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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report: June 8, 1998
(Date of earliest event reported)
ENSTAR INCOME/GROWTH PROGRAM Five-B, L.P.,
a Georgia limited partnership
(Exact name of registrant as specified in its charter)
Georgia Commission File: 58-1713008
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(State or other jurisdiction 0-16789 (I.R.S. Employer
of incorporation or identification No.)
organization)
10900 Wilshire Boulevard, 15th Floor
Los Angeles, California 90024
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(Address of principal executive offices, including zip code)
(310) 824-9990
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(Registrant's phone number, including area code)
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Item 5. Other Events
On May 30, 1998, Sierra Fund 4, L.L.C. disseminated a letter
stating its interest in acquiring up to 4.9% of the outstanding
units of limited partnership interests in Enstar Income/Growth
Program Five-B, L.P. (the "Registrant") for a price of $60 per
unit. This offer was made without the consent or involvement of
the Registrant's Corporate General Partner. The Corporate General
Partner has considered the offer, concluded that it is inadequate
and, accordingly, recommended that limited partners not accept
the offer. Pursuant to Rule 14e-2 promulgated under the
Securities Exchange Act of 1934, as amended, this recommendation
and the Corporate General Partner's bases therefor were conveyed
to limited partners in a letter dated June 8, 1998 which is filed
as an exhibit hereto and incorporated herein by this reference.
Forward-looking statements contained or referred to in this
report are made pursuant to the safe harbor provisions of Section
21E of the Securities Exchange Act of 1934, as amended. Investors
are cautioned that such forward-looking statements involve risks
and uncertainties including, without limitation, the effects of
legislative and regulatory changes; the potential of increased
levels of competition for the Partnership; technological changes;
the Partnership's dependence upon third-party programming; the
absence of unitholder participation in the governance and
management of the Partnership; the management fees payable to the
Corporate General Partner; the exoneration and indemnification
provisions contained in the Partnership agreement relating to the
Corporate General Partner; other potential conflicts of interest
involving the Corporate General Partner and its affiliate; and
other risks detailed from time to time in the Partnership's
Annual Report on Form 10-K and other periodic reports filed with
the Commission.
Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits
(c) Exhibits
5.1 Letter to Limited Partners dated June 8, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Enstar Income/Growth Program Five-B, L.P.
a Georgia limited partnership
Date: June 8, 1998. By: /s/ Michael K. Menerey
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Michael K. Menerey
Executive Vice President,
Chief Financial Officer and
Secretary
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Sequentially
Numbered
Exhibit Description Page
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5.1 Letter to Limited 5
Partners dated
June 8, 1998
(Enstar Letterhead)
June 8, 1998
Dear Limited Partner:
Enstar Income/Growth Program Five-B, L.P. (the "Partnership") has become
aware that an unsolicited offer for up to 4.9% of the outstanding Units in the
Partnership at a price of $60 per Unit, was commenced by Sierra Fund 4, LLC
("Sierra Fund"), in a letter dated May 30, 1998. This offer was made without the
consent or the involvement of the Corporate General Partner.
Pursuant to rule 14e-2 under the Securities Exchange Act of 1934, we are
required to furnish you with our position with respect to the Sierra Fund offer.
We have considered this offer and, based on the very limited information made
available by Sierra Fund, believe that it is inadequate, not representative of
the inherent value of the Partnership's cable systems and not in your best
interest to accept. Accordingly, the Corporate General Partner's recommendation
is that you reject the offer. We urge you not to sign the Agreement of
Assignment and Transfer that Sierra Fund sent to you and not to tender your
Units to Sierra Fund. In evaluating the offer, the Corporate General Partner
believes that its limited partners should consider the following information:
* The offering price for each limited partnership Unit during the offering
period was $250 per Unit. The Sierra Fund's offer is only $60 per Unit. If
Sierra Fund is successful in buying Units at the price in its offer, it
will own Units, in our view, for much less than they are worth. Limited
partners should note that the Partnership's cash flow (operating income
before depreciation and amortization) for the trailing