SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
(Amendment No. 3)
Solicitation/Recommendation Statement Pursuant to Section 14(d)(4) of
the Securities Exchange Act of 1934
BALCOR/COLONIAL STORAGE INCOME FUND-86
(Name of Subject Company)
BALCOR/COLONIAL STORAGE INCOME FUND-86
(Name of Person(s) Filing Statement)
Limited Partnership Interests
(Title of Class of Securities)
N/A
(CUSIP Number of Class of Securities)
THOMAS E. MEADOR JAMES R. PRUETT
CHAIRMAN PRESIDENT
The Balcor Company Colonial Storage 86, Inc.
Bannockburn Lake Office Plaza 4381 Green Oaks Blvd. West
2355 Waukegan Road, Suite A200 Suite 100
Bannockburn, Illinois 60015 Arlington, Texas 76016
(847)267-1600 (817)561-0100
(Name, Address and Telephone Number of Persons Authorized to
Receive Notice and Communications on Behalf of the Person(s)
Filing Statement)
Copy To:
Herbert S. Wander
Lawrence D. Levin
Katten Muchin & Zavis
Suite 1600
525 West Monroe Street
Chicago, Illinois 60661-3693
(312)902-5654
<PAGE>
Amendment No. 3 to Schedule 14D-9
This Amendment No. 3 to Schedule 14D-9 amends the Schedule 14D-9 (the
"Schedule 14D-9") filed by Balcor/Colonial Storage Income Fund-86, an Illinois
limited partnership (the "Partnership"), with the Securities and Exchange
Commission on April 26, 1996 and previously amended by Amendment No. 1 filed
May 3, 1996 and Amendment No. 2 filed May 8, 1996. All capitalized terms used
herein but not otherwise defined shall have the meanings ascribed to such terms
in the Schedule 14D-9.
Item 2. Tender Offer of the Bidder
Item 2 is hereby amended as follows:
This statement relates to the unsolicited tender offer by Public Storage,
Inc., a California corporation ("Public Storage"), to purchase up to
approximately 39% (but not more than 39%) of the Units at a purchase price of
$260 per Unit, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated April 15,
1996 (the "Offer to Purchase"), as amended by an Amended Tender Offer on
Schedule 14D-1/A, dated May 7, 1996, and the related letters of transmittal
(which together constitute the "Offer"), as filed with the Securities and
Exchange Commission (the "Commission"). Public Storage has also filed a Proxy
Statement on Schedule 14A, dated May 8, 1996 (the "Proxy Statement"). The
Offer to Purchase states that the address of the principal executive office of
Public Storage is 600 North Brand Boulevard, Glendale, California 91203-1241.
Item 3. Identity and Background
The fifth full paragraph of Item 3(b)(2) is hereby amended as follows:
Public Storage has indicated that it does not intend to vote Units it
acquires or owns in favor of the sale of the properties to STP. Public Storage
is soliciting opposition to the Purchase Agreement by asking the Limited
Partners, in the Proxy Statement, to vote against the sale of the Partnership's
properties to STP, and has conditioned its offer to purchase 39% of the Units
on the vote against such sale. If the sale of the properties to STP is
prevented by Public Storage, the affiliates of the General Partners will not
receive their brokerage commission for the sale of the Partnership's properties
as described in Item 4(b)(i) or its share of cash flow from operations from the
current year. In the event a sale to STP is prevented and certain other
conditions are satisfied, the Partnership will also have to pay STP a
termination amount of approximately $1.4 million. Public Storage was given the
opportunity to bid on the Partnership's properties and it declined.
Nevertheless, Public Storage has stated in the Offer to Purchase that depending
on the number of Units acquired by Public Storage in the Offer, Public Storage
may seek to renew previous discussions it has had regarding the acquisition of
the Colonial Affiliate or otherwise seek to obtain the right to manage the
Partnership's properties.
