Exhibit (a)(1)
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OFFER TO PURCHASE FOR CASH UP TO 330,000
LIMITED PARTNERSHIP UNITS
OF
SECURED INCOME L.P.
AT
$16.25 PER UNIT
MP INCOME FUND 11, L.P.; MP INCOME FUND 12, LLC; MP INCOME FUND 14, LLC;
MP INCOME FUND 15, LLC; MP INCOME FUND 16, LLC; ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS III, LTD.; ACCELERATED HIGH YIELD GROWTH FUND II, LTD.;
ACCELERATED HIGH YIELD INSTITUTIONAL FUND I, LTD.; ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS, LTD.; ACCELERATED HIGH YIELD PENSION INVESTORS, LTD.;
ACCELERATED HIGH YIELD INCOME FUND I, LTD.; ACCELERATED HIGH YIELD INCOME
FUND II, LTD.; PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS INCOME FUND 3;
PREVIOUSLY OWNED PARTNERSHIPS INCOME FUND; MP-DEWAAY FUND, LLC; SPECIFIED
INCOME FUND, A CALIFORNIA LIMITED PARTNERSHIP; MACKENZIE PATTERSON SPECIAL
FUND 5, LLC; MP FALCON GROWTH FUND, LLC; MP FALCON FUND, LLC; MP VALUE
FUND 5, LLC; MP VALUE FUND 6, LLC; MACKENZIE PATTERSON SPECIAL FUND 3, LLC;
and MACKENZIE FUND VI, A CALIFORNIA LIMITED PARTNERSHIP
(collectively the "Purchasers")
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT
12:00 MIDNIGHT, PACIFIC STANDARD TIME, ON AUGUST 15, 2000, UNLESS
THE OFFER IS EXTENDED.
The Purchasers hereby seek to acquire Units of limited partnership interest (the
"Units") in SECURED INCOME L.P., a Delaware limited partnership (the
"Partnership"). The Purchasers are not affiliated with the Partnership, the
Partnership's general partners, Wilder Richman Resources Corporation, a Delaware
corporation, Real Estate Equity Partners L.P., a Delaware limited partnership
and WRC-87A Corporation, a Delaware corporation (the "General Partners"), or
West Putnam Housing Investors II LLC (the " GP Offeror"), an affiliate of
certain of the General Partners currently making a tender offer for the Units.
The Purchasers hereby offer to purchase up to 330,000 Units at a purchase price
equal to $16.25 per Unit, less the amount of any distributions declared or made
with respect to the Units between July 14, 2000 and August 15, 2000, or such
other date to which this Offer may be extended (the "Expiration Date"), in cash,
without interest, upon the terms and subject to the conditions set forth in this
Offer to Purchase (the "Offer to Purchase") and in the related Letter of
Transmittal, as each may be supplemented or amended from time to time (which
together constitute the "Offer"). The Partnership has announced that it expects
to make a distribution of $8.35 per Unit on or about July 31, 2000 to holders of
Units as of June 30, 2000. As noted above, the Offer price would be subject to
reduction for distributions made or declared prior to the Expiration Date. Any
distributions made or declared after the Expiration Date would, by the terms of
the Offer and as set forth in the Letter of Transmittal, be assigned by
tendering Unit holders to the Purchasers. The number of Units subject to the
Offer will be reduced to the extent necessary so that the number of Units
purchased in the offer, when added to the number of all other Units transferred
within the 12 months preceding the closing of the offer, would not equal or
exceed 50% of the outstanding Units. Purchase of units in excess of this amount
would result in the termination of the Partnership for tax purposes and may be
prohibited under its limited partnership agreement.
The 330,000 Units sought pursuant to the Offer represent approximately 33.5% of
the Units outstanding as of December 31, 1999. The Purchasers and their
affiliates currently beneficially own an aggregate total of 160,502 Units, or
approximately 16.3% of the total of 984,369 outstanding Units. If the Offer is
successful and the Purchasers acquire all of the Units sought, they will
collectively beneficially own approximately 49.8% of the outstanding Units.
Holders of Units ("Unit holders") are urged to consider the following factors:
- Unit holders who tender their Units will give up the
opportunity to participate in any future benefits from the
ownership of Units, including potential future distributions
by the Partnership, and the purchase price per Unit payable to
a tendering Unit holder by the Purchasers may be less than the
total amount which might otherwise be received by the Unit
holder with respect to the Unit over the remaining term of the
Partnership.
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- The Purchasers are making the Offer for investment purposes
and with the intention of making a profit from the ownership
of the Units. In establishing the purchase price of $16.25 per
Unit, the Purchasers are motivated to establish the lowest
price which might be acceptable to Unit holders consistent
with the Purchasers' objectives. There is no public market for
the Units, and neither the Unit holders nor the Purchasers
have any accurate means for determining the actual present
value of the Units. Although there can be no certainty as to
the actual present value of the Units, the Purchasers have,
for the purposes of determining an acceptable Offer price,
relied on the GP Offeror's estimate of the liquidation value
of the Units in the GP Offeror's current offer for Units. The
GP Offeror has estimated that "$20.68 per Unit, represents the
(GP Offeror's) estimate of the aggregate net liquidation
proceeds which could be realized on an orderly liquidation of
the Partnership" prior to the anticipated July 31, 2000
distribution of certain property refinancing proceeds, and the
GP Offeror has stated that "Net of the proceeds available from
the refinancing of the Westmont Property, the (GP Offeror's)
estimated liquidation value is ... $12.33 per Unit." The
Purchase Price of the Offer less the expected per-Unit
distribution from the proceeds of the property refinancing is
$7.90 per Unit, or $0.50 per Unit higher than the GP Offeror's
net offer price. It should be noted, however, that the
Purchasers have not made an independent appraisal of the Units
or the Partnership's properties, and are not qualified to
appraise real estate. Accordingly, there can be no assurance
that this estimate accurately reflects an approximate value of
the Units or that the actual amounts which may be realized by
holders for the Units may not vary substantially from this
estimate.
- As a result of consummation of the Offer, the Purchaser may be
in a position to significantly influence all Partnership
decisions on which Unit holders may vote. The Purchaser will
vote the Units acquired in the Offer in its own interest,
which may be different from or in conflict with the interests
of the remaining Unit holders.
- The Purchasers may accept only a portion of the Units tendered
by a Unit holder in the event a total of more than 330,000
Units are tendered.
- The Depositary, MacKenzie Patterson, Inc., is an affiliate of
certain of the Purchasers. No independent party will hold
securities tendered until the offer closes and payment is
made. Because there is no independent intermediary to hold the
Purchasers' funds and tendered securities, the Purchasers may
have access to the securities before all conditions to the
Offer have been satisfied and selling Unit holders have been
paid.
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. IF MORE THAN 330,000 UNITS ARE VALIDLY TENDERED AND NOT WITHDRAWN, THE
PURCHASERS WILL ACCEPT FOR PURCHASE 330,000 UNITS FROM TENDERING UNIT HOLDERS ON
A PRO RATA BASIS, SUBJECT TO THE TERMS AND CONDITIONS HEREIN. A UNIT HOLDER MAY
TENDER ANY OR ALL UNITS OWNED BY SUCH UNIT HOLDER.
The Purchasers expressly reserve the right, in their sole discretion, at any
time and from time to time, (i) to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Units, (ii) upon the occurrence of any of the conditions specified in
Section 13 of this Offer to Purchase, to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or paid for, or to delay
the acceptance for payment of, or payment for, any Units not theretofore
accepted for payment or paid for, and (iii) to amend the Offer in any respect.
Notice of any such extension, termination or amendment will promptly be
disseminated to Unit holders in a manner reasonably designed to inform Unit
holders of such change in compliance with Rule 14d-4(c) under the Securities
Exchange Act of 1934 (the "Exchange Act"). In the case of an extension of the
Offer, such extension will be followed by a press release or public announcement
which will be issued no later than 9:00 a.m., Eastern Sta ndard Time, on the
next business day after the scheduled Expiration Date, in accordance with Rule
14e-1(d) under the Exchange Act.
July 14, 2000
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IMPORTANT
Any Unit holder desiring to tender any or all of such Unit holder's Units should
complete and sign the Letter of Transmittal (a copy of which is enclosed with
this Offer to Purchase, printed on blue paper) in accordance with the
instructions in the Letter of Transmittal and mail, deliver or telecopy the
Letter of Transmittal and any other required documents to MacKenzie Patterson,
Inc. (the "Depositary"), an affiliate of certain of the Purchasers, at the
address or facsimile number set forth below.
MacKenzie Patterson, Inc.
1640 School Street
Moraga, California 94556
Telephone: 800-854-8357
Facsimile: 925-631-9119
E-Mail Address: [email protected]
Questions or requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to the Purchasers at
1-800-854-8357.
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NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY REPRESENTATION
ON BEHALF OF THE PURCHASERS OR TO PROVIDE ANY INFORMATION OTHER THAN AS
CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH RECOMMENDATION,
INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN AUTHORIZED.
---------------------------
The Partnership is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Such reports and other information are available on the
Commission's electronic data gathering and retrieval (EDGAR) system, at its
internet web site at www.sec.gov, may be inspected at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and are available for inspection and
copying at the regional offices of the Commission located in Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can also be obtained from the Public Reference Room of the Commission
in Washington, D.C. at prescribed rates.
The Purchasers have filed with the Commission a Tender Offer Statement on
Schedule TO (including exhibits) pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer. Such statement and any amendments thereto, including
exhibits, may be inspected and copies may be obtained from the offices of the
Commission in the manner specified above.
