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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Schedule 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
Resources Accrued Mortgage Investors L.P. - Series 86,
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(Name of Subject Company)
Resources Accrued Mortgage Investors L.P. - Series 86,
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(Name of Person Filing Statement)
Units of Limited Partnership Interest
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(Title of Class of Securities)
None
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(CUSIP Number of Class of Securities)
Michael Ashner
Resources Capital Corp.
100 Jericho Quadrangle
Suite 214
Jericho, New York 11753
(516) 822-0022
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person(s) filing Statement)
Copy to:
Mark I. Fisher, Esq.
Rosenman & Colin LLP
575 Madison Avenue
New York, New York 10022
(212) 940-8877
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<PAGE>
Item 1. Security and Subject Company
The name of the subject partnership is Resources Accrued Mortgage
Investors L.P. Series 86, (the "Partnership"), a Delaware limited partnership,
and the address of its principal executive offices is 5 Cambridge Center, 9th
Floor, Cambridge, Massachusetts 02142. The title of the class of equity
securities to which this Statement relates is Units of Limited Partnership
Interest of the Partnership ("Units").
Item 2. Tender Offer of the Bidder
This Statement relates to the tender offer of Bighorn Associates LLC (the
"Purchaser"), a Delaware limited liability company, to purchase up to 148,000
outstanding Units at a purchase price of $22 per Unit, pursuant to the terms and
conditions of an Offer to Purchase dated November 17, 1999, and the related
Letter of Transmittal (together, the "Offer"). The Offer is being made pursuant
to a tender offer statement on Schedule 14D-1 dated November 17, 1999.
The address of the executive offices of the Purchaser is 527 Madison
Avenue, New York, New York 10022.
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) The Purchaser is wholly owned by Presidio Capital Investment Corp.
("Presidio"). Presidio also controls the general partners of the Partnership
(collectively the "General Partner").
Certain Relationships. The General Partner, an affiliate of the Purchaser,
holds a 5% equity interest in the Partnership and thus receives, as a continuing
interest in the Partnership, an amount equal to a 5% allocation of the
Partnership's profits and losses and 5% of distributions. Resources Capital
Corp., the Partnership's administrative general partner is entitled to receive
an asset management fee for services rendered in the administration and
management of the Partnership's operations equal to 1/4 of 1% per annum of the
Net Asset Value of the Partnership, as defined in the Partnership's Limited
Partnership Agreement. Payment of the asset management fee was deferred until
commencement of the disposition of the Partnership's mortgage loans, with
interest on the amount deferred at 10% per annum, compounded annually. The
Partnership's administrative general partner earned $114,114, including accrued
interest of $111,674 for the nine months ended September 30, 1998 while no asset
management fee was earned for the nine months ended September 30, 1999. For the
years ended December 31, 1998, 1997 and 1996, the Partnership's administrative
general partner earned asset management fees of $75,334, $151,989 and $162,567,
respectively, including accrued interest of $73,527, $144,758 and $158,607. In
May 1999, the Partnership's administrative general partner was paid $891,608
representing interest on the deferred asset management fee. In addition, the
Partnership's administrative general partner was paid asset management fees of
$174,298 in August 1998, $193,426 in May 1997 and $54,134 in July 1997. At
September 30, 1999, the Partnership owed $460,892 in asset management fees.
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The Partnership's administrative general partner is also entitled to
receive a mortgage servicing fee at an annual rate of 1/4 of 1% per annum of the
principal balance of the Partnership's mortgage loans outstanding from time to
time. Payment of the mortgage servicing fee is deferred until disposition of the
applicable mortgage loan, with interest on the amount deferred at 10% per annum,
compounded annually. The Partnership's administrative general partner earned
$33,352, including accrued interest of $10,356 for the nine months ended
September 30, 1998, while no mortgage servicing fee was earned for the nine
months ended September 30, 1999. For the years ended December 31, 1998, 1997 and
1996, the Partnership's administrative general partner earned mortgage servicing
fees of $33,943, the $71,880 and $93,527, respectively, including accrued
interest of $20,378, $42,817 and $28,120. In addition, the Partnership's
administrative general partner was paid mortgage servicing fees of $43,528 in
August 1998, $381,648 in July 1998, $197,600 in June 1997, $58,900 in May 1997
and $86,827 in June 1996.
A conflict of interest exists for the General Partner continuing the
Partnership and receiving the fees described above and liquidating the
Partnership.
