SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9/A1
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)
LF Special Fund II, L.P.
Liquidity Fund Asset Management, Inc.
Brent R. Donaldson
(Name of Person(s) Filing Statement)
LIMITED PARTNERSHIP INTERESTS
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
William McSherry, Esq.
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
(212) 856-6999
(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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INTRODUCTORY NOTE
This Amendment No. 1 to Schedule 14D-9
Solicitation/Recommendation Statement (this "Amendment") relates to the limited
partnership interests of Damson/Birtcher Realty Income Fund II, a Pennsylvania
limited partnership. The limited partnership interests are the subject of a
tender offer by Grape Investors, LLC, a Delaware limited liability company. The
Schedule 14D-9 Solicitation/Recommendation Statement of LF Special Fund II,
L.P., filed with the Securities and Exchange Commission on June 9, 1998, is
amended and restated in its entirety to read as set forth in this Amendment.
ITEM 1. SECURITY AND SUBJECT COMPANY
This statement relates to the limited partnership interests
("Interests") of Damson/Birtcher Realty Income Fund II, a Pennsylvania 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 "Grape Investors
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 Schedule 14D-9 is being filed by (i) LF Special Fund
II, L.P., a California limited partnership ("LFSFII") and a non-managing general
partner of the Partnership, (ii) its general partner, Liquidity Fund Asset
Management, Inc. ("LFAM"), and (iii) Mr. Brent R. Donaldson, the President of
LFAM ("Donaldson" and, together with LFSFII and LFAM, the "Filing Persons"), at
the request of the Securities and Exchange Commission (the "Commission") in
response to inquiries by the Commission regarding the events described in Item
3(b) below. LFSFII previously executed, on behalf of the Partnership in its
capacity as a general partner of the Partnership, the Partnership's Schedule
14D-9, dated May 6, 1998, as amended by the filing of a Schedule 14D-9A, dated
May 19, 1998 (the "Partnership Schedule 14D-9"). The address of each of the
Filing Persons is 2200 Powell Street, Suite 700, Emeryville, CA 94608.
(b) Reference is made to the Schedule 14D-1, dated April 21,
1998, as amended on May 22, 1998 and June 8, 1998 (the "Schedule 14D-1"), filed
with the Commission by Grape Investors. Reference is also made to the
Partnership Schedule 14D-9.
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Grape Investors filed the Schedule 14D-1, dated April 21,
1998, with the Commission. The Partnership filed the Partnership Schedule 14D-9,
dated May 6, 1998, with the Commission.
On May 7, 1998, a registered broker dealer, DCC Securities
Corporation ("DCC"), mailed a letter to numerous investors in the Partnership
expressing an interest in assisting investors who were desirous of liquidating
their Interests at secondary market prices which were higher than the price
offered by Grape Investors in its Schedule 14D-1. A copy of the May 7, 1998
letter is annexed as Exhibit 9(c)(1) hereto.
Dolomite Investors L.L.C. ("Dolomite"), an entity controlled
by Donaldson, who is also the President of LFAM, which is a general partner of
LFSFII, assisted DCC in the preparation of the May 7, 1998 letter and paid for
its mailing. The statements contained in the May 7, 1998 letter were consistent
with those contained in the letter dated May 5, 1998 from the Partnership to its
investors (annexed as Exhibit 99.1 to the Partnership Schedule 14D-9) insofar as
both letters informed investors of the existence of a secondary market for the
Interests through which investors might obtain a higher price than that offered
by Grape Investors. Dolomite, which is not otherwise involved with the
Partnership, contemplated that it might respond to offers made by investors to
DCC to sell their Interests in response to the May 7, 1998 letter. Dolomite
contemplated that, in response to these offers, it might be able to purchase
Interests and, if it were to do so, the prices for such Interests in the
secondary market would likely have been higher than the tender offer price
offered by Grape Investors, Although the Filing Persons believe that DCC may
have discussed specific transactions and prices with investors, no purchases of
Interests were made by Dolomite or any of its affiliates. Dolomite was informed
by DCC that other unrelated parties had expressed an interest in acquiring
Interests and that for Dolomite to acquire Interests it would have to pay the
then highest price in the market. Dolomite informed DCC that prior to any
purchase of Interests by Dolomite, a seller must be informed of Dolomite's
relationship with LFSFII and that such seller be encouraged to review all
information regarding the Partnership set forth in filings with the Commission,
including the Partnership Schedule 14D-9. Shortly thereafter, the Commission
contacted the Partnership regarding the May 7, 1998 letter and, in part, due to
the Commission's inquiry, Dolomite determined not to pursue any secondary market
transactions in the Interests. The Filing Persons understand that DCC has
announced that it does not intend to serve as a broker for investors in the
Partnership during the pendency of the Grape Investors Offer as described in the
Grape Investors Schedule 14D-1.
