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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
(Amendment No. 1)
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ML Media Partners, L.P.
(Name of Subject Company)
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ML Media Partners, L.P.
(Name of Person(s) Filing Statement)
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Units of Limited Partnership Interest
(Title of Class of Securities)
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none
(CUSIP Number of Class of Securities)
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James V. Caruso
Executive Vice President
ML Media Management Inc.
World Financial Center
South Tower - 23rd Floor
New York, NY 10080-6123
(212) 236-4368
(Name, Address and Telephone Number of Person Authorized to Receive
Notice and Communications on Behalf of the Person(s) Filing Statement)
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Copies to:
Susan D. Lewis, Esq.
Brown & Wood LLP
One World Trade Center
New York, NY 10048-0557
(212) 839-5317
<PAGE>
This Amendment No. 1 amends and supplements the Solicitation/Recommendation
Statement on Schedule 14D-9 originally filed with the Securities and Exchange
Commission by ML Media Partners, L.P., a Delaware limited partnership (the
"Partnership"), on February 9, 1999 (the "Schedule 14D-9"). The Schedule 14D-9,
as amended by this Amendment No. 1, relates to the unsolicited tender offer made
by Smithtown Bay, LLC, a Delaware limited liability company ("Smithtown" or the
"Purchaser"), disclosed in a Tender Offer Statement on Schedule 14D-1 dated
January 27, 1999, as amended (the "Schedule 14D-1"), to purchase for cash up to
6,500 units of limited partnership interest ("Units"), representing
approximately 3.5% of the Units outstanding as of January 27, 1999. The purpose
of this Amendment No. 1 is to amend Items 2, 4 and 9 of the Partnership's
Schedule 14D-9 as set forth below. Capitalized terms used but not defined herein
have the meanings ascribed to them in the Schedule 14D-9.
The following Items of the Schedule 14D-9 are hereby supplemented and/or
amended as follows:
Item 2. Tender Offer of the Bidder.
The third line of the first sentence of Item 2 of the Schedule 14D-9 is
hereby amended by replacing "January 27, 1999" with "January 27, 1999, as
amended on February 25, 1999."
The fifth line of the first sentence of Item 2 of the Schedule 14D-9 is
hereby amended by replacing "$950 per Unit" with "$1,100 per Unit."
Item 4. The Solicitation or Recommendation.
Sub-item (a) of Item 4 of the Schedule 14D-9 is hereby amended and restated
to read as follows
At meetings of the General Partner held on February 3, 1999, February 26,
1999, and March 3, 1999, at which RPMM and MLMM, as general partners of the
General Partner participated, the General Partner, on behalf of the Partnership,
concluded that the Current Offer, as originally made and as amended, is
inadequate and not in the best interest of the Limited Partners, and recommends
that the Limited Partners reject the Current Offer and not tender their Units
pursuant to the Current Offer. Letters to the Limited Partners of the
Partnership communicating the Partnership's view with respect to the Current
Offer are filed as Exhibits (a)(2)(i) and (a)(2)(ii) hereto and incorporated
herein by reference. Depending on, among other things, (i) the personal tax
situation, liquidity needs and other financial considerations of each Limited
Partner and such Limited Partner's own facts and circumstances, (ii) such
Limited Partner's own assessment of the Current Offer and the relevant facts,
(iii) such Limited Partner's willingness to accept the risks relating to the
amount of proceeds that the Partnership will actually realize from the sales of
its remaining Media Properties and (iv) the amount and timing of any
distributions of such proceeds, certain Limited Partners may determine that it
is appropriate to tender their Units in the Current Offer. However, the
Partnership and the General Partner believe that all Limited Partners should
carefully consider the information set forth in Item 4(b) below before making a
decision whether or not to tender their Units.
Sub-item (b) of Item 4 of the Schedule 14D-9 is hereby amended and restated
to read as follows:
The Partnership reached the conclusion set forth in Item 4(a) after
considering the following factors:
(i) Expected First Quarter 1999 Cash Distribution. Pursuant to the
previously announced sales of the Partnership's radio stations in Anaheim,
California and Cleveland, Ohio on January 4, 1999, and January 28, 1999,
respectively, the Partnership on March 1, 1999, declared a distribution to
Limited Partners in the amount of $337 per Unit that will be made by the
end of the first calendar quarter of 1999. A portion of the distribution,
consisting of $305 per Unit relating to distributable proceeds from the
sales of the Anaheim and Cleveland radio stations, will be made to Limited
Partners who were recorded on the Partnership's books as owning their Units
during the period of January 4 through January 28, 1999. The balance of the
distribution, consisting of $32 per Unit relating to certain amounts
released from reserves created in connection with the prior sale of the
Partnership's California cable system, will be made to Limited Partners of
record on March 1, 1999. The Current Offer provides that the Purchaser will
deduct the total distribution from the cash amount the Purchaser will pay
to tendering Limited Partners. See paragraph (viii) below.