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TABLE OF CONTENTS
Page
SUMMARY TERM SHEET.............................................................5
INTRODUCTION...................................................................7
TENDER OFFER...................................................................9
Section 1. Terms of the Offer...........................................9
Section 2. Proration; Acceptance for Payment and Payment for Units.....10
Section 3. Procedures for Tendering Units..............................11
Section 4. Withdrawal Rights...........................................12
Section 5. Extension of Tender Period; Termination; Amendment..........13
Section 6. Certain Federal Income Tax Consequences.....................14
Section 7. Effects of the Offer........................................16
Section 8. Future Plans................................................17
Section 9. The Business of the Partnership.............................17
Section 10. Conflicts of Interest.......................................18
Section 11. Certain Information Concerning the Purchasers...............18
Section 12. Source of Funds.............................................19
Section 13. Conditions of the Offer.....................................19
Section 14. Certain Legal Matters.......................................21
Section 15. Fees and Expenses...........................................22
Section 16. Miscellaneous...............................................22
Schedule I - The Purchasers and Their Respective Principals
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SUMMARY TERM SHEET
The Purchasers are offering to purchase up to 330,000 Units for $16.25 per Unit
in cash. The following are some of the questions that you, as a Unit holder of
the Partnership may have and answers to those questions. The information in this
summary is not complete and we urge you to carefully read the remainder of this
Offer to Purchase and the accompanying Letter of Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
The offer to purchase up to 330,000 Units is being made jointly by MP INCOME
FUND 11, L.P.; MP INCOME FUND 12, LLC; MP INCOME FUND 14, LLC; MP INCOME FUND
15, LLC; MP INCOME FUND 16, LLC; ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS
III, LTD.; ACCELERATED HIGH YIELD GROWTH FUND II, LTD.; ACCELERATED HIGH YIELD
INSTITUTIONAL FUND I, LTD.; ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS,
LTD.; ACCELERATED HIGH YIELD PENSION INVESTORS, LTD.; ACCELERATED HIGH YIELD
INCOME FUND I, LTD.; ACCELERATED HIGH YIELD INCOME FUND II, LTD.; PREVIOUSLY
OWNED MORTGAGE PARTNERSHIPS INCOME FUND 3; PREVIOUSLY OWNED PARTNERSHIPS INCOME
FUND; MP-DEWAAY FUND, LLC; SPECIFIED INCOME FUND, A CALIFORNIA LIMITED
PARTNERSHIP; MACKENZIE PATTERSON SPECIAL FUND 5, LLC; MP FALCON GROWTH FUND,
LLC; MP FALCON FUND, LLC; MP VALUE FUND 5, LLC; MP VALUE FUND 6, LLC; MACKENZIE
PATTERSON SPECIAL FUND 3, LLC; and MACKENZIE FUND VI, A CALIFORNIA LIMITED
PARTNERSHIP. Each of the Purchasers is a real estate investment fund managed or
advised by MacKenzie Patterson, Inc. a private, independent real estate
investment firm, or another of its affiliates. None of these entities is
affiliated with the Partnership's general partners or the GP Offeror.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase up to 330,000 of the limited partnership interests,
which are the "Units" issued to public investors in the Partnership. The number
of Units subject to the Offer will be the lesser of 330,00 Units or the number
of Units which, when added to the number of all other Units transferred within
the 12 months preceding the closing of the offer, would not equal or exceed 50%
of the outstanding Units. Purchase of Units in excess of the latter amount would
result in the termination of the Partnership for tax purposes and may be
prohibited under its limited partnership agreement.
HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are offering to pay $16.25 per Unit, net to you in cash, less the amount of
any distributions declared or made with respect to the Units between July 14,
2000 and the date the Offer expires. The Partnership has announced that it
expects to make a distribution of $8.35 per Unit on or about July 31, 2000 to
holders of Units as of June 30, 2000. The Offer price would be reduced by the
amount of distributions made or declared prior to the Expiration Date. Any
distributions made or declared after the Expiration Date would, by the terms of
the Offer and as set forth in the Letter of Transmittal, be assigned by
tendering Unit holders to the Purchasers. If you tender your shares to us in the
Offer, you will not have to pay brokerage fees or similar expenses.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
If the total amount of Units sought is purchased, the Purchasers' capital
commitment will be approximately $5.4 million. The Purchasers have an aggregate
of in excess $32 million in net assets at their disposal to fund payment to
selling Unit holders.
IS THE FINANCIAL CONDITION OF THE BIDDERS RELEVANT TO MY DECISION ON WHETHER TO
TENDER IN THE OFFER?
Because this is a cash offer that is not conditioned on financing being
available, and the Purchasers have more than adequate liquid resources and no
intention to take control of the Partnership, other information concerning the
Purchasers' financial condition would seem to have little relevance to your
decision.
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HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 12:00 midnight, pacific standard time, on August
15, 2000, to decide whether to tender your shares in the Offer.
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
The Offer can be extended in our discretion.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will make a public announcement of the extension, not
later than 9:00 a.m., eastern standard time, on the day after the day on which
the Offer was scheduled to expire.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
There are no conditions to the offer based on minimum Units tendered, the
availability of financing or otherwise determined by the success of the offer.
However, we may not be obligated to purchase any Units in the event certain
conditions occur, such as legal or government actions which would prohibit the
purchase. Furthermore, we are not obligated to purchase any Units which are
validly tendered if, among other things, there is a material adverse change in
the Partnership or its business.
HOW DO I TENDER MY UNITS?
To tender your shares, you must deliver a completed Letter of Transmittal
(printed on blue paper), to the Depositary at: MacKenzie Patterson, Inc., 1640
School Street, Moraga, California 94556 (Telephone: 800-854-8357; Facsimile
Transmission: 925-631-9119), no later than the time the Offer expires.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED UNITS?
You can withdraw previously tendered shares at any time until the Offer has
expired and, if we have not agreed to accept your shares for payment by
September 12, 2000, you can withdraw them at any time after such time until we
do accept your shares for payment.
HOW DO I WITHDRAW PREVIOUSLY TENDERED UNITS?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the Depositary while you
still have the right to withdraw the shares.
WHAT DOES THE PARTNERSHIP'S GENERAL PARTNER THINK OF THE OFFER?
The Purchasers have not sought the approval or disapproval of the General
Partners. The General Partners may be expected to respond with the Partnership's
position on the offer in the next two weeks. An affiliate of certain of the
General Partners has offered to purchase Units for a price which is $0.50 less
per Unit than the Purchasers' offer.
WILL THE PARTNERSHIP CONTINUE AS A PUBLIC COMPANY?
The Partnership reported 1,314 holders of its outstanding Units as of the end of
1999, the most recent year for which it has filed an annual report. Unless the
total number of Unit holders were to fall below 300, the Partnership will
continue as a public reporting company. The Offer and the current offer by the
GP Offeror are each limited to an acquisition of a number of Units which, when
added to the number of all other Units transferred within the 12 months
preceding the closing of the offer, would not equal or exceed 50% of the
outstanding Units. Accordingly, the Purchasers do not currently anticipate that
the offer will result in such a reduction in the number of Unit holders, though
it cannot now determine the results with any certainty.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
The Purchasers do not anticipate that Units held by non-tendering Unit holders
will be affected by the completion of the offer. However, if the Purchasers
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should acquire all of the Units sought in the Offer, the Purchasers would
control a large, though not necessarily controlling, block of Units.
WHAT ARE THE PURCHASERS' FUTURE INTENTIONS CONCERNING THE PARTNERSHIP?
The Purchasers have no present intention to seek control of the Partnership or
to change the management or operations of the Partnership. The Purchasers do not
have any present intention to seek or cause a liquidation of the Partnership.
Although the Purchasers do not have any present intention to take any action
with respect to management or control of the Partnership, the Purchasers reserve
the right, at an appropriate time, to exercise their rights as limited partners
to vote on matters subject to a limited partner vote, including any vote to
cause the sale of the Partnership's properties and the liquidation and
dissolution of the Partnership.
WHAT IS THE MARKET VALUE OF MY SHARES?
According to the Partnership, "There is no developed public market for the
purchase and sale of Units and Registrant does not anticipate that such a market
will develop." An affiliate of certain of the General Partners is currently
making a tender offer for the Units at a price of $15.75 per Unit. During June
and July of this year, certain of the Purchasers and Affiliates of the
Purchasers acquired approximately 120,000 Units in independently negotiated
private transactions for prices ranging from $16 to $17 per Unit.
WHOM CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call MacKenzie Patterson, Inc., toll free, at 800-854-8357.
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To the Unit holders of SECURED INCOME L.P.
INTRODUCTION
The Purchasers hereby offer to purchase up to 330,000 Units (the
"Maximum Offer") at a purchase price of $16.25 per Unit ("Offer Price"), less
the amount of any distributions declared or paid with respect to the Units
between July 14, 2000, and the Expiration Date, in cash, without interest, upon
the terms and subject to the conditions set forth in the Offer. The Purchasers
are unaware of any distributions declared or paid since July 14, 2000. Unit
holders who tender their Units will not be obligated to pay any Partnership
transfer fees, or any other fees, expenses or commissions in connection with the
tender of Units. The Purchasers will pay all such costs and all charges and
expenses of the Depositary, an affiliate of certain of the Purchasers, as
depositary in connection with the Offer.
For further information concerning the Purchasers, see Section 11 below
and Schedule I.
