SECURITIES AND EXCHANGE COMMISSION
Washington 20549
____________________
SCHEDULE 14D-9
___________________
Solicitation/ Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934
(Amendment No. 1)
___________________
PROMETHEUS INCOME PARTNERS,
a California Limited Partnership
(Name of Subject Company)
____________________
PROMETHEUS INCOME PARTNERS,
a California Limited Partnership
(Name of Person(s) Filing Statement)
____________________
Units of Limited Partnership Interest
(Title of Class of Securities)
____________________
742941 10 7
(CUSIP Number of Class of Securities)
____________________
Vicki R. Mullins
Chief Financial Officer
Prometheus Development Co., Inc.
350 Bridge Parkway
Redwood City, California 94065-1517
(415) 596-5300
(Name, address and telephone number of person authorized to
receive notice and communications on behalf of the person(s)
filing statement)
Copy to:
Gary Apfel, Esq.
Kaye, Scholer, Fierman, Hays & Handler, LLP
1999 Avenue of the Stars, Suite 1600
Los Angeles, California 90067
(310) 788-1000
This Amendment amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") filed on November 4, 1996 by Prometheus Income
Partners, a California Limited Partnership (the "Partnership"),
with the Securities and Exchange Commission. Unless otherwise
indicated, capitalized terms used herein have the same meaning as
set forth in the originally filed Schedule 14D-9.
Item 2. Tender Offer of the Bidder
Item 2(a) of the Schedule 14D-9 is amended to add the following
information:
On November 12, 1996, Apollo amended the Apollo Tender Offer.
According to Amendment No. 1 to the Apollo Schedule 14D-1, the
Apollo Tender Offer has been amended (as so amended, the "Amended
Apollo Tender Offer") to (1) increase the Apollo Purchase Price
to $475 per Unit, net to the seller in cash, without interest
thereon, less the aggregate amount of any distributions per Unit
declared or made by the Partnership after October 18, 1996 and
the date of payment of the Apollo Purchase Price for the Units by
Apollo, upon the terms and subject to the conditions set forth in
the Apollo Offer to Purchase and the related Letter of
Transmittal, (2) eliminate the condition that a minimum of 4,750
Units be tendered and not withdrawn prior to the expiration of
the Amended Apollo Tender Offer, and (3) extend the expiration
date under the Amended Apollo Tender Offer to 12:00 midnight, New
York City time, on November 26, 1996, unless further extended.
Item 2(b) of the Schedule 14D-9 is amended to add the following
information:
On November 8, 1996, PIP General filed with the SEC a Tender
Offer Statement on Schedule 14D-1 (the "PIP General Schedule 14D-
1"), dated November 8, 1996, in connection with the PIP General
Tender Offer.
On November 15, 1996, PIP General, by Amendment No. 1 to the PIP
General Schedule 14D-1 dated November 15, 1996, amended the PIP
General Tender Offer (as so amended, the "Amended PIP General
Tender Offer") to (1) increase the PIP General Purchase Price to
$475 per unit, net to the seller in cash, without interest
thereon, less the aggregate amount of any distributions per Unit
declared or made by the Partnership after November 8, 1996 and
the date of payment of the PIP General Purchase Price for the
Units by PIP General, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated November 8,
1996 (the "PIP General Offer to Purchase"), and the related
Letter of Transmittal, copies of which were filed with the PIP
General Schedule 14D-1.
Item 4. The Solicitation or Recommendation
Item 4(b) of the Schedule 14D-9 is amended by adding the
following information:
On November 12, 1996, after receiving the Amended Apollo Tender Offer,
the Special Committee met to review and discuss the Amended
Apollo Tender Offer. The Special Committee noted that, in an
apparent response to the lawsuit filed by the Partnership, the
Amended Apollo Tender Offer corrected certain statements made in
the Apollo Tender Offer that the Special Committee believed were
false and misleading. Thereafter, the Special Committee inquired
of PIP General whether it would amend The PIP General Tender
Offer to increase the PIP Purchase Price. On November 14, 1996,
a representative of PIP General informed the Special Committee
that PIP General would amend the PIP General Tender Offer to
increase the PIP Purchase Price to $475 per Unit. On November
15, 1996, the Special Committee met to review and discuss the
Amended Apollo Tender Offer and the proposed amended PIP General
Tender Offer and determined, for the reasons set forth in this
Item 4(b), to reiterate the recommendations set forth in Item
4(a) above. On November 15, 1996 the Partnership sent a letter
to PIP General consenting to and approving the amended PIP
General Tender Offer. On November 15, 1996, the Partnership sent
a letter to the Limited Partners in which it reiterated its
recommendations set forth in this Schedule 14D-9 and summarized
the reasons therefore. Such letter, which is filed as Exhibit
(a)(4) hereto, is hereby incorporated herein by reference
thereto.