(ii) Sales of Remaining Media Properties. The Partnership's Puerto Rico cable
systems are owned in a 50-50 joint venture with Century Communications
Corp., a public company currently seeking a buyer. The General Partner
currently expects the Partnership to either sell its interest in the Puerto
Rico cable systems in conjunction with the sale of Century Communications
Corp. or, in 1999, to trigger the mechanism in the joint venture agreement
to sell the Puerto Rico cable systems (or its interest therein). In either
event, a sale may not be consummated until as late as 2000 or 2001. There
can be no assurance, however, as to the price that the Partnership will
ultimately realize from such sale or the timing of such sale. In addition,
the Partnership is presently negotiating a sale of its Bridgeport,
Connecticut radio combination, although there can be no assurance as to
whether, when and on what terms such sale may be consummated. Limited
Partners who tender their Units to the Purchaser will not receive any
economic benefit from such sales, if and when consummated by the
Partnership, to the extent that benefit is not reflected in the Current
Offer price.
(iii)The Value of the Partnership's Remaining Assets could be Significantly
Higher than the Value Reflected in the Current Offer. The General Partner
currently estimates that the net asset value of the Partnership, computed
as of September 25, 1998, adjusted to reflect the actual sales prices of
the Anaheim and Cleveland radio stations, is $1,150 per Unit. Such
estimated net asset value takes into consideration the estimated value of
the Partnership's Media Properties (including the Anaheim and Cleveland
radio stations), its cash holdings, as well as its other assets and
liabilities; and it reflects the Partnership's estimated fees and expenses
to be incurred in connection with its remaining operations and the winding
up of the Partnership, but does not reflect any potential costs, expenses
or liabilities relating to the litigation described in Item 8(b) below. In
addition, although there can be no assurance that the Partnership's net
asset value can or will be realized, or certainty as to the amount of
future fees and expenses, the General Partner believes that it has used
conservative assumptions in estimating the value of the remaining Media
Properties. Furthermore, due to the recent strengthening of the market for
cable systems generally, the General Partner believes that there is
significant upside potential to the value it has assigned to the Puerto
Rico cable systems. As a result, the Partnership believes that the actual
proceeds received by the Partnership from the sales of its remaining Media
Properties may be significantly higher than the values assumed in
calculating the net asset value of the Partnership described above.
Therefore, the Partnership has concluded that it would be better for a
Limited Partner to hold its Units rather than to tender them pursuant to
the Current Offer.
However, there can be no assurance that changing market conditions or other
factors will not have a negative impact on the value of the Partnership's
cable systems in San Juan, Puerto Rico or its radio station combination in
Bridgeport, Connecticut or its ability to sell either or both of such
assets at any particular price or within any particular time frame. In
addition, the actual proceeds received by the Partnership from the sales of
its Media Properties could be lower than estimated.
The actual value of Units to be ultimately realized by Limited Partners
from the Partnership will also be dependent on the ability of the
Partnership to sell its Media Properties, and the actual proceeds received
for such Media Properties, as well as the actual costs and expenses
(including with respect to litigation) incurred prior to the completion of
the liquidation of the Partnership and the results of the litigation
referred to in Item 8(b) below. Also, the pendency of the litigation may
delay distributions to the Limited Partners.
Therefore, Limited Partners who do not want to take the risks of changing
market or other conditions or who want to liquidate their investment in the
Partnership now and make other uses of the proceeds of their investment
(rather than wait until the sales of the remaining Media Properties and the
distributions of any distributable proceeds related to such sales, the
timing of all of which is uncertain) may want to tender all or a portion of
their Units.
The Partnership's estimates and assumptions have not been reviewed by an
independent appraiser or financial advisor.
(iv) The Purchaser's Profit Motive. As set forth in the Current Offer, the
Purchaser is making the Current Offer for investment purposes and with the
intention of making a profit from its purchase and ownership of the Units.
The Purchaser also stated that its intent is to acquire the Units at a
discount to the value that the Purchaser might ultimately realize from
owning the Units. Please note that the Current Offer price, as provided by
the Amendment, is $1,100 per Unit, reduced by the $50 transfer fee (per
transfer, not per Unit) and further reduced by the amount of any
distributions paid or declared with respect to the Units after January 1,
1999 (including the expected first quarter 1999 distribution of $337,
described above).
