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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
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SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
ANGELES INCOME PROPERTIES, LTD. IV,
A CALIFORNIA LIMITED PARTNERSHIP
(Name of Subject Company)
ANGELES INCOME PROPERTIES, LTD. IV,
A CALIFORNIA LIMITED PARTNERSHIP
(Name of Person(s) Filing Statement)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
N/A
(Cusip Number of Class of Securities)
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CARROLL D. VINSON
PRESIDENT
ANGELES REALTY CORPORATION II
ONE INSIGNIA FINANCIAL PLAZA
GREENVILLE, SOUTH CAROLINA 29602
(864) 239-2747
(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications on Behalf of
the person(s) filing statement)
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Angeles Income Properties, Ltd.
IV, a California limited partnership (the "Partnership"), and the address of
the principal executive offices of the Partnership is One Insignia Financial
Plaza, Greenville, South Carolina 29602. The title of the class of equity
securities to which this statement relates is the units of limited partnership
interest ("Units") of the Partnership.
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to an offer by Cooper River Properties,
L.L.C., a Delaware limited liability company (the "Purchaser"), to purchase up
to 50,000 of the outstanding Units at a purchase price of $75 per Unit, net to
the seller in cash, without interest, upon the terms and subject to the
conditions set forth in an Offer to Purchase dated August 12, 1998 (the "Offer
to Purchase") and related Assignment of Partnership Interest (which
collectively constitute the "Offer"). A Tender Offer Statement on Schedule
14D-1 with respect to the Offer has been filed by the Purchaser, Insignia
Properties, L.P., a Delaware limited partnership ("IPLP"), Insignia Properties
Trust, a Maryland real estate investment trust ("IPT") and Insignia Financial
Group, Inc., a Delaware corporation ("Insignia") (collectively, the "Bidders").
The address of the Purchaser's principal executive offices is One
Insignia Financial Plaza, Greenville, South Carolina 29602.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Partnership, which is the
person filing this statement, are set forth in Item 1 above.
(b)(1) The Partnership's general partner is Angeles Realty
Corporation II, a California corporation (the "General Partner") and an
affiliate of the Purchaser.
The General Partner of the Partnership is a direct, wholly-owned
subsidiary of Angeles Securitization Corporation ("ASC"), and IAP GP
Corporation ("IAP") owns all of the equity interests in ASC. IAP in turn is a
direct, wholly-owned subsidiary of IPT. The Purchaser is a recently formed,
wholly-owned subsidiary of IPLP, which is the operating partnership of IPT. IPT
is the sole general partner of IPLP (owning approximately 66% of the total
equity interests in IPLP), and Insignia is the sole limited partner of IPLP
(owning approximately 34% of the total equity interests in IPLP). Insignia and
its affiliates also own approximately 68% of the outstanding common shares of
IPT.
For more than the past three years, Insignia/ESG, Inc., formerly
known as Insignia Commercial Group, Inc. ("IESG"), which is an affiliate of
Insignia and the Purchaser, has provided property management services to the
Partnership, and Insignia (directly or through affiliates) has performed asset
management, partnership administration and investor relations services for the
Partnership.
By reason of the relationships described in the three preceding
paragraphs, the General Partner has conflicts of interest in considering the
Offer.