<PAGE>
Item 4. The Solicitation and Recommendation
The third full paragraph of Item 4(b)(i) is hereby amended as follows:
An initial distribution of at least $254 per Unit is expected to be made
no later than 30 days after the sale to STP. The $260 per Unit price offered
by Public Storage, though greater than the proposed liquidating distribution is
only for a portion of the Units and, therefore, Limited Partners may be left
holding Units whose future value is uncertain.
Item 4(b)(ii) is hereby amended as follows:
The General Partners' estimated liquidating distribution of $254 to $257
per Unit upon consummation of the sale of the Partnership's properties to STP
is payable with respect to all of the outstanding Units. On the other hand,
Public Storage's current Offer is for only 39% of the outstanding Units. If
more than 39% of the outstanding Units are tendered to Public Storage, it will
only accept 39% of the outstanding Units, with such Units being purchased on a
pro rata basis according to the number of Units validly tendered and not
properly withdrawn. Accordingly, Limited Partners who want to sell all of
their Units to Public Storage may be unable to do so and, therefore, Limited
Partners may be left holding Units whose future value is uncertain.
The first full paragraph of Item 4(b)(iv) is hereby amended as follows:
Public Storage originally stated in the Offer to Purchase that it adjusted
the General Partners' estimated liquidating distribution and unilaterally
arrived at an Offer Price of $240. Subsequently, Public Storage has increased
its Offer Price to $260 for 39% of the outstanding Units, as disclosed in the
Amended Offer. The General Partners' estimated liquidating distribution of
$254 to $257 is based on an assessment of the Partnership's current operations,
as well as an analysis of certain components of the sale to STP, including, but
not limited to (A) net cash proceeds, (B) estimated closing and solicitation
costs and (C) a reserve for contingencies.
Item 4(b)(v) is hereby amended as follows:
Public Storage owns 7.8% of the outstanding Units. Pursuant to the Offer,
Public Storage seeks to acquire up to an additional 39% of the outstanding
Units. If successful, Public Storage will own 46.8% of the Units and will be in
a position to virtually control all matters subject to a vote of the Limited
Partners, including removal of the General Partners and sale of the properties.
Public Storage has not indicated how the interests of the non-tendering Limited
Partners will be protected under these circumstances.
Item 4(b)(vii) is hereby amended as follows:
On January 29, 1996, Public Storage commenced an unsolicited tender offer
to purchase up to 25% of the outstanding Units at a purchase price of $200 per
Unit, which tender offer remained open until March 12, 1996. On March 21,
1996, Public Storage entered into a private transaction to acquire additional
Units at $240 per Unit, and consummated such transaction, as described in Item
7(a) below. On April 15, 1996, Public Storage commenced an unsolicited tender
offer to purchase up to 32.5% of the outstanding Units at a purchase price of
$240 per Unit, which tender offer was to remain open until May 14, 1996. On
May 8, 1996, Public Storage increased the Offer to $260 per Unit for 39% of the
outstanding Units and extended the tender offer until May 22, 1996. Public
Storage did not indicate in its Offer to Purchase the reason it originally
increased its offer price by $40 per Unit approximately one month after the
close of the first tender offer, and now has increased its offer price by an
additional $20 per Unit. Public Storage has not stated whether it will enter
into additional private transactions or commence additional tender offers at
a higher or lower price per Unit in the future. Public Storage has stated in
its Proxy Statement that "There can be no assurance that any future liquidation
[of the Partnership] would result in a liquidating distribution in an amount
exceeding the [$260]."
Item 4(b) is hereby amended to include the following additional
information:
(xii) On May 2, 1996, the Partnership received an unsolicited letter
from U-Haul International, Inc. ("U-Haul") stating that U-Haul was willing to
purchase the Partnership's properties for $69 million. The Purchase Agreement
between the Partnership and STP prevents the General Partners, except under
certain circumstances, from negotiating other offers, and in accordance
therewith, the General Partners notified STP of the U-Haul letter.
On May 3, 1996, the Partnership received a second letter from U-Haul.