None of the Purchasers nor the Depositary is affiliated with the
Partnership, the Partnership's general partners, Wilder Richman Resources
Corporation, a Delaware corporation, Real Estate Equity Partners L.P., a
Delaware limited partnership and WRC-87A Corporation, a Delaware corporation
(the "General Partners"), or West Putnam Housing Investors II LLC (the " GP
Offeror"), an affiliate of certain of the General Partners currently making a
tender offer for the Units, or with any affiliate of such persons. The address
of the Partnership's principal executive offices is 599 W. Putnam Avenue,
Greenwich, Connecticut 06830.
Unit holders are urged to consider the following factors:
- Unit holders who tender their Units will give up the
opportunity to participate in any future benefits from the
ownership of Units, including potential future distributions
by the Partnership, and the purchase price per Unit payable to
a tendering Unit holder by the Purchasers may be less than the
total amount which might otherwise be received by the Unit
holder with respect to the Unit over the remaining term of the
Partnership.
- The Purchasers are making the Offer for investment purposes
and with the intention of making a profit from the ownership
of the Units. In establishing the purchase price of $16.25 per
Unit, the Purchasers are motivated to establish the lowest
price which might be acceptable to Unit holders consistent
with the Purchasers' objectives. There is no public market for
the Units, and neither the Unit holders nor the Purchasers
have any accurate means for determining the actual present
value of the Units. Although there can be no certainty as to
the actual present value of the Units, the Purchasers have,
for the purposes of determining an acceptable Offer price,
relied on the GP Offeror's estimate of the liquidation value
of the Units it the GP Offeror's current offer for Units. The
GP Offeror has estimated that "$20.68 per Unit, represents the
(GP Offeror's) estimate of the aggregate net liquidation
proceeds which could be realized on an orderly liquidation of
the Partnership" prior to the anticipated July 31, 2000
distribution of certain property refinancing proceeds, and the
GP Offeror has stated that "Net of the proceeds available from
the refinancing of the Westmont Property, the (GP Offeror's)
estimated liquidation value is ... $12.33 per Unit." The
Purchase Price of the Offer less the expected per-Unit
distribution from the proceeds of the property refinancing is
$7.90 per Unit, or $0.50 per Unit higher than the GP Offeror's
net offer price. It should be noted, however, that the
Purchasers have not made an independent appraisal of the Units
or the Partnership's properties, and are not qualified to
appraise real estate. Accordingly, there can be no assurance
that this estimate accurately reflects an approximate value of
the Units or that the actual amounts which may be realized by
holders for the Units may not vary substantially from this
estimate.
- As a result of consummation of the Offer, the Purchaser may be
in a position to significantly influence all Partnership
decisions on which Unit holders may vote. The Purchaser will
vote the Units acquired in the Offer in its own interest,
which may be different from or in conflict with the interests
of the remaining Unit holders.
- The Purchasers may accept only a portion of the Units tendered
by a Unit holder in the event a total of more than 330,000
Units are tendered.
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o The Depositary, MacKenzie Patterson, Inc., is an affiliate of
the Purchasers. No independent party will hold securities
tendered until the offer closes and payment is made. Because
there is no independent intermediary to hold the Purchasers'
funds and tendered securities, the Purchasers may have access
to the securities before all conditions to the Offer have been
satisfied and selling Unit holders have been paid.
The Offer will provide Unit holders with an opportunity to liquidate
their investment without the usual transaction costs associated with market
sales. Unit holders may have a more immediate need to use the cash now tied up
in an investment in the Units and wish to sell them to the Purchasers. Unit
holders who sell all of their Units will also eliminate the need to file form
K-1 information for the Partnership with their federal tax returns for years
after 2000.
Establishment of the Offer Price
The Purchasers have set the Offer Price at $16.25 per Unit, less the
amount of any distributions declared or made with respect to the Units between
July 14, 2000 and the Expiration Date. In determining the Offer Price, the
Purchasers analyzed a number of quantitative and qualitative factors,
including: (i) the lack of a secondary market for resales of the Units and the
resulting lack of liquidity of an investment in the Partnership; (ii) the GP
Offeror's estimated value of the Partnership's real estate assets; and (iii) the
costs to the Purchasers associated with acquiring the Units.
The Partnership made the following statement in its annual report on
Form 10-K for the year ended December 31, 1999: "There is no developed public
market for the purchase and sale of Units and Registrant does not anticipate
that such a market will develop." The lack of any public market for the sale of
Units means that Unit holders have limited alternatives if they seek to sell
their Units. As a result of such limited alternatives for Unit holders, the
Purchasers may not need to offer as high a price for the Units as they would
otherwise. On the other hand, the Purchasers take a greater risk in establishing
a purchase price as there is no prevailing market price to be used for reference
and the Purchasers themselves will have limited liquidity for the Units upon
consummation of the purchase.
An affiliate of certain of the General Partners is currently making a
tender offer for the Units at a price of $15.75 per Unit. In individually
negotiated private transactions during March 2000, Affiliates of the Purchasers
acquired approximately 24,000 Units for a price of $8.25 per Unit; in
individually negotiated private transactions during June and July 2000, certain
of the Purchasers and their affiliates acquired approximately 5,600 Units for a
price of $17 per Unit, and in individually negotiated private transactions
during June and July 2000, certain of the Purchasers and their affiliates
acquired approximately 115,000 Units for prices ranging from $16 to $16.25 per
Unit.
The Purchasers are offering to purchase Units which are an illiquid
investment and are not offering to purchase the Partnership's underlying assets.
The assets of the Partnership may not be liquidated for an indefinite period of
time. Accordingly, the underlying asset value of the Partnership is only one
factor used by the Purchasers in arriving at the Offer Price. However, in the
absence of trading price information, the Purchasers estimate of the net asset
value of the Partnership may be relevant to Unit holders review of the Offer
Price.
In its offer to purchase up to 451,235 Units for a price of $15.75 per
Unit, the GP Offeror made the following disclosure concerning its estimate of
the liquidation value of the Units in the determination of its offer price:
"The (GP Offeror) is offering to purchase Units, which are a relatively
illiquid investment, and is not offering to purchase the Partnership's
underlying assets or assume any of its liabilities. Consequently, the
(GP Offeror) does not believe that the per-Unit amount which might be
distributed to Unit Holders following a future sale of the Complexes
necessarily reflects the present fair value of a Unit. Conversely, the
realizable value of the Partnership's assets clearly is a relevant
factor in determining the price a prudent purchaser would offer for
Units. In considering this factor, the (GP Offeror) made a calculation
of the amount each Unit Holder might receive in a theoretical orderly
liquidation of the Partnership, based upon an unsolicited third-party
purchase offer for the Fieldpointe Property and a third-party appraisal
utilized in the recent financing of the Westmont Property (the "Gross
Real Estate Value Estimate"). The (GP Offeror) based its liquidation
analysis on the Gross Real Estate Value Estimate because the (GP
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Offeror) believes that the Gross Real Estate Value Estimate represents
a reasonable estimate, based on currently available information, of the
values of the Complexes.
In estimating the net liquidation value per Unit, the (GP
Offeror) adjusted its Gross Real Estate Value Estimate of approximately
$56,100,000 by (I) adding (i) the $8,259,000 expected to be available
for distribution to Unit Holders from the proceeds of the Westmont
Property and (ii) $1,500,000 in cash and distributable reserves and
(II) deducting (i) mortgages payable of approximately $42,500,000, (ii)
amounts due to General Partners and affiliates from the Partnership of
approximately $500,000, (iii) assumed closing costs and brokerage
expenses of approximately $1,965,000 (3.5% of the Gross Real Estate
Value Estimate) and $250,000 in estimated liquidation expenses, and
(iv) $385,000 in distributions that would be payable to the general
partners and the other limited partners of the Columbia Partnership and
to the General Partners of the Partnership upon liquidation. The
resulting amount of $20,359,000 or $20.68 per Unit, represents the (GP
Offeror)'s estimate of the aggregate net liquidation proceeds which
could be realized on an orderly liquidation of the Partnership, before
distribution of the proceeds of the Westmont refinancing based on the
assumptions implicit in the calculations described above. Assuming no
reduction in the Purchase Price ... the Purchase Price represents
approximately 76% of liquidation value.
Net of the proceeds available from the refinancing of the
Westmont Property, the (GP Offeror)'s estimated liquidation value is
$12,139,519 or $12.33 per Unit. The Purchase Price of the Offer less
the expected per-Unit distribution from the proceeds of the Westmont
refinancing is $7.40 per Unit.
The (GP Offeror)'s liquidation analysis described above is
merely theoretical and does not itself necessarily reflect the value of
the Units because (i) there is no assurance that any such liquidation
in fact will occur in the foreseeable future, (ii) any liquidation in
which the estimated fair market values described above might be
realized would take a period of time, during which time the Partnership
and its partners would continue to be exposed to the risk of
fluctuations in asset values because of changing market conditions and
other factors, (iii) the Westmont Property owned by the Columbia
Partnership is subject to certain restrictions on immediate sale, and
the Fieldpointe Property owned by the Carrollton Partnership is subject
to Federal Housing Administration regulations and (iv) interest rates
have trended higher in 2000 and may cause a prospective purchaser to
utilize higher capitalization rates due to such increases. In light of
these factors, the (GP Offeror) believes the actual current value of
the Units is less than its estimate of the Partnership's liquidation
value. Conversely, there is a meaningful possibility that the per-Unit
value realized in an orderly liquidation could be greater than the (GP
Offeror)'s estimated liquidation value. For example, the Westmont
Property is now financed with a floating interest rate, subject to an
interest rate cap contract limiting the interest rate to a maximum of
6.54%. A purchaser may believe that short-term tax-exempt interest rate
instruments will trend downward in the future and therefore ascribe
greater value to the Westmont Property. Accordingly, this analysis
should be viewed merely as indicative of the (GP Offeror)'s approach to
valuing Units and not as any way predictive of the likely result of any
future transactions."