In addition, affiliates of the General Partner hold a 5% special limited
partnership interest in West Palm Associates Limited Partnership ("West Palm")
and promissory notes of West Palm which are secured by an approximate 35.7%
limited partner interest in West Palm. West Palm is the obligor under a second
mortgage note with a current principal balance of $5,000,000 (the "Note") held
by the Partnership. The Note bears interest at 7% per annum and matures in
February 2017. West Palm is not required to make any payments of principal or
interest until maturity. West Palm has approached the Partnership with a
proposal to restructure the Note. The current proposal to restructure the Note
provides for the Partnership to receive from the proceeds of a sale of the
property owned by West Palm, after satisfaction of all prior loans (which
include a first mortgage loan with a current balance of approximately
$38,600,000), certain expenses and closing costs, an amount equal to the first
$1,200,000 of the remaining sale proceeds, if any, plus 60% of all additional
sales proceeds. The General Partner is currently evaluating this proposal. As a
result of the interest which affiliates of the General Partner hold in West
Palm, a conflict of interest could arise in connection with the proposal to
restructure the Note.
On October 14, 1999, Allan Rothschild, the then President of the
Partnership's administrative general partner, received a telephone call from
C.E. Patterson, President of Mackenzie Patterson, Inc., an affiliate of certain
purchasers in the offer being made by Sutter Opportunity Fund, LLC and its
affiliates (the "Sutter Offer") pursuant to a tender offer statement on Schedule
14D-1 dated November 3, 1999, as amended by Amendment No. 1 to Schedule 14D-1
dated November 12, 1999 (the "Sutter Amendment"). During the telephone
conversation, Mr. Patterson indicated that his affiliates were interested in
acquiring the Partnership, including the General Partner's interest in the
Partnership. Mr. Rothschild responded that the General Partner's interest was
not for sale and that any offer to acquire the Partnership would be evaluated in
light of the best interests of the limited partners.
On October 15, 1999, Mr. Rothschild received a letter from Mr. Patterson
containing an offer to purchase the General Partner's interest in the
Partnership for $600,000 in conjunction with an offer to purchase all of the
limited partnership interests in the Partnership for $12 per Unit (subject to
possible upward adjustment). Mr. Patterson indicated in his letter that he would
<PAGE>
expect the proposed transaction to close in January 2000. Mr. Patterson's letter
also contained an implied threat to proceed on a hostile basis if his "friendly"
approach failed.
The General Partner did not consider the Patterson offer to be in the best
interest of the Partnership or its limited partners. Accordingly, neither Mr.
Rothschild nor any other representative of the General Partner responded to the
Patterson offer.
On November 3, 1999, the General Partners received a letter from counsel
to the purchasers in the Sutter Offer notifying it of the Sutter Offer and
providing a copy of the offering materials related thereto. The letter also
contained a request that the Partnership comply with certain provisions of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") by either
providing the purchasers in the Sutter Offer with a list of the name and address
of, and the number of Units held by, each limited partner of the Partnership, or
agreeing to mail the Sutter Offer offering materials to limited partners.
On November 5, 1999, a representative of the General Partner telephoned a
representative of the purchasers in the Sutter Offer and stated that the
Partnership would neither provide the requested list of limited partner
information nor agree to mail the Sutter Offer offering materials, and that a
letter from the Partnership's legal counsel would be forthcoming.
On November 5, 1999, the Partnership's legal counsel mailed a letter
written on behalf of the Partnership to a representative of the purchasers in
the Sutter Offer. In the letter counsel indicated that (i) the Sutter Offer was
for the purchase of any and all outstanding Units; (ii) the Partnership's
agreement of limited partnership prohibited the assignment of units which would
in the opinion of counsel for the Partnership result in a termination of the
Partnership under the Internal Revenue Code and any such purported assignment
was void and ineffectual, (iii) the Sutter Offer specifically acknowledged that
the Partnership could terminate for federal income tax purposes as a result of
the consummation of the Sutter Offer and (iv) the provisions of the
Partnership's agreement of limited partnership prevent the Sutter Offer from
being fully consummated in accordance with its terms and, accordingly, the
Partnership was not required to comply with the November 3rd request.
On November 12, 1999 (i) the purchasers in the Sutter Offer filed the
Sutter Amendment and made a new request that the Partnership comply with certain
provisions of the Exchange Act by either providing the purchasers in the Sutter
Offer with a list of the name and address of, and the number of Units held by,
each limited partner of the Partnership, or agreeing to mail the Sutter Offer
offering materials to limited partners and (ii) the Partnership notified the
purchasers in the Sutter Offer that the Partnership had elected to comply with
all of the provisions of Rule 14d-5(b) under the Exchange Act.
