SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
(Amendment No. 1)
-----------------------
Capital Source L.P.
(Name of Subject Company)
Madison Liquidity Investors 104, LLC
Madison/OHI Liquidity Investors, LLC
Ronald M. Dickerman
Bryan E. Gordon
(Bidders)
Beneficial Assignment Certificates
(Title of Class of Securities)
140494105
(CUSIP Number of Class of Securities)
--------------------------
<TABLE>
<S> <C>
Ronald M. Dickerman Copy to:
Madison Liquidity Investors 104, LLC Sheila Corvino
Madison/OHI Liquidity Investors, LLC 811 Dorset West Road
P.O. Box 7461 Dorset, Vermont 05251
Incline Village, Nevada 89452 (802) 867-0112
(212) 687-0251
</TABLE>
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
Calculation of Filing Fee
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<S> <C>
Transaction Amount of
Valuaion* Filing Fee
$1,653,370 $330.67
</TABLE>
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* For purposes of calculating the filing fee only. This amount
assumes the purchase of 165,337 units of Beneficial
Assignment Certificates ("Units") of the subject company at
$10.00 in cash per Unit.
X] Check box if any part of the fee is offset as provided by
Rule 0-11(a)(2) and identify the filing with which the
offsetting fee was previously paid. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: $330.67
Form or Registration Number: Schedule 14D-1
Filing Party: Madison Liquidity Investors 104, LLC and Madison/OHI
Liquidity Investors, LLC
Date Filed: May 13, 1999
Amendment No. 1 to Schedule 14D-1
This Amendment No. 1 amends and supplements the Tender Offer
Statement on Schedule 14D-1 originally filed with the Securities and
Exchange Commission on May 13, 1999 (the "Schedule") by Madison
Liquidity Investors 104, LLC (the "Purchaser") and Madison/OHI
Liquidity Investors, LLC. This Schedule relates to the Purchaser's
offer to purchase up to 165,337 units of Beneficial Assignment
Certificates ("Units") of Capital Source L.P., a Delaware limited
partnership (the "Partnership") at $10.00 in cash per Unit, upon the
terms and subject to the conditions set forth in the Offer to
Purchase dated May 13, 1999 (the "Offer to Purchase") and related
Agreement of Assignment and Transmittal (which collectively
constitute the "Offer"). All capitalized terms used herein but
not otherwise defined herein shall have the meanings ascribed to
such terms in the Offer to Purchase. Reference to the "Supplement"
in this Amendment No. 1 shall mean the Supplement to the Offer to
Purchase dated June 11, 1999, which Supplement is filed herewith as
Exhibit (a)(5).
Item 5. Purpose of the Tender Offer and Plans or Proposals of the
Bidder.
Item 5 is hereby amended to read in its entirety as follows:
(a)-(f) The information set forth under the caption Section
9 ("Purpose of the Offer; Future Plans") in the Offer to Purchase,
as amended and supplemented by the Supplement, is incorporated
herein by reference.
Item 10. Additional Information.
Item 10 (f) is hereby amended to read in its entirety as follows:
(f) Reference is hereby made to the Offer to Purchase, which was
previously filed as Exhibit (a)(1) to this Schedule, and the
Supplement which is filed herewith as Exhibit (a)(5) and which is
incorporated in its entirety by reference.
Item 11. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase dated May 13, 1999*
(a)(2) Agreement of Assignment and Transfer*
(a)(3) Form of Letter to Unitholders dated May 13, 1999*
(a)(4) Summary Publication of Notice of Offer*
(a)(5) Supplement, dated June 11, 1999, to the Offer to
Purchase
(a)(6) Form of Letter to Unitholders dated June 11, 1999
(b)(1) Loan Agreement between Madison/OHI Liquidity
Investors, LLC and Omega Healthcare Investors, Inc.
dated as of October 2, 1998.*
(c)-(f) None.
______________________
* Previously filed.