(v) No Established Market Valuations by Third Parties. Limited partnership
interests are generally illiquid and there is no established trading market
for the Units to provide established market valuations for the Units
against which to compare the purchase price in the Current Offer. Secondary
market sales activity for the Units, including privately negotiated sales,
has been limited and sporadic. Privately negotiated sales and sales through
intermediaries (e.g., through the matching services for buyers and sellers
of partnership interests) currently are the primary means available to a
Limited Partner to liquidate an investment in the Units (other than tender
offers to purchase, including the Current Offer) because the Units are not
listed or traded on any exchange or quoted on any NASDAQ list or system.
During the past twelve months, however, several Limited Partners of the
Partnership who are not in any other way affiliated with the Partnership or
the General Partner conducted unregistered unsolicited tender offers for
Units in the Partnership at prices ranging from $360 per Unit to $600 per
Unit, and registered unsolicited tender offers for Units in the Partnership
at prices ranging from $750 to $950 per Unit (see below). In addition,
private sales during the past twelve months generally have ranged from $125
per Unit to $1,020 per Unit. Sales prices in the informal secondary market
have typically reflected a discount to the Partnership's estimates of net
asset value at the time.
Madison Liquidity Investors 104, LLC ("Madison"), a Delaware limited
liability company unaffiliated with the Partnership and the General
Partner, has disclosed in a Tender Offer Statement on Schedule 14D-1 filed
with the SEC on November 23, 1998, as amended, its unsolicited tender offer
(the "Madison Offer") to purchase up to 9.9% of outstanding Units of the
Partnership at a price of $750 per Unit (less transfer fees and less cash
distributions, as described therein). The Partnership has stated its
position as to the Madison Offer in a Recommendation Statement on Schedule
14D-9 dated November 30, 1998, as amended. Madison has announced that as of
the close of business on February 9, 1999, 274 Units have been tendered and
not withdrawn. In addition, the Purchaser filed with the SEC a Tender Offer
Statement on Schedule 14D-1 dated November 27, 1998, as amended, in
connection with the Purchaser's Prior Offer, pursuant to which it offered
to purchase up to 4.8% of the then outstanding Units of the Partnership at
a price of $950 per Unit (less transfer fees and less cash distributions,
as described therein). The Purchaser's Prior Offer terminated on December
31, 1998, and the Purchaser has announced that it purchased 2,582 Units
pursuant to such Prior Offer, representing approximately 1.4% of the issued
and outstanding Units.
(vi) Limitations on Recognition of Transfers in any Tax Year; Uncertainty as to
Timing of Payment for Units Tendered. As provided by Section 7.1B(1) of the
Partnership Agreement, the Partnership need not recognize any transfer that
would cause the Partnership to be treated as an association taxable as a
corporation for federal income tax purposes, which could be the result if
the transfers of Units were deemed to cause the Partnership to be a
"publicly traded partnership" for federal income tax purposes. As more
fully described in Item 8(a) below, it has been and is the Partnership's
practice in any tax year to limit the number of transfers recognized in any
Partnership tax year to no more than 4.8% of outstanding Units in order to
stay within a safe harbor from classification of the Partnership as a
"publicly traded partnership", as provided in Internal Revenue Service
Notice 88-75 (the "IRS Notice"). In tax year 1998, the Partnership
recognized transfers of 4.8% of Units (a limit previously set by the
General Partner in an effort not to inadvertently exceed the 5%
limitation), and did not recognize any transfers in such tax year after
August 1998. Similarly, in tax year 1997 the Partnership reached its
limitation in June of that year and no further transfers were recognized in
that tax year (other than excluded transfers under the IRS Notice). The
Partnership's policy of limiting transfers to stay within the safe harbor
limitations established by the IRS Notice may have the effect of limiting
the number of Units that can be transferred pursuant to the Current Offer
in any tax year of the Partnership. Thus, notwithstanding that the
Purchaser seeks to acquire up to 3.5% of the outstanding Units, the actual
number of Units tendered pursuant to the Current Offer that will be
recognized for transfer by the Partnership in the 1999 tax year, after
taking into account the number of other transfers recognized for such tax
year (whether as a result of private sales, competing tender offers or the
prior unsolicited tender offer made by the Purchaser in late 1998 (the
latter of which transfers already have been recognized in the Partnership's
1999 tax year)) could be considerably less than the number of Units sought.
As of March 1, 1999, 4,626 Units (approximately 2.5% of outstanding Units)
have been recognized for transfer in the Partnership's 1999 tax year). In
addition, based on the terms of the Current Offer, the Purchaser has stated
that it will not pay for tendered Units until it has confirmed that it will
become a registered owner on the books and records of the Partnership.
