SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
SCHEDULE 14D-9
-------------------------
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
SECURED INCOME L.P.
(Name of Subject Company)
SECURED INCOME L.P.
(Name of Person(s) Filing Statement)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
813901105
(CUSIP Number of Class of Securities)
-----------------------------
GINA S. SCOTTI
SECRETARY OF GENERAL PARTNER
SECURED INCOME L.P.
C/O WILDER RICHMAN RESOURCES CORPORATION
599 WEST PUTNAM AVENUE
GREENWICH, CT 06830
(203) 869-0900
(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications on Behalf of
the Person(s) Filing Statement)
Copies to:
Peter G. Smith, Esq.
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
212-715-9100
----------------------------
<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Secured Income L.P., a Delaware
limited partnership (the "Partnership"), and the address of the principal
executive offices of the Partnership is c/o Wilder Richman Resources
Corporation, 599 W. Putnam Avenue, Greenwich, CT 06830. The general partners of
the Partnership (the "General Partners") are Wilder Richman Resources
Corporation ("WRRC"), Real Estate Equity Partners, L.P. ("REEP") and WRC-87A
Corporation ("WRC-87A"). The title of the class of equity securities to which
this Statement relates is the units of limited partnership interest ("Units") of
the Partnership.
ITEM 2. TENDER OFFER OF THE PURCHASER.
This statement relates to an offer by West Putnam Housing Investors
LLC, a Delaware limited liability company (the "Purchaser"), to purchase up to
394,000 of the outstanding Units at a purchase price of $6.50 per Unit (the
"Offer Price"), net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in an Offer to Purchase dated July 24, 1998
(the "Offer to Purchase") and related Assignment of Partnership Interest (which
collectively constitute the "Offer"). A Tender Offer Statement on Schedule 14D-
1 with respect to the Offer has been filed by the Purchaser.
The address of the Purchaser's principal executive offices is 599 W.
Putnam Avenue, Greenwich, CT 06830.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Partnership, which is the
Person filing this Statement, are set forth in Item 1 above.
(b) The Partnership is a limited partnership and has no executive
officers or directors. WRRC, a Delaware corporation, WRC-87A, a Delaware
corporation, and REEP, a Delaware limited partnership, are the general partners
of the Partnership. (WRRC and WRC- 87A are together referred to as the
"Affiliated General Partners," and the Affiliated General Partners and REEP are
collectively referred to as the "General Partners.") Mr. Richard P. Richman owns
approximately 50% of the equity interest in WRRC and is president and a director
of that corporation. Mr. Robert H. Wilder, Jr. beneficially owns the remaining
approximately 50% of the equity interest in WRRC and is executive vice president
and a director of that corporation. WRC-87A is owned one-half by WRRC and
one-half by Real Estate Equity Partners Inc. ("REEPI"), the corporate general
partner of REEP. Mr. Richman is executive vice president, secretary, treasurer
and a director of WRC-87A. REEP is an affiliate of Lehman Brothers Inc.
("Lehman").
The Purchaser has indicated that it is a newly formed entity whose sole
managing member is Mr. Richman. Approximately 75% of the equity interest in the
Purchaser is owned by Mr. Richman and the remaining approximately 25% of the
equity interest in the Purchaser is owned by Mr. Wilder. Mr. Richman and Mr.
Wilder are collectively referred to as the "Purchaser Affiliates"). Since the
commencement of operations of the Partnership, Wilder
- 2 -
<PAGE>
Richman Management Corp. ("WRMC"), an affiliate of the Purchaser and the
Affiliated General Partners, has provided property management services to the
Carrollton Partnership (as defined below) and has been compensated therefor.
WRC-87A is also a special limited partner of the operating partnerships in which
the Partnership has invested. By reason of these relationships, the Affiliated
General Partners have conflicts of interest in considering the Offer. In the
case of WRC-87A, this conflict is limited to the interests of Messrs. Richman
and Wilder in WRRC, which owns 50% of WRC-87A, since Lehman, which owns (through
its interest in REEPI) half of the equity interest in WRC-87A, has no interest
in the Purchaser or in the Offer.