The Partnership paid IESG property management fees for property
management services in the amounts of approximately $131,000, $129,000 and
$171,000 for the years ended
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December 31, 1997, 1996 and 1995, respectively, and has paid IESG property
management fees equal to $68,000 during the first six months of 1998. The
Partnership reimbursed the General Partner and its affiliates (including
Insignia) for expenses incurred in connection with asset management and
partnership administration services performed by them for the Partnership for
the years ended December 31, 1997, 1996 and 1995 in the amounts of $197,000,
$242,000 and $334,000, respectively, and has reimbursed them for such services
in the amount of $88,000 through June 30, 1998. The reimbursement amounts for
the year ended December 31, 1997 and the six months ended June 30, 1998 include
$1,000 and $1,000, respectively, which amounts were paid to an affiliate of the
General Partner for costs incurred in connection with construction oversight
services. The Partnership paid $175,000 and $21,000 for the year ended December
31, 1997 and the six months ended June 30, 1998, respectively, to an affiliate
of the General Partner for commercial lease commissions. The reimbursement
amount for the six months ended June 30, 1998 includes $27,500 which was paid
to an affiliate of the General Partner for consulting services. For the period
January 1, 1996 through August 31, 1997, the Partnership insured its properties
under a master policy through an agency affiliated with the General Partner,
but with an insurer unaffiliated with the General Partner. An affiliate of the
General Partner acquired, in the acquisition of a business, certain financial
obligations from an insurance agency which was later acquired by the agent who
placed the current year's master policy. That agent assumed the financial
obligations to the affiliate of the General Partner who received payments on
these obligations from the agent. Insignia and the General Partner believe that
the aggregate financial benefit derived by Insignia and its affiliates from
such arrangement was immaterial.
As described above, the Purchaser and the General Partner are
affiliates of and controlled by IPT, which is controlled by Insignia. The
General Partner has conflicts of interest with respect to the Offer, including
conflicts resulting from its affiliation with IPT and the Purchaser. The
General Partner also would have conflicts of interest (i) as a result of the
fact that a sale or liquidation of the Partnership's assets would result in a
decrease or elimination of the fees paid to the General Partner and/or its
affiliates and (ii) as a consequence of the Purchaser's ownership of Units,
because the Purchaser (which is an affiliate of the General Partner) may have
incentives to seek to maximize the value of its ownership of Units, which in
turn may result in a conflict for the General Partner in attempting to
reconcile the interests of the Purchaser (which is an affiliate of the General
Partner) with the interests of the other Limited Partners. In addition, the
Purchaser (which is an affiliate of the General Partner) is making the Offer
with a view to making a profit. Accordingly, there is a conflict between the
desire of the Purchaser (which is an affiliate of the General Partner) to
purchase Units at a low price and the desire of the Limited Partners to sell
their Units at a high price.
As described in the Offer to Purchase, the Purchaser (which is an
affiliate of the General Partner) expects to pay for the Units it purchases
pursuant to the Offer with funds provided by IPLP as capital contributions.
IPLP in turn intends to use its cash on hand and, if necessary, borrowings from
its credit facility with a commercial bank and financial institution to make
such contributions. See Section 12 of the Offer to Purchase. It is possible,
however, that in connection with its future financing activities, IPT or IPLP
may cause or request the Purchaser (which is an affiliate of the General
Partner) to pledge the Units as collateral for loans, or otherwise agree to
terms which provide IPT, IPLP and the Purchaser with incentives to generate
substantial near-term cash flow from the Purchaser's investment in the Units.
This could be the case, for example, if a loan has a "balloon" maturity after a
relatively short time or bears a high or increasing interest rate. In such a
situation, the General Partner may experience a conflict of interest in seeking
to reconcile the best interests of the Partnership with the need of its
affiliates for cash flow from the Partnership's activities.
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If the Purchaser is successful in acquiring a significant number of
Units pursuant to the Offer, the Purchaser (which is an affiliate of the
General Partner) will have the right to vote those Units and thereby
significantly influence all voting decisions with respect to the Partnership,
including decisions concerning liquidation, amendments to the Limited
Partnership Agreement, removal and replacement of the General Partner or the
individual general partner and mergers, consolidations and other extraordinary
transactions. This means that (i) non- tendering Limited Partners could be
prevented from taking action they desire but that IPT (which is an affiliate of
the General Partner) opposes and (ii) IPT (which is an affiliate of the General
Partner) may be able to take action desired by IPT but opposed by the
non-tendering Limited Partners.