Thus, although tendered Units may be withdrawn at any time prior to the
Current Offer's expiration date (March 30, 1999, unless extended), it is
uncertain when the transfer of certain Units tendered pursuant to the
Current Offer, and not otherwise withdrawn, will be recognized and when
such tendering Limited Partners will actually be paid.
(vii)Tendering Limited Partners Will Receive Schedule K-1s for 1999. The
ability of a Limited Partner to transfer Units is subject to the terms and
conditions set forth in the Partnership Agreement. As provided in Section
7.1C of the Partnership Agreement, transfers of Units are recognized by the
Partnership as of the last day of the calendar month. Such transfers will
be recognized after the close of business on the last day of the calendar
month in which all conditions to transfer have been satisfied and will be
effective for the period commencing on the first day of the following
month. Limited Partners who tender their Units in connection with the
Current Offer will receive Schedule K-1 tax forms for the Partnership's tax
year ending December 31, 1999.
(viii) Continuing Tax Allocations by the Partnership. The Current Offer provides
that a Limited Partner who tenders Units assigns to the Purchaser all
profits, losses and distributions paid or declared by the Partnership after
January 1, 1999, with respect to those Units; and any distributions
received by the tendering Limited Partner from the Partnership will reduce
the amount of the purchase price paid by the Purchaser to the tendering
Limited Partner. However, pursuant to the Partnership Agreement, as
described above, transfers of Units are only recognized by the Partnership
on monthly transfer dates and subject to the terms and conditions of the
Partnership Agreement. Thus, tendering Limited Partners will receive no
additional economic benefit with respect to tendered Units from any
distributions paid or declared after January 1, 1999, but a tendering
Limited Partner will receive any tax allocations from the Partnership
relating to such distributions, as reflected on a Schedule K-1 tax form,
until a transfer of such Limited Partner's Units is actually recognized by
the Partnership, which period could, based on the terms of the Current
Offer, extend beyond tax year 1999, depending on the aggregate number of
Units presented by all tendering Limited Partners to the Partnership for
transfer and the number of Units that have been previously recognized for
transfer. See paragraph (vi) above. Accordingly, with respect to the sales
of the Anaheim and Cleveland stations, for example, the gain or loss from
such sales will be reported on a Schedule K-1 tax form to Limited Partners
(including tendering Limited Partners) from the Partnership, but tendering
Limited Partners would not receive the economic benefit of the sale
proceeds, except to the extent reflected in the value of the Current Offer
price. See paragraphs (i) and (ii) above.
(ix) Other Limitations to Recognition of Transfers. The Partnership Agreement,
in Section 7.3, also contains other limitations applicable to the transfer
of interests. Units may only be transferred to "Eligible Citizens", as
defined in the Partnership Agreement. Furthermore, additional information
must be provided to the Partnership by any transferee wishing to be
recognized as the owner of 1% or more of the Partnership Units to address
certain FCC regulatory concerns related to the ownership of the
Partnership's Media Properties. As described in Item 3(b)(ii) above, the
Partnership has previously been provided with confirmation as to these
matters from the Purchaser. Transfers will be recorded on the books and
records of the Partnership only upon the satisfactory completion and
acceptance by the General Partner of transfer documents acceptable to the
General Partner, in compliance with applicable laws and the terms of the
Partnership Agreement.
(x) Limited Partners May Be Able to Sell Their Units at a Higher Price.
The Partnership recommends that Limited Partners who seek current liquidity
but do not wish to sell their Units pursuant to the Current Offer make
their own inquiry as to alternative transactions that may be available,
including among others, the limited informal secondary market for trading
limited partnership interests, any proposed or pending tender offer by any
other party and any other offer that may be announced prior to the
expiration of the Current Offer. There can be no assurance, however, that a
Limited Partner will be able to sell its Units or achieve a higher price in
an alternative transaction.
In making its recommendation with respect to the Current Offer, the
Partnership has not taken into account the tax consequences of, or the tax
consequences to, individual Limited Partners as a result of accepting or
rejecting the Current Offer; those tax consequences could vary significantly for
each Limited Partner based on such Limited Partner's unique tax situation or
other circumstances. In addition, the Partnership has not engaged any financial
advisor to evaluate the terms of the Current Offer or to determine whether the
Current Offer is fair to Limited Partners.
Each Limited Partner must make his, her, or its own decision whether
to accept or reject the Current Offer. Limited Partners are urged to carefully
review all the information contained in or incorporated by reference in the
Current Offer, as well as the Partnership's publicly available annual, quarterly
and other reports, and the Partnership's communications with Limited Partners.
The Partnership urges Limited Partners to carefully consider all such
information, as well as the information contained herein, and to consider their
own personal situation and consult with their own tax, financial or other
advisors in evaluating the terms of the Current Offer before deciding to tender
Units.