The Purchaser has indicated that it is making the Offer with a view
towards realizing a profit for the benefit of the Purchaser Affiliates, which
collectively own all of the equity interest in the Purchaser. Messrs. Richman
and Wilder, who also control or share control over the Affiliated General
Partners, may be expected to realize a greater profit on the Purchaser's
investment in the Units to the extent that the Purchaser is able to acquire the
Units in the Offer at a lower price. It is in the interest of the Unit Holders
desiring to sell their Units to receive the highest possible price for such
Units available in the circumstances. This may result in a conflict between the
fiduciary obligations of the Affiliated General Partners to act in the best
interests of the holders of Units and the desire of the persons controlling the
Affiliated General Partners to further their own economic interests.
If the Offer is consummated, the Purchaser may own a substantial equity
interest and voting power in the Partnership. Because of different financial,
tax and other circumstances of affiliates of the Purchaser and the other Unit
Holders, it may be in the interest the Purchaser to cause the liquidation of the
Partnership, or the sale or refinancing of the assets in which the Partnership,
through operating partnerships, is invested, at a time when such action is not
in the best interest of the other Unit Holders, or vice versa. This could result
in a conflict for the Affiliated General Partners in attempting to reconcile the
interests of the Purchaser and its controlling persons with whom they are
affiliated and the interests of the other Unit Holders.
The Purchaser has stated that it will seek to be admitted to the
Partnership as a substituted Unit Holder upon consummation of the Offer and,
when admitted, will have the right to vote each Unit purchased pursuant to the
Offer. Even if the Purchaser is not admitted to the Partnership as a substituted
Unit Holder, the Purchaser has indicated that it will have the right to vote
each Unit purchased in the Offer pursuant to the irrevocable appointment by
tendering Unit Holders of the Purchaser and its managing member and designees as
proxies with respect to the Units tendered by such Unit Holders and accepted for
payment by the Purchaser. As a result, if the Purchaser is successful in
acquiring a significant number of Units pursuant to the Offer, the Purchaser
will have the right to vote those Units and thereby significantly influence all
voting decisions of the Unit Holders with respect to the Partnership. In
general, the Purchaser has indicated that it will vote the Units owned by it in
whatever manner it deems to be in its and the Purchaser Affiliates' best
interests, which, because of their relationship with the Affiliated General
Partners, also may be in the interest of the Affiliated General Partners, but
may not be in the interest of other Unit Holders. This could (i) prevent
non-tendering Unit Holders from taking action they desire but that the Purchaser
opposes, and (ii) enable the Purchaser to take action desired but opposed by
non-tendering Unit Holders. For purposes of the preceding sentence, the term
"non-tendering Unit Holders" includes both those Unit Holders
- 3 -
<PAGE>
not all of whose Units were tendered by the Unit Holder in the Offer and those
Unit Holders not all of whose Units were purchased by the Purchaser in the Offer
because of proration. Under the Partnership's Amended and Restated Agreement of
Limited Partnership (the "Limited Partnership Agreement"), Unit Holders holding
a majority of the Units are entitled to take action (without concurrence of the
General Partners) with respect to a variety of matters, including: removal of a
General Partner and in certain circumstances election of new or successor
General Partners; dissolution of the Partnership; the sale of all or
substantially all of the assets of the Partnership; and most types of amendments
to the Limited Partnership Agreement.
The Purchaser has stated in its Offer to Purchase that it expects to
pay for the Units it purchases pursuant to the Offer with funds provided by the
Purchaser Affiliates as a capital contribution. It is possible, however, that in
connection with its future financing activities, the Purchaser will pledge the
Units as collateral for loans, or otherwise agree to terms which provide the
Purchaser with incentives to generate substantial near-term cash flow from the
Purchaser's investment in the Units. This could be the case, for example, if a
loan has a "balloon" maturity after a relatively short time or bears a high or
increasing interest rate. In such a situation, the Affiliated General Partners
may experience a conflict of interest in seeking to reconcile the best interests
of the Partnership with the need of its affiliates for cash flow from the
Partnership's activities.
WRMC, an affiliate of the Purchaser, is the management agent for the
Fieldpointe Complex owned by Carrollton X Associates Limited Partnership (the
"Carrollton Partnership"), an operating partnership in which the Partnership is
invested. The Carrollton Partnership paid or accrued fees for property
management and other services provided by WRMC in the amounts of approximately
$86,040, $83,958 and $82,012 for the years ended December 31, 1997, 1996 and
1995, respectively. WRMC was owed by the Carrollton Partnership accrued fees in
the amount of $35,659 at March 31, 1998. In addition, at March 31, 1998, WRMC
was owed by the Carrollton Partnership $166,000 for past years' operating
advances.