The Offer Price represents the price at which the Purchasers are
willing to purchase Units. No independent person has been retained to evaluate
or render any opinion with respect to the fairness of the Offer Price and no
representation is made by the Purchasers or any affiliate of the Purchasers as
to such fairness. Other measures of the value of the Units may be relevant to
Unit holders. Unit holders are urged to consider carefully all of the
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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.
The Offer is not made with any current view toward or plan or purpose
of acquiring Units in a series of successive and periodic offers. Nevertheless,
the Purchasers reserve the right to gauge the response to this solicitation,
and, if not successful in achieving the Maximum Offer, may consider future
offers. Factors affecting the Purchasers' future interest in acquiring
additional Units include, but are not limited to, the relative success of the
current Offer, any increase or decrease in the availability of capital for
investment by the Purchasers and their investment fund affiliates, the current
diversification and performance of each affiliated fund's portfolio of real
estate interests, the development of any public market in the Units or actions
by unrelated parties to tender for or purchase Units, the status of and changes
and trends in the Partnership's operations, announcement of pending property
sales and the proposed terms of sales, and local and national real estate and
financial market developments and trends.
General Background Information
Certain information contained in this Offer to Purchase which relates
to, or represents, statements made by the Partnership or the General Partners,
has been derived from information provided in reports filed by the Partnership
with the Securities and Exchange Commission.
According to publicly available information, there were 984,369 Units
issued and outstanding held by approximately 1,314 Unit holders at December 31,
1999.
Tendering Unit holders will not be obligated to pay transfer fees,
brokerage fees or commissions on the sale of the Units to the Purchasers
pursuant to the Offer. The Purchasers will pay all charges and expenses incurred
in connection with the Offer. The Purchasers desire to purchase all Units
tendered by each Unit holder.
If, prior to the Expiration Date, the Purchasers increase the
consideration offered to Unit holders pursuant to the Offer, such increased
consideration will be paid with respect to all Units that are purchased pursuant
to the Offer, whether or not such Units were tendered prior to such increase in
consideration.
Unit holders are urged to read this Offer to Purchase and the
accompanying Letter of Transmittal carefully before deciding whether to tender
their Units.
TENDER OFFER
Section 1. Terms of the Offer. Upon the terms and subject to the conditions of
the Offer, the Purchasers will accept for payment and pay for Units validly
tendered on or prior to the Expiration Date and not withdrawn in accordance with
Section 4 of this Offer to Purchase. The term "Expiration Date" shall mean 12:00
midnight, Pacific Standard Time, on August 15, 2000, unless and until the
Purchasers shall have extended the period of time for which the Offer is open,
in which event the term "Expiration Date" shall mean the latest time and date on
which the Offer, as so extended by the Purchasers, shall expire.
The Offer is conditioned on satisfaction of certain conditions. See
Section 13, which sets forth in full the conditions of the Offer. The Purchasers
reserve the right (but shall not be obligated), in their sole discretion and for
any reason, to waive any or all of such conditions. If, by the Expiration Date,
any or all of such conditions have not been satisfied or waived, the Purchasers
reserve the right (but shall not be obligated) to (i) decline to purchase any of
the Units tendered, terminate the Offer and return all tendered Units to
tendering Unit holders, (ii) waive all the unsatisfied conditions and, subject
to complying with applicable rules and regulations of the Commission, purchase
all Units validly tendered, (iii) extend the Offer and, subject to the right of
Unit holders to withdraw Units until the Expiration Date, retain the Units that
have been tendered during the period or periods for which the Offer is extended
or (iv) to amend the Offer. Notwithstanding the foregoing, upon the expiration
of the Offer, if all conditions are either satisfied or waived, the Purchasers
will promptly pay for all validly tendered Units, and the Purchasers do not
intend to imply that the foregoing rights of the Purchasers would permit the
Purchasers to delay payment for validly tendered Units following expiration.
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The Purchasers do not anticipate and have no reason to believe that any
condition or event will occur that would prevent the Purchasers from purchasing
tendered Units as offered herein.
Section 2. Proration; Acceptance for Payment and Payment for Units. If the
number of Units validly tendered prior to the Expiration Date and not withdrawn
less than the maximum number of Units sought, which is the lesser of 330,00
Units or the number of Units which, when added to the number of all other Units
transferred within the 12 months preceding the closing of the offer, would not
equal or exceed 50% of the outstanding Units (the "Maximum Offer"), the
Purchasers, upon the terms and subject to the conditions of the Offer, will
accept for payment all Units so tendered. If the number of Units validly
tendered prior to the Expiration Date and not withdrawn exceeds the Maximum
Offer, the Purchasers, upon the terms and subject to the conditions of the
Offer, will accept for payment Units so tendered on a pro rata basis.
In the event that proration is required, because of the difficulty of
immediately determining the precise number of Units to be accepted, the
Purchasers will announce the final results of proration as soon as practicable,
but in no event later than five business days following the Expiration Date. The
Purchasers will not pay for any Units tendered until after the final proration
factor has been determined.
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any extension
or amendment), the Purchasers will accept for payment, and will pay for, Units
validly tendered and not withdrawn in accordance with Section 4, as promptly as
practicable following the Expiration Date. In all cases, payment for Units
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by the Letter of
Transmittal.
For purposes of the Offer, the Purchasers shall be deemed to have
accepted for payment (and thereby purchased) tendered Units when, as and if the
Purchasers give oral or written notice to the Depositary of the Purchasers'
acceptance for payment of such Units pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Units purchased pursuant to
the Offer will in all cases be made by deposit of the Offer Price with the
Depositary, which will act as agent for the tendering Unit holders for the
purpose of receiving payment from the Purchasers and transmitting payment to
tendering Unit holders.
Under no circumstances will interest be paid on the Offer Price by
reason of any delay in making such payment.
If any tendered Units are not purchased for any reason, the Letter of
Transmittal with respect to such Units not purchased will be of no force or
effect. If, for any reason whatsoever, acceptance for payment of, or payment
for, any Units tendered pursuant to the Offer is delayed or the Purchasers are
unable to accept for payment, purchase or pay for Units tendered pursuant to the
Offer, then, without prejudice to the Purchasers' rights under Section 13 (but
subject to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary
may, nevertheless, on behalf of the Purchasers, retain tendered Units, subject
to any limitations of applicable law, and such Units may not be withdrawn except
to the extent that the tendering Unit holders are entitled to withdrawal rights
as described in Section 4.
If, prior to the Expiration Date, the Purchasers shall increase the
consideration offered to Unit holders pursuant to the Offer, such increased
consideration shall be paid for all Units accepted for payment pursuant to the
Offer, whether or not such Units were tendered prior to such increase.
Section 3. Procedures for Tendering Units.
Valid Tender. For Units to be validly tendered pursuant to the Offer, a properly
completed and duly executed Letter of Transmittal (a copy of which is enclosed
with this Offer to Purchase, printed on blue paper) with any other documents
required by the Letter of Transmittal must be received by the Depositary at its
address set forth on the back cover of this Offer to Purchase on or prior to the
Expiration Date. A Unit holder may tender any or all Units owned by such Unit
holder.
In order for a tendering Unit holder to participate in the Offer, Units must be
validly tendered and not withdrawn prior to the Expiration Date, which is 12:00
midnight, Pacific Standard Time, on August 15, 2000, or such date to which the
Offer may be extended.
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The method of delivery of the Letter of Transmittal and all other required
documents is at the option and risk of the tendering Unit holder and delivery
will be deemed made only when actually received by the Depositary.
Backup Federal Income Tax Withholding. To prevent the possible application of
31% backup federal income tax withholding with respect to payment of the Offer
Price for Units purchased pursuant to the Offer, a tendering Unit holder must
provide the Depositary with such Unit holder's correct taxpayer identification
number and make certain certifications that such Unit holder is not subject to
backup federal income tax withholding. Each tendering Unit holder must insert in
the Letter of Transmittal the Unit holder's taxpayer identification number or
social security number in the space provided on the front of the Letter of
Transmittal. The Letter of Transmittal also includes a substitute Form W-9,
which contains the certifications referred to above. (See the Instructions to
the Letter of Transmittal.)
FIRPTA Withholding. To prevent the withholding of federal income tax in an
amount equal to 10% of the sum of the Offer Price plus the amount of Partnership
liabilities allocable to each Unit tendered, each Unit holder must complete the
FIRPTA Affidavit included in the Letter of Transmittal certifying such Unit
holder's taxpayer identification number and address and that the Unit holder is
not a foreign person. (See the Instructions to the Letter of Transmittal and
"Section 6. Certain Federal Income Tax Consequences.")
Other Requirements. By executing a Letter of Transmittal as set forth above, a
tendering Unit holder irrevocably appoints the designees of the Purchasers as
such Unit holder's proxies, in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
Unit holder's rights with respect to the Units tendered by such Unit holder and
accepted for payment by the Purchasers. Such appointment will be effective when,
and only to the extent that, the Purchasers accept such Units for payment. Upon
such acceptance for payment, all prior proxies given by such Unit holder with
respect to such Units will, without further action, be revoked, and no
subsequent proxies may be given (and if given will not be effective). The
designees of the Purchasers will, with respect to such Units, be empowered to
exercise all voting and other rights of such Unit holder as they in their sole
discretion may deem proper at any meeting of Unit holders, by written consent or
otherwise. In addition, by executing a Letter of Transmittal, a Unit holder also
assigns to the Purchasers all of the Unit holder's rights to receive
distributions from the Partnership with respect to Units which are accepted for
payment and purchased pursuant to the Offer, other than those distributions
declared or paid during the period commencing on the Offer Date and terminating
on the Expiration Date.
Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation
to Give Notice of Defects. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Units
pursuant to the procedures described above will be determined by the Purchasers,
in their sole discretion, which determination shall be final and binding. The
Purchasers reserve the absolute right to reject any or all tenders if not in
proper form or if the acceptance of, or payment for, the absolute right to
reject any or all tenders if not in proper form or if the acceptance of, or
payment for, the Units tendered may, in the opinion of the Purchasers' counsel,
be unlawful. The Purchasers also reserve the right to waive any defect or
irregularity in any tender with respect to any particular Units of any
particular Unit holder, and the Purchasers' interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
Instructions thereto) will be final and binding. Neither the Purchasers, the
Depositary, nor any other person will be under any duty to give notification of
any defects or irregularities in the tender of any Units or will incur any
liability for failure to give any such notification.
A tender of Units pursuant to any of the procedures described above
will constitute a binding agreement between the tendering Unit holder and the
Purchasers upon the terms and subject to the conditions of the Offer, including
the tendering Unit holder's representation and warranty that (i) such Unit
holder owns the Units being tendered within the meaning of Rule 14e-4 under the
Exchange Act and (ii) the tender of such Unit complies with Rule 14e-4.
Rule 14e-4 requires, in general, that a tendering security holder actually be
able to deliver the security subject to the tender offer, and is of concern
particularly to any Unit holders who have granted options to sell or purchase
the Units, hold option rights to acquire such securities, maintain "short"
positions in the Units (i.e., have borrowed the Units) or have loaned the Units
to a short seller. Because of the nature of limited partnership interests, the
Purchasers believe it is unlikely that any option trading or short selling
activity exists with respect to the Units. In any event, a Unit holder will be
deemed to tender Units in compliance with Rule 14e-4 and the Offer if the holder
is the record owner of the Units and the holder (i) delivers the Units pursuant
to the terms of the Offer, (ii) causes such delivery to be made, (iii)
guarantees such delivery, (iv) causes a guaranty of such delivery, or (v) uses
any other method permitted in the Offer (such as facsimile delivery of the
Transmittal Letter).
Section 4. Withdrawal Rights. Except as otherwise provided in this Section 4,
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all tenders of Units pursuant to the Offer are irrevocable, provided that
Units tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment as provided in this
Offer to Purchase, may also be withdrawn at any time on or after September 12,
2000.
For withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at the address or
the facsimile number set forth in the attached Letter of Transmittal. 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 Letter of
Transmittal in the same manner as the Letter of Transmittal was signed.
If purchase of, or payment for, Units is delayed for any reason or if
the Purchasers are unable to purchase or pay for Units for any reason, then,
without prejudice to the Purchasers' rights under the Offer, tendered Units may
be retained by the Depositary on behalf of the Purchasers and may not be
withdrawn except to the extent that tendering Unit holders are entitled to
withdrawal rights as set forth in this Section 4, subject to Rule 14e-1(c) under
the Exchange Act, which provides that no person who makes a tender offer shall
fail to pay the consideration offered or return the securities deposited by or
on behalf of security holders promptly after the termination or withdrawal of
the tender offer.
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Purchasers, in their sole
discretion, which determination shall be final and binding. Neither the
Purchasers, the Depositary, nor any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
will incur any liability for failure to give any such notification.
Any Units properly withdrawn will be deemed not to be validly tendered
for purposes of the Offer. Withdrawn Units may be re-tendered, however, by
following the procedures described in Section 3 at any time prior to the
Expiration Date.
Section 5. Extension of Tender Period; Termination; Amendment. The Purchasers
expressly reserve the right, in their sole discretion, at any time and from time
to time, (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Units by
giving oral or written notice of such extension to the Depositary, (ii) upon the
occurrence or failure to occur of any of the conditions specified in Section 13,
to delay the acceptance for payment of, or payment for, any Units not heretofore
accepted for payment or paid for, or to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or paid for, by giving
oral or written notice of such termination to the Depositary, and (iii) to amend
the Offer in any respect (including, without limitation, by increasing or
decreasing the consideration offered or the number of Units being sought in the
Offer or both or changing the type of consideration) by giving oral or written
notice of such amendment to the Depositary. Any extension, termination or
amendment will be followed as promptly as practicable by public announcement,
the announcement in the case of an extension to be issued no later than 9:00
a.m., Eastern Standard Time, on the next business day after the previously
scheduled Expiration Date, in accordance with the public announcement
requirement of Rule 14d-4(c) under the Exchange Act. Without limiting the manner
in which the Purchasers may choose to make any public announcement, except as
provided by applicable law (including Rule 14d- 4(c) under the Exchange Act),
the Purchasers will have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by issuing a release to the
Dow Jones News Service. The Purchasers may also be required by applicable law to
disseminate to Unit holders certain information concerning the extensions of the
Offer and any material changes in the terms of the Offer.
If the Purchasers extend the Offer, or if the Purchasers (whether
before or after its acceptance for payment of Units) are delayed in their
payment for Units or are unable to pay for Units pursuant to the Offer for any
reason, then, without prejudice to the Purchasers' rights under the Offer, the
Depositary may retain tendered Units on behalf of the Purchasers, and such Units
may not be withdrawn except to the extent tendering Unit holders are entitled to
withdrawal rights as described in Section 4. However, the ability of the
Purchasers to delay payment for Units that the Purchasers have accepted for
payment is limited by Rule 14e-1 under the Exchange Act, which requires that the
Purchasers pay the consideration offered or return the securities deposited by
or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer.
If the Purchasers make a material change in the terms of the Offer or
the information concerning the Offer or waive a material condition of the Offer,
the Purchasers will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an
offer must remain open following a material change in the terms of the offer or
information concerning the offer, other than a change in price or a change
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in percentage of securities sought, will depend upon the facts and
circumstances, including the relative materiality of the change in the terms or
information. With respect to a change in price or a change in percentage of
securities sought (other than an increase of not more than 2% of the securities
sought), however, a minimum ten business day period is generally required to
allow for adequate dissemination to security holders and for investor response.
As used in this Offer to Purchase, "business day" means any day other than a
Saturday, Sunday or a federal holiday, and consists of the time period from
12:01 a.m. through 12:00 midnight, Pacific Standard Time.
Section 6. Certain Federal Income Tax Consequences. THE FEDERAL INCOME TAX
DISCUSSION SET FORTH BELOW IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY AND
DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF TAXATION THAT MAY BE RELEVANT TO A
PARTICULAR UNIT HOLDER. For example, this discussion does not address the effect
of any applicable foreign, state,
local or other tax laws other than federal income tax laws. Certain Unit holders
(including trusts, foreign persons, tax- exempt organizations or corporations
subject to special rules, such as life insurance companies or S corporations)
may be subject to special rules not discussed below. This discussion is based on
the Internal Revenue Code of 1986, as amended (the "Code"), existing
regulations, court decisions and Internal Revenue Service ("IRS") rulings and
other pronouncements. EACH Unit holder TENDERING UNITS SHOULD CONSULT SUCH UNIT
HOLDER'S OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH UNIT
HOLDER OF ACCEPTING THE OFFER, INCLUDING THE APPLICATION OF THE ALTERNATIVE
MINIMUM TAX AND FEDERAL, FOREIGN, STATE, LOCAL AND OTHER TAX LAWS.
The following discussion is based on the assumption that the
Partnership is treated as a partnership for federal income tax purposes and is
not a "publicly traded partnership" as that term is defined in the Code.
Gain or Loss. A taxable Unit holder will recognize a gain or loss on the sale of
such Unit holder's Units in an amount equal to the difference between (i) the
amount realized by such Unit holder on the sale and (ii) such Unit holder's
adjusted tax basis in the Units sold. The amount realized by a Unit holder will
include the Unit holder's share of the Partnership's liabilities, if any (as
determined under Code section 752 and the regulations thereunder). If the Unit
holder reports a loss on the sale, such loss generally could not be currently
deducted by such Unit holder except against such Unit holder's capital gains
from other investments. In addition, such loss would be treated as a passive
activity loss.
(See "Suspended Passive Activity Losses" below.)
The adjusted tax basis in the Units of a Unit holder will depend upon
individual circumstances. (See also "Partnership Allocations in Year of Sale"
below.) Each Unit holder who plans to tender hereunder should consult with the
Unit holder's own tax advisor as to the Unit holder's adjusted tax basis in the
Unit holder's Units and the resulting tax consequences of a sale.
If any portion of the amount realized by a Unit holder is attributable
to such Unit holder's share of "unrealized receivables" or "substantially
appreciated inventory items" as defined in Code section 751, a corresponding
portion of such Unit holder's gain or loss will be treated as ordinary gain or
loss. It is possible that the basis allocation rules of Code Section 751 may
result in a Unit holder's recognizing ordinary income with respect to the
portion of the Unit holder's amount realized on the sale of a Unit that is
attributable to such items while recognizing a capital loss with respect to the
remainder of the Unit.
A tax-exempt Unit holder (other than an organization described in Code
Section 501(c)(7) (social club), 501(c)(9) (voluntary employee benefit
association), 501(c)(17) (supplementary unemployment benefit trust), or
501(c)(20) (qualified group legal services plan)) should not be required to
recognize unrelated trade or business income upon the sale of its Units pursuant
to the Offer, assuming that such Unit holder does not hold its Units as a
"dealer" and has not acquired such Units with debt financed proceeds.