Item 7. Certain Negotiations and Transactions by the Subject
Company
Item 7(a) of the Schedule 14D-9 is amended by adding the
following information after the fifth paragraph thereof:
On November 5, 1996, one of the members of the Special Committee
received a voice mail message from a representative of Liquidity
Financial. Such representative requested a meeting between a
representative of Apollo and someone in the member's "shop" "to
see if there is a way to prevent the next round of escalation" of
litigation or to see if there is "an opportunity to effect some
sort of splitting of purchases, standstills, etc., and make peace
instead of war [with] everybody coming out ahead economically." On
November 6, 1996, a representative of Apollo placed a phone call
to a representative of the Partnership. The representative of
Apollo was informed that all communications with respect to this
matter to the Partnership should be made through counsel for the
Partnership. The representative of Apollo left a message for the
representative of the Partnership that an offer would be made by
Apollo on the day following such phone call.
On November 6, 1996, counsel to Apollo left a message for counsel
to the Partnership that Apollo wished to discuss a joint tender
offer by Apollo and PIP General. On November 6, 1996, counsel
for the Partnership sent a letter by facsimile to counsel for
Apollo stating that discussions of matters of mutual interest can
take place only if (i) the list of Limited Partners (and all
copies thereof) are returned to the Partnership, (ii) the Apollo
Tender Offer is withdrawn and (iii) all participants in the
Apollo Tender Offer sign a standstill agreement which would
remain in effect for five years. Counsel for the Partnership has
not received a response to such letter from either counsel for
Apollo or Apollo.
The information contained under Item 4 of this Amendment is
hereby incorporated in this Item 7(a) by reference thereto.
Item 8. Additional Information to be Furnished
Item 8 of the Schedule 14D-9 is amended by adding the following
information:
On November 8, 1996, Apollo filed and served an opposition to the
Partnership's motion for a temporary restraining order or for
expedited discovery. In its opposition papers, Apollo stated,
among other things, that it intended to file an amendment to the
Apollo Schedule 14D-1 increasing the Apollo Purchase Price to
$475 and correcting certain statements in the Apollo Schedule
14D-1. On November 8, 1996, the Partnership filed a reply brief
and supporting declaration in support of its motion for a
temporary restraining order or for expedited discovery. The
judge in such lawsuit scheduled a telephonic hearing on such
motion for November 12, 1996.
In a telephonic hearing held on November 12, 1996, counsel for
the Partnership informed the judge that, because of the
improvement in information to Limited Partners contained in the
amended Apollo Schedule 14D-1, the Partnership was withdrawing
its motion for a temporary restraining order or for expedited
discovery, without prejudice to its right to renew the motion in
the event that, after a full review of the Amended Apollo Tender
Offer, the Partnership determined that, even as amended, the
Amended Apollo Tender Offer still violated the Williams Act. The
Partnership is continuing to review the amended Apollo Schedule
14D-1, and has not yet determined whether to renew its motion to
enjoin the Amended Apollo Tender Offer.
Item 9. Material to be Filed as Exhibits.
Item 9 of the Schedule 14D-9 is amended to add the following
Exhibits:
(a)(4) Form of Letter to Limited Partners, dated November 15,
1996
(a)(5) Letter regarding Agreement to Make Tender Offer, dated
November 15, 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.
PROMETHEUS INCOME PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
By: Prometheus Development Co., Inc.,
a California corporation
By:_/S/ Vicki R. Mullins_____
Name: Vicki R. Mullins
Title: Chief Financial Officer
Dated: November 15, 1996
Exhibit (a)(4)
PROMETHEUS INCOME PARTNERS
350 Bridge Parkway
Redwood City, CA 94065-1517
(415) 596-5393
November 15, 1996
Dear Limited Partners:
We know you have received a significant amount of
information from many different sources over the past few weeks.