Neither Dolomite nor any of its affiliates (a) informed the
other general partner of the Partnership of Dolomite's interest in acquiring
Interests in the Partnership, or (b) purchased, or offered to purchase, any
Interests of the Partnership through DCC or otherwise. Neither Dolomite nor any
of its affiliates initiated any contact, by telephone, or in writing with any
investor of the Partnership. One investor called Dolomite (at the suggestion of
DCC) and this investor was told that Dolomite had nothing to say about the
Partnership. No offer was made to that investor or to any other person.
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Neither Dolomite nor any of its affiliates has any present
intention of (a) making any purchases or offers to purchase of any Interests in
the Partnership; (b) contacting any investor in the Partnership; (c) responding
to any investor who calls or writes to any of them about the Partnership; or (d)
making any public statement as to the Grape Investors Offer other than through
appropriate filings under the federal securities laws.
To the best knowledge of the Filing Persons, none of the
foregoing actions has had, or will have, any effect on the Purchase Offer
described in Item 4(b) below.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) LFSFII previously executed, on behalf of the Partnership
in its capacity as a general partner of the Partnership, the Partnership
Schedule 14D-9. By so executing the Partnership Schedule 14D-9, LFSFI evidenced
its concurrence with the Partnership's reasons for recommending that limited
partners reject the Grape Investors Offer.
(b) The Filing Persons recommend that limited partners of the
Partnership reject the Grape Investors Offer based upon the following factors:
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"), 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 Partnership's February
18, 1997 Consent Solicitation.
o The prospective purchaser (the "Purchaser") is Abbey
Investments, Inc., an affiliate of The Abbey Company.
The Abbey Company is a Southern California-based real
estate operating company founded in 1990. The
Purchaser is not affiliated in any way with the
Partnership or the Partnership's general partner, or
any of the Partnership's general partner's principals
or affiliates.
o The Purchaser currently does not own or operate real
property outside of Southern California. Therefore,
it is seeking to negotiate a property management
agreement with affiliates of Birtcher Investors to
manage the properties after closing.
o The Purchase Offer anticipates closing in
approximately 30-60 days, and is subject to the
following conditions:
- Completion and approval by the Purchaser of Phase I
environmental reports for each property;
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- Physical and engineering inspection of each
property;
- The Purchaser's approval of title reports and
underlying documents; and
- Receipt, review and approval by the Purchaser of
operating documents, including leases, rental
agreements and contracts, notes and trust deeds,
inventories of personal property to remain at the
properties, utility and other operating expense
bills, property tax bills, and specifications for
each property.
o 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 $640 per $1,000 originally invested
in the Partnership. Grape Investor'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
Partnership's 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 the Partnership's
properties on a collective basis at the high end of
the range that the Partnership's General Partner
previously discussed in the February 18, 1997 Consent
Solicitation.
o If limited partners tender to Grape Investors, Grape
Investors and not limited partners 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 Partnership's General Partner's estimates are
based upon a variety 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 If the properties are not sold pursuant to the
Purchase Offer, the timing of property sales and
distributions of sale proceeds are and will be
determined solely by the Partnership's General
Partner. Accordingly, limited partners who do not
accept the Grape Investors Offer may not receive any
distribution of sale proceeds for a significant
period of time following the Grape Investors Offer.