Partnership Allocations in Year of Sale. A tendering Unit holder will be
allocated the Unit holder's pro rata share of the annual taxable income and
losses from the Partnership with respect to the Units sold for the period
through the date of sale, even though such Unit holder will assign to the
Purchasers their rights to receive certain cash distributions with respect to
such Units. Such allocations and any Partnership distributions for such period
would affect a Unit holder's adjusted tax basis in the tendered Units and,
therefore, the amount of gain or loss recognized by the Unit holder on the sale
of the Units.
Possible Tax Termination. The Code provides that if 50% or more of the capital
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and profits interests in a partnership are sold or exchanged within a
single 12-month period, such partnership generally will terminate for federal
income tax purposes. It is possible that the Partnership could terminate for
federal income tax purposes as a result of consummation of the Offer. Although
the likelihood is remote, as the Maximum Offer is calculated as an amount which
is not expected to cause such a termination, a tax termination of the
Partnership could have an effect on a corporate or other non-individual Unit
holder whose tax year is not the calendar year, as such a Unit holder might
recognize more than one year's Partnership tax items in one tax return, thus
accelerating by a fraction of a year the effects from such items.
Suspended "Passive Activity Losses". A Unit holder who sells all of the Unit
holder's Units would be able to deduct "suspended" passive activity losses from
the Partnership, if any, in the year of sale free of the passive activity loss
limitation. As a limited partner of the Partnership, which was engaged in real
estate activities, the ability of a Unit holder, who or which is subject to the
passive activity loss rules, to claim tax losses from the Partnership was
limited. Upon sale of all of the Unit holder's Units, such Unit holder would be
able to use any "suspended" passive activity losses first against gain, if any,
on sale of the Unit holder's Units and then against income from any other
source.
Foreign Unit holders. Gain realized by a foreign Unit holder on a sale of a Unit
pursuant to the Offer will be subject to federal income tax. Under Section 1445
of the Code, the transferee of a partnership interest held by a foreign person
is generally required to deduct and withhold a tax equal to 10% of the amount
realized on the disposition. The Purchasers will withhold 10% of the amount
realized by a tendering Unit holder from the purchase price payment to be made
to such Unit holder unless the Unit holder properly completes and signs the
FIRPTA Affidavit included as part of the Letter of Transmittal certifying the
Unit holder's TIN, that such Unit holder is not a foreign person and the Unit
holder's address. Amounts withheld would be creditable against a foreign Unit
holder's federal income tax liability and, if in excess thereof, a refund could
be obtained from the Internal Revenue Service by filing a U.S. income tax
return.
Section 7. Effects of the Offer.
Limitations on Resales. The Partnership's Limited Partnership Agreement
prohibits transfers of Units if a transfer, when considered with all other
transfers during the same applicable twelve-month period, would cause a
termination of the Partnership for federal income tax purposes. As explained
above, a termination of a partnership occurs if there is a sale or exchange of
50% or more of the total interests in the partnership's capital and profits
within a twelve-month period. If the number of Units purchased in the Offer is
at or close to the maximum number of Units sought, Unit Holders would be
prohibited or severely restricted from selling Units for the twelve-month period
following consummation of the Offer.
Effect on Trading Market. If a substantial number of Units are purchased
pursuant to the Offer and there is no proration, the result could be a reduction
in the number of Unit Holders. Reducing the number of security holders in
certain kinds of equity securities might be expected to result in a reduction in
the liquidity and volume of activity in the trading market for the security.
However, there is no established public trading market for the Units and,
therefore, the Purchasers do not believe a reduction in the number of Unit
holders will materially further restrict the Unit holders' ability to find
purchasers for their Units through secondary market transactions.
Voting Power of Purchasers. Depending on the number of Units acquired by the
Purchasers pursuant to the Offer, the Purchasers may have the ability to exert
certain influence on matters subject to the vote of Unit holders, though the
maximum number of Units sought hereunder would not give the Purchasers a
controlling voting interest. The Partnership does not hold annual or regular
meetings to elect directors, and does not have a representative board of
directors overseeing management. Votes of Unit holders would only be solicited,
if ever, for matters affecting the fundamental structure of the Partnership, and
the affirmative vote of more than 50% of the outstanding Units (not a mere
quorum) is required to effect action. The Purchasers and their affiliates do not
intend to call for any such vote in the foreseeable future, nor are they aware
that the General Partners intend to do so. They would, nevertheless, exercise
any and all rights they might hold in the event that such a vote is called by
the General Partners, or if, in the future, changes in circumstances would
dictate that limited partners exercise their right to call a vote. If the
Purchasers were to acquire all of the Units sought in the Offer, the Purchasers
would hold approximately 49.8% of the outstanding Units. Accordingly, the
Purchasers' votes would significantly influence the outcome of any
extraordinary vote (as there are no regular or annual votes). However, even in
those circumstances, the Purchasers would not see any divergence between the
Purchasers' interests as holders and those of any other ordinary holder.
Other Potential Effects. The Units are registered under the Exchange Act, which
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requires, among other things that the Partnership furnish certain
information to its Unit holders and to the Commission and comply with the
Commission's proxy rules in connection with meetings of, and solicitation of
consents from, Unit holders. Registration and reporting requirements could be
terminated by the Partnership if the number of record holders falls below 300,
or below 500 if the Partnership's total assets are below $10 million for three
consecutive preceding fiscal years. The Partnership reported a total of 1,314
limited partners as of its most recent fiscal year end and in excess of $36
million in total assets. The Offer and the current offer by the GP Offeror are
each limited to an acquisition of a number of Units which, when added to the
number of all other Units transferred within the 12 months preceding the closing
of the offer, would not equal or exceed 50% of the outstanding Units.
Accordingly, the Purchasers do not currently anticipate that the offer will
result in a reduction in the number of Unit holders below 300, though it cannot
now determine the results with any certainty. Accordingly, the Purchasers do not
believe that the purchase of Units pursuant to the Offer will result in the
Units becoming eligible for de-registration under the Exchange Act.
Section 8. Future Plans. Following the completion of the Offer, the Purchasers,
or their affiliates, may acquire additional Units. Any such acquisitions may be
made through private purchases, one or more future tender offers or by any other
means deemed advisable or appropriate. Any such acquisitions may be at a
consideration higher or lower than the consideration to be paid for the Units
purchased pursuant to the Offer. The Purchasers are seeking to purchase a total
of 330,000 Units. If the Purchasers acquire fewer than 330,000 Units pursuant to
the Offer, the Purchasers may seek to make further purchases on the open market
at prevailing prices, or solicit Units pursuant to one or more future tender
offers at the same price, a higher price or, if the Partnership's circumstances
change, at a lower price. Alternatively, the Purchasers may discontinue any
further purchases of Units after termination of the Offer, regardless of the
number of Units purchased. The Offer is not made with any current view toward or
plan or purpose of acquiring Units in a series of successive and periodic
offers. Nevertheless, as noted above, the Purchasers reserve the right to gauge
the response to this solicitation, and, if not successful in achieving the
Maximum Offer, may consider future offers. Factors affecting the Purchasers'
future interest in acquiring additional Units include, but are not limited to,
the relative success of the current Offer, any increase or decrease in the
availability of capital for investment by the Purchasers and their investment
fund affiliates, the current diversification and performance of each affiliated
fund's portfolio of real estate interests, the development of any public market
in the Units or actions by unrelated parties to tender for or purchase Units,
the status of and changes and trends in the Partnership's operations,
announcement of pending property sales and the proposed terms of sales, and
local and national real estate and financial market developments and trends.
The Purchasers are acquiring the Units pursuant to the Offer solely for
investment purposes. The Purchasers have no present intention to seek control of
the Partnership or to change the management or operations of the Partnership.
The Purchasers do not have any present intention to seek or cause a liquidation
of the Partnership. The Purchasers nevertheless reserve the right, at an
appropriate time, to exercise their rights as limited partners to vote on
matters subject to a limited partner vote, including, but not limited to, any
vote to cause the sale of the Partnership's properties and the liquidation and
dissolution of the Partnership.
Section 9. The Business of the Partnership. Information included herein
concerning the Partnership is derived from the Partnership's publicly-filed
reports and the publicly field offer by the GP Offeror. Information concerning
the Partnership, its assets, operations and management is contained in its
Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q and other filings
with the Securities and Exchange Commission, including the Schedule TO filed in
connection with the current tender offer by the GP Offeror and the Partnership's
response on Schedule 14D-9. Such reports and filings are available on the
Commission's EDGAR system, at its internet website at www.sec.gov, and are
available for inspection at the Commission's principal office in Washington,
D.C. and at its regional offices in New York, New York and Chicago, Illinois.
The Purchasers have relied on such information to the extent information is
presented herein concerning the Partnership, and expressly disclaim any
responsibility for the information included in such reports and extracted in
this Offer.
Section 10. Conflicts of Interest. The Depositary is affiliated with certain
Purchasers. Therefore, by virtue of this affiliation, the Depositary may have
inherent conflicts of interest in acting as Depositary for the Offer. The
Depositary's role is administrative only, however, and any conflict of interest
should not be deemed material to Unit holders.
Section 11. Certain Information Concerning the Purchasers. The Purchasers
are MP INCOME FUND 11, L.P.; MP INCOME FUND 12, LLC; MP INCOME FUND 14, LLC; MP
INCOME FUND 15, LLC; MP INCOME FUND 16, LLC; ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS III, LTD.; ACCELERATED HIGH YIELD GROWTH FUND II, LTD.;
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ACCELERATED HIGH YIELD INSTITUTIONAL FUND I, LTD.; ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS, LTD.; ACCELERATED HIGH YIELD PENSION INVESTORS, LTD.;
ACCELERATED HIGH YIELD INCOME FUND I, LTD.; ACCELERATED HIGH YIELD INCOME FUND
II, LTD.; PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS INCOME FUND 3; PREVIOUSLY OWNED
PARTNERSHIPS INCOME FUND; MP-DEWAAY FUND, LLC; SPECIFIED INCOME FUND, A
CALIFORNIA LIMITED PARTNERSHIP; MACKENZIE PATTERSON SPECIAL FUND 5, LLC; MP
FALCON GROWTH FUND, LLC; MP FALCON FUND, LLC; MP VALUE FUND 5, LLC; MP VALUE
FUND 6, LLC; MACKENZIE PATTERSON SPECIAL FUND 3, LLC; and MACKENZIE FUND VI, A
CALIFORNIA LIMITED PARTNERSHIP. For information concerning the Purchasers and
their respective principals, please refer to Schedule I attached hereto. The
principal business of each of the Purchasers is investment in securities,
particularly real estate-based securities. The principal business address of
each of the Purchasers is 1640 School Street, Moraga, California 94556.
The Purchasers have made binding commitments to contribute and have
available sufficient amounts of capital necessary to fund the acquisition of all
Units subject to the Offer, the expenses to be incurred in connection with the
Offer, and all other anticipated costs of the Purchasers. The Purchasers are not
public companies and have not prepared audited financial statements. Set forth
below is summary of total net assets (that is, total assets less total
liabilities), total current assets (defined for this purpose as cash, cash
equivalents and marketable securities), and total current liabilities for each
of the Purchasers (numbers are expressed in thousands of dollars and are rounded
to the nearest thousand) as of July 1, 2000:
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<TABLE>
Fund Name Total Net Assets Current Assets Current Liabilities
<S> <C> <C> <C>
MP Income Fund 11, L.P. $ 1,163,413.31 $335,022.68 $(635.87)
MP Income Fund 12, LLC $ 1,428,548.23 $220,966.14 $0.00
MP Income Fund 14, LLC $ 1,693,001.48 $81,833.36 $0.00
MP Income Fund 15, LLC $ 1,839,003.44 $(21,421.29) $0.00
MP Income Fund 16, LLC $ 1,796,291.85 $465,000.00 $0.00
MP-Dewaay Fund, LLC $ 442,416.12 $107,763.31 $0.00
Previously Owned Mortgage Partnerships Income Fund 3 $ 1,129,948.00 $162,799.46 $0.00
Specified Income Fund, a California limited partnership $ 2,307,522.25 $227,439.99 $(12,687.43)
MacKenzie Patterson Special Fund 5, LLC $ 1,958,645.00 $332,773.15 $(2,992.71)
MP Falcon Growth Fund, LLC $ 0.00 $0.00 $0.00
MP Falcon Fund, LLC $ 1,795,944.31 $250,250.45 $(36,945.83)
MP Value Fund 5, LLC $ 1,904,884.63 $681,899.43 $(12,861.46)
MP Value Fund 6, LLC $ 1,991,598.11 $251,235.47 $(6,351.61)
Accelerated High Yield Institutional Investors III, LTD $ 437,064.33 $118,265.95 $(453.25)
Accelerated High Yield Growth Fund II, LTD $ 694,653.37 $93,888.38 $(343.50)
Accelerated High Yield Institutional Fund I, LTD $ 1,353,606.99 $131,868.92 $(26,063.33)
MacKenzie Patterson Special Fund 3, LLC $ 2,840,849.20 $46,358.56 $(10,000.00)
MacKenzie Fund VI, a California limited partnership $ 1,642,872.54 $(47,301.77) $0.00
Accelerated High Yield Institutional Investors, LTD $ 2,384,282.56 $203,467.19 $(2,798.83)
Accelerated High Yield Pension Investors, LTD $ 712,554.14 $(2,706.69) $(2,013.00)
Accelerated High Yield Income Fund I, LTD $ 1,163,566.60 $97,049.05 $0.00
Accelerated High Yield Income Fund II, LTD $ 805,864.93 $88,741.50 $(10,702.12)
Previously Owned Partnerships Income Fund $ 565,908.38 $8,251.03 $(7,751.80)
TOTALS $ 32,052,439.77 $3,833,444.27 $(132,600.74)
</TABLE>
Except as otherwise set forth herein, (i) neither the Purchasers nor,
to the best knowledge of the Purchasers, the persons listed on Schedule I nor
any affiliate of the Purchasers beneficially owns or has a right to acquire any
Units, (ii) neither the Purchasers nor, to the best knowledge of the Purchasers,
the persons listed on Schedule I nor any affiliate of the Purchasers, or any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Units within the past 60 days, (iii) neither the
Purchasers nor, to the best knowledge of the Purchasers, the persons listed on
Schedule I nor any affiliate of the Purchasers has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Partnership, including but not limited to, contracts,
arrangements, understandings or relationships concerning the transfer or voting
thereof, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies,
consents or authorizations, (iv) there have been no transactions or business
relationships which would be required to be disclosed under the rules and
regulations of the Commission between any of the Purchasers or, to the best
knowledge of the Purchasers, the persons listed on Schedule I, or any affiliate
of the Purchasers on the one hand, and the Partnership or its affiliates, on the
other hand, and (v) there have been no contracts, negotiations or transactions
between the Purchasers, or to the best knowledge of the Purchasers any affiliate
of the Purchasers on the one hand, the persons listed on Schedule I, and the
Partnership or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets.
Section 12. Source of Funds. The Purchasers expect that approximately $5,362,500
would be required to purchase 330,000 Units, if tendered, and an additional
$20,000 may be required to pay related fees and expenses. The Purchasers
anticipate funding all of the purchase price and related expenses through their
existing liquid capital reserves. The cash to complete the entire purchase is in
the bidders' hands and is committed to that purpose. Accordingly, there are no
financing arrangements to fall through and no alternative financing plans.
19
<PAGE>
Section 13. Conditions of the Offer. Notwithstanding any other term of the
Offer, the Purchasers shall not be required to accept for payment or to pay for
any Units tendered if all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
court, administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, necessary for the consummation of the
transactions contemplated by the Offer shall not have been filed, occurred or
been obtained on or before the Expiration Date.
The Purchasers shall not be required to accept for payment or pay for
any Units not theretofore accepted for payment or paid for and may terminate or
amend the Offer as to such Units if, at any time on or after the date of the
Offer and before the Expiration Date, any of the following conditions exists:
(a) a preliminary or permanent injunction or other order of any federal
or state court, government or governmental authority or agency shall have been
issued and shall remain in effect which (i) makes illegal, delays or otherwise
directly or indirectly restrains or prohibits the making of the Offer or the
acceptance for payment of or payment for any Units by the Purchasers, (ii)
imposes or confirms limitations on the ability of the Purchasers effectively to
exercise full rights of ownership of any Units, including, without limitation,
the right to vote any Units acquired by the Purchasers pursuant to the Offer or
otherwise on all matters properly presented to the Partnership's Unit holders,
(iii) requires divestiture by the Purchasers of any Units, (iv) causes any
material diminution of the benefits to be derived by the Purchasers as a result
of the transactions contemplated by the Offer or (v) might materially adversely
affect the business, properties, assets, liabilities, financial condition,
operations, results of operations or prospects of the Purchasers or the
Partnership, in the reasonable judgment of the Purchasers;
(b) there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed applicable
to the Offer by any federal or state court, government or governmental authority
or agency, other than the application of the waiting period provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which might,
directly or indirectly, result in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) any change or development shall have occurred or been threatened
since the date hereof, in the business, properties, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Partnership, which, in the reasonable judgment of the Purchasers, is or may be
materially adverse to the Partnership, or the Purchasers shall have become aware
of any fact that, in the reasonable judgment of the Purchasers, does or may have
a material adverse effect on the value of the Units;
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange or
in the over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any governmental authority on, or other
event which might affect, the extension of credit by lending institutions or
result in any imposition of currency controls in the United States, (iv) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States, (v) a material
change in United States or other currency exchange rates or a suspension of a
limitation on the markets thereof, or (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof; or
(e) it shall have been publicly disclosed or the Purchasers shall have
otherwise learned that (i) more than fifty percent of the outstanding Units have
been or are proposed to be acquired by another person (including a "group"
within the meaning of Section 13(d)(3) of the Exchange Act), or (ii) any person
or group that prior to such date had filed a Statement with the Commission
pursuant to Sections 13(d) or (g) of the Exchange Act has increased or proposes
to increase the number of Units beneficially owned by such person or group as
disclosed in such Statement by two percent or more of the outstanding Units.
The foregoing conditions are for the sole benefit of the Purchasers and
may be asserted by the Purchasers regardless of the circumstances giving rise to
such conditions or may be waived by the Purchasers in whole or in part at any
time and from time to time in their sole discretion, and the Offer will remain
open for a period of at least five business days following any such waiver of a
material condition. Any termination by the Purchasers concerning the events
described above will be final and binding upon all parties.
20
<PAGE>
Section 14. Certain Legal Matters.
General. Except as set forth in this Section 14, the Purchasers are not aware of
any filings, approvals or other actions by any domestic or foreign governmental
or administrative agency that would be required prior to the acquisition of
Units by the Purchasers pursuant to the Offer. Should any such approval or other
action be required, it is the Purchasers' present intention that such additional
approval or action would be sought. While there is no present intent to delay
the purchase of Units tendered pursuant to the Offer pending receipt of any such
additional approval or the taking of any such action, there can be no assurance
that any such additional approval or action, if needed, would be obtained
without substantial conditions or that adverse consequences might not result to
the Partnership's business, or that certain parts of the Partnership's business
might not have to be disposed of or held separate or other substantial
conditions complied with in order to obtain such approval or action, any of
which could cause the Purchasers to elect to terminate the Offer without
purchasing Units thereunder. The Purchasers' obligation to purchase and pay for
Units is subject to certain conditions, including conditions related to the
legal matters discussed in this Section 14.
Antitrust. The Purchasers do not believe that the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of Units
pursuant to the Offer.
Margin Requirements. The Units are not "margin securities" under the regulations
of the Board of Governors of the Federal Reserve System and, accordingly, such
regulations are not applicable to the Offer.
State Takeover Laws. A number of states have adopted anti-takeover laws which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets, security holders, principal executive offices or principal places of
business therein. These laws are directed at the acquisition of corporations and
not partnerships. The Purchasers, therefore, do not believe that any
anti-takeover laws apply to the transactions contemplated by the Offer.
Although the Purchasers have not attempted to comply with any state
anti-takeover statutes in connection with the Offer, the Purchasers reserve the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer nor any action taken in
connection herewith is intended as a waiver of such right. If any state
anti-takeover statute is applicable to the Offer, the Purchasers might be unable
to accept for payment or purchase Units tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer. In such case, the Purchasers
may not be obligated to accept for purchase or pay for any Units tendered.
Section 15. Fees and Expenses. The Purchasers have retained MacKenzie Patterson,
Inc., an affiliate of certain Purchasers, to act as Depositary in connection
with the Offer. The Purchasers will pay the Depositary reasonable and customary
compensation for its services in connection with the Offer, plus reimbursement
for out-of-pocket expenses, and will indemnify the Depositary against certain
liabilities and expenses in connection therewith, including liabilities under
the federal securities laws. The Purchasers will also pay all costs and expenses
of printing, publication and mailing of the Offer and all costs of transfer.
Section 16. Miscellaneous. THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE
ACCEPTED FROM OR ON BEHALF OF) UNIT HOLDERS IN ANY JURISDICTION IN WHICH THE
MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH
THE LAWS OF SUCH JURISDICTION. THE PURCHASERS ARE NOT AWARE OF ANY JURISDICTION
WITHIN THE UNITED STATES IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE
THEREOF WOULD BE ILLEGAL.
No person has been authorized to give any information or to make any
representation on behalf of the Purchasers not contained herein or in the Letter
of Transmittal and, if given or made, such information or representation must
not be relied upon as having been authorized.
July 14, 2000
MP INCOME FUND 11, L.P.; MP INCOME FUND 12, LLC; MP INCOME FUND 14, LLC; MP
INCOME FUND 15, LLC; MP INCOME FUND 16, LLC; ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS III, LTD.; ACCELERATED HIGH YIELD GROWTH FUND II, LTD.;
ACCELERATED HIGH YIELD INSTITUTIONAL FUND I, LTD.; ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS, LTD.; ACCELERATED HIGH YIELD PENSION INVESTORS, LTD.;
ACCELERATED HIGH YIELD INCOME FUND I, LTD.; ACCELERATED HIGH YIELD INCOME FUND
II, LTD.; PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS INCOME FUND 3; PREVIOUSLY OWNED
PARTNERSHIPS INCOME FUND; MP-DEWAAY FUND, LLC; SPECIFIED INCOME FUND, A
CALIFORNIA LIMITED
21
<PAGE>
PARTNERSHIP; MACKENZIE PATTERSON SPECIAL FUND 5, LLC; MP FALCON GROWTH FUND,
LLC; MP FALCON FUND, LLC; MP VALUE FUND 5, LLC; MP VALUE FUND 6, LLC; MACKENZIE
PATTERSON SPECIAL FUND 3, LLC; and MACKENZIE FUND VI, A CALIFORNIA LIMITED
PARTNERSHIP
22
<PAGE>
SCHEDULE I
THE PURCHASERS AND THEIR RESPECTIVE PRINCIPALS
The Purchasers are MP INCOME FUND 11, L.P.; MP INCOME FUND 12, LLC;
MP INCOME FUND 14, LLC; MP INCOME FUND 15, LLC; MP INCOME FUND 16, LLC;
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS III, LTD.; ACCELERATED HIGH YIELD
GROWTH FUND II, LTD.; ACCELERATED HIGH YIELD INSTITUTIONAL FUND I, LTD.;
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.; ACCELERATED HIGH YIELD
PENSION INVESTORS, LTD.; ACCELERATED HIGH YIELD INCOME FUND I, LTD.; ACCELERATED
HIGH YIELD INCOME FUND II, LTD.; PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS INCOME
FUND 3; PREVIOUSLY OWNED PARTNERSHIPS INCOME FUND; MP-DEWAAY FUND, LLC;
SPECIFIED INCOME FUND, A CALIFORNIA LIMITED PARTNERSHIP; MACKENZIE PATTERSON
SPECIAL FUND 5, LLC; MP FALCON GROWTH FUND, LLC; MP FALCON FUND, LLC; MP VALUE
FUND 5, LLC; MP VALUE FUND 6, LLC; MACKENZIE PATTERSON SPECIAL FUND 3, LLC; and
MACKENZIE FUND VI, A CALIFORNIA LIMITED PARTNERSHIP. Each of the Purchasers is
organized as either a limited partnership or a limited liability company. The
Manager of each of the limited liability company Purchasers and the General
Partner of each of the limited partnership purchasers is MacKenzie Patterson,
Inc. The names of the directors and executive officers of MacKenzie Patterson,
Inc. and Moraga Partners, Inc., respectively, are set forth below. Each of the
Purchasers is managed or advised by affiliates of MacKenzie Patterson, Inc. The
Purchasers have jointly made the offer and are jointly and severally liable for
satisfying its terms. Other than the foregoing, the Purchasers' relationship
consists of an informal agreement to share the costs associated with making the
offer and to allocate any resulting purchases of Units among them in such manner
and proportions as they may determine in the future. Each individual is a
citizen of the United States of America. Each of ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS III, LTD.; ACCELERATED HIGH YIELD GROWTH FUND II, LTD.;
ACCELERATED HIGH YIELD INSTITUTIONAL FUND I, LTD.; ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS, LTD.; ACCELERATED HIGH YIELD PENSION INVESTORS, LTD.;
ACCELERATED HIGH YIELD INCOME FUND I, LTD.; ACCELERATED HIGH YIELD INCOME FUND
II, LTD. is a Florida partnership, and each of the other entities is organized
in California.
MacKenzie Patterson, Inc.
C.E. Patterson is President and a director of MacKenzie Patterson, Inc.
which acts as manager and general partner of a number of real estate investment
vehicles. He is the co-founder and President of Patterson Financial Services,
Inc. (PFS) which provides investment advice concerning real estate securities.
In 1981, Mr. Patterson founded PFS with Berniece A. Patterson, as a financial
planning firm. Mr. Patterson founded Patterson Real Estate Services, a licensed
California Real Estate Broker, in 1982. As President of PFS, Mr. Patterson is
responsible for all investment counseling activities. He supervises the analysis
of investment opportunities for the clients of the firm. He is a trustee of
Consolidated Capital Properties Trust, a liquidating trust formed out of the
bankruptcy court proceedings involving Consolidated Capital Properties, Ltd. Mr.
Patterson is also an officer and controlling shareholder of Cal-Kan, Inc., a
director and executive officer of Host Funding, Inc., an executive officer and
controlling shareholder of Moraga Partners, Inc., and trustee of the Pat
Patterson Western Securities, Inc. Profit Sharing Plan. Mr. Patterson, through
his affiliates, manages a number of investment and real estate partnerships.
Berniece A. Patterson is a director of MacKenzie Patterson, Inc. In 1981,
Ms. Patterson and C.E. Patterson established Patterson Financial Services, Inc.
She serves as Chair of the Board and Vice President of PFS. Her responsibilities
with PFS include oversight of administrative matters and monitoring of past
projects underwritten by PFS. Ms. Patterson is Chief Executive Officer of an
affiliate, Pioneer Health Care Services, Inc., and is responsible for the
day-to-day operations of three nursing homes and over 300 employees.
Glen W. Fuller is senior vice president, chief operating officer, and a director
of MacKenzie Patterson, Inc. Prior to becoming senior vice president he was with
MacKenzie for two years as a portfolio manager and research analyst. Prior to
joining MacKenzie Patterson, Inc., Mr. Fuller spent two years running the over
the counter trading desk for North Coast Securities Corp. (previously Morgan
Fuller Capital Group) with responsibility for both the proprietary and retail
trading desks. Mr Fuller was also the registered options principal and
registered municipal bond principal for North Coast Securities, a registered
broker dealer. Mr. Fuller currently is a NASD - registered options principal,
registered bond principal, and holds his NASD Series 7, general securities
licence. Mr. Fuller has also spent time working on the floor of the New York
Stock Exchange as a trading clerk and on the floor of the Pacific Stock Exchange
in San Francisco as an assistant specialist for LIT America.
Christine Simpson is vice president of MacKenzie Patterson, Inc. and is
responsible for the day-to-day management of research, and securities purchases
and sales on behalf of the entities managed by MacKenzie Patterson, Inc. Ms.
Simpson has been employed by MacKenzie Patterson, Inc. since 1990.
23