Limited Partners should carefully and completely review the terms of
all information available, including the terms of any competing offers, prior to
deciding to tender Units.
Item 9. Material to be filed As Exhibits.
Item 9 of the Schedule 14D-9 is hereby amended by adding the following
exhibit thereto:
(a) (2) (i) Letter from the Partnership to Limited Partners dated February
9, 1999.*
(a) (2) (ii) Letter from the Partnership to Limited Partners dated March 4,
1999.
* Previously filed as Exhibit (a) (2) to the Partnership's Recommendation
Statement on Schedule 14D-9 dated February 9, 1999
<PAGE>
SignatureS
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this Amendment No. 1 is
true, complete and correct.
ML MEDIA PARTNERS, L.P.
By Media Management Partners, its General Partner
By RP Media Management, general partner
By: /s/ Elizabeth McNey Yates
Name: Elizabeth McNey Yates
Title: Executive Vice President
By ML Media Management Inc., general partner
By: /s/ James V. Caruso
Name: James V. Caruso
Title: Executive Vice President
Dated: March 4, 1999
ML MEDIA PARTNERS, L.P.
World Financial Center
South Tower, 23rd Floor
New York, NY 10080-6123
March 4, 1999
Re: Amendment to Smithtown Bay, LLC - 1999 Tender Offer
Partnership's Position and Recommendation
Dear Limited Partner of ML Media Partners, L.P.:
ML Media Partners, L.P., a Delaware limited partnership (the
"Partnership"), has reviewed Amendment No. 1 dated February 25, 1999 (the
"Amendment") to the unsolicited tender offer dated January 27, 1999, by
Smithtown Bay, LLC ("Smithtown") and Global Capital Management, Inc., to
purchase up to 3.5% of the units of limited partnership interest (the "Units")
of the Partnership. The Amendment provides for an increase in the price offered
by Smithtown to $1,100 per Unit (less transfer fees and less cash distributions
paid or declared to Limited Partners after January 1, 1999) and further provides
that the Smithtown offer will expire on March 30, 1999. The Smithtown offer, as
amended by the Amendment, is referred to herein as the "Amended Smithtown
Offer." The Partnership has filed with the Securities and Exchange Commission
(the "SEC") an Amendment No. 1 dated March 4, 1999 (the "Recommendation
Amendment") to its Recommendation Statement on Schedule 14D-9 with respect to
the Amended Smithtown Offer. We have enclosed a copy of the Recommendation
Amendment with this letter and urge you to carefully and completely review it,
together with the Recommendation Statement on Schedule 14D-9 dated February 9,
1999 (the "Recommendation Statement") previously provided to you. The
Recommendation Statement, as amended by the Recommendation Amendment, is
referred to herein as the "Amended Recommendation Statement."
As more fully described in the Amended Recommendation Statement, the
Partnership has concluded that the Amended Smithtown Offer is inadequate and not
in the best interests of the Limited Partners. Accordingly, the Partnership
recommends that Limited Partners reject the Amended Smithtown Offer and not
tender any of their Units. Neither the Partnership's general partner, Media
Management Partners (the "General Partner"), nor any of its officers, directors
or affiliates intends to tender any of their Units pursuant to the Amended
Smithtown Offer. However, for those Limited Partners who have an immediate need
for liquidity or who conclude that the risks of continuing to hold Units are
significant, the Amended Smithtown Offer may indeed be adequate and in their
best interests. In addition, for those Limited Partners who desire to sell their
Units, the Amended Smithtown Offer provides a higher price than that offered by
the competing tender offer by Madison Liquidity Investors 104, LLC.
In arriving at its recommendation, the Partnership reviewed the Amended
Smithtown Offer and considered many factors, including the business, financial
condition and prospects of the Partnership and the potential value of its
remaining assets. The Partnership believes that all Limited Partners should
carefully consider these and all other relevant facts and circumstances,
including their own personal tax situation, liquidity needs and other financial
considerations, and should review all available information before making a
decision whether or not to tender their Units. Depending on, among other things,
(a) each Limited Partner's own consideration of such factors, (b) such Limited
Partner's own assessment of the Amended Smithtown Offer and the relevant facts,
(c) such Limited Partner's willingness to accept the risks relating to the
amount of proceeds that the Partnership will actually realize from the sales of
the Partnership's remaining media properties (the "Media Properties") and (d)
the amount and timing of any distributions of such proceeds and the
Partnership's remaining assets, certain Limited Partners may determine that it
is appropriate to tender their Units in the Amended Smithtown Offer. Factors
that have been considered by the Partnership include the following, which are
more fully discussed in the Amended Recommendation Statement:
o Expected First Quarter 1999 Cash Distribution. Pursuant to the
previously announced sales of the Partnership's radio stations in
Anaheim, California and Cleveland, Ohio on January 4, 1999, and
January 28, 1999, respectively, the Partnership on March 1, 1999,
declared a distribution to Limited Partners in the amount of $337 per
Unit that will be made by the end of the first calendar quarter of
1999. A portion of the distribution, consisting of $305 per Unit
relating to distributable proceeds from the sales of the Anaheim and
Cleveland radio stations, will be made to Limited Partners who were
recorded on the Partnership's books as owning their Units during the
period of January 4 through January 28, 1999. The balance of the
distribution, consisting of $32 per Unit relating to certain amounts
released from reserves created in connection with the prior sale of
the Partnership's California cable system, will be made to Limited
Partners of record on March 1, 1999. The Amended Smithtown Offer
provides that Smithtown will deduct the total distribution from the
cash amount Smithtown will pay to tendering Limited Partners.
