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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 7, 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
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 or about October 31, 1996, Everest Cable Investors, L.L.C.
disseminated a letter stating its interest in acquiring up to 1,464 units of
limited partnership interests in Enstar Income Program II-2, L.P. (the
"Registrant") for a price of $150 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 7, 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; AND 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 7, 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 7, 1996. By: /s/ Michael K. Menerey
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Michael K. Menerey
Chief Financial Officer
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5.1 Letter to Limited Partners dated
November 7, 1996 5
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Exhibit 5.1
(Enstar Letterhead)
November 7, 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 $150 per Unit,
was commenced by Everest Cable Investors, L.L.C. ("Everest") in a letter dated
October 31, 1996. This offer was made without 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 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 Everest offer pursuant to Rule 14e-2 under the
Securities and Exchange Act of 1934. Accordingly, we have considered this offer
and, based on the very limited information made available by Everest, believe
that it is inadequate and not representative of the inherent value of the
Partnership's cable systems.
In evaluating the offer, the Corporate General Partner believes that
its limited partners should consider the following information:
o 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.
o The offering price for each limited partnership unit during the offering
period was $250 per unit. Cash distributions of approximately $79.38 per
unit were paid from formation through January 31, 1990, at which time
distributions were terminated to preserve cash resources. In contrast,
Everest's offer is only $150 per unit. If Everest is successful in buying
Units at the price in its offer, Everest 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) for the twelve months ended September 30, 1996 was
approximately $48 per unit. The Everest offer represents a valuation of
only approximately 2.0 times said cash flow (after adjustment for the
excess of current assets over total liabilities as of September 30, 1996).
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
$337 and $409 based on the factors noted below. The Corporate General
Partner believes that Everest'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
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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.
o Based on the information received by the Corporate General Partner, the
$150 per unit offer by Everest is less than the price for which limited
partnership units were recently sold on the secondary market. Partnership
Spectrum, an independent industry publication, has reported that between
June 1, 1996 and July 31, 1996, 320 units were sold on the secondary market
between a high of $190 per unit and a low of $165 per unit. In the
Corporate General Partner's opinion, the fact that the Everest offer is
being made at a discount from the most recent secondary market price
available to the Corporate General Partner only serves to underscore the
inadequacy of the Everest offer. In addition, 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 Everest 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 Everest's 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
cc: Account Representative