SIGNATURES
After due 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: June 11, 1999
MADISON LIQUIDITY INVESTORS 104, LLC
By: /s/ Ronald M. Dickerman
Ronald M. Dickerman, Managing Director
MADISON/OHI LIQUIDITY INVESTORS, LLC
By: /s/ Ronald M. Dickerman
Ronald M. Dickerman, Managing Director
/s/ Ronald M. Dickerman
Ronald M. Dickerman
/s/ Bryan E. Gordon
Bryan E. Gordon
EXHIBIT INDEX
Exhibit Description Page
(a)(1) Offer to Purchase dated May 13, 1999*
(a)(2) Agreement of Assignment and Transfer*
(a)(3) Form of Letter to Unitholders dated May 13, 1999*
(a)(4) Summary Publication of Notice of Offer*
(a)(5) Supplement, dated June 11, 1999, to the Offer to Purchase
(a)(6) Form of Letter to Unitholders dated June 11, 1999
(b)(1) Loan Agreement between Madison/OHI Liquidity
Investors, LLC and Omega Healthcare
Investors, Inc. dated as of October 2, 1998.*
____________________
* Previously filed.
EXHIBIT (a)(5)
SUPPLEMENT TO THE
OFFER TO PURCHASE FOR CASH
UNITS OF BENEFICIAL ASSIGNMENT CERTIFICATES
of
CAPITAL SOURCE L.P.
at
$10.00 PER UNIT
by
MADISON LIQUIDITY INVESTORS 104, LLC
(the "Purchaser")
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT
5:00 P.M., EASTERN STANDARD TIME, ON JUNE 17, 1999, UNLESS EXTENDED.
Madison Liquidity Investors 104, LLC (the "Purchaser")(1) hereby
supplements and amends its offer to purchase up to 165,337 of the
issued and outstanding Beneficial Assignment Certificates (the
"Units") in Capital Source L.P., a Delaware limited partnership (the
"Partnership") upon the terms and subject to the conditions set
forth in the Purchaser's Offer to Purchase dated May 13, 1999, as
supplemented and amended by this Supplement, dated June 11, 1999 (as
it may be further supplemented or amended from time to time, the
"Offer to Purchase") and in the related Agreement of Assignment and
Transfer and accompanying documents, as each may be supplemented or
amended from time to time (which together constitute the "Offer").
Capitalized terms not otherwise defined in this Supplement shall
have the meanings set forth in the Offer to Purchase.
____________________
1 For purposes of applicable securities laws, the Purchaser's
sole member and funding source, Madison/OHI Liquidity Investors, LLC
("Madison/OHI"), as well as Ronald M. Dickerman and Bryan E. Gordon,
who are the principals of the Purchaser and Madison/OHI, are deemed
co-bidders to this Offer. As such, references in this Offer to the
"Purchaser" may be deemed to include Madison/OHI, Mr. Dickerman and
Mr. Gordon. However, the purchaser of the Units will be Madison
Liquidity Investors 104, LLC.
1. The Cover Page of the Offer to Purchase is hereby amended (a)
to delete the text commencing with the sentence "Before tendering,
Unitholders are urged to consider the following factors:" and
concluding with the sentence "Please see the Introduction
"Additional Factors to Consider When Tendering"", and (b) to insert
in lieu thereof the following:
Factors to Consider in Evaluating in the Offer
The Purchaser believes that the following are aspects of the
Offer that should be considered when deciding whether or not
to tender Units.
- - Unitholders who tender their Units will give up the
opportunity to participate in any future benefits from the
ownership of Units, including potential future distributions
by the Partnership. Although the Purchaser cannot predict
the future value of the Partnership's assets on a per Unit
basis, the Offer Price could differ significantly from or be
significantly less than the net proceeds that would be
realized from a current sale of the properties owned by the
Partnership (the "Properties"), that may be realized upon a
future liquidation of the Partnership or that may be realized
by holding the Units for the entire life of the expected
payment stream from the Properties.
- - The Purchaser has undertaken the Offer at this time in order
to participate, as a Limited Partner of the Partnership, in
the proposed merger of the Partnership with America First
Real Estate Investment Company, Inc. ("AFRIC") where the
resulting entity is a publicly-traded limited partnership.
This proposed merger was disclosed in a registration
statement on Form S-4 filed by AFRIC on May 7, 1998.
Unitholders who tender their Units will give up the
opportunity to participate in this merger, if it occurs.