o Sales of Remaining Media Properties. The Partnership's Puerto Rico
cable systems are owned in a 50-50 joint venture with Century
Communications Corp., a public company currently seeking a buyer. The
General Partner currently expects the Partnership to either sell its
interest in the Puerto Rico cable systems in conjunction with the sale
of Century Communications Corp. or, in 1999, to trigger the mechanism
in the joint venture agreement to sell the Puerto Rico cable systems
(or its interest therein). In either event, a sale may not be
consummated until as late as 2000 or perhaps 2001. There can be no
assurance, however, as to the price that the Partnership will
ultimately realize from such sale or the timing of such sale. In
addition, the Partnership is presently negotiating a sale of its
Bridgeport, Connecticut radio combination, although there can be no
assurance as to whether, when and on what terms such sale may be
consummated. Limited Partners who tender their Units to Smithtown will
not receive any economic benefit from such sales, if and when
consummated by the Partnership, to the extent that benefit is not
reflected in the Amended Smithtown Offer price.
o The Value of the Partnership's Remaining Assets could be Significantly
Higher than the Value Reflected in the Amended Smithtown Offer. The
General Partner currently estimates that the net asset value of the
Partnership, computed as of September 25, 1998, adjusted to reflect
the actual sales prices of the Anaheim and Cleveland radio stations,
is $1,150 per Unit. Such estimated net asset value takes into
consideration the estimated value of the Partnership's Media
Properties (including the Anaheim and Cleveland radio stations), its
cash holdings, as well as its other assets and liabilities; and it
reflects the Partnership's estimated fees and expenses to be incurred
in connection with its remaining operations and the winding up of the
Partnership, but does not reflect any potential costs, expenses or
liabilities relating to the litigation more fully described in the
Amended Recommendation Statement. In addition, although there can be
no assurance that the Partnership's net asset value can or will be
realized, or certainty as to the amount of future fees and expenses,
the General Partner believes that it has used conservative assumptions
in estimating the value of the remaining Media Properties.
Furthermore, due to the recent strengthening of the market for cable
systems generally, the General Partner believes that there is
significant upside potential to the value it has assigned to the
Puerto Rico cable systems. As a result, the Partnership believes that
the actual proceeds received by the Partnership from the sales of its
remaining Media Properties may be significantly higher than the values
assumed in calculating the net asset value of the Partnership
described above. Therefore, the Partnership has concluded that it
would be better for a Limited Partner to hold its Units rather than to
tender them pursuant to the Amended Smithtown Offer.
However, there can be no assurance that changing market conditions or
other factors will not have a negative impact on the value of the
Partnership's cable systems in San Juan, Puerto Rico or its radio
station combination in Bridgeport, Connecticut or its ability to sell
either or both of such assets at any particular price or within any
particular time frame. In addition, as further discussed in the
Amended Recommendation Statement, the actual proceeds received by the
Partnership from the sales of its Media Properties could be lower than
estimated. Also, the pendency of the litigation described in the
Amended Recommendation Statement, may delay distributions to Limited
Partners.
Therefore, Limited Partners who do not want to take the risks of
changing market or other conditions or who want to liquidate their
investment in the Partnership now and make other uses of the proceeds
of their investment (rather than wait until the sales of the remaining
Media Properties and the distributions of any distributable proceeds
related to such sales, the timing of all of which is uncertain) may
want to tender all or a portion of their Units.
