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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: May 8, 1998
(DATE OF EARLIEST EVENT REPORTED)
ENSTAR INCOME PROGRAM IV-2, L.P.,
A GEORGIA LIMITED PARTNERSHIP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Georgia 0-15706 58-1648318
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) FILE NUMBER) IDENTIFICATION NO.)
10900 Wilshire Blvd., 15th Floor, Los Angeles, California 90024
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (310) 824-9990
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ITEM 5. OTHER EVENTS.
On April 27, 1998, Madison Partnership Liquidity Investors 52, LLC
disseminated a letter stating its interest in Enstar Income Program IV-2, L.P.
(the "Registrant") for a price of $141 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 8, 1998 which
is filed as an exhibit hereto and incorporated herein by this reference.
FORWARD-LOOKING STATEMENTS CONTAINED OR REFERRED TO IN THIS REPORT ARE
MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. INVESTORS ARE CAUTIONED THAT SUCH
FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES INCLUDING, WITHOUT
LIMITATION, THE EFFECTS OF LEGISLATIVE AND REGULATORY CHANGES; THE POTENTIAL OF
INCREASED LEVELS OF COMPETITION FOR THE PARTNERSHIP; TECHNOLOGICAL CHANGES; THE
PARTNERSHIP'S DEPENDENCE UPON THIRD-PARTY PROGRAMMING; THE ABSENCE OF UNITHOLDER
PARTICIPATION IN THE GOVERNANCE AND MANAGEMENT OF THE PARTNERSHIP; THE
MANAGEMENT FEES PAYABLE TO THE CORPORATE GENERAL PARTNER; THE EXONERATION AND
INDEMNIFICATION PROVISIONS CONTAINED IN THE PARTNERSHIP AGREEMENT RELATING TO
THE CORPORATE GENERAL PARTNER; OTHER POTENTIAL CONFLICTS OF INTEREST INVOLVING
THE CORPORATE GENERAL PARTNER AND ITS AFFILIATES; AND OTHER RISKS DETAILED FROM
TIME TO TIME IN THE PARTNERSHIP'S ANNUAL REPORT ON FORM 10-K AND OTHER PERIODIC
REPORTS FILED WITH THE COMMISSION.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
5.1 Letter to Limited Partners dated May 8, 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-2, L.P.,
A Georgia limited partnership
By: Enstar Communications Corporation
General Partner
Date: May 20, 1998 By: /s/ Michael K. Menerey
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Michael K. Menerey
Executive Vice President,
Chief Financial Officer and
Secretary
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<TABLE>
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Exhibit Description Page
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5.1 Letter to Limited 5
Partners dated
May 8, 1998
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EXHIBIT 5.1
May 8, 1998
Dear Limited Partner:
Enstar Income Program IV-2, Ltd. (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 $141 per Unit, was commenced by Madison Partnership
Liquidity Investors 52, LLC ("Madison"), in a letter dated April 27, 1998. THIS
OFFER WAS MADE WITHOUT THE CONSENT OR THE INVOLVEMENT OF THE CORPORATE GENERAL
PARTNER.
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.
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:
o As discussed above, after five percent of the units have been
transferred in 1998, the Partnership will inform its Transfer Agent
that, in order to protect its tax status as a partnership for Federal
income tax purposes, it will not recognize any additional resales of
limited partnership assignee units, including any attempted resales
related to the Madison offer, for the remainder of 1998 in order to
remain in compliance with applicable Federal income tax regulations.
Transfers to which the above trading limit DOES NOT apply include (i)
carryover basis transactions, (ii) transfers at death, (iii) transfers
between siblings, spouses, ancestors or lineal descendants and (iv)
distributions from a qualified retirement plan.
o The offering price for each limited partnership Unit during the offering
period was $250 per Unit. Cash distributions of approximately $122.22
per Unit were paid from formation through December 31, 1997. The
Partnership expects to continue to pay quarterly distributions to
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Unitholders during 1998 at the annualized rate of five percent.
Madison's offer is only $141 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 twelve months ended December 31, 1997 was
approximately $35.76 per Unit. The Madison offer represents a valuation
of only approximately 3.21 times said cash flow (after adjustment for
the excess of current assets over total liabilities as of December 31,
1997).
o As of the date of this letter, the Corporate General Partner believes
that a reasonable range of valuation per limited partnership Unit is
between $225 and $260 based on the factors noted below. The Corporate
General Partner believes that the Madison offer is inadequate because it
does not even approach the $225 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 December 31, 1997, 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
effect to any brokerage or other transaction fees that might be incurred
by the Partnership in any actual sale of the Partnership's system.
o Furthermore, you should also be aware that there is a limited secondary
market for sales of partnership units. Partnership Spectrum, an
independent industry publication, has reported that between December 1,
1997 and January 31, 1998, 40 units were sold on the secondary market at
$149 per unit. The Corporate General Partner believes that the price for
units in the secondary market is not an accurate reflection of the fair
market value of such units due to the low volume of transactions in that
limited market and the legal and tax restrictions on such transfers.
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-2, Ltd.
A Georgia Limited Partnership
cc: Account Representative