- - The Purchaser is making the Offer for investment purposes and
with the intention of making a profit from the ownership of
the Units. In establishing the Offer Price of $10.00 per
Unit, the Purchaser is motivated to establish the lowest
price that might be acceptable to Unitholders consistent with
the Purchaser's objectives. Such objectives and motivations
may conflict with the interests of the Unitholders in
receiving the highest price for their Units.
- - Upon the liquidation of the Partnership, the Purchaser will
benefit to the extent, if any, that the amount per Unit it
receives in the liquidation exceeds the Offer Price, if any.
Therefore, Unitholders might receive more value if they hold
their Units, rather than tender, and receive proceeds from
the liquidation of the Partnership. When the assets of the
Partnership are ultimately sold, the return to Unitholders
could be higher than the Offer Price. Unitholders are urged
to consider carefully all the information contained herein
before accepting the Offer.
- - No independent person has been retained to evaluate or render
any opinion with respect to the fairness of the Offer Price
and no representation is made by the Purchaser or any
affiliate of the Purchaser as to such fairness.
- - The net asset value of the Units, as communicated by the
General Partner to the Purchaser, is $13.96 per Unit, which
is more than the Offer Price.
- - Although not necessarily an indication of value, the $10.00
Offer Price per Unit is approximately 19% lower than the
$12.33 weighted average selling price for the Units (before
any adjustment for typical commissions or transaction costs),
as reported by The Partnership Spectrum, an independent,
third-party source, for the period December 1, 1998 through
January 31, 1999. As further reported by The Partnership
Spectrum during the two month period ended January 31, 1999,
there were 11 trades conducted representing an aggregate of
13,500 Units sold or transferred.
- - After the consummation of the Offer, and unless otherwise
prohibited, the Purchaser will vote the Units acquired in the
Offer in its own interest, which may be different from or in
conflict with the interests of the remaining Unitholders.
- - In the event a total of more than 165,337 Units are tendered,
the Purchasers may accept only a portion of the Units
tendered by a Unitholder on a pro rata basis.
- - The eventual transfer of all tendered Units is subject to the
final approval of the Partnership or General Partner and is
subject to their discretion.
Unitholders may no longer wish to continue with their investment in the
Partnership for a number of reasons, including:
- - The gross sales prices reported by The Partnership Spectrum
do not necessarily reflect the net sales proceeds received by
sellers of Units, which typically are reduced by commissions
and other secondary market transaction costs to amounts less
than the reported prices. The Purchaser cannot, and does
not, know whether the information compiled by The Partnership
Spectrum is accurate or complete.
- - The Partnership's ability to generate cash adequate to meet
its needs is dependent primarily upon the operations of its
real estate investments and the future availability of bank
borrowings and the potential refinancing and sale of the
Partnership's remaining real estate investments. These
sources of liquidity will be used by the Partnership for
payment of expenses related to real estate operations,
capital expenditures, debt service and expenses. Cash flow,
if any, will then be available for distribution to the Partners.
- - For Unitholders who sell their Units in accordance with this
Offer, 1999 will be the final year for which you receive a
K-1 Tax Form from the Partnership assuming that the transfer
of your Units is effectuated by the General Partner in 1999.
Many investors who have tax professionals prepare their taxes
find the cost of filing K-1s to be burdensome, particularly
if more than one limited partnership is owned.
- - The decision to accept the Offer eliminates the potential
uncertainty related to waiting for future distributions of
sales and final liquidation proceeds. Furthermore, by
selling the Units for cash now, the Unitholder would enjoy
the ability to redeploy investment assets into alternative
and potentially more liquid investments.
- - The Offer will provide Unitholders with an immediate
opportunity to liquidate their investment in the Partnership
without the usual transaction costs associated with market
sales.
- - Although there are some limited resale mechanisms available
to the Unitholders wishing to sell their Units, there is no
formal trading market for the Units. Accordingly,
Unitholders who desire liquidity may wish to consider the
Offer. The Offer affords Unitholders an opportunity to
dispose of their Units for cash, which alternative otherwise
might not be available to them. However, the Offer Price is
not intended to represent either the fair market value of a
Unit or the fair market value of the Partnership's assets on
a per Unit basis.
- - General disenchantment with real estate investments.
- - General disenchantment with long-term investments in limited
partnerships because of, among other things, their
illiquidity and the inability of Unitholders to effectuate
management control over the Partnership's affairs through the
annual election of the General Partners. Unitholders should
note, however, that they do have the right to remove the
General Partners by majority vote.
