of valuation per limited partnership unit is
between $337 and $409 based on the factors noted below. The Corporate
General Partner believes that JJJ Group's offer price is inadequate
because it does not even approach the $337 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
twelve months ended September 30, 1996, 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 systems.
- - Furthermore, you should also be aware that there is a limited
secondary market for sale of partnership units. Partnership Spectrum,
an independent industry publication, has reported that between August
1, 1996 and September 30, 1996, 66 Units were sold on the secondary
market between a high of approximately $187 and a low of $150 per unit
between. The Corporate General Partner believes that the price for
units in the secondary market is not an accurate reflection of the
fair market value of such units due to the low volume of transactions
in that limited market and the legal and tax restrictions on such
transfers.
For the reasons discussed above, the Corporate General Partner
believes that the JJJ Group 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 JJJ Group 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-2, Ltd.
A Georgia Limited Partnership
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