The Partnership's estimates and assumptions have not been reviewed by
an independent appraiser or financial advisor.
o Smithtown's Profit Motive. As set forth in the Amended Smithtown
Offer, Smithtown is making the Amended Smithtown Offer for investment
purposes and with the intention of making a profit from its purchase
and ownership of the Units. Smithtown also stated that its intent is
to acquire the Units at a discount to the value that Smithtown might
ultimately realize from owning the Units. Please note that the Amended
Smithtown Offer price, as provided by the Amendment, is $1,100 per
Unit, reduced by the $50 transfer fee (per transfer, not per Unit) and
further reduced by the amount of any distributions paid or declared
with respect to the Units after January 1, 1999 (including the
expected first quarter 1999 distribution of $337, described above).
o No Established Market Valuations by Third Parties. Limited partnership
interests are generally illiquid and there is no established trading
market for the Units to provide established market valuations for the
Units against which to compare the purchase price in the Amended
Smithtown Offer. As further discussed in the Amended Recommendation
Statement, secondary market activity for the Units, including
privately negotiated sales, has been limited and sporadic. However, in
late November 1998, Madison Liquidity Investors 104, LLC, a Delaware
limited liability company unaffiliated with the Partnership and the
General Partner ("Madison"), commenced its unsolicited tender offer
(the "Madison Offer") to purchase up to 9.9% of the outstanding Units
of the Partnership at a price of $750 per Unit (less transfer fees and
less cash distributions, as described therein). Madison has announced
that as of the close of business on February 9, 1999, 274 Units have
been tendered and not withdrawn. (The Partnership has separately
communicated to Limited Partners its position as to the Madison
Offer.) In addition, also in late November 1998, Smithtown commenced
its prior unsolicited tender offer (the "Prior Smithtown Offer") to
purchase up to 4.8% of the then outstanding Units of the Partnership
at a price of $950 per Unit (less transfer fees and less cash
distributions as described therein). The Prior Smithtown Offer
terminated on December 31, 1998, and Smithtown has announced that it
purchased 2,582 Units pursuant to such prior offer, representing
approximately 1.4% of the issued and outstanding Units.
o Limitations on Recognition of Transfers in any Tax Year; Uncertainty
as to Timing of Payment for Units Tendered. It has been and is the
Partnership's practice to limit transfers within any tax year of the
Partnership to no more than 4.8% of outstanding Units in order to stay
within certain safe harbor tax provisions so that the Partnership is
not classified as a "publicly traded partnership." Thus,
notwithstanding that Smithtown seeks to acquire up to 3.5% of the
outstanding Units, the actual number of Units tendered pursuant to the
Amended Smithtown Offer that will be recognized for transfer by the
Partnership in the 1999 tax year, after taking into account the number
of other transfers recognized for such tax year (whether as a result
of private sales, competing tender offers or the prior unsolicited
tender offer made by Smithtown in late 1998 (the latter of which
transfers already have been recognized in the Partnership's 1999 tax
year)) could be considerably less than the number of Units sought. As
of March 1, 1999, 4,626 Units (approximately 2.5% of outstanding
Units) have been recognized for transfer in the Partnership's 1999 tax
year. In addition, based on the terms of the Amended Smithtown Offer,
Smithtown has stated that it will not pay for tendered Units until it
has confirmed that it will become a registered owner on the books and
records of the Partnership. Thus, although tendered Units may be
withdrawn at any time prior to the Amended Smithtown Offer's
expiration date (March 30, 1999, unless extended), it is uncertain
when the transfer of certain Units tendered pursuant to the Amended
Smithtown Offer, and not otherwise withdrawn, will be recognized and
when such tendering Limited Partners will actually be paid.
o Tendering Limited Partners Will Receive Schedule K-1s for 1999.
Limited Partners who tender their Units in connection with the Amended
Smithtown Offer will receive Schedule K-1 tax forms for the
Partnership's tax year ending December 31, 1999.
o Continuing Tax Allocations by the Partnership. Tendering Limited
Partners will receive no additional economic benefit from any
distributions paid or declared after January 1, 1999, but a tendering
Limited Partner will receive any tax allocations from the Partnership
relating to such distributions, as reflected on a Schedule K-1 tax
form, until a transfer of such Limited Partner's Units is actually
recognized by the Partnership, which period could, based on the terms
of the Amended Smithtown Offer, extend beyond tax year 1999, depending
on the number of Units presented by all tendering Limited Partners to
the Partnership for transfer and the number of Units that have been
previously recognized for transfer. Accordingly, with respect to the
sales of the Anaheim and Cleveland stations, for example, the gain or
loss from such sales will be reported on a Schedule K-1 tax form to
Limited Partners (including tendering Limited Partners) from the
Partnership, but tendering Limited Partners would not receive the
economic benefit of the sale proceeds, except to the extent reflected
in the value of the Amended Smithtown Offer price.
o Other Limitations to Recognition of Transfers. The Second Amended and
Restated Agreement of Limited Partnership, as amended, which governs
the Partnership, contains other limitations applicable to the transfer
of interests pursuant to restrictions established by the Federal
Communications Commission and otherwise.
o Limited Partners May Be Able to Sell Their Units at a Higher Price.