- - The Offer provides Unitholders with the opportunity to
liquidate their Units and to reinvest the proceeds in other
investments should they desire to do so. The Purchaser
believes that the Units represent an attractive investment
for the Purchaser at the Offer Price. There can be no
assurance, however, that this judgment is correct. Ownership
of Units will remain a speculative investment."
2. The Introduction to the Offer to Purchase is hereby amended
and supplemented as follows:
a. The text contained under the caption "Additional Factors to
Consider When Tendering" of the Introduction is hereby deleted in
its entirety.
b. The second paragraph under the heading "Establishment of the
Offer Price" of the Introduction is hereby amended and supplemented
to read in its entirety as follows:
The Purchaser established the Offer Price based on the
Purchaser's analysis that concluded the value of the
Partnership Units to be $13.60. The Purchaser conducted
internal analysis on the Partnership based the Annual Report
filed on Form 10-K for the year ended December 31, 1998. The
Purchaser estimated the 1998 cash flow of the Partnership's
properties at $3,423,969 and applied a capitalization rate of
9.00% which yielded a value of $38,044,100 for the
Partnership's properties. The Purchaser then added the net
cash of the Partnership as of December 31, 1998, subtracted
the mortgage debt on the properties as of December 31, 1998,
to arrive at a total value of $45,905,561 or $13.60 per
Partnership Unit. The Purchaser believes that the
capitalization rate utilized by it is within a range of
capitalization rates currently employed in the marketplace
for apartment buildings of this age and quality. In the view
of the Purchaser, the capitalization rate selected by the
Purchaser is appropriate for financial purchasers such as the
Purchasers. The Purchaser elected not to obtain any
appraisals or valuations on the Partnership assets or the
Units because of the costs associated with obtaining such
appraisals and valuations. Therefore, based on the
Purchaser's own internal analysis, the Purchaser concluded
the net asset value of the Partnership to be $13.60 per Unit.
c. The fourth paragraph under the heading "Establishment of the
Offer Price" of the Introduction is hereby amended and supplemented
to read in its entirety as follows:
The net asset value of the Units, as communicated by the
General Partner to the Purchaser by telephone, is $13.96 per
Unit. The Purchaser's Offer Price represents a discount of
28.3% to the General Partner's net asset value. The Purchaser
does not know how the General Partner calculated the net
asset value. The disparity between the net asset values as
calculated by the Purchaser and the General Partner may have
resulted from the application by the General Partner of
different capitalization rates than those used by the
Purchaser, or the making of calculations or assumptions which
differ from those made by the Purchaser. However, the
Purchaser believes that the General Partner's net asset value
does not necessarily reflect the fair market value of a Unit,
which may be higher or lower than the net asset value
depending on several factors. For example, the Purchaser
does not believe that the fair market value of a Unit
reflects the relative illiquidity of such Unit. The
Purchaser does not propose or represent that the Offer Price
represents the fair market value of the Units.
3. Section 9 ("Purpose of the Offer; Future Plans") of the
Offer to Purchase is hereby amended and supplemented as follows.
a. The first paragraph of such Section is amended and
supplemented to add to the end of such paragraph the following
sentence:
In addition, the Purchaser has undertaken the Offer at this
time in order to participate, as a Limited Partner of the
Partnership, in the proposed merger of the Partnership with
America First Real Estate Investment Company, Inc. ("AFRIC")
where the resulting entity is a publicly-traded limited
partnership. This proposed merger was disclosed in a
registration statement on Form S-4 filed by AFRIC on May 7,
1998.
b. The first sentence of the second paragraph of such Section is
amended to read in its entirety as follows:
Although neither the Purchaser nor any of its affiliates has
any present plans or proposals to acquire Units in addition
to those sought pursuant to the Offer, the Purchaser and its
affiliates reserve the right, following the completion of the
Offer, to acquire additional Units.