In an effort to keep you informed, the Special Committee of the
General Partner wants to report the following information:
PIP Partners-General, LLC, an affiliate of your General
Partner ("PIP General"), has agreed to increase its tender offer
price to $475 per Unit in response to the Special Committee's
request that PIP General increase its offer price. This request
was made after the affiliate of Apollo Realty Advisors, Prom
Income Partners, L.L.C., ("Apollo") raised its bid to $475 from
$405 per Unit (the "Apollo Tender Offer") in response to the $450
bid previously made by PIP General.
THE SPECIAL COMMITTEE RECOMMENDS THAT THOSE LIMITED PARTNERS
WITH A CURRENT OR ANTICIPATED NEED OR DESIRE FOR LIQUIDITY SHOULD
TENDER THEIR UNITS TO PIP PARTNERS-GENERAL, LLC, AN AFFILIATE OF
THE GENERAL PARTNER, PURSUANT TO ITS INCREASED OFFER. ALL
LIMITED PARTNERS SHOULD REJECT THE APOLLO TENDER OFFER, AND THOSE
LIMITED PARTNERS WHO DO NOT HAVE A CURRENT OR ANTICIPATED NEED OR
DESIRE FOR LIQUIDITY SHOULD HOLD ONTO THEIR UNITS UNTIL THE
PARTNERSHIP'S HARDBOARD SIDING PROBLEM HAS BEEN RESOLVED.
The Special Committee understands that PIP General's
increased offer of $475 per Unit will be mailed to all Limited
Partners on approximately Monday, November 18, 1996. Any Limited
Partner who tendered Units in response to the Apollo Tender Offer
has the unconditional right to withdraw, and is encouraged to
withdraw, the tender by delivering a completed and executed
Notice of Withdrawal prior to November 26, 1996 to The Herman
Group, Inc. at 2121 San Jacinto Street, 26th Floor, Dallas, Texas
75201, fax nos. (214) 999-9348 and (214) 999-9323. The Special
Committee also understands that, for the convenience of the
Limited Partners, such a Notice of Withdrawal will be included in
the PIP General tender offer materials mailed November 18, 1996.
Please feel free to contact PIP General's information agent,
Georgeson & Company Inc., at (800) 223-2064, for assistance,
forms, or with any questions. They will be happy to help you.
The Special Committee is of the opinion that certain key
concerns exist for the Partnership which should lead Limited
Partners either to tender their Units to PIP General or hold onto
their Units:
1. The Special Committee is of the opinion that the
Partnership must be extremely careful in dealing with the
hardboard siding problem since it could have a major impact on
the value and marketability of the Partnership Properties, and
hence the value of the Units. Mr. Sanford N. Diller and his
affiliates, who beneficially own the General Partner and PIP
General, have substantial knowledge, skill, and experience in
managing the many business and legal aspects of this problem,
including managing litigation against manufacturers, insurers,
subcontractors, and others as a result thereof. The General
Partner recently commenced such litigation on behalf of the
Partnership as a result of the Partnership's hardboard siding
problem.
2. The Special Committee is unaware of any attempt by
the persons behind the Apollo Tender Offer to understand the
magnitude of the hardboard siding problem, its impact upon the
Partnership and the Partnership Properties, and the importance of
managing the problem with the greatest care.
3. The Special Committee continues to believe that
Apollo has undisclosed plans regarding the Partnership, including
a management change, and that such a change would be detrimental
to the Partnership for the reasons described above.
We thank you for your attention and will keep you advised of
material developments.
Sincerely,
The Special Committee
Exhibit (a) (5)
PROMETHEUS INCOME PARTNERS
350 Bridge Parkway
Redwood City, CA 94065-1517
(415)596-5393
November 15, 1996
Mr. Sanford N. Diller
PIP Partners - General, LLC
350 Bridge Parkway
Redwood City, CA 94065-1517
Re: PIP Partners - General, LLC Tender Offer
Dear Sanford:
We hereby consent to and approve the amended tender offer of PIP
Partners - General, LLC described in its Amended Offer to
Purchase, dated November 15, 1996, and confirm that the terms of
the Agreement to Make Tender Offer, dated as of November 4, 1996,
are applicable to such amended offer.
Sincerely,
PROMETHEUS INCOME PARTNERS, a California limited partnership
By: PROMETHEUS DEVELOPMENT CO., INC., a
California corporation, its general partner
By: /S/ Vicki R. Mullins
Vicki R. Mullins, Chief Financial Officer