WRC-87A, a General Partner and an affiliate of the Purchaser, is
entitled to an annual investor services fee, to the extent that such investor
services are not provided by an independent third party. Investor services
include maintenance of Partnership books and records and the preparation and
distribution to Unit Holders of reports and other information. The Partnership
and/or the operating partnerships of the Partnership paid or accrued fees for
investor services provided by WRC-87A during 1997, 1996 and 1995 in the amounts
of $65,873, $65,971 and $83,975, respectively, and in the amount of $15,468
during the three months ended March 31, 1998.
LaMere Associates, Inc., an entity in which an affiliate of the
Purchaser owns a 20% interest, receives premiums in connection with property,
workers compensation, liability and umbrella insurance coverage provided to the
Carrollton Partnership. The Carrollton Partnership incurred premiums in
connection with such insurance coverage during 1997, 1996 and 1995 of $45,864,
$47,303 and $49,104, respectively.
As of March 31, 1998, the Carrollton Partnership owed its general
partners and their affiliates $65,154 relating to prior years' advances.
- 4 -
<PAGE>
To the best knowledge of the Partnership, except as described in this
Schedule 14D-9, there are no other material agreements, arrangements,
understandings or any actual or potential conflicts of interest between the
Partnership, the General Partners and their affiliates, on one hand, and the
Purchaser, its managing member, and its other members or affiliates, on the
other hand.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) This Statement relates to the recommendation by the Partnership
with respect to the Offer. A letter to the Unit Holders communicating the
Partnership's views is filed as an exhibit hereto and is incorporated herein by
reference.
(b) Because of the existing and potential future conflicts of interest
described in Item 3 above and for the reasons set forth below, the Partnership
and the General Partners are remaining neutral and making no recommendation as
to whether Unit Holders should tender their Units in response to the Offer.
In considering whether to tender Units, the Partnership believes that
Unit Holders should carefully consider all of the surrounding circumstances and
available information, including among other things the Partnership's most
recent Annual Report and Quarterly Report as well as the considerations noted
below.
The Offer to Purchase for the Offer includes the Purchaser's estimate
that the "Estimated Liquidation Value" of the Partnership's assets was
approximately $12.55 per Unit, substantially higher than the Offer Price of
$6.50 per Unit. While the basis for such estimate is not set forth in detail and
Partnership is not commenting on the assumptions made in the Offer to Purchase,
the Partnership believes that Estimated Liquidation Value is within a reasonable
range of possible liquidation values that could be estimated at this time for
the Purchaser's purposes in making the Offer.
Accordingly, the Partnership does not believe that the Offer Price in
the Offer necessarily reflects fully the underlying value of the Partnership's
assets or the potential value that might be attributed to the Units under
certain circumstances. However, Unit Holders whose individual investment goals
or financial requirements lead them to consider selling Units for cash at this
time may find that the Offer represents an opportunity to do so.
The Partnership believes that there is no active trading market for the
Units. The Partnership understands that within the past 12 months certain Units
have been sold in private transactions at prices ranging from $1.00 to $3.50 per
Unit (including certain transactions which have not yet been fully processed).
The Partnership also understands that independent tender offers for
Units, other than the Offer, have recently been made by other parties, including
pending or recently completed offers, to purchase Units at prices of $3.50,
$4.75 and $5.00 per Unit.
- 5 -
<PAGE>
The Partnership recommends that Unit Holders, if any, who do wish to
sell Units for cash at this time make their own inquiry as to alternative
transactions that may be available, including among others any pending tender
offer and any offer that may be announced prior to the August 20 expiration of
the Offer.