4. Section 13 ("Conditions of the Offer") is hereby amended and
supplemented as follows:
a. Clause (iv) of paragraph (e) of such Section is amended to
read in its entirety as follows:
(iv) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly
involving the United States (other than the current level of
United States military operations in the former Yugoslavia or
in Iraq);
b. The second paragraph of such Section is amended to read in
its entirety as follows:
The Purchaser shall not be required to accept for payment or
pay for any Units not theretofore accepted for payment or
paid for and may terminate or amend the Offer as to such
Units if, at any time on or after the date of the Offer and
before the Expiration Date, the Purchaser determines, in its
reasonable judgment, that any of the following conditions exist:
June 11, 1999
MADISON LIQUIDITY INVESTORS 104, LLC
EXHIBIT (a)(6)
June 11, 1999
TO UNITHOLDERS IN CAPITAL SOURCE L.P.
RE: Offer to Purchase Beneficial Assignment Certificates
Dear Fellow Investor:
Madison Liquidity Investors 104, LLC (the "Purchaser") is seeking to
buy your Beneficial Assignment Certificates (the "Units") in Capital
Source L.P. (the "Partnership") for $10.00 per Unit in cash (the
"Offer Price"). This amount will be reduced by the $50.00 transfer
fee (per transfer, not per Unit) charged by the Partnership and any
cash distributions made by the Partnership on or after May 13, 1999.
This letter supersedes in its entirety the previous letter to you,
dated May 13, 1999.
We are an investment firm which buys units in dozens of
underperforming limited partnerships and are not affiliated with the
Partnership or the General Partner. We are principals seeking to
acquire Units for our investment portfolio only (we are not a
matching service or professional broker who resells units). The
Purchaser and its affiliates have over $285 million in capital that
is committed to paying limited partners for their units. To date,
over 52,000 limited partners nationwide in over 250 limited
partnerships have chosen to sell their units to us. This has made
the Purchaser a leading and reliable choice for limited partnership
investors seeking a time and cost efficient liquidity option.
Please consider the following points in evaluating our offer:
- - Unitholders who tender their Units will give up the
opportunity to participate in any future benefits from the
ownership of Units, including potential future distributions
by the Partnership. Although the Purchaser cannot predict
the future value of the Partnership's assets on a per Unit
basis, the Offer Price could differ significantly from or be
significantly less than the net proceeds that would be
realized from a current sale of the properties owned by the
Partnership (the "Properties"), that may be realized upon a
future liquidation of the Partnership or that may be realized
by holding the Units for the entire life of the expected
payment stream from the Properties.
- - The Purchaser has undertaken the Offer at this time in order
to participate, as a Limited Partner of the Partnership, in
the proposed merger of the Partnership with America First
Real Estate Investment Company, Inc. ("AFRIC") where the
resulting entity is a publicly-traded limited partnership.
This proposed merger was disclosed in a registration
statement on Form S-4 filed by AFRIC on May 7, 1998.
Unitholders who tender their Units will give up the
opportunity to participate in this merger, if it occurs.
- - The Purchaser is making the Offer for investment purposes and
with the intention of making a profit from the ownership of
the Units. In establishing the Offer Price of $10.00 per
Unit, the Purchaser is motivated to establish the lowest
price that might be acceptable to Unitholders consistent with
the Purchaser's objectives. Such objectives and motivations
may conflict with the interests of the Unitholders in
receiving the highest price for their Units.
- - Upon the liquidation of the Partnership, the Purchaser will
benefit to the extent, if any, that the amount per Unit it
receives in the liquidation exceeds the Offer Price, if any.
Therefore, Unitholders might receive more value if they hold
their Units, rather than tender, and receive proceeds from
the liquidation of the Partnership. When the assets of the
Partnership are ultimately sold, the return to Unitholders
could be higher than the Offer Price. Unitholders are urged
to consider carefully all the information contained herein
before accepting the Offer.
- - No independent person has been retained to evaluate or render
any opinion with respect to the fairness of the Offer Price
and no representation is made by the Purchaser or any
affiliate of the Purchaser as to such fairness.
- - The net asset value of the Units, as communicated by the
General Partner to the Purchaser, is $13.96 per Unit, which
is more than the Offer Price.
- - Although not necessarily an indication of value, the $10.00
Offer Price per Unit is approximately 19% lower than the
$12.33 weighted average selling price for the Units (before
any adjustment for typical commissions or transaction costs),
as reported by The Partnership Spectrum, an independent,
third-party source, for the period December 1, 1998 through
January 31, 1999. As further reported by The Partnership
Spectrum during the two month period ended January 31, 1999,
there were 11 trades conducted representing an aggregate of
13,500 Units sold or transferred.