This letter indicated that U-Haul would pay a cash price of $69 million for the
properties and that U-Haul has available bank lines in excess of $150 million
to finance the acquisition. U-Haul further stated that it would pay $7 million
as a good faith deposit and that it would pay $1.4 million in addition to the
$69 million purchase price "to release [the Partnership] from its existing
contract with STP."
On May 6, 1996, the General Partners formally notified STP of their
decision to investigate the U-Haul offer. The General Partners also offered
STP the opportunity to respond to the U-Haul offer with a higher purchase
price. At that time, STP declined to increase their offer.
On May 8, 1996, STP entered into discussions with U-Haul in an effort to
see whether either or a combination of these companies could increase the
amount to be paid for the Partnership properties. On May 13, 1996 U-Haul
stated it will not itself make an offer for the properties. However, the
parties have not yet determined whether an agreement could be consummated to
increase the purchase price. Accordingly, the STP purchase price remains $67.1
million, which results in a distribution to investors of $254 to $257 per Unit
with respect to all of the outstanding Units. On the other hand, Public
Storage's current Offer is for only 39% of the Units, and therefore, the
General Partners continue to encourage investors to vote in favor of the sale
to STP.
Item 7. Certain Negotiations and Transactions by the Subject Company
The first full paragraph of Item 7(a) is hereby amended as follows:
Except as described in Item 4(b)(i) and 4(b)(xii) above, no negotiations
are being undertaken or are underway by the Partnership in response to the
Offer which relate to or would result in: (1) an extraordinary transaction
such as a merger or reorganization involving the Partnership or any affiliate
controlled by the Partnership; (2) a purchase, sale or transfer of a material
amount of assets by the Partnership or any affiliate controlled by the
Partnership; (3) a tender offer for or other acquisition of securities by or of
the Partnership; or (4) any material change in the present capitalization or
distribution policy of the Partnership.
<PAGE>
The third full paragraph of Item 7(a) is hereby amended as follows:
On January 23, 1996, Public Storage commenced an unsolicited tender offer
to purchase up to 25% of the outstanding Units at a purchase price of $200 per
Unit. The Public Storage tender offer expired on March 12, 1996, and on April
2, 1996, Public Storage reported that approximately 3.77% of the outstanding
Units were tendered. Public Storage also indicated on April 2, 1996 that it
had entered into an agreement with Everest to Purchase the Units acquired by
Everest in its tender offer described in this Item 7(a) for $240 per Unit.
Public Storage has asserted in the Amended Offer that it currently owns 7.8% of
the outstanding Units, which reflects the consummation of Public Storage's
purchase of the Units from Everest.
Item 9. Material to be Filed as Exhibits.
Item 9 is hereby amended to include the following exhibit:
"(c)(6) Press Release dated May 8, 1996"
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.
Dated: May 14, 1996 BALCOR/COLONIAL STORAGE INCOME FUND-86
By: Balcor Storage Partners-86, a general
partner
By: The Balcor Company, a partner
By: /s/ THOMAS E. MEADOR
--------------------------
Thomas E. Meador, Chairman
By: Colonial Storage 86, Inc., a general
partner
By: /s/ JAMES R. PRUETT
--------------------------
James R. Pruett, President
Contact: John Powell
(847)317-4393
BALCOR/COLONIAL STORAGE INCOME FUND-86 RECEIVES OFFER
Bannockburn, Illinois May 8, 1996 - Balcor/Colonial Storage Income Fund-86
today announced that it has received an unsolicited offer from U-Haul
International, Inc. to purchase all of the Partnership's properties for $69
million.
U-Haul also offered to pay $1.3 million to release the Partnership from its
existing contract. The Partnership has a contract to sell the properties to
Storage Trust Properties, L.P. for $67.1 million.
The Partnership is investigating the U-Haul offer and today filed with the
Securities and Exchange Commission an amendment to its Schedule 14D-9 which
more fully discusses the U-Haul offer.