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o The Partnership 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 Grape Investors 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 the Interests and may not take
into account the Purchase Offer, which was only
recently agreed to and is subject to certain closing
conditions described above. Limited partners seeking
immediate cash for their Interests should check the
secondary market prior to making any decision to
tender pursuant to the Grape Investors Offer. Limited
partners should keep in mind that the secondary
market itself is an inefficient market that may not
reflect the true value of the Interests. Limited
partners should also keep in mind that the secondary
market may not be able to accommodate substantial
sales of Interests over a short period of time at
current prevailing prices.
o The Grape Investors Offer was not discussed with, and
is not sponsored or endorsed by, the Partnership's
General Partner. The Partnership's General Partner
did not negotiate on behalf of the limited partners.
In light of the factors discussed above, the Filing Persons
recommend that you reject the Grape Investors Offer.
ITEM 5 PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
None.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO
SECURITIES
(a) Neither the Filing Persons, any of their respective
affiliates, any of their respective subsidiaries nor any executive officers or
directors of the Filing Persons, any of their respective affiliates or any of
their respective subsidiaries has entered into any transaction with respect to
the Interests in the past 60 days.
(b) Neither the Filing Persons, any of their respective
affiliates, any of their respective subsidiaries nor any executive officers or
directors of the Filing Persons, any of
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their respective affiliates or any of their respective subsidiaries has any
present intention to tender to Grape Investors, sell or hold any Interests.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT
COMPANY
(a) Not applicable.
(b) The Filing Persons are only aware of the possible
sale and liquidation of the Partnership's properties
described in Item 4(b) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
Not applicable.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
(a) None.
(b) Not applicable.
(c) (1) Letter mailed on May 7, 1998 by DCC Securities
Corporation to numerous investors in the Partnership.
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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.
LF SPECIAL FUND II, L.P.,
By: Liquidity Fund Asset Management, Inc.,
General Partner of LF Special Fund II, L.P.
By: /s/ Brent R. Donaldson
------------------------------
Brent R. Donaldson
President
LIQUIDITY FUND ASSET MANAGEMENT, INC.
By: /s/ Brent R. Donaldson
------------------------------
Brent R. Donaldson
President
/s/ Brent R. Donaldson
------------------------------
Brent R. Donaldson
Dated: June 17, 1998
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Exhibit 9(c)(1)
DEC SECURITIES CORP INC.
342 Madison Avenue
New York, New York 10173
May 1, 1998
RE: Damson Birtcher Realty Income Fund I
Damson Birtcher Realty Income Fund II
Realty Income Fund III
Dear Damson Birtcher limited partner:
You recently may have received, or soon will be receiving an offer from Grape
Investors LLC ("Grape") to acquire your interest in the Damson Birtcher Realty
Income Fund limited partnerships.
We have buyers willing to pay you a higher price.
Call 1-800-990-5604
We are a NASD licensed securities broker specializing in trading limited
partnership interests. We are obligated under NASD rules to try to find the
highest price in the market. We will: (i) provide you with a higher price than
Grape, (ii) guarantee a smooth transfer process and, (iii) have you paid the
purchase price much faster than offered by Grape. If you plan to sell your
interests, please call us first, toll-free at 1-800-990-5064.
In addition, our buyers are willing to let you have what is rightfully yours,
the first quarter 1998 distribution. Grape intends to subtract this distribution
from the price it is offering to pay you.
We now have buyers willing to pay substantially more than historical secondary
market prices, or those offered in the Grape tender offer.
If you are interested in selling, we will need the following information from
you when you call: (i) social security number, (ii) the name under which the
units are registered, (iii) your address, and (iv) if held through an IRA, the
name of the custodian. Alternatively, fill in this information on the back of
this page and send it back to us in the enclosed business reply envelope.
Thank your for your kind consideration.
DCC Securities Corp, Inc.
IF YOU HAVE, ALREADY RESPONDED TO THE TENDER OFFER FROM GRAPE, YOU CAN STILL
SELL AT HIGHER PRICE. CALL US IMMEDIATELY AT 1-800- 990-5604 TO FIND OUT HOW.
(over)
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REGISTRATION FORM
Partnership:
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Original Investment: $ (To be verified with the General Partner)
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Seller Name(s):
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Address:
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Telephone:
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Social Security #:
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IRA Custodian:
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Please call me with a price..................................... [ ]
Please send me a price.......................................... [ ]
Please send me information to withdraw from the Grape and a price..... [ ]
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