- - After the consummation of the Offer, and unless otherwise
prohibited, the Purchaser will vote the Units acquired in the
Offer in its own interest, which may be different from or in
conflict with the interests of the remaining Unitholders.
- - In the event a total of more than 165,337 Units are tendered,
the Purchasers may accept only a portion of the Units
tendered by a Unitholder on a pro rata basis.
- - The eventual transfer of all tendered Units is subject to the
final approval of the Partnership or General Partner and is
subject to their discretion.
Unitholders may no longer wish to continue with their investment in
the Partnership for a number of reasons, including:
- - The gross sales prices reported by The Partnership Spectrum
do not necessarily reflect the net sales proceeds received by
sellers of Units, which typically are reduced by commissions
and other secondary market transaction costs to amounts less
than the reported prices. The Purchaser cannot, and does
not, know whether the information compiled by The Partnership
Spectrum is accurate or complete.
- - The Partnership's ability to generate cash adequate to meet
its needs is dependent primarily upon the operations of its
real estate investments and the future availability of bank
borrowings and the potential refinancing and sale of the
Partnership's remaining real estate investments. These
sources of liquidity will be used by the Partnership for
payment of expenses related to real estate operations,
capital expenditures, debt service and expenses. Cash flow,
if any, will then be available for distribution to the Partners.
- - For Unitholders who sell their Units in accordance with this
Offer, 1999 will be the final year for which you receive a
K-1 Tax Form from the Partnership assuming that the transfer
of your Units is effectuated by the General Partner in 1999.
Many investors who have tax professionals prepare their taxes
find the cost of filing K-1s to be burdensome, particularly
if more than one limited partnership is owned.
- - The decision to accept the Offer eliminates the potential
uncertainty related to waiting for future distributions of
sales and final liquidation proceeds. Furthermore, by
selling the Units for cash now, the Unitholder would enjoy
the ability to redeploy investment assets into alternative
and potentially more liquid investments.
- - The Offer will provide Unitholders with an immediate
opportunity to liquidate their investment in the Partnership
without the usual transaction costs associated with market
sales.
- - Although there are some limited resale mechanisms available
to the Unitholders wishing to sell their Units, there is no
formal trading market for the Units. Accordingly,
Unitholders who desire liquidity may wish to consider the
Offer. The Offer affords Unitholders an opportunity to
dispose of their Units for cash, which alternative otherwise
might not be available to them. However, the Offer Price is
not intended to represent either the fair market value of a
Unit or the fair market value of the Partnership's assets on
a per Unit basis.
- - General disenchantment with real estate investments.
- - General disenchantment with long-term investments in limited
partnerships because of, among other things, their
illiquidity and the inability of Unitholders to effectuate
management control over the Partnership's affairs through the
annual election of the General Partners. Unitholders should
note, however, that they do have the right to remove the
General Partners by majority vote.
- - The Offer provides Unitholders with the opportunity to
liquidate their Units and to reinvest the proceeds in other
investments should they desire to do so. The Purchaser
believes that the Units represent an attractive investment
for the Purchaser at the Offer Price. There can be no
assurance, however, that this judgment is correct. Ownership
of Units will remain a speculative investment.
The Purchaser will purchase a maximum of 4.90% of the outstanding
Units pursuant to this Offer. If more Units are offered to us, we
will prorate our purchase ratably to all sellers. You will be paid
promptly following (i) receipt of a valid, properly executed
Agreement of Assignment and Transfer (see the enclosed document) and
(ii) receipt by the Purchaser of the Partnership's confirmation that
the transfer of Units has been effectuated, subject to Section 4
("Proration") of the Offer to Purchase. ALL SALES OF UNITS WILL BE
IRREVOCABLE BY YOU, SUBJECT TO SECTION 5 ("WITHDRAWAL RIGHTS") OF
THE OFFER TO PURCHASE.
A COMPREHENSIVE DISCUSSION OF THE TERMS OF THE OFFER CAN BE FOUND IN
THE OFFER TO PURCHASE, EXHIBIT (A)(1) TO THE SCHEDULE 14D-1.
If you wish to accept our offer, please complete and MEDALLION
SIGNATURE GUARANTEE (this must be done by your broker or a bank
where you have an account) the enclosed Agreement of Assignment and
Transfer and return it in the enclosed envelope, along with your
limited partnership certificate (if one was issued to you and is
available).
Our offer will expire at 5:00 p.m., Eastern Standard Time, on June
17, 1999 unless the offer is extended. We encourage you to act
promptly.
Please call us at (303) 858-0000, or send a fax to (303) 858-0001,
if you have any questions. Thank you for your consideration of our
offer.
Very truly yours,
Madison Liquidity Investors 104, LLC
COMMONLY ASKED QUESTIONS AND ANSWERS
WHY WOULD I WANT TO SELL MY UNITS TO THE PURCHASER?
Have your original objectives for this investment been met? Are you
pleased with the way this investment has performed to date? We have
found that most investors are disappointed with the performance of
their limited partnership investments. Many investors have been in
these investments far longer than originally anticipated and their
returns have been disappointing. In addition, the tax reporting
requirements for limited partnerships are burdensome and costly,
often requiring an accountant to prepare your taxes. Requirements by
certain states also increase this burden by requiring limited
partners to file state income tax returns, and potentially to pay
taxes, in states where a partnership owns properties, regardless of
the overall profitability of the partnership.
Many investors feel that selling their limited partnership units
will free up funds to pursue more attractive investment options.
And unlike limited partnerships, most other investments provide
immediate liquidity in the event an investor needs access to his/her
funds.
While emotionally difficult to accept, many investors are realizing
that not only will original projections never be met on many of
these limited partnerships, but, in some cases, original investment
capital will never be fully recovered. Thus, a readily available
purchase offer for an underperforming investment with an uncertain
termination date may be an opportunity worthy of your consideration.
WHY DOES THE PURCHASER WANT TO BUY MY UNITS?
The Purchaser purchases units in dozens of underperforming limited
partnerships for its own investment portfolio and not for the
purposes of reselling the Units or matching buyers and sellers, as
is the case with secondary market matching services. By agreeing to
sell to the Purchaser, you are assuring a sale of your Units,
subject to proration rights and other conditions having been met. A
secondary market firm cannot assure a sale unless it can locate a
buyer who is interested in purchasing your particular Units. Most
individual investors are not interested in purchasing limited
partnership units for their investment portfolios, so the Purchaser
is providing you with a liquidity option that is generally not
otherwise readily available.
Unlike other firms that purchase limited partnership units, the
Purchaser is typically not interested in acquiring controlling
interests in limited partnerships. Furthermore, buying units in a
broad portfolio of limited partnerships allows us to diversify our
investment portfolio, thus mitigating our risk of purchasing such
underperforming investments.
WHAT OTHER OPTIONS ARE AVAILABLE TO ME TO SELL MY UNITS?
NOT MANY! Unlike the Purchaser, secondary market firms will only
match buyers and sellers. They do not provide a firm bid. So the
only way you can sell your Units through this market is if they can
locate an interested buyer. FURTHERMORE, THE PURCHASER CHARGES NO
COMMISSIONS (SECONDARY MARKET FIRMS GENERALLY CHARGE UP TO 10%,
SUBJECT TO A $150 - $200 MINIMUM COMMISSION PER TRADE).
HOW DO I SUBSCRIBE TO THE PURCHASER'S OFFER AND WHEN WILL I BE PAID?
The purchase process involves several steps. By carefully following
the instructions on the enclosed checklist, you are ensuring the
fastest possible turnaround time for the sale of your Units.
Properly completed Agreements of Assignment and Transfer are
forwarded by the Purchaser to the General Partner on a weekly basis
following the completion of the offer. Most general partners will
take approximately four weeks thereafter to confirm the number of
Units you own and provide the Purchaser with the effective transfer
date. IRA investors should add approximately two weeks because of
the additional signatures required from your custodian. Thereafter,
you will be promptly paid by the Purchaser.
HOW DID THE PURCHASER GET MY NAME?
The rules of the Securities and Exchange Commission provide that
issuers such as the Partnership are required under certain
circumstances to either provide bidders such as the Purchaser with a
list of its securityholders, or to contact such securityholders on
our behalf.