Under the Limited Partnership Agreement, Limited Partners holding a
majority of the Units are entitled to take action with respect to a variety of
matters, including removal of the General Partner and in certain circumstances
election of a new or successor general partner, dissolution of the Partnership,
and most types of amendments to the Limited Partnership Agreement. In general,
IPLP and the Purchaser (which are affiliates of the General Partner) will vote
the Units owned by them in whatever manner they deem to be in the best
interests of IPT, which, because of their relationship with the General
Partner, also may be in the best interest of the General Partner, but may not
be in the best interest of other Limited Partners.
To the best knowledge of the General Partner, except as described in
this Schedule 14D- 9, there are no other material agreements, arrangements,
understandings or any actual or potential conflicts of interest between the
Partnership, the General Partner and their affiliates and the Bidders, their
executive officers, directors or affiliates.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Because of the existing and potential future conflicts of interest
described in Item 3 above, the Partnership and the General Partner are
remaining neutral and making no recommendation as to whether Limited Partners
should tender their Units in response to the Offer.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Neither the Partnership nor any person acting on its behalf has
employed, retained or compensated, or intends to employ, retain or compensate,
any person or class of person to make solicitations or recommendation to
Limited Partners on its behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTEREST WITH RESPECT TO SECURITIES.
(a) Except as described in Schedule I attached hereto, no
transactions in the Units have been effected during the past 60 days by the
Partnership or the General Partner or, to the knowledge of the General Partner,
by any of its current or former executive officers, directors or affiliates.
(b) To the knowledge of the Partnership, neither the General Partner
nor any of its current or former executive officers, directors or affiliates
intends to tender pursuant to the Offer any Units beneficially owned by them.
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ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
None.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Litigation. On March 24, 1998, certain persons claiming to own
limited partner interests in certain limited partnerships (including the
Partnership) whose general partners (the "General Partners") are affiliates of
Insignia (the "Partnerships") filed a purported class and derivative action in
California Superior Court in the County of San Mateo (the "San Mateo
Complaint") against Insignia, the General Partners (including the General
Partner), certain persons and entities who purportedly formerly controlled the
General Partners, and additional entities affiliated with and individuals who
are officers, directors and/or principals of several of the defendants. The San
Mateo Complaint contains allegations that, among other things, (i) the
defendants breached their fiduciary duties to the plaintiffs by selling or
agreeing to sell their "fiduciary positions" as stockholders, officers and
directors of the General Partners for a profit and retaining said profit rather
than distributing it to the plaintiffs; (ii) the defendants breached their
fiduciary duties by mismanaging the Partnerships and misappropriating the
assets of the Partnerships by (a) manipulating the operations of the
Partnerships to depress the trading price of limited partnership units (the
"Units") of the Partnerships; (b) coercing and fraudulently inducing
unitholders to sell Units to certain of the defendants at depressed prices; and
(c) using the voting control obtained by purchasing Units at depressed prices
to entrench certain of the defendants' positions of control over the
Partnerships; and (iii) the defendants breached their fiduciary duties to the
plaintiffs by (a) selling assets of the Partnerships such as mailing lists of
unitholders; and (b) causing the General Partners to enter into exclusive
arrangements with their affiliates to sell goods and services to the General
Partners, the unitholders and tenants of Partnership properties. The San Mateo
Complaint also alleges that the foregoing allegations constitute violations of
various California securities, corporate and partnership statutes, as well as
conversion and common law fraud. The San Mateo Complaint seeks unspecified
compensatory and punitive damages, an injunction blocking the sale of control
of the General Partners to AIMCO and a court order directing the defendants to
discharge their fiduciary duties to the plaintiffs. As of the date of this
Offer to Purchase, defendants have not served or filed a reply to the San Mateo
Complaint. IPT and Insignia believe that the allegations contained in the San
Mateo Complaint are without merit and intend to vigorously contest the
plaintiffs' action.