The Partnership recommends that Limited Partners who seek current
liquidity but do not wish to sell their Units pursuant to the Amended
Smithtown Offer make their own inquiry as to alternative transactions
that may be available, including among others, the informal secondary
market for trading limited partnership interests, any proposed or
pending tender offer by any other parties and any other offer that may
be announced prior to the expiration of the Amended Smithtown Offer.
There can be no assurance, however, that a Limited Partner will be
able to sell its Units or achieve a higher price in an alternative
transaction.
In making its recommendation with respect to the Amended Smithtown Offer,
the Partnership has not taken into account the tax consequences of, or the tax
consequences to, individual Limited Partners as a result of accepting or
rejecting the Amended Smithtown Offer; those tax consequences could vary
significantly for each Limited Partner based on such Limited Partner's unique
tax situation or other circumstances. In addition, the Partnership has not
engaged any financial advisor to evaluate the terms of the Amended Smithtown
Offer or to determine whether the Amended Smithtown Offer is fair to Limited
Partners.
Each Limited Partner must make his, her, or its own decision whether to
accept or reject the Amended Smithtown Offer. Limited Partners are urged to
carefully review all the information contained in or incorporated by reference
in the Amended Smithtown Offer, as well as the Partnership's publicly available
annual, quarterly and other reports, and the Partnership's communications with
Limited Partners. The Partnership urges Limited Partners to carefully consider
all such information, as well as the information contained in the Partnership's
Amended Recommendation Statement and to consider their own personal situation
and consult with their own tax, financial or other advisors in evaluating the
terms of the Amended Smithtown Offer before deciding to tender Units.
Limited Partners should carefully and completely review the terms of all
information available, including the terms of any competing offers, prior to
deciding to tender Units.
TO THE EXTENT THAT YOU HAVE ALREADY TENDERED UNITS TO SMITHTOWN PURSUANT TO
ITS OFFER, WHETHER PRIOR TO OR AFTER THE DATE OF THE AMENDMENT, YOU SHOULD
CONSIDER THAT YOU HAVE A RIGHT TO WITHDRAW YOUR TENDER BY FOLLOWING THE
PROCEDURES SET FORTH UNDER "SECTION 4. WITHDRAWAL RIGHTS" IN SMITHTOWN'S OFFER
TO PURCHASE DATED JANUARY 27, 1999, AS AMENDED ON FEBRUARY 25, 1999. The Offer
to Purchase, as amended, provides that Units tendered pursuant to the Amended
Smithtown Offer may be withdrawn at any time prior to the Amended Smithtown
Offer's expiration date (March 30, 1999, unless extended). For withdrawal to be
effective, a written notice of withdrawal must be timely received by Smithtown's
transfer agent, MAVRICC Management Systems, Inc., Post Office Box 7090, Troy,
Michigan 48007-7090. Any such notice of withdrawal must specify the name of the
person who tendered the Units to be withdrawn and must be signed by the
person(s) who signed the Agreement of Transfer and Sale in the same manner as
the Agreement of Transfer and Sale was signed and it must also contain a
medallion signature guarantee.
The Recommendation Statement, as amended by the Amendment thereto which is
attached to this letter, expands upon the reasons for the position taken by the
Partnership concerning the Amended Smithtown Offer, and contains additional
information about the potential risks to Limited Partners from their continuing
to hold their Units through the planned liquidation of the Partnership. We urge
you to read the Amended Recommendation Statement, carefully.
Certain statements in the foregoing discussion constitute "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. The Partnership notes that a variety of factors, many of which are
beyond its control, affect media property values and the Partnership's value,
business prospects, and results and could cause actual results and experience to
differ materially from the expectations and estimates expressed herein. These
factors include, but are not limited to, the effect of changing economic and
market conditions, generally, and particularly with respect to media businesses,
generally, or in specific local markets where the Partnership's media properties
are located, or on specific trends in business and finance and in investor
sentiment, the level of volatility of interest rates, the actions undertaken by
both current and potential or new competitors, the impact of and inherent
uncertainties in current, pending and future legislation, regulation, and
litigation, and the other risks and uncertainties described herein and in the
Amended Recommendation Statement. The Partnership undertakes no responsibility
to update publicly or revise any forward-looking statements.
Please do not hesitate to call our Investor Services Information Center at
(800) 288-3694 for assistance in any Partnership matter. Our Investor Services
Information Center operates Monday through Friday, from 10:00 a.m. to 1:00 p.m.
and from 2:00 p.m. to 5:00 p.m. Eastern time.
ML MEDIA PARTNERS, L.P.
