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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report: May 26, 1998
(Date of earliest event reported)
ENSTAR INCOME PROGRAM IV-1, L.P.,
a Georgia limited partnership
(Exact name of registrant as specified in its charter)
Georgia Commission File: 58-1648322
(State or other jurisdiction 0-15705 (I.R.S. Employer
of incorporation or organization) identification No.)
10900 Wilshire Boulevard, 15th Floor
Los Angeles, California 90024
(Address of principal executive offices, including zip code)
(310) 824-9990
(Registrant's phone number, including area code)
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Item 5. Other Events
On April 29, 1998, Madison Partnership Liquidity Investors 58, L.L.C.
disseminated a letter stating its interest in acquiring up to 4.9% of
the outstanding units of limited partnership interests in Enstar
Income Program IV-1, L.P. (the "Registrant") for a price of $125 per
unit. This offer was made without the consent or involvement of the
Registrant's Corporate General Partner. The Corporate General Partner
has considered the offer, concluded that it is inadequate and,
accordingly, recommended that limited partners not accept the offer.
Pursuant to Rule 14e-2 promulgated under the Securities Exchange Act
of 1934, as amended, this recommendation and the Corporate General
Partner's bases therefor were conveyed to limited partners in a letter
dated May 26, 1998 which is filed as an exhibit hereto and
incorporated herein by this reference.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(c) Exhibits
5.1 Letter to Limited Partners dated May 26, 1998.
* * * *
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Enstar Income Program IV-1, L.P.
a Georgia limited partnership
Date: May 26, 1998. By: /s/ Michael K. Menerey
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Michael K. Menerey
Chief Financial Officer
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Sequentially
Numbered
Exhibit Description Page
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5.1 Letter to Limited 5
Partners dated
May 26, 1998
(Falcon Classic Letterhead)
May 26, 1998
Dear Limited Partner:
Enstar Income Program IV-1, L.P. (the "Partnership") has become aware that
an unsolicited offer for up to 4.9% of the outstanding Units in the Partnership
at a price of $125 per Unit, was commenced by Madison Partnership Liquidity
Investors 58, LLC ("Madison"), in a letter dated April 29, 1998. This offer was
made without the consent or the involvement of the Corporate General Partner.
Pursuant to rule 14e-2 under the Securities Exchange Act of 1934, we are
required to furnish you with our position with respect to the Madison offer. We
have considered this offer and, based on the very limited information made
available by Madison, believe that it is inadequate, not representative of the
inherent value of the Partnership's cable systems and not in your best interest
to accept. Accordingly, the Corporate General Partner's recommendation is that
you reject the offer. We urge you not to sign the Agreement of Assignment and
Transfer that Madison sent to you and not to tender your Units to Madison. In
evaluating the offer, the Corporate General Partner believes that its limited
partners should consider the following information:
* The offering price for each limited partnership Unit during the offering
period was $250 per Unit. Cash distributions of approximately $137.15 per
Unit were paid from formation through March 31, 1998. The Partnership
expects to continue to pay quarterly distributions to Unitholders during
1998 at the annualized rate of five percent. Madison's offer is only $125
per Unit. If Madison is successful in buying Units at the price in its
offer, it will own Units, in our view, for much less than they are worth.
Limited partners should note that the Partnership's cash flow (operating
income before depreciation and amortization) for the trailing twelve months
ended March 31, 1998 was approximately $35.67 per Unit. The Madison offer
represents a valuation of only approximately 2.55 times said cash flow
(after adjustment for the excess of current assets over total liabilities
as of March 31, 1998).
* As of the date of this letter, the Corporate General Partner believes that
a reasonable range of valuation per limited partnership Unit is between
$200 and $250 based on the factors noted below. The Corporate General
Partner believes that the Madison offer is inadequate because it does not
even approach the $200 low end of the range provided. The Corporate General
Partner did not retain a third party to conduct an evaluation of the
Partnership's assets or otherwise obtain any appraisals. Rather, the per
Unit valuations provided were derived by attributing a range of multiples
to the Partnership's cash flow (operating income before depreciation and
amortization) for the twelve months ended March 31, 1998, adjusted for the
excess of current assets over total liabilities. The Corporate General
Partner has selected market multiples based on, among other things, its
understanding of the multiples placed on other transactions involving
comparable cable television properties and the securities of companies in
that industry. The Corporate General Partner's belief as to the valuation
range provided is necessarily based on economic, industry and financial
market conditions as they exist as of the date of this letter, all of which
are subject to change, and there can be no assurance that the Partnership's
cable properties could actually be sold at a price within this range.
Additionally, the valuations provided do not give
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effect to any brokerage or other transaction fees that might be incurred by
the Partnership in any actual sale of the Partnership's system.
Furthermore, one of the obligations of the Corporate General Partner is to
endeavor to preserve the status of the Partnership as a partnership under
Federal income tax laws. Failure to maintain this status could have a material
adverse effect on the Partnership and its partners. Among the related legal
requirements imposed upon the Partnership is that its partnership interests not
be traded in an established securities market. As it believes is customary, the
Partnership complies with this requirement by adhering to a safe harbor
provision contained in the Federal income tax regulations which limits most
sales of limited partnership interests to five percent of the outstanding units
in any given year. After five percent of the outstanding units have been
transferred in 1998, no further resales of units, including any attempted sales
related to the Madison offer, will be recognized by the Partnership for the
balance of 1998.
For the reasons discussed above, the Corporate General Partner believes
that the Madison offer is not in the best interest of the limited partners and
recommends that you NOT transfer, agree to transfer, or tender any Units in
response to the Madison offer.
If you have any questions regarding these matters or your investment,
please call our Investor Services Department at (800) 433-4287.
Sincerely,
Enstar Income Program IV-1, L.P.
A Georgia Limited Partnership
cc: Account Representative
