================================================================================
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: February 24, 1999
(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 Commission File: 58-1648318
(State or other jurisdiction 0-15706 (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)
================================================================================
Item 5. Other Events
On February 1, 1999, Madison Liquidity Investors 107, LLC
disseminated a letter offering to acquire up to 4.9% of the
outstanding units of limited partnership interests in Enstar
Income Program IV-2, L.P. (the "Registrant") for a price of $161
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 February 24,
1999 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 affiliate; 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 February 24, 1999.
* * * *
<PAGE>
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
Date: February 24, 1999. By: /s/ Michael K. Menerey
---------------------------------
Michael K. Menerey
Executive Vice President,
Chief Financial Officer and
Secretary
3
<PAGE>
Sequentially
Numbered
Exhibit Description Page
------- ----------- ----
5.1 Letter to Limited 5
Partners dated
February 24, 1999
4
(Enstar Letterhead)
February 24, 1999
Dear Limited Partner:
Enstar Income Program IV-2, L.P. (the "Partnership") and its corporate
general partner, Enstar Communications Corporation (the "General Partner"), have
become aware that an unsolicited offer (the "Offer") to purchase outstanding
units in the Partnership, at a price of $161 per unit, was commenced by Madison
Liquidity Investors 107, LLC ("Madison") pursuant to an offer to purchase dated
February 1, 1999. This Offer was made without the consent or the involvement of
the Partnership or the 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 and not representative of
the inherent value of the Partnership's cable systems. Accordingly, the
Partnership and the General Partner recommend that you reject Madison's 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 Partnership and the General Partner believe that limited partners should
also consider the following information:
o The Partnership's cash flow (operating income before depreciation and
amortization) for the twelve months ended December 31, 1998 was
approximately $36.43 per unit. The price offered by Madison represents a
valuation of approximately 3.1 times cash flow (after adjustment for the
excess of current assets over total liabilities as of December 31, 1998).
The Partnership and the General Partner believe that a valuation of 3.1
times cash flow is considerably lower than the inherent value of the
Partnership's assets based on cash flow multiples paid for similar assets.
o As of the date of this letter, the General Partner believes that a
reasonable range of valuation per limited partnership unit is between $270
and $320 based on the factors noted below. The General Partner believes
that the Madison Offer is inadequate because it is significantly less than
the $270 low end of the range provided. The 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, 1998, adjusted for the excess of current assets
over total liabilities. The 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 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 systems.
o The Partnership and the General Partner believe that secondary market
prices generally do not reflect the current market value of the
Partnership's assets, nor are they indicative of total return, since prior
cash distributions and tax benefits received by the original investor are
not reflected in the prices. Nevertheless, the secondary market prices, to
the extent that the reported data are reliable, are indicative of the
prices at which the Partnership's units trade in the illiquid secondary
market. As reported in The Partnership Spectrum, the weighted average price
was $185.60 per unit for the months of November and December 1998 (based on
one trade involving an aggregate of 20 units). There can be no assurance
regarding future secondary market prices.
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 on an established securities market, a secondary market or the
substantial equivalent of a secondary market. As it believes is customary, the
Partnership complies with this requirement by adhering to an Internal Revenue
Service safe harbor 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 1999, no further sales of units,
including any attempted sales related to the Madison Offer, will be recognized
by the Partnership for the balance of 1999.
For the reasons discussed above, the Partnership and the General
Partner recommend 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, L.P.
Enstar Communications Corporation
cc: Account Representative