On July 30, 1998, certain entities claiming to own limited
partnership interests in certain limited partnerships (including the
Partnership) whose general partners are affiliates of Insignia, IPT and the
Purchaser (the "Affiliated General Partners") filed a complaint in the Superior
Court of the State of California, County of Los Angeles (the "Los Angeles
Complaint") against Insignia, the Subject Partnerships (defined below), the
Affiliated General Partners (including the General Partner) and additional
entities affiliated with several of the defendants. The action involves 44 real
estate limited partnerships (each named as a defendant) in which the plaintiffs
allegedly own interests and which Insignia affiliates allegedly manage or
control (the "Subject Partnerships"). Plaintiffs allege that they have
requested from, but have been denied by each of the Subject Partnerships, lists
of their respective limited partners for the purpose of making tender offers to
purchase up to 4.9% of the units of limited partnership interest in each of the
Subject Partnerships. The Los Angeles Complaint also alleges that certain of
the defendants made tender offers to purchase units of limited partnership
interest in many of the Subject Partnerships, with the alleged result that
plaintiffs have been deprived of the benefits they would have realized from
ownership of the additional units. The plaintiffs assert eleven causes of
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action, including breach of contract, unfair business practices, and violations
of the partnership statutes of the states in which the Subject Partnerships are
organized. Plaintiffs seek compensatory, punitive and treble damages. Insignia
was only recently served with the Los Angeles Complaint and has not yet
responded to it. Insignia believes the claims to be without merit and intends
to defend the action vigorously.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) Form of cover letter to Limited Partners of the Partnership
dated August 12, 1998.
(b) None.
(c) None.
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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: August 12, 1998
Angeles Income Properties, Ltd. IV,
a California limited partnership
By: Angeles Realty Corporation II,
its General Partner
By: /s/ Carroll D. Vinson
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Carroll D. Vinson
President
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SCHEDULE I
TRANSACTIONS IN THE UNITS
EFFECTED BY IPLP WITHIN THE PAST 60 DAYS
Number of Price
DATE Units Purchased Per Unit
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6/17/98 14.00 $63.60
6/22/98 60.00 60.00
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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(a) Form of cover letter to Limited Partners from the Partnership
dated August 12, 1998.
(b) None.
(c) None.
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Exhibit (a)
Angeles Income Properties, Ltd. IV
August 12, 1998
Dear Limited Partner:
Enclosed is the Schedule 14D-9 which was filed by Angeles Income
Properties, Ltd. IV (the "Partnership") with the Securities and Exchange
Commission in connection with an offer (the "Offer") by Cooper River
Properties, L.L.C., a Delaware limited liability company (the "Purchaser"),
Insignia Properties, L.P., a Delaware limited partnership ("IPLP"), Insignia
Properties Trust, a Maryland real estate investment trust ("IPT"), and Insignia
Financial Group, Inc., a Delaware corporation ("Insignia," and together with
IPLP, IPT and the Purchaser, the "Bidders"), to purchase units of limited
partnership interest ("Units") in the Partnership.
The Partnership's general partner is Angeles Realty Corporation II
(the "General Partner"), which is an affiliate of the Bidders. Due to the
affiliation between the General Partner of the Partnership and the Bidders, the
General Partner is subject to certain conflicts of interest in connection with
the response to the Offer.
AS A RESULT OF THE EXISTING AND POTENTIAL CONFLICTS OF INTEREST,
NEITHER THE PARTNERSHIP NOR THE GENERAL PARTNER EXPRESSES ANY OPINION AS TO THE
OFFER AND EACH IS REMAINING NEUTRAL AND MAKING NO RECOMMENDATION AS TO WHETHER
LIMITED PARTNERS SHOULD TENDER THEIR UNITS IN RESPONSE TO THE OFFER.
Limited Partners are advised to carefully read the enclosed Schedule
14D-9.
Angeles Income Properties, Ltd. IV