In a letter to limited partners dated November 16, 1999, the Partnership
disclosed that limited partners would be receiving an offer from an affiliate of
the General Partner to purchase Units at a price substantially above the price
provided for in the Sutter Offer.
On November 16, 1999, the Partnership filed with the Securities and
Exchange Commission a Solicitation/Recommendation Statement on Schedule 14D-9
(the "Sutter 14D-9") recommending that limited partners not tender their Units
in the Sutter Offer.
<PAGE>
Item 4. The Solicitation or Recommendation
Because the Purchaser is an affiliate of the General Partner, the
Partnership is making no recommendation and is remaining neutral as to whether
Unitholders should tender their Units pursuant to the Offer.
Item 5. Persons Retained, Employed or to be Compensated
None.
Item 6. Recent Transfers and Intent with Respect to Securities
None.
Item 7. Certain Negotiations and Transactions by the Subject Company
In August 1999, an entity in which the Partnership held an equity
participation sold its sole asset, a 146,470 square foot office building in
Berkeley, California, to an unaffiliated third party. In connection with this
sale, the Partnership received $3,887,555 representing repayment of an
outstanding $550,000 note and its share of participation in sale proceeds. As a
result of the receipt of the foregoing payments, the Partnership anticipates
that it will be making a distribution from its current cash reserves within the
next ninety days. It is not possible at this time to determine the exact amount
of the distribution as cash reserves will be retained for both anticipated and
unanticipated future Partnership needs.
Item 8. Additional Information to be Furnished
None.
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Item 9. Material to be Filed as Exhibits
The following Exhibits are filed herewith:
Exhibit a(i) Letter from the Partnership to limited partners, dated
November 17, 1999.
Exhibit (b) None.
Exhibit (c)(i) Letter from the Partnership to limited partners, dated
November 16, 1999 (incorporated by reference to Exhibit
(a)(i) to the Sutter 14D-9).
Exhibit (c)(ii) The Sutter 14D-9 is incorporated by reference.
Exhibit (c)(iii) Letter from C.E. Patterson to Alan Rothschild, dated
October 13, 1999 (incorporated by reference to Exhibit
(c)(i) to the Sutter 14D-9).
Exhibit (c)(iv) Letter from counsel to the purchasers in the Sutter
Offer, to the General Partners, dated November 2, 1999
(incorporated by reference to Exhibit (c)(ii) to the
Sutter 14D-9).
Exhibit (c)(v) Letter from legal counsel to the Partnership to
representatives of the purchasers in the Sutter Offer,
dated November 5, 1999 (incorporated by reference to
Exhibit (c)(iii) to the Sutter 14D-9).
Exhibit (c)(vi) Letter from legal counsel to the purchasers in the
Sutter Offer to the Partnership, dated November 12, 1999
(incorporated by reference to Exhibit (c)(iv) to the
Sutter 14D-9).
Exhibit (c)(vii) Letter from legal counsel to the Partnership to the
purchasers in the Sutter Offer, dated November 12, 1999
(incorporated by reference to Exhibit (c)(v) to the
Sutter 14D-9).
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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.
RESOURCES ACCRUED MORTGAGE
INVESTORS L.P. - SERIES 86
By: Resources Capital Corp.,
Administrative General Partner
Date: November 17, 1999 By: /s/ Michael Ashner
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President
Exhibit (a)(i)
RESOURCES MORTGAGE INVESTORS L.P. -
SERIES 86
5 Cambridge Center, 9th Floor
Cambridge, Massachusetts 02142
(888) 448-5554
November 17, 1999
Dear Limited Partner:
Please be advised that the general partners of Resources Mortgage Investors L.P.
- - Series 86 (the "Partnership") are affiliated with Bighorn Associates LLC, the
entity making an offer to purchase up to 148,000 units of limited partnership
interest in the Partnership. As a result of this affiliation, the Partnership is
making no recommendation and is remaining neutral as to whether limited partners
should tender their units pursuant to the Offer.
We are enclosing for your information a copy of the Schedule 14D-9 which we have
filed with the Securities and Exchange Commission which sets forth more detailed
information. If you have any questions or would like further information, please
contact us at (888) 448-5554.
Sincerely,
RESOURCES ACCRUED MORTGAGE
INVESTORS L.P. - SERIES 86
