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OFFER TO PURCHASE FOR CASH
BIGHORN ASSOCIATES LLC
IS OFFERING TO PURCHASE UP TO 57,000 UNITS OF
LIMITED PARTNERSHIP INTEREST IN RESOURCES
ACCRUED MORTGAGE INVESTORS 2 L.P.,
A DELAWARE LIMITED PARTNERSHIP,
FOR $90 PER UNIT IN CASH
We will purchase up to 57,000 (approximately 30.33%) of the outstanding units of
limited partnership interest in your partnership. If more units are tendered to
us, we will accept units on a pro rata basis according to the number of units
tendered by each person.
You will not pay any fees or commissions if you tender your units.
Our offer is not subject to any minimum number of units being tendered.
We are an affiliate of your general partners and are making this offer with a
view towards making a profit.
Depending on your tax circumstances, there may be federal income tax benefits
associated with a tender of your units.
Our offer and your withdrawal rights will expire at 12:00 midnight, New York
City time, on February 20, 2001, unless we extend the deadline.
SEE "RISK FACTORS" BEGINNING ON PAGE 1 OF THIS OFFER TO PURCHASE FOR A
DESCRIPTION OF RISK FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH OUR
OFFER, INCLUDING THE FOLLOWING:
o We are making our offer to make a return on our investment.
Accordingly, in establishing our purchase price we were motivated
to set the lowest price for your units that might be acceptable to
you consistent with our objectives. Such objectives and
motivations may conflict with your interest in receiving the
highest price for your units.
o Our purchase price of $90 is not based on any third party
appraisal or valuation. In addition, our purchase price was
determined without any arms length negotiation between us and your
partnership. No independent person has given an opinion on the
fairness of our offer, and no representation is made by us or the
general partner of your partnership on the fairness of our offer.
o If you tender your units you will be giving up future potential
benefits from owning the units, including participating in the
proposed settlement of a pending action brought against your
general partners and two of their affiliates. The proposed
settlement is subject to a number of conditions including
execution of a definitive agreement and court approval. If the
proposed settlement is approved in its current form, it is
anticipated that limited partners would receive a payment of
approximately $38.40 per unit.
o You may receive more value by retaining your units rather than by
tendering your units to us.
o We are an affiliate of the general partners of your partnership.
Accordingly, there are certain conflicts of interest for the
general partners of your partnership.
o We and our affiliates currently own approximately 16.97% of the
outstanding units. The more units we acquire, the more we are able
to influence limited partners' voting decisions of your
partnership.
To accept our offer, please execute the enclosed letter of transmittal
and return it to American Stock Transfer, which is acting as Information Agent
and Depositary for our offer, together with any additional documents required,
in the enclosed pre-addressed, postage paid envelope (see "Procedures for
Tendering Units"). QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL
COPIES OF THIS OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL SHOULD BE DIRECTED
TO US AT (888) 448-5554.
January 17, 2001
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TABLE OF CONTENTS
Page
INTRODUCTION..................................................................1
RISK FACTORS..................................................................1
Offer Price May Not Represent Fair Market Value............................1
Our Estimate of Liquidation Value May Not Properly Reflect
Current Market Value.....................................................1
Loss of Future Benefits from Your Ownership of Units.......................1
Possible Increase in Control of Your Partnership by Us.....................2
Alternatives to Selling Us Your Units......................................2
Conflicts of Interest......................................................2
Sale of Your Units Will Be a Taxable Transaction...........................2
Holding Units May Result in Greater Future Value...........................2
Continuation of the Partnership............................................2
THE OFFER.....................................................................2
Section 1. Terms of the Offer............................................2
Section 2. Proration; Acceptance for Payment and Payment for Units.......3
Section 3. Procedures for Tendering Units................................3
Section 4. Withdrawal Rights.............................................4
Section 5. Extension of Tender Period; Termination; Amendment............5
Section 6. Certain Federal Income Tax Consequences.......................5
Section 7. Effects of the Offer..........................................7
Section 8. Future Plans..................................................7
Section 9. Certain Information Concerning Your Partnership...............8
Section 10. Conflicts of Interest and Transactions with Affiliates.......11
Section 11. Certain Information Concerning Us............................11
Section 12. Source of Funds..............................................12
Section 13. Background of the Offer......................................12
Section 14. Conditions of the Offer......................................13
Section 15. Certain Legal Matters........................................14
Section 16. Fees and Expenses............................................14
Section 17. Miscellaneous................................................15
Schedule 1 Information With Respect to the Executive Officers and
Directors of NorthStar Capital Investment Corp.
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INTRODUCTION
We are offering to purchase up to 57,000 units, representing
approximately 30.33% of the 187,919 outstanding units of limited partnership
interest in your partnership, for the purchase price of $90 per unit, net to the
seller in cash, without interest, less any distributions paid after the date
hereof and prior to the expiration date. We are affiliated with your general
partners and our offer is made upon the terms and subject to the conditions set
forth in this offer to purchase and in the accompanying letter of transmittal.
Our offer will expire at 12:00 midnight, New York City time, on
February 20, 2001, unless we have extended the period of time during which the
offer is open. If you desire to accept our offer, you must complete and sign the
letter of transmittal in accordance with the instructions and mail or facsimile
the letter of transmittal and any other required documents to the Depositary.
See "THE OFFER" Section 3, Procedures for Tendering Units. You may withdraw your
tender of units to us at any time prior to the expiration date of our offer.
We, together with our affiliates currently beneficially own 31,893
units representing approximately 16.97% of the outstanding units. None of the
units owned by our affiliates will be tendered in the offer.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT, THE
LETTER OF TRANSMITTAL AND OTHER DOCUMENTS THAT WE HAVE REFERRED YOU TO. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT.
RISK FACTORS
Before deciding whether or not to tender any of your units, you should
consider carefully the following risks and disadvantages of the offer:
OFFER PRICE MAY NOT REPRESENT FAIR MARKET VALUE
There is no established or regular trading market for your units, nor
is there another reliable standard for determining the fair market value of the
units. Our offer price may not reflect the price that you could receive in the
open market for your units which could be higher than our offer price. According
to Partnership Spectrum, an independent industry publication, between January 1,
2000 and October 31, 2000, a limited number of units traded in the informal
secondary market for units at prices ranging from a high of $77.50 per unit to a
low of $60.04 per unit, with a weighted average price of approximately $73.19
per unit and without taking into account commissions and other transactional
costs.
OUR ESTIMATE OF LIQUIDATION VALUE MAY NOT PROPERLY REFLECT CURRENT MARKET VALUE
We have estimated that the liquidation value of your partnership as of
December 31, 2000 is $135.09 per unit, which includes an estimated $38.40 per
unit that you would receive if the proposed settlement of a pending litigation
is consummated. Our estimate may not reflect the current market value of your
partnership's one remaining mortgage loan and you may receive more money in the
settlement if the court does not approve the amount of fees and expenses for
plaintiff's counsel that have been estimated by your partnership.
LOSS OF FUTURE BENEFITS FROM YOUR OWNERSHIP OF UNITS
If you tender your units in response to our offer you will transfer to
us all right, title and interest in and to all of the units we accept, including
the right to participate in any future potential benefits represented by the
ownership of the units. If you tender your units to us, you will not receive any
amounts which may be paid as the result of the settlement of a pending lawsuit
brought against your general partners and two of their affiliates. See "Section
9. Certain Information Concerning your Partnership - Litigation." Accordingly,
you will not receive any future potential benefits from units you sell to us,
such as future distributions by your partnership and the potential for
appreciation in the value of the units you sell to us.
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POSSIBLE INCREASE IN CONTROL OF YOUR PARTNERSHIP BY US
We, together with our affiliates, currently beneficially own
approximately 16.97% of the outstanding units. The more units we acquire, the
more we are able to influence limited partner voting decisions of your
partnership, including decisions on the removal of your general partners,
amendment of the partnership agreement, the sale of substantially all of your
partnership's assets and the liquidation of your partnership.
ALTERNATIVES TO SELLING US YOUR UNITS
Your general partners originally anticipated making mortgage loan
investments with terms of eight to twelve years and liquidating your partnership
by December 31, 2002. Your partnership's one remaining mortgage loan matures in
February 2003. Instead of selling us your units, you and other limited partners
in your partnership could propose alternative actions such as liquidating your
partnership.
CONFLICTS OF INTEREST
Since our affiliates receive fees for managing and administering your
partnership and its assets, a conflict of interest exists for your general
partners between continuing the partnership and receiving such fees, and
liquidating the partnership.
SALE OF YOUR UNITS WILL BE A TAXABLE TRANSACTION
A sale of units to us will be a taxable sale. We believe that most
unitholders will realize a tax loss on a sale of units in our offer. Your
after-tax benefit (or cost) from a sale will be based on a number of factors
including your tax basis in the units sold, whether you sell all of your units
and whether (assuming you sell at a loss) you have capital gains against which
to offset your capital loss. We recommend that you consult with your tax advisor
prior to tendering your units to determine your particular tax situation.
HOLDING UNITS MAY RESULT IN GREATER FUTURE VALUE
You might receive more value if you retain your units until your
partnership is liquidated.
CONTINUATION OF THE PARTNERSHIP
Your partnership will continue to be operated as it has in the past.
Accordingly, there may be no way to liquidate your investment in the partnership
in the future until the assets are sold and the partnership is liquidated.
THE OFFER
SECTION 1. TERMS OF THE OFFER. Upon the terms of the offer, we will
accept and thereby purchase up to 57,000 units that are validly tendered on or
prior to the expiration date and not withdrawn in accordance with the procedures
set forth in Section 4 of this offer to purchase. For purposes of this offer,
the term "expiration date" means 12:00 Midnight, New York City time, on February
20, 2001, unless we have extended the period of time during which the offer is
open, in which case the term "expiration date" means the latest time and date on
which the offer, as extended by us, expires. See Section 5 of this offer to
purchase for a description of our right to extend the period of time during
which the offer is open and to amend or terminate our offer.
Our offer is subject to satisfaction of certain conditions. THE OFFER
IS NOT CONDITIONED UPON ANY MINIMUM AMOUNT OF UNITS BEING TENDERED. See Section
14, which sets forth in full the conditions of the offer. We reserve the right,
in our sole discretion, to waive any or all of those conditions. If, on or prior
to the expiration date, any or all of such conditions have not been satisfied or
waived, we may (i) decline to purchase any of the units tendered, terminate the
offer and return all tendered units to tendering limited partners, (ii) waive
all the unsatisfied conditions and, subject to complying with applicable rules
and regulations of the Securities and Exchange Commission (the "Commission"),
purchase all units validly tendered, (iii) extend the offer and, subject to the
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withdrawal rights of limited partners, cause the Depositary to retain the units
that have been tendered during the period or periods for which the offer is
extended, or (iv) amend the offer.
SECTION 2. PRORATION; ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS. If
the number of units validly tendered on or before the expiration date and not
properly withdrawn is 57,000 or less, we will accept for payment, subject to the
terms and conditions of the offer, all units so tendered. If more than 57,000
units are validly tendered on or prior to the expiration date and not properly
withdrawn, we will accept for payment an aggregate of 57,000 units so tendered
on a pro rata basis according to the number of units validly tendered by each
limited partner with appropriate adjustments to avoid purchases of fractional
units.
We will pay for up to the maximum number of units validly tendered and
not withdrawn in accordance with Section 4, as promptly as practicable following
the expiration date. In all cases, the payments for units purchased in our offer
will be made only after timely receipt by our Depositary of a properly completed
and duly executed letter of transmittal or a facsimile thereof, and any other
documents required by the terms hereof or by the letter of transmittal. (See
"Section 3. Procedures for Tendering Units".)
For purposes of the offer, we will be deemed to have accepted for
payment, and thereby purchased, validly tendered units under the offer when, as
and if we give verbal or written notice to our Depositary of our acceptance of
those units for payment pursuant to the offer. Upon the terms and subject to the
conditions of the offer, payment for units tendered and accepted for payment
pursuant to the offer will in all cases be made through our Depositary, which
will act as agent for tendering limited partners for the purpose of receiving
cash payments from us and by transmitting cash payments to tendering limited
partners. 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 will be destroyed by us and we will
return any certificates representing such units. If, for any reason, acceptance
for payment of, or payment for, any units tendered in our offer is delayed or we
are unable to accept for payment, purchase or pay for units tendered in our
offer, then, without prejudice to our rights under Section 14 of this offer to
purchase, we may cause our Depositary to retain tendered units and those units
may not be withdrawn except to the extent that the tendering limited partners
are entitled to withdrawal rights as described in Section 4 of this offer to
purchase; subject, however, to our obligation under Rule 14e-1(c) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to pay limited
partners the offer price for units tendered or return those units promptly after
termination or withdrawal of the offer.
SECTION 3. PROCEDURES FOR TENDERING UNITS.
VALID TENDER. To validly tender units, a properly completed and duly
executed letter of transmittal or a facsimile thereof and any other documents
required by the terms hereof or by the letter of transmittal including
certificates, if any, representing the units being tendered, must be received by
our Depositary on or prior to the expiration date. If you do not provide us with
the certificate(s) representing your units which you would like to tender to us,
by signing the letter of transmittal you are certifying that the certificate(s)
representing your units have been lost or misplaced and agreeing to indemnify us
and your partnership in the manner provided for in the letter of transmittal. In
order to comply with certain restrictions on transfer in the partnership
agreement, a tender which would result in the tendering limited partner owning
less than ten units, or four units in the case of a limited partner which is an
IRA or Keogh Plan, will not be effective.
SIGNATURE REQUIREMENTS. If the letter of transmittal is signed by the
registered holder of a unit, then no notarization or signature guarantee is
required on the letter of transmittal. Similarly, if a unit is tendered for the
account of eligible institutions such as a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc. or a commercial bank, savings bank, credit union, savings and loan
association or trust company having an office, branch or agency in the United
States, no notarization or signature guarantee is required on the letter of
transmittal. HOWEVER, IN ALL OTHER CASES, ALL SIGNATURES ON THE LETTER OF
TRANSMITTAL MUST EITHER BE NOTARIZED OR GUARANTEED BY AN ELIGIBLE INSTITUTION.
IN ORDER FOR YOU TO TAKE PART IN THE OFFER, YOUR UNITS MUST BE VALIDLY
TENDERED AND NOT WITHDRAWN ON OR PRIOR TO THE EXPIRATION DATE.
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The method of delivery of the letter of transmittal and all other
required documents, including certificates representing the units being
tendered, is at your option and risk of delivery will be deemed made only when
actually received by our Depositary.
BACKUP FEDERAL INCOME TAX WITHHOLDING. If you tender your units and you
are not a corporation or foreign individual, you may be subject to 31% backup
federal income tax withholding unless you provide us with your correct taxpayer
identification number ("TIN"). To avoid this backup withholding, you should
complete and sign the Substitute Form W-9 included in the letter of transmittal.
If you tender your units and do not complete the Substitute Form W-9, we will be
required to withhold 31% (and if you fail to provide your TIN, an additional $50
or such other amount as may be imposed by law) from the purchase price payment
made to you. See the instructions to the letter of transmittal and "Section 6.
Certain Federal Income Tax Matters."
OTHER REQUIREMENTS. By executing the letter of transmittal, you are
irrevocably appointing us and our designees, in the manner set forth in the
letter of transmittal, each with full power of substitution, to the full extent
of your rights with respect to the units tendered by you and accepted for
payment and purchased by us. Such appointment will be effective when, and only
to the extent that, we accept the tendered units for payment. Upon such
acceptance for payment, all prior proxies given by you with respect to the units
will, without further action, be revoked, and no subsequent proxies may be
given, and if given will not be effective. We and our designees will, as to
those units, be empowered to exercise all of your voting and other rights as a
limited partner as we in our sole discretion may deem proper at any meeting of
limited partners, by written consent or otherwise. We reserve the right to
require that, in order for units to be deemed validly tendered, immediately upon
our acceptance for payment for the units, we must be able to exercise full
voting rights with respect to the units, including voting at any meeting of
limited partners then scheduled. In addition, by executing the letter of
transmittal, you also assign to us all of your rights to receive distributions
from the partnership with respect to units which we have accepted for payment
and purchased pursuant to the offer. (See "Section 6. Certain Federal Income Tax
Matters".)
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 in our offer will be determined by us, in our sole discretion, which
determination shall be final and binding. We reserve the absolute right to
reject any or all tenders of any particular unit determined by us not to be in
proper form or if the acceptance of, or payment for, that unit may, in the
opinion of our counsel, be unlawful. We also reserve the right to waive any
defect or irregularity in any tender with respect to any particular unit of any
particular limited partner, and our interpretation of the terms and conditions
of the offer, including the letter of transmittal and the instructions thereto,
will be final and binding. Neither us,our Depositary, nor any other person will
be under any duty to give notification of any defects or irregularities in the
tender of any unit or will incur any liability for failure to give any such
notification.
BINDING AGREEMENT. A tender of a unit under any of the procedures
described above and the acceptance for payment of such unit will constitute a
binding agreement between the tendering unitholder and us on the terms set forth
in this offer and the related letter of transmittal.
SECTION 4. WITHDRAWAL RIGHTS. You may withdraw tendered units at any
time prior to the expiration date and after the 60th day following the date of
this offer to purchase, if the units have not been previously accepted for
payment.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by our Depositary at the address
set forth on the back cover of this offer to purchase. Any such notice of
withdrawal must specify the name of the person who tendered, the number of 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, a unit is delayed for any reason, or if
we are unable to purchase or pay for a unit for any reason, then, without
prejudice to our rights under the offer, we may cause our Depositary to retain
tendered units and such units may not be withdrawn except to the extent that a
tendering limited partner is entitled to withdrawal rights as set forth in this
Section 4; subject, however, to our obligation, pursuant to Rule 14e-1(c) under
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the Exchange Act, to pay the offer price in respect of units tendered or return
those units promptly after termination or withdrawal of the offer.
Any units properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of our offer. However, withdrawn units may be
re-tendered by following any of the procedures described in Section 3 at any
time prior to the expiration date.
SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT. We
expressly reserve the right, in our sole discretion, at any time and from time
to time (i) to extend the period of time during which our offer is open and
thereby delay acceptance for payment of, and the payment for, any unit, (ii)
upon the occurrence of any of the conditions specified in Section 14 of this
offer to purchase, to delay the acceptance for payment of, or payment for, any
units not already accepted for payment or paid for and (iii) to amend our offer
in any respect, including, without limitation, by increasing the consideration
offered, increasing or decreasing the number of units being sought, or both.
Notice of an amendment will promptly be disseminated to you in a manner
reasonably designed to inform you of the change in compliance with Rule 14d-4(c)
under the Exchange Act. An extension of the offer will be followed by a press
release or public announcement which will be issued no later than 9:00 a.m., New
York City time, on the next business day after the scheduled expiration date of
our offer, in accordance with Rule 14e-1(d) under the Exchange Act.
If we extend the offer, or if we delay payment for a unit, whether
before or after its acceptance for payment, or are unable to pay for units
pursuant to our offer for any reason, then, without prejudice to our rights
under the offer, we may cause our Depositary to retain tendered units and those
units may not be withdrawn except to the extent tendering limited partners are
entitled to withdrawal rights as described in Section 4; subject, however, to
our obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to pay the
offer price in respect of units tendered or return those units promptly after
termination or withdrawal of the offer.
If we make a material change in the information concerning the offer or
if we waive a material condition to our offer, we will extend the offer and
disseminate additional tender offer materials to the extent required by Rules
14d-4(c) and 14d-6(d) under the Exchange Act. The minimum period during which an
offer must remain open following any material change in the information
concerning the offer will depend upon the facts and circumstances, including the
relative materiality of the change in information. In the Commission's view, an
offer should remain open for a minimum of five business days from the date the
material change is first published, sent or given to securityholders, and if
material changes are made with respect to information that approaches the
significance of price or the percentage of securities sought, a minimum of ten
business days may be required to allow for adequate dissemination to
securityholders 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, New York
City time.
SECTION 6. CERTAIN FEDERAL INCOME TAX MATTERS. The following summary is
a general discussion of certain federal income tax considerations that should be
relevant to you in connection with a sale of units in our offer. This summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), applicable
Treasury regulations thereunder, administrative rulings, practice and procedures
and judicial authority, all as of the date of our offer. All of the foregoing
are subject to change, and any such change could affect the continuing accuracy
of this summary. This summary does not discuss all aspects of federal income
taxation that may be relevant to you in light of your specific circumstances or
to certain types of investors subject to special tax rules (for example, dealers
in securities, banks, insurance companies and, except as discussed below,
foreign and tax-exempt investors), nor does it discuss any aspect of state,
local, foreign or other tax laws. Sales of units pursuant to our offer will be
taxable transactions for federal income tax purposes, and may also be taxable
transactions under applicable state, local, foreign and other tax laws. Your
resulting tax consequences will depend, in part, on your personal tax situation.
YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES,
INCLUDING STATE AND LOCAL TAX CONSEQUENCES, TO YOU OF SELLING UNITS IN OUR
OFFER.
You will recognize gain or loss on a sale of units in our offer equal
to the difference between (i) your "amount realized" on the sale and (ii) your
adjusted tax basis in the units sold. The amount of your adjusted tax basis will
vary depending upon your particular circumstances, but generally will equal your
cash investment in your units, increased
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by your share of your partnership's income and gain and decreased by your share
of your partnership's losses and distributions. The "amount realized" with
respect to a unit sold will be a sum equal to the amount of cash received by you
for the unit plus the amount of your partnership's liabilities that are
allocable to the unit.
You will be allocated a share of your partnership's taxable income or
loss with respect to the units sold by you in accordance with the provisions of
your partnership's limited partnership agreement concerning transfers of units.
Such allocations and any cash distributed by your partnership to you or for your
benefit will affect your adjusted tax basis in your units and, therefore, your
taxable gain or loss upon a sale of units in our offer. In this regard, if you
tender your units, you will be allocated a pro rata share of taxable income with
respect to your units sold in our offer through the end of the calendar quarter
in which the units are sold, but we will receive all future distributions made
with respect to your units. See "Section 9. Certain Information Concerning Your
Partnership."
Based on the results of your partnership's operations through December
31, 1999, and without giving effect to your partnership's operations,
transactions or distributions after that date, we estimate that, depending on
your date of entry into your partnership, if you sell your units in our offer
and you purchased your units in your partnership's original offering, you will
realize a loss for federal income tax purposes of between ($59) per unit for
units acquired in June 1998 and ($53 per unit for units acquired in September
1989). For purposes of the passive activity loss rules (discussed below), we
estimate that such loss is 100% allocable to your partnership's remaining
mortgage loan asset. Based on your partnership's treatment of its interest
income from the mortgage loan as non-passive activity income, we believe that
such loss generally should be deductible by you in the year of sale free of the
passive activity loss limitation (but subject to any other applicable
limitations) even if you are unable to sell all of your units in our offer.
Your gain or loss on a sale of a unit in our offer generally will be
treated as a capital gain or loss if you held the unit as a capital asset. Your
capital gain or loss will be treated as long-term capital gain or loss assuming
your holding period for the unit exceeds 12 months. Under current law, capital
gains and losses of individuals and non-corporate taxpayers are taxed under tax
rules different from the rules applicable to corporations. Long-term capital
gains of individuals and other non-corporate taxpayers are taxed at a maximum
federal income tax rate of 20%; however, their gain attributable to
straight-line depreciation deductions is taxed at a federal income tax rate of
25%. The maximum federal income tax rate for other income of such persons is
39.6%. Capital losses are deductible only to the extent of capital gains, except
that non-corporate taxpayers may deduct up to $3,000 of capital losses in excess
of the amount of their capital gains against their ordinary income. An
individual's long-term capital losses in excess of his long-term capital gains
can offset his short-term capital gains on which he would otherwise be subject
to tax at the same federal income tax rates as his ordinary income. Excess
capital losses generally can be carried forward to succeeding years (a
corporation's carryforward period is five years and a non-corporate taxpayer can
carry forward such losses indefinitely); in addition, corporations, but not
non-corporate taxpayers, are allowed to carry back excess capital losses to the
three preceding taxable years.
Under special tax rules applicable to "passive activity losses," if you
are a non-corporate taxpayer or closely held corporation, you generally cannot
use your losses from your partnership's passive activities to offset your
non-passive activity income. We estimate that 100% of your loss on a sale of
your units in our offer is allocable to your partnership's mortgage loan asset,
and that 100% of such loss should be deductible by you in the year of sale free
of the passive activity loss limitation (based on your partnership's treatment
of its income from this asset as non-passive activity income). In any event, if
you sell all your units in our offer, then your loss on the sale could be
deducted by you in full in the year of sale (subject to any other applicable
limitations).
In order to avoid liability for federal estimated tax penalties, an
individual generally is required to make quarterly estimated tax payments on
account of his annual tax liability. Penalties generally may be avoided by the
individual's paying at least 90% of his taxes due for the current year or a
percentage of his prior year's tax equal to 110% if the preceding tax year is
2000, 112% if the preceding tax year is 2001 and 110% if the preceding tax year
is 2002 or thereafter. Accordingly, if you are an individual and you elect to
pay estimated taxes for 2001 equal to 110% of your tax liability for 2000, you
would be able to defer payment of taxes associated with a sale of your units
until April, 2002, whereas if you elect to pay estimated taxes for 2001 equal to
90% of your estimated tax liability for 2001, you will have to make quarterly
estimated tax payments on account of your tax liability on a sale of your units
in 2001.
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If you are a tax-exempt investor, you generally should not realize
unrelated business taxable income upon a sale of your units in our offer
assuming you do not hold your units subject to acquisition indebtedness.
However, if you are a tax-exempt investor described in section 501(c)(7),
(c)(9), (c)(17) or (c)(20) of the Code, you should consult your tax advisor
concerning the application of "set aside" and reserve requirements to a sale of
your units.
In addition to federal income tax, you may be subject to state and
local taxes on your gain (if any) on a sale of your units. You should consult
with your own professional tax advisors concerning the state and local tax
consequences of a sale of your units.
Information Reporting, Backup Withholding. If you sell your units, you
must report the sale by filing a statement with your federal income tax return
for the year of sale. To prevent the possible application of back-up federal
income tax withholding of 31% with respect to the payment of the purchase price,
you will have to provide us with your correct taxpayer identification number.
See the instructions to the letter of transmittal.
SECTION 7. EFFECTS OF THE OFFER.
LIMITATIONS ON RESALES. Under the partnership agreement, transfers of
units which in the opinion of counsel to your partnership would cause a
termination of your partnership for federal income tax purposes are not
permitted. A termination may occur when 50% or more of the units are transferred
in a twelve-month period. Depending upon the number of units tendered in our
offer, sales of units on the secondary market for the twelve-month period
following completion of our offer may be limited. The partnership will not
process any requests for transfers of units during such twelve-month period
which the general partners of your partnership believe may cause a tax
termination. In determining the number of units subject to our offer, we took
this restriction into account so as to permit historical levels of transfers to
occur after consummation of our offer without violating this restriction.
EFFECT ON TRADING MARKET. There is no established public trading market
for the units and, therefore, a reduction in the number of limited partners
should not materially further restrict your ability to find purchasers for your
units through secondary market transactions.
INFLUENCE ON LIMITED PARTNER VOTING DECISIONS BY US AND OUR AFFILIATES.
We will have the right to vote each unit that we purchase in the offer.
Depending on the number of units that we purchase in the offer, we and our
affiliates could be in a position to influence the outcome of voting decisions
with respect to your partnership. Accordingly, we and our affiliates could (i)
prevent non-tendering limited partners from taking action they desire but that
we and our affiliates oppose and (ii) take action desired by us and our
affiliates but opposed by non-tendering limited partners. Under the partnership
agreement, limited partners holding a majority of the units are entitled to take
action with respect to a variety of matters, including: removing your general
partners; dissolving your partnership; selling all or substantially all of your
partnership's assets; effecting material changes in the investment objectives
and policies of your partnership; and causing most types of amendments to the
partnership agreement. When voting on matters, we and our affiliates will vote
units owned and acquired by us, in our interest, which, because of our
affiliation with your general partners, may also be in the interest of your
general partners.
The units are registered under the Exchange Act, which means, among
other things, that your partnership is required to furnish certain information
to its limited partners and to the Commission and comply with the Commission's
proxy rules in connection with meetings of, and solicitation of consents from,
limited partners. Our purchase of units under the offer will not result in the
units becoming eligible for deregistration under Section 12(g) of the Exchange
Act.
SECTION 8. FUTURE PLANS. We are seeking to acquire units primarily for
investment purposes and with a view to making a profit. We have no present
intention or plan to make a series of successive and periodic offers in the
future.
We do not have any present plans or intentions with respect to an
extraordinary transaction, such as a merger, reorganization or liquidation,
involving your partnership or a sale of your partnership's one remaining
mortgage loan. However, we expect that consistent with its fiduciary
obligations, the general partners of your partnership will review opportunities
presented to them to engage in transactions which could benefit your
partnership, with the objective of seeking to maximize returns to limited
partners.
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SECTION 9. CERTAIN INFORMATION CONCERNING YOUR PARTNERSHIP. Information
included herein concerning your partnership is derived from your partnership's
publicly-filed reports. Additional financial and other information concerning
your partnership is contained in your partnership's annual reports on Form 10-K,
quarterly reports on Form 10-Q and other filings with the Commission. Such
reports and other documents may be examined and copies may be obtained from the
offices of the Commission at 450 Fifth Street, N.W., Washington, D.C 20549, and
at the regional offices of the Commission located in the Northwestern Atrium
Center, 500 Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World
Trade Center, New York, New York 10048. Copies should be available by mail upon
payment of the Commission's customary charges by writing to the Commission's
principal offices at 450 Fifth Street, N.W., Washington, D.C. 20549. The
materials may also be reviewed through the Commission's Web site
(http://www.sec.gov).
Your partnership was organized on August 14, 1986 under the laws of the
State of Delaware. Its principal executive offices are located at 5 Cambridge
Center, 9th floor, Cambridge, Massachusetts 02142. Its telephone number is (617)
234-3000. Your partnership was formed for the purpose of investing in "zero
coupon" first and junior mortgage loans which were secured by real property.
Your general partners originally anticipated making first and junior loans which
would be satisfied within eight to twelve years after funding.
Presidio Capital Investment Company, LLC, the entity which is our sole
member, and certain of its affiliates and affiliates of your general partners,
have entered into a services agreement with AP-PCC III, L.P. pursuant to which
AP-PCC III, L.P. was retained to provide asset management and investor relation
services to your partnership and other entities affiliated with your
partnership.
As a result of this agreement, AP-PCC III, L.P. has the duty to direct
the day to day affairs of your partnership, including, without limitation,
reviewing and analyzing potential sale, financing or restructuring proposals
regarding your partnership's assets, preparation of all partnership reports,
maintaining partnership records and maintaining bank accounts of your
partnership. AP-PCC III, L.P. is not permitted, however, without the consent of
our affiliate Presidio Capital Corp., or as otherwise required under the terms
of your partnership's agreement of limited partnership to, among other things,
cause your partnership to sell or acquire an asset or file for bankruptcy.
In order to facilitate the provision by AP-PCC III, L.P. of the asset
management services and the investor relation services, effective October 25,
1999, the officers and directors of your managing general partner resigned and
nominees of AP-PCC III, L.P. were elected as the officers and directors of your
managing general partner. AP-PCC III, L.P. is an affiliate of Winthrop Financial
Associates, a Boston based company that provides asset management services,
investor relation services and property management services to over 150 limited
partnerships which own commercial property and other assets.
Until March 1999 your partnership owned a second mortgage loan secured
by an office building in Boston, Massachusetts. In February 1999, the holder of
the first mortgage loan on the property filed a motion for foreclosure and a
foreclosure sale was scheduled to be held in March 1999. After your partnership
unsuccessfully tried to secure financing to satisfy the first mortgage, your
partnership sold its second mortgage loan to the holder of the first mortgage
for gross proceeds of $1,000,000. Following such sale, the holder of the
mortgages foreclosed on the loans and acquired the property. The holder of the
mortgage loans also entered into an agreement with Charbird Enterprises LLC, an
affiliate of your general partners and NorthStar Capital Investment Corp., for
the performance of services in connection with the marketing of the property.
Charbird assigned to NorthStar its right to receive a substantial portion of
amounts paid under the agreement and NorthStar agreed to indemnify Charbird for
any liabilities under the agreement. When the property was sold in December 1999
Charbird received a fee of $14,050,884 under the agreement, $12,615,796 of which
was paid to NorthStar. See "Litigation."
YOUR PARTNERSHIP'S CURRENT INVESTMENTS. Your partnership currently
holds a zero-coupon first mortgage loan secured by an approximately 233,000
square foot shopping center located in Reno, Nevada. The property consists of
two main buildings and three anchor tenant buildings with surface parking for
1,184 automobiles. The loan had an original principal balance of $6,500,000,
bears interest at a rate of 11.22% per annum, compounded monthly, and was
originally scheduled to mature on February 28, 2001 at which time a balloon
payment of $24,964,745, together with additional interest which may be owed as
described immediately below, would have been due. At September 30, 2000, the
contractual balance of principal and accrued interest on this loan was
$23,831,501 and your partnership valued this loan on its financial statements at
$15,979,355. Your partnership is
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entitled to additional interest equivalent to 23.9% of the appreciation in the
value of the underlying property after payment of a specified return to the
borrower. The maximum annual rate of interest, including the additional
interest, cannot exceed 16% compounded annually. Your partnership stated in its
Annual Report on Form 10K for the year ended December 31, 1999 that it is
unlikely that your partnership will realize any additional interest from the
appreciation of the property. Further, the terms of the loan provide that your
partnership can require the borrower to provide a current appraisal of the
property. If an appraisal indicates the value of the loan and any indebtedness
senior to the loan, taking into account principal plus accrued interest at a
rate of 6.22% per annum, compounded monthly, exceeds 85% of the then current
appraisal, the borrower must repay the indebtedness to a point where an 85% loan
to value ratio is restored.
During the first quarter of 1997, the borrower had written down the
value of the property that secured your partnership's mortgage loan to
$15,875,000 which the borrower believed was the estimated fair market value of
the property. Your managing general partner performed its own evaluation and
determined that this estimate was a fair representation of the property value at
that time. As a result of this evaluation, your partnership stopped accruing
interest on the mortgage loan. Since January 1, 1997, your partnership has
valued the mortgage loan at $15,979,355 which represented the outstanding
balance on the loan at December 31, 1996.
In December 2000, your partnership and the borrower under your
partnership's remaining loan agreed to modify the loan as follows:
1. To extend the term of the loan until February 28, 2003.
2. The borrower placed in escrow a deed as well as documents necessary
to convey the property, which documents will be released to your partnership on
the earlier (A) March 1, 2003, (B) at such time as a third-party purchaser is
identified to acquire the property or (C) at any time after March 1, 2002 if
your partnership deems it necessary to protect its economic interest.
3. The borrower will pay to your partnership to be applied towards the
loan all cash flow generated from the property in excess of $100,000 per year.
4. The borrower will have an appraisal prepared on the property to
determine if an excess payment as described above is due and, if such a payment
is due, to make such payment.
5. The borrower has the right to prepay the loan after the initial
maturity date (February 28, 2001) by paying to your partnership the sum of the
then unpaid principal balance of the loan together with accrued interest and
other charges due under the loan and 66% of the value of the property in excess
of such amount.
The borrower has also advised your partnership that it believes that
the value of its property has increased since the beginning of 1997. The actual
valuation of the property will depend upon the results of the appraisal.
Depending on the results of the appraisal, the value of your partnership's
mortgage loan may exceed the value at which the mortgage loan is currently
carried on your partnership's financial statements.
LITIGATION.
On or about May 19, 2000, Dr. Warren Heller, a limited partner,
commenced a putative class action and derivative lawsuit in the Delaware Court
of Chancery against, among others, your partnership, as a nominal defendant,
your general partners and two affiliates of your general partners seeking, among
other things, monetary damages resulting from purported breaches of fiduciary
duties and breaches of your partnership's partnership agreement in connection
with the March 1999 sale of one of your partnership's mortgage loans and the
marketing of the property which had been secured by that loan. In addition, the
action alleges breaches of fiduciary duty in connection with the purported
failure of your partnership to distribute cash and the purported failure of your
general partners to enforce the provisions of your partnership's remaining
mortgage loan.
Your partnership has disclosed that the defendants have preliminarily
agreed to enter into a memorandum of understanding settling the lawsuit. As
currently contemplated, the memorandum (i) provides for an $8,000,000
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payment by the defendants to your partnership and (ii) requires your partnership
to make a special distribution to partners of the $8,000,000 payment, less fees
and expenses awarded by the court to plaintiff's counsel, together with
$1,000,000 of your partnership's cash reserves. The memorandum of understanding
is subject to various conditions including execution of a definitive agreement,
completion of discovery and court approval of the settlement following notice to
all limited partners. You therefore cannot be assured that the settlement will
be consummated on the terms currently contemplated or that a settlement will be
consummated at all.
If the settlement is approved on the terms currently contemplated, a
distribution will be made to limited partners of approximately $38.40 per unit,
$33.21 of which would represent net proceeds attributable to payments to your
partnership to settle the action and $5.19 of which would represent the
distribution of cash reserves. In estimating the distribution, we assumed that
the court would approve $1,600,000 for fees and expenses of plaintiff's counsel.
The amount distributed by your partnership would increase if the court approved
a lesser amount.
SELECTED FINANCIAL DATA.
The following is a summary of certain financial data for your
partnership for the periods indicated. The summary financial information for
your partnership for the years ended 1999, 1998 and 1997 is based on audited
financial statements and the information for your partnership for the nine
months ended September 30, 2000 and 1999 is unaudited.
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
FISCAL YEAR ENDED
DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30.
1999 1998 1997 2000 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Short-Term Investment Interest $ 173,731 $ 145,513 $ 145,249 $ 184,889 $ 122,473
Other Income 82,320 23,375 19,815 -- 75,380
Total Revenues 256,051 168,888 165,064 184,889 197,853
(Recovery of) Loan Losses, Net (99,156) (400,000) -- -- --
Total Expenses (8,503) (312,427) 92,382 131,562 70,611
Net Income 264,554 481,315 72,682 53,327 127,242
Net Income Per Unit 1.37 2.50 .38 .28 .66
<CAPTION>
As of December 31 As of September 30,
1999 1998 1997 2000 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total Assets $20,288,723 $20,019,207 $19,537,040 $20,276,331 $20,288,723
Total Liabilities 99,954 94,992 94,140 34,235 99,954
Partners Equity - (187,919 units 20,188,769 19,924,215 19,442,900 19,736,069 19,684,075
Outstanding)
Statements of Cash Flow Data:
Cash and Cash Equivalents $ 4,276,843 $ 2,992,413 $ 2,908,425 $ 4,296,976 $ 4,152,430
Net Cash provided by 148,596 83,988 35,341 20,133 123,339
Operating Activities
</TABLE>
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SECTION 10. CONFLICTS OF INTEREST AND TRANSACTIONS WITH AFFILIATES.
Your general partners have certain conflicts of interest with respect to the
offer as set forth below.
VOTING BY US AND OUR AFFILIATES. As a result of the offer, we and our
affiliates may be in a position to influence the outcome of partnership
decisions on which limited partners may vote. This means that (i) non-tendering
limited partners could be prevented from taking action they desire but that we
and our affiliates oppose and (ii) we and our affiliates may be able to take
action desired by us and our affiliates but opposed by non-tendering limited
partners. (See "Section 7. Effects of the Offer".)
TRANSACTIONS WITH AFFILIATES. Under the partnership agreement, your
general partners are entitled to receive 2.5% of your partnership's income,
loss, capital and distributions including without limitation your partnership's
cash flow from operations and disposition proceeds. However, since all interest
and principal due on the mortgage loan held by your partnership has been
deferred until maturity, no distributions are expected to be made from
operations unless there are prepayments of the mortgage loan or the borrower is
otherwise required to make payments on the mortgage loan. Your general partners
would also receive their pro rata interest in any distributions made by your
partnership if the proposed settlement of a pending action is approved in its
current form. For the year ended December 31, 1999, your general partners were
allocated an aggregate of $909,960 of taxable income.
During the years ended December 31, 1999 and 1998, your partnership
paid NorthStar Presidio Management Company LLC, an affiliate of your general
partners, $12,781 and $1,000, respectively, for management and administrative
services rendered.
SECTION 11. CERTAIN INFORMATION CONCERNING US. We are Bighorn
Associates LLC, a Delaware limited liability company formed for the purpose of
making the offer. We are wholly-owned by Presidio Capital Investment Company
LLC, a Delaware limited liability company controlled by NorthStar Capital
Investment Corp., a Maryland corporation. Our principal executive office is at
527 Madison Avenue, New York, New York 10022.
The names, positions and business addresses of the directors and
executive officers of NorthStar Capital Investment Corp., as well as a
biographical summary of the experience of such persons for the past five years
or more, are set forth on Schedule 1 attached hereto and are incorporated herein
by reference.
Except as otherwise set forth herein, (i) neither we, Presidio Capital
Corp., Presidio Capital Investment Company, LLC, NorthStar Capital Investment
Corp. (collectively, the "Presidio Entities") to the best of our knowledge, the
persons listed on Schedule 1, nor any affiliate of the foregoing beneficially
owns or has a right to acquire any units, (ii) neither we, any Presidio Entity,
to the best of our knowledge, the persons listed on Schedule 1, nor any
affiliate thereof or director, executive officer or subsidiary of us or the
Presidio Entities. has effected any transaction in the units within the past 60
days, (iii) neither we, any Presidio Entity, to the best of our knowledge, any
of the persons listed on Schedule 1, nor any director or executive officer of us
or the Presidio Entities, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of your
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, (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 us, any
Presidio Entity, or, to the best of our knowledge, the persons listed on
Schedule 1, on the one hand, and your partnership or its affiliates, on the
other hand, and (v) there have been no contracts, negotiations or transactions
between us, any Presidio Entity, or, to the best of our knowledge, the persons
listed on Schedule 1, on the one hand, and your 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. We expect that approximately $5,130,000,
exclusive of fees and expenses, will be required to purchase all of the 57,000
units we are seeking in this offer. We plan to obtain the funds necessary to
consummate the offer, including fees and expenses, from capital contributions
directly or indirectly
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<PAGE>
from Presidio Capital Investment Company, LLC, which has a net worth
substantially greater than the amount required to purchase the units. (See
"Section 11. Certain Information Concerning Us".)
SECTION 13. BACKGROUND OF THE OFFER.
ESTABLISHMENT OF PURCHASE PRICE. We are offering to purchase units
which are a relatively illiquid investment and which do not presently generate
current income. We are not offering to purchase your partnership's underlying
assets. Consequently, we do not believe that the underlying asset value of your
partnership is determinative in arriving at the purchase price. Nevertheless, as
set forth below, we have determined an estimated liquidation value for your
partnership.
We valued your partnership's mortgage loan at $15,979,355, the value of
the mortgage loan on your partnership's September 30, 2000 balance sheet. This
value represented the outstanding balance on the mortgage loan at December 31,
1996. As a result of a 1997 evaluation by your managing general partner of the
value of the property securing the mortgage loan, your partnership has not
accrued any interest on the mortgage loan since January 1, 1997. If the full
amount of interest had been accrued, as of September 30, 2000 the mortgage loan
would have a value of $23,831,501. As discussed under "Your Partnership's
Current Investments," the borrower has advised your partnership that it believes
that the value of its property has increased since the beginning of 1997. Thus
the value of your partnership's mortgage loan may exceed the value we have used
in our estimate.
To determine the estimated liquidation value of your partnership, we
added to the value we attributed to your partnership's mortgage loan the net
unencumbered cash of your partnership at September 30, 2000 ($4,296,976) and
deducted $639,174 or 4% of the value of the mortgage loan as an estimated
reserve to cover disposition of the mortgage loan and wind up your partnership.
We then added $6,400,000 which represents the estimated net proceeds that your
partnership would receive if the proposed settlement of a pending litigation is
consummated. These proceeds were estimated based on the assumption that the
court would approve $1,600,000 for fees and expenses of plaintiff's counsel. The
liquidation value of your partnership would increase if the court approves a
lesser amount. The resulting estimated liquidation value of your partnership is
$26,037,157, or $135.09 per unit based upon the share of proceeds that limited
partners are entitled to receive.
The following chart summarizes our determination of the estimated
liquidation value of your partnership:
Estimated Value of Mortgage Investment $15,979,355
Unencumbered Cash Reserves as
of September 30, 2000
$4,296,976
Less: Liquidation Costs 639,174
---------
Net Cash 3,657,802
Estimated Proceeds of Litigation
Settlement 6,400,000
-----------
Liquidation Value $26,037,157
Per Unit Liquidation Value $135.09
We believe that the above methodology is an appropriate method for
determining the liquidation value of your partnership's assets. The utilization
of different valuation methods or assumptions also could be appropriate. In this
regard, you should understand that other appropriate valuation methods could
yield a higher value.
The purchase price represents the price at which we are willing to
purchase the units. No independent person has been retained to evaluate or
render any opinion on the fairness of the offer price and no representation is
made by us, or the general partners of your partnership as to the fairness of
our offer. We did not, nor did the general partners of your partnership, attempt
to obtain a current independent valuation or appraisal of your partnership's
mortgage loan. You are urged to consider carefully all of the information
contained herein and consult with your own advisors, tax, financial or
otherwise, in evaluating the terms of our offer before deciding whether to
tender your units.
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Secondary market sales activity for the units, including privately
negotiated sales, has been limited. At present, privately negotiated sales and
sales through intermediaries (e.g., through the trading system operated by
American Partnership Board, Inc., which publishes sell offers by holders of
units) are the only means available to a limited partner to liquidate an
investment in units because the units are not listed or traded on any exchange
or quoted on any NASDAQ list or system. According to Partnership Spectrum, an
independent third party industry publication, between December 1, 1999 and
September 30, 2000, there were 104 reported trades in the secondary market (for
a total of 6,439 units) which were made at between a high of $77.50 per unit and
a low of $60.04 per unit, with a weighted average price of approximately $74.50
per unit. These prices do not take into account commissions and other
transactional costs which sellers of units may be required to pay (which
typically range between 8% and 10% of the reported selling price).
PARTNERSHIP MAKES NO RECOMMENDATION. Your partnership is making no
recommendation as to whether limited partners should tender their units.
SECTION 14. CONDITIONS OF THE OFFER. Notwithstanding any other term of
our offer, we 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 our offer shall not have been filed, occurred or
been obtained. Furthermore, notwithstanding any other term of our offer, we
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 our offer as to such
units if, at any time on or after the date of our offer and before the
acceptance of such units for payment or the payment therefore, 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 our offer
or the acceptance for payment of or payment for any units by us, (ii) imposes or
confirms limitations on our ability to effectively exercise full rights of
ownership of any units, including, without limitation, the right to vote any
units acquired by us in our offer or otherwise on all matters properly presented
to your partnership's limited partners, (iii) requires divestiture by us of any
units, (iv) causes any material diminution of the benefits to be derived by us
as a result of the transactions contemplated by our offer, or (v) might
materially adversely affect our or your partnership's business, properties,
assets, liabilities, financial condition, operations, results of operations or
prospects ;
(b) there shall be any action taken, or any statute, rule,
regulation or order proposed, enacted, enforced, promulgated, issued or deemed
applicable to our offer by any federal or state court, government or
governmental authority or agency, 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 your partnership, which, in our reasonable judgment, is or may be materially
adverse to your partnership, or we shall have become aware of any fact that, in
our reasonable judgment, does or may have a material adverse effect on the value
of the units;
(d) there shall have been threatened, instituted or pending
any action or proceeding before any court or government agency or other
regulatory or administrative agency or commission or by any other person
challenging the acquisition of any units in our offer, or otherwise directly or
indirectly relating to our offer, or otherwise, in our reasonable judgment,
adversely affecting us or your partnership;
(e) your partnership shall have (i) issued, or authorized or
proposed the issuance of, any partnership interests of any class, or any
securities convertible into, or rights, warrants or options to acquire, any such
interests or other convertible securities, (ii) issued or authorized or proposed
the issuance of any other securities, in respect of, in lieu of, or in
substitution for, all or any of the presently outstanding units, (iii)
refinanced any of your partnership's properties, other than in the ordinary
course of your partnership's business and consistent with the past practice,
(iv) declared or paid any distribution, other than in cash and consistent with
past practice, on
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any of its partnership interests, or (v) your partnership or the general partner
of your partnership shall have authorized, proposed or announced its intention
to propose any merger, consolidation or business combination transaction,
acquisition of assets, disposition of assets or material change in its
capitalization, or any comparable event not in the ordinary course of business
and consistent with past practice; or
(f) 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 our offer, a material
acceleration or worsening thereof.
Notwithstanding anything to the contrary set forth above, the above
conditions must be satisfied or waived prior to the expiration date of our offer
and we will exercise a standard of reasonableness in determining whether the
conditions have been satisfied.
SECTION 15. CERTAIN LEGAL MATTERS.
GENERAL. Except as set forth in this Section 15, we 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 us in our offer. Should any such approval or other action be required,
it is our present intention that such additional approval or action would be
sought. While there is no present intent to delay the purchase of units tendered
in our 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 your partnership's business, or that
certain parts of your 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 us to elect to terminate our
offer without purchasing units hereunder. Our obligation to purchase and pay for
units is subject to certain conditions, including conditions related to the
legal matters discussed in this Section 15.
ANTITRUST. We do not believe that the Hart-Scott-Rodeo Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of units
contemplated by our 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 our 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. Although we have not attempted to comply with any
state anti-takeover statutes in connection with our offer, we reserve the right
to challenge the validity or applicability of any state law allegedly applicable
to our offer and nothing in this offer to purchase nor any action taken in
connection herewith is intended as a waiver of such right. If any state
anti-takeover statute is applicable to our offer, we might be unable to accept
for payment or purchase units tendered in our offer or be delayed in continuing
or consummating our offer. In such case, we may not be obligated to accept for
purchase or pay for any units tendered.
SECTION 16. FEES AND EXPENSES. Except as set forth in this Section 16,
we will not pay any fees or commissions to any broker, dealer or other person
for soliciting tenders of units in our offer. We have retained American Stock
Transfer to act as Information Agent/Depositary in connection with our offer. We
will pay American Stock Transfer reasonable and customary compensation for its
respective services in connection with the offer, plus reimbursement for
out-of-pocket expenses. We will also pay all costs and expenses of printing and
mailing our offer and its legal fees and expenses. You will not be required to
pay any fees or commissions to us in connection with a tender. However, you will
be responsible for the payment of any fees charged by your broker for
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assisting you in tendering your units or any fee charged by a custodian or other
trustee of an Individual Retirement Account or profit sharing plan that is the
record owner of your units. Although we do not know the fees charged by these
brokers and trustees, we believe that such fees are typically $24 to $50 per
transaction.
SECTION 17. MISCELLANEOUS. We are not aware of any jurisdiction in
which the making of our offer is not in compliance with applicable law. If we
become aware of any jurisdiction in which the making of our offer would not be
in compliance with applicable law, we will make a good faith effort to comply
with any such law. If, after such good faith effort, we cannot comply with any
such law, our offer will not be made to, nor will tenders be accepted from or on
behalf of, the holders of units residing in such jurisdiction.
No person has been authorized to give any information or to make any
representation on our behalf 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.
We have filed with the Commission a Schedule TO, pursuant to Rule 14d-3
under the Exchange Act, furnishing certain additional information with respect
to our offer, and may file amendments thereto. The Schedule TO and any
amendments thereto, including exhibits, may be inspected and copies maybe
obtained at the same places and in the same manner as set forth in Section 9
hereof, except that they will not be available at the regional offices of the
Commission.
BIGHORN ASSOCIATES LLC
January 17, 2001
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SCHEDULE 1
INFORMATION WITH RESPECT TO THE EXECUTIVE OFFICERS
AND DIRECTORS OF NORTHSTAR CAPITAL INVESTMENT CORP.
Set forth below is the name, current business address, present
principal occupation, and employment history for at least the past five years of
each director and executive officer of NorthStar Capital Investment Corp. Each
person listed below is a citizen of the United States.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL OCCUPATION, POSITION, OFFICE
OR EMPLOYMENT FOR THE PAST FIVE YEARS
Peter W. Ahl, 34, has been a Vice President of NorthStar Capital
Investment Corp. since November 1997. For the previous five years he was a
director in the Alternate Investment Group of AEW Capital Management, L.P. Mr.
Ahl's current business address is 527 Madison Avenue, New York, New York 10022.
Martin L. Edelman, 58, has been a director of NorthStar Capital
Investment Corp. since November 1997. Since 1994, Mr. Edelman has been of
counsel to Battle Fowler LLP, a New York City law firm specializing in real
estate and corporate law. Mr. Edelman is one of the Managing Partners of
Chartwell Hotel Associates (an affiliate of Fisher Brothers, the Getty family
and Soros family interests), and is on the Board of Directors and Executive
Committee of Grupo Chartwell de Mexico, S.A. de C.V. Mr. Edelman is a member of
the Board of Directors of each of Avis Rent-a-Car, Inc. Cendant Incorporated,
Delancey Estates PLC., Acadia Real Estate Trust, and Capital Trust. Mr.
Edelman's current business address is 75 East 55th Street, New York, New York
10022.
Richard Georgi, 36, has been a director of NorthStar Capital Investment
Corp. since June 1999. Currently, Mr. Georgi is a Managing Partner of Soros Real
Estate Partnership and is responsible for the Soros group of funds (including
Quantum Realty Fund) global real estate investments. Prior to joining SREP in
1999, Mr. Georgi spent nine years with Goldman Sachs & Co. in real estate
related businesses, including responsibility for the Real Estate Principal Area
and the Whitehall Real Estate Funds in Europe from 1995 to 1999. Mr. Georgi is a
board member of Europlex, Mapeley and MedGroup. Mr. Georgi's current business
address is 20 St. James Street, London SW2A 1ES.
Marc Gordon, 35, has been a Vice President and Assistant Secretary of
NorthStar Capital Investment Corp. since November 1997. From 1993 to 1997, Mr.
Gordon was Vice President in the real estate investment banking group at Merrill
Lynch. Mr. Gordon's current business address is 527 Madison Avenue, New York,
New York 10022.
David Hamamoto, 40, has been a Co-Chairman of the Board, Co-President
and Co-Chief Executive of NorthStar Capital Investment Corp. since November
1997. Previously he was a partner and co-head of the Real Estate Principal
Investment Area at Goldman, Sachs & Co. Mr. Hamamoto's current business address
is 527 Madison Avenue, New York, New York 10022.
Christopher M. Jeffries, 49, has been a director of NorthStar Capital
Investment Corp. since May 1998. Mr. Jeffries founded Millennium Partners in
1990, a developer of mixed-use urban entertainment and living centers. Mr.
Jeffries' current business address is 1995 Broadway, New York, New York 10023.
David King, 37, has been a Vice President and Assistant Treasurer of
NorthStar Capital Investment Corp. since November 1997. He is also a Vice
President of your general partners. For more than the previous five years he was
a Senior Vice President of Finance at Olympia & York Companies (USA). Mr. King's
current business address is 527 Madison Avenue, New York, New York 10022.
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Martin Lamb, 38, has been a Vice President of NorthStar Capital
Investment Corp. since April 1998. From 1996 until 1998 he was a Senior Vice
President with The Morgan Stanley Real Estate Fund. Prior to that, he served as
Vice President at The Argo Fund, an opportunistic real estate joint venture
between affiliates of J.P. Morgan and The O'Connor Group. Mr. Lamb's current
business address is 527 Madison Avenue, New York, New York 10022.
Dallas E. Lucas, 37, has been a director, Vice President, Treasurer and
Chief Financial Officer of NorthStar Capital Investment Corp. since August 1998.
He is also a Vice President of your general partners. From 1994 until August
1998 he was the Chief Financial Officer and Senior Vice President of Crescent
Real Estate Equities Company. Mr. Lucas' current business address is 527 Madison
Avenue, New York, New York 10022.
Richard J. McCready, 41, has been a Vice President and Secretary of
NorthStar Capital Investment Corp. since March 1998. Previously, he was
President, Chief Operating Officer and a director of First Winthrop Corporation.
Mr. McCready's current business address is 527 Madison Avenue, New York, New
York 10022.
W. Edward Scheetz, 34, has been a Co-Chairman of the Board,
Co-President and Co-Chief Executive Officer of NorthStar Capital Investment
Corp. since November 1997. Previously he was a partner at Apollo Real Estate
Advisors L.P. since 1993. Mr. Scheetz' current business address is 527 Madison
Avenue, New York, New York 10022.
Robert Soros has been a director of NorthStar Capital Investment Corp.
since June 1999. Mr. Soros is a partner at Soros Private Equity Partners, an
affiliate of Soros Fund Management LLC, which is responsible for the private
equity and real estate investing for Quantum Group of Funds and Soros Fund
Management Fund LLC. In addition, Mr. Soros oversees various Soros Family
investments. Mr. Soros has been with Soros Fund Management LLC since 1994. Mr.
Soros is a member of the Board of Directors of American Malls International and
MenuDirect Corporation. Mr. Soros' current business address is 888 Seventh
Avenue, 33rd Floor, New York, New York 10106.
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The letter of transmittal and any other required documents should be
sent or delivered by you or your broker, dealer, commercial bank, trust company
or other nominee to the Depositary at its address set forth below:
VIA U.S. MAIL: American Stock Transfer
59 Maiden Lane
New York, NY 10038
Attn: Reorg. Department - RAM 2
VIA OVERNIGHT COURIER American Stock Transfer &
Trust Company
6201 15th Avenue
Brooklyn, New York 11219
Attn: Reorg. Department - RAM 2
VIA FACSIMILE: (718) 234-5001
FOR INFORMATION CALL: (888) 448-5554
IF YOU HAVE ANY QUESTIONS OR IF YOU NEED ASSISTANCE IN COMPLETION OF
THE LETTER OF TRANSMITTAL, YOU MAY CONTACT US BY CALLING: (888) 448-5554