The Partnership believes that Unit Holders should also review and
carefully consider the Partnership's business and prospects, including factors
that may affect its underlying investments in operating partnerships and such
matters as cash flow from such partnerships and, potentially, possible future
distributions to Unit Holders. In this connection, the Partnership notes that,
consistent with previous discussions in the Partnership's quarterly and annual
reports to Unit Holders, the local general partners of Columbia Associates (the
"Columbia Partnership") (the operating partnership of the Westmont property in
New York City in which the Partnership is invested) have had discussions with
its current and alternative lenders with the goal of refinancing or
restructuring the Columbia Partnership's current financing. Given the perceived
strength of the New York rental market and increasingly favorable climate for
refinancing, the local general partners of the Columbia Partnership believe
there is a significant prospect that the current financing can be refinanced or
restructured with a view to, among other things, reducing, or eliminating
altogether, prohibitions on the distribution of cash flow or sale or refinancing
proceeds. The Partnership believes that any such refinancing or restructuring,
if it occurs at all, may be able to be completed within approximately the next
six to twelve months. In the event of any such refinancing, the Columbia
Partnership anticipates that the fees charged by its management firm will
increase from approximately $80,000 per year (which fees are believed to be
generally lower than comparable fees for similar services charged by other
management firms) to approximately $200,000 per year (which fees are believed to
be generally competitive with fees charged by other management firms for similar
services). There can be no assurance that any such refinancing or restructuring
will be completed.
In view of, among other things, the current restrictions on
distributions, no sale of the Westmont property has been pursued, and to the
Partnership's knowledge no serious and specific offers to purchase the property
have been received.
The Partnership also believes that Unit Holders should be aware that,
since the Offer seeks to purchase only some, and not all, of the Units, if any
Unit Holders tender Units in the Offer, the Purchaser may purchase less than all
of the Units tendered by each Unit Holder. Accordingly, each Unit Holder may
continue to hold Units in the Partnership at a time when the Purchaser may hold
a significant number of Units and may seek to vote those Units in a manner
adverse to other Unitholders. The Offer applies to only approximately 40% (or
less) of the outstanding Units. If more Units are tendered under the Offer, the
Purchaser will only accept Units on a pro rata basis, meaning that Unit Holders
who wish to sell all of their Units may not be able to do so. However, as stated
by the Purchaser in the Offer to Purchase, if the Offer is consummated and the
Purchaser is successful in acquiring a significant number of votes pursuant to
the Offer, the Purchaser "will be in a position to significantly influence all
voting decisions with respect to the Partnership." As a practical matter, if the
Purchaser acquires a sizeable percentage, although less than a majority, of the
Units, the Partnership may find it difficult or impossible to take action
requiring a Unit Holder vote (such as liquidation or sale of substantially all
of its assets) without the approval of the Purchaser.
- 6 -
<PAGE>
The Partnership urges all Unit Holders to carefully consider all the
information contained herein and consult with their own advisors, tax, financial
or otherwise, in evaluating the terms of the Offer before deciding whether to
tender Units. There will be certain tax consequences to individual Unit Holders
as a result of accepting the Offer and those tax consequences could vary
significantly for each Unit Holder based on such Unit Holder's unique tax
situation or other circumstances. No independent person has been retained by the
Partnership to evaluate or render any opinion with respect to the fairness of
the Offer Price in the Offer.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Neither the Partnership nor any person acting on its behalf has
employed, retained or compensated, or intends to employ, retain or compensate,
any person or class of person to make solicitations or recommendation to Unit
Holders on the Partnership's behalf concerning the Offer. The Purchaser, an
affiliate of the Affiliated General Partners, has indicated that it has retained
Shareholder Communications Corp. as information agent with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTEREST WITH RESPECT TO
SECURITIES.
(a) No transactions in the Units have been effected during the past 60
days by the Partnership or any of the General Partners or, other than the Offer,
to the knowledge of the Partnership, by any of the current or former executive
officers, directors or affiliates of any of the General Partners or the
Partnership.
(b) To the knowledge of the Partnership, none of the General Partners
and none of the current or former executive officers, directors or affiliates of
any of the General Partners or the Partnership intends to tender pursuant to the
Offer any Units beneficially owned by them.
(c) To the knowledge of the Partnership, none of General Partners, and
none of the executive officers, directors or affiliates of any of General
Partners, is a beneficial owner of Units.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT
COMPANY.
(a) The Partnership is not engaged in any negotiation in response to
the Offer which relates to or would result in: (1) an extraordinary transaction
such as a merger or reorganization, involving the Partnership; (2) a purchase,
sale or transfer of a material amount of assets 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 (except for the potential effects of any possible refinancing of
indebtedness of the Columbia Partnership as noted in Item 4(b) above).
(b) None.
- 7 -
<PAGE>
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) Form of letter to Unit Holders of the Partnership dated July 30,
1998.