WHAT HAPPENS IF I DON'T SELL MY UNITS?
Nothing. If you choose to retain your investment in the
Partnership, you will be a limited partner until all its assets and
the Partnership have been liquidated. Remember, however, that even
if the Partnership had an original anticipated holding period of
five, seven or ten years, there is usually nothing requiring
liquidation within this time frame. In fact, most limited
partnerships can legally continue for up to twenty or thirty years,
or longer, from inception.
IF YOU HAVE ANY ADDITIONAL QUESTIONS, PLEASE CALL:
THE PURCHASER, MADISON LIQUIDITY INVESTORS 104, LLC
(303) 858-0000
INSTRUCTIONS TO COMPLETE AGREEMENT OF ASSIGNMENT AND TRANSFER
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
By checking-off below ALL of the items that pertain to your form of
ownership, you are guaranteeing the fastest turnaround time for
payment for your Units. Refer to the "Other Common Oversights"
section below to make sure you are not forgetting anything that may
delay processing.
Upon our receipt of your Agreement of Assignment and Transfer, the
Purchaser will evaluate it to determine if it is complete by the
General Partner's standards. If your Agreement is incomplete, you
will receive a deficiency letter from us that will let you know the
additional information that we need to process your sale. Please
respond promptly to such request for additional information. YOUR
FAILURE TO PROVIDE THIS ADDITIONAL INFORMATION CAN ADD WEEKS TO THE
PROCESSING TIME.
1.BOX A
- - INDIVIDUAL OWNER/JOINT OWNERS OF RECORD
[ ] Sign Agreement (BOTH owners must sign if joint account).
[ ] Provide a MEDALLION SIGNATURE GUARANTEE.
[ ] Enclose your original limited partnership
certificate, if available.
[ ] Return Agreement to the Purchaser in
pre-paid/pre addressed envelope provided.
- - IRA INVESTORS
[ ] Beneficial owner should sign Agreement.
the Purchaser will work directly with your
Custodian to get the necessary custodial
signature/medallion guarantee and we will then
forward your check directly to your IRA account.
- - TRUST, PROFIT SHARING AND PENSION PLANS
[ ] Authorized signatory should sign Agreement.
[ ] Enclose first, last and other applicable pages
of TRUST OR PLAN AGREEMENT showing that
signor(s) is authorized signatory.
- - CORPORATIONS
[ ] Authorized signatory should sign Agreement.
[ ] INCLUDE CORPORATE RESOLUTION showing that
signor(s) is authorized signatory.
- - OTHER COMMON OVERSIGHTS
[ ] Death Certificates: If the owner of the Units
has died, please enclose a copy of the Death
Certificate and evidence of your signature
authority.
[ ] Letters Testamentary: If you have inherited
the Units, include a copy of the original
owner's DEATH CERTIFICATE and a copy of the
LETTERS TESTAMENTARY OR WILL showing that you
are the legal owner of the Units.
2. BOX B - MEDALLION SIGNATURE GUARANTEE.
Required to be signed by your bank or brokerage house only.
3. BOX C - SUBSTITUTE FORM W-9.
Please check the shaded box in Box C(i) if you do not have a
Taxpayer Identification Number or Social Security Number
("TIN") but have already applied for a TIN. Please check the
shaded box in Box C(ii) if you are subject to the 31% federal
tax backup withholding.
4. BOX D - FIRPTA AFFIDAVIT.
Please check the shaded box in Box D(i) if you are not a U.S.
citizen or a resident alien for purposes of U.S. income
taxation, or are a foreign corporation, foreign partnership,
foreign estate or foreign trust. If the Unitholder is a
corporation, please indicate the state of incorporation in
the shaded area in Box D(iii).
5. BOX E - FOREIGN PERSONS.
Please check the shaded box in Box E if you are an "exempt
foreign person" for purposes of the backup withholding rules
under the federal income tax laws.
Please note: A Medallion Signature Guarantee is similar to a
notary, but is provided by your bank or brokerage house where you
have an account.
IF YOU HAVE ANY ADDITIONAL QUESTIONS, PLEASE CALL:
MADISON LIQUIDITY INVESTORS 104, LLC
(303) 858-0000
