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As filed with the Securities and Exchange Commission on May 6, 1998
Commission File No. 0-13563
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
Pursuant to
SECTION 14(d)(4) of
THE SECURITIES EXCHANGE ACT OF 1934
DAMSON/BIRTCHER REALTY INCOME FUND-II
(Name of Subject Company)
DAMSON/BIRTCHER REALTY INCOME FUND-II
(Name of Person(s) Filing Statement)
LIMITED PARTNERSHIP INTERESTS
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
David Wohlberg, Esq.
Troy & Gould Professional Corporation
1801 Century Park East, Suite 1600
Los Angeles, California 90067
(310) 553-4441
(Name, address and telephone number of person authorized to
receive notice and communications on behalf of the
person(s) filing statement)
1.
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ITEM 1. SECURITY AND SUBJECT COMPANY
This statement relates to the limited partnership interests
("Interests") of Damson/Birtcher Realty Income Fund II, a Delaware Limited
Partnership (the "Partnership"), whose principal executive offices are located
at 27611 La Paz Road, P.O. Box A-1, Laguna Niguel, California 92677-0100.
ITEM 2. TENDER OFFER OF THE BIDDER
This statement relates to a tender offer (the "Offer") by Grape
Investors, LLC, a Delaware Limited Liability Company ("Grape Investors"), whose
principal executive offices are located at 1650 Hotel Circle North, Suite 200,
San Diego, California 92108.
ITEM 3. IDENTITY AND BACKGROUND
(a) This statement is being filed by the Partnership, whose business
address is 27611 La Paz Road, Laguna Niguel, California 92656.
(b) In March of 1997, the Partnership's limited partners consented to
dissolve the Partnership and liquidate its remaining properties. Since that
time, the Partnership has reviewed and considered certain possible transactions
to accomplish the liquidation of its properties and the winding up of the
Partnership. On April 30, 1998, the General Partner accepted an offer to
purchase all of the Partnership's properties. The accepted offer anticipates
closing in approximately 60-90 days, and is subject to certain customary
contingencies, including due diligence review by the purchaser and negotiation
of a definitive purchase and sale agreement. More details of the accepted offer
are set forth in the letter to limited partners attached as an exhibit to this
schedule and incorporated herein by reference. Limited partners who tender to
Grape Investors will not receive any proceeds from the eventual sale and
liquidation of the Partnership's properties or any distributions from operations
pending completion of the liquidation.
In its Schedule 14D-1 dated April 21, 1998 (the "Schedule 14D-1") filed
with the Securities and Exchange Commission (the "Commission"), Grape Investors
represents that it believes that there are a number of qualified purchasers that
would purchase all of the Partnership's property in a single transaction. Grape
Investors states in the Schedule 14D-1 that it intends to encourage the
Partnership's general partner to pursue a potential sale of the Partnership's
properties in a "controlled auction." Grape Investors does not state in the
Schedule 14D-1 whether it believes an auction would result in the optimal sales
price, but the Schedule 14D-1 notes that, in Grape Investor's view, the purchase
price offered by Grape Investors "could differ significantly from the net
proceeds that would be realized from a current sale of the Properties owned by
the Partnership or from that which may be realized upon future liquidation of
the Partnership."
The Partnership believes that Grape Investors' intention that the
Partnership auction the properties conflicts with the Partnership's obligations
under the accepted offer to purchase all of the Partnership's properties and its
ongoing attempts to sell and liquidate the Partnership's properties.
Grape Investors also states in the Schedule 14D-1 that "if the General
Partner does not pursue these options" Grape Investors is considering actions
which may include assembling a group of 10 percent of the Limited Partners in
order to call a meeting of the Limited Partners to replace the Partnership's
general partner in order to pursue a controlled auction of the Partnership's
properties.
2.
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Other than with respect to the advisability of immediately auctioning
the Partnership's properties as a portfolio and any possible future attempt by
Grape Investors to remove the Partnership's general partner, the Partnership
also is not aware of any actual or potential conflict between Grape Investors
and the Partnership's general partner or its other affiliates.
There is no material contract, agreement, arrangement or understanding
between the Partnership and Grape Investors.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) The Partnership recommends that limited partners reject the Offer.
(b) The Partnership's recommendation that limited partners reject the
Offer is based on the factors set forth in the letter to limited partners
attached as an exhibit to this Schedule and incorporated herein by reference.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Partnership has retained EquiNet Fund Administrators, Inc. of
Dallas, Texas, to provide investor relations services to the Partnership. As
part of its ongoing services, Equinet Fund Administrators, Inc. will be
available to respond to inquiries about the Offer at (888) 387-5387. EquiNet
Fund Administrators, Inc. will make no solicitation or recommendation with
respect to the Offer and will not be specifically compensated for responding to
inquiries relating to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) Not applicable.
(b) Certain family members of the partners of the Partnership's general
partner own Interests representing less than 1% of all outstanding Interests. To
the Partnership's knowledge, these individuals currently intend to hold their
Interests and to not tender them in response to the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) There is no negotiation undertaken or underway by the Partnership's
general partner or the Partnership in response to the Offer.
(b) See the information in Item 3(b) of this Schedule regarding the
possible sale and liquidation of the Partnership's properties currently
underway, which information is incorporated herein by reference.
3.
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ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
(a) Not applicable.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
(a) 99.1 Letter dated May 6, 1998 to the limited partners of the
Partnership.
(b) Not applicable.
(c) Not applicable.
4.
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Signature, After reasonable inquiry and to the best of my knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
DAMSON/BIRTCHER REALTY INCOME FUND II,
a Delaware limited partnership
By: BIRTCHER/LIQUIDITY PROPERTIES
General Partner
Damson/Birtcher Realty Income Fund II
By: BIRTCHER INVESTORS,
a California general partnership
By: BIRTCHER INVESTMENTS,
a California general partnership,
General Partner of Birtcher Partners
By: BIRTCHER LIMITED,
a California limited partnership,
General Partner of Birtcher Investments
By: BREICORP,
a California corporation,
formerly known as Birtcher Real
Estate Inc., General Partner of
Birtcher Limited
By: /s/ Robert M. Anderson
-----------------------------
Robert M. Anderson
Executive Director
BREICORP
Date: May 6, 1998
By: LF Special Fund I, L.P.,
a California limited partnership
By: Liquidity Fund Asset Management, Inc.,
a California corporation,
General Partner of LF Special Fund I, L.P.
By: /s/ Brent R. Donaldson
------------------------------
Brent R. Donaldson
President
Liquidity Fund Asset Management, Inc.
Date: May 6, 1998
5.
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EXHIBIT 99.1
BIRTCHER/LIQUIDITY PROPERTIES
27611 La Paz Road
Laguna Niguel, California 96656
May 6, 1998
Dear Limited Partner:
Birtcher/Liquidity Properties (the "General Partner") has become aware
that Grape Investors, LLC ("Grape") has recently sent an unsolicited tender
offer to the limited partners of Damson/Birtcher Realty Income Fund-II, L.P.
(the "Partnership") to purchase approximately 10% of the Partnership's
outstanding limited partnership interests for approximately $450 per $1,000 of
original subscription amount (the "Offer"), reduced by any transfer fees and any
Partnership distributions made to you after February 28, 1998.
The General Partner recommends that you reject the Offer. The General
Partner believes that each limited partner should be aware of the factors listed
below in making a decision whether to tender to Grape. The factors that the
General Partner believes to be significant are:
o On April 30, 1998, the General Partner accepted an
offer to purchase all of the Partnership's
Properties for $33,680,000 (the "Purchase Offer"),
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Limited Partner
May 6, 1998
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an amount greater than the most recent appraised value of the
properties and more than the high end of the range previously
discussed in the 1997 Consent Solicitation. The Purchase Offer
anticipates closing in approximately 60-90 days, and is subject
to certain customary contingencies, including due diligence
review by the purchaser and negotiation of a definitive purchase
and sale agreement. Although there can be no assurance that the
proposed sale of the properties will be completed, if the sale is
completed at the stated price, the limited partners will receive
total aggregate sales proceeds of approximately $550 per $1,000
originally invested in the Partnership. Grape's offer is for
approximately $450 per $1,000 originally invested, reduced by any
transfer fees and any Partnership distributions made after
February 28, 1998. In addition to the recent Purchase Offer, the
General Partner has received several other indications of
interest from prospective purchasers to acquire all of the
Partnership's remaining properties in a single transaction. The
indications of interest all value
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Limited Partner
May 6, 1998
Page 3
the Partnership's properties on a collective basis at the high
end of the range that the General Partner previously discussed in
the February 18, 1997 Consent Solicitation.
o If you tender to Grape, Grape and not you will receive the
proceeds from any sale of the Partnership's properties pursuant
to the Purchase Offer or other indications of interest or any
distributions from operations pending completion of the sale.
o The General Partner's estimates are based upon a variety of
assumptions that are subject to significant uncertainties and
contingencies. Such estimates are inherently imprecise and there
can be no assurance they can be realized. There can be no
assurance as to when or at what price properties will be sold.
o In the event the properties are not sold pursuant
to the Purchase Offer, the timing of property sales
and distributions of sale proceeds are and will be
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Limited Partner
May 6, 1998
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determined solely by the General Partner. Accordingly, limited
partners who do not accept the Offer may not receive any
distribution of sale proceeds for a significant period of time
following the Offer.
o The General Partner's estimate of sales proceeds
from the Purchase Offer does not take into account
Partnership cash reserves, operating expenses or
net income or net loss of the Partnership for any
period prior to the time the remaining properties
are sold, which could affect the amount of sales
proceeds available for distribution. Therefore,
the actual proceeds to be received by the limited
partners may vary materially, up or down, from the
estimate.
o The Offer price of approximately $450 per $1,000 of original
investment is below the price of recent bid prices and trade
prices on the secondary market for limited partnership interests
and, presumably, do not take into account the Purchase Offer,
which was only recently agreed to. Limited partners
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Limited Partner
May 6, 1998
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seeking immediate cash for their interests should check the
secondary market prior to making any decision to tender. Please
keep in mind that the secondary market itself is an inefficient
market that the General Partner does not believe has generally
reflected the true value of Partnership interests. Please also
keep in mind that the secondary market may not be able to
accommodate substantial sales of limited partnership interests
over a short period of time at current prevailing prices.
o The Offer was not discussed with, and is not
sponsored or endorsed by, the General Partner. The
General Partner did not negotiate on behalf of the
limited partners.
In light of the factors discussed above, the General Partner recommends
that you reject the Offer.
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Limited Partner
May 6, 1998
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If you have any questions about the Offer that you want to address to
the General Partner, please call EquiNet Fund Administrators at 888-387-5387.
Very truly yours,
BIRTCHER/LIQUIDITY PROPERTIES