(b) None.
(c) None.
- 8 -
<PAGE>
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: July 30, 1998
SECURED INCOME L.P.
By: Wilder Richman Resources Corporation
General Partner
By: /s/ Richard P. Richman
----------------------
Name: Richard P. Richman
Title: President
- 9 -
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
(a) Form of letter to Unit Holders from the Partnership dated
July 30, 1998.
- 10 -
<PAGE>
Exhibit (a)
Dear Unit Holder:
As you may know, a tender offer to purchase Units of Secured Income
L.P. (the "Partnership") has been announced by West Putnam Housing Investors
LLC, a Delaware limited liability company and an affiliate of two of the three
General Partners of the Partnership (the "Offer").
The Partnership has filed with the Securities and Exchange Commission a
statement on Schedule 14D-9 relating to the Offer. A copy of that Schedule 14D-9
is enclosed with this letter and should be carefully read by each Unit Holder.
AS SET FORTH IN THE SCHEDULE 14D-9, THE PARTNERSHIP AND THE GENERAL
PARTNERS OF THE PARTNERSHIP ARE MAKING NO RECOMMENDATION AS TO WHETHER UNIT
HOLDERS SHOULD TENDER THEIR UNITS IN RESPONSE TO THE OFFER.
In considering whether to tender Units, the Partnership believes that
Unit Holders should carefully consider all of the surrounding circumstances and
available information. Consideration that could affect your decision may
include, but are by no means limited to, the following:
o THE OFFER ESTIMATES THE "ESTIMATED LIQUIDATION VALUE" OF THE
PARTNERSHIP'S ASSETS AT APPROXIMATELY $12.55 PER UNIT. THE PRICE
OFFERED TO YOU IN THE OFFER IS $6.50 PER UNIT.
o THE PARTNERSHIP UNDERSTANDS THAT TENDER OFFERS FOR UNITS OTHER
THAN THE OFFER HAVE RECENTLY BEEN MADE BY OTHER PARTIES,
INCLUDING A PENDING OFFER AT $5.00 PER UNIT, AND THAT WITHIN THE
PAST 12 MONTHS UNITS HAVE BEEN SOLD IN PRIVATE TRANSACTIONS
INCLUDING OTHER TENDER OFFERS AT PRICES RANGING UP TO $3.50 PER
UNIT.
o CONSISTENT WITH PREVIOUS DISCUSSIONS IN ANNUAL AND QUARTERLY
REPORTS TO UNIT HOLDERS, IT IS POSSIBLE, BUT NOT CERTAIN, THAT
EXISTING INDEBTEDNESS OF ONE OF THE PARTNERSHIP'S UNDERLYING
OPERATING PARTNERSHIP INVESTMENTS MAY BE REFINANCED OR
RESTRUCTURED, PERHAPS WITHIN THE NEXT SIX TO TWELVE MONTHS, IN A
MANNER THAT COULD REDUCE, OR ELIMINATE ALTOGETHER, THE
PROHIBITIONS ON POTENTIAL DISTRIBUTIONS OF CASH FLOW FROM THAT
OPERATING PARTNERSHIP OR OTHERWISE HAVE IMPLICATIONS FOR THE
PARTNERSHIP AND THE UNIT HOLDERS. THERE CAN BE NO ASSURANCE THAT
ANY SUCH REFINANCING OR RESTRUCTURING WILL BE COMPLETED.
o THE OFFER IS FOR ONLY 40% OR LESS OF THE UNITS, AND UNIT HOLDERS
WHO TENDER IN THE OFFER MAY HAVE LESS THAN ALL OF THEIR TENDERED
UNITS PURCHASED.
- 11 -
<PAGE>
The foregoing are only some of the considerations that may be relevant
to Unit Holders. These and certain other matters are mentioned in greater detail
in the enclosed Schedule 14D-9, which should be carefully read in its entirety.
You should also bear in mind that no immediate decision by you is
required. The Offer states that tenders of Units will be accepted until 12:00
midnight, New York Time, on August 20, 1998. All Unit Holders are advised to
take the time to carefully consider the Offer and their alternatives.
Very truly yours,
SECURED INCOME L.P.
By: Wilder Richman Resources Corporation,
General Partner
GINA SCOTTI
Secretary
- 10 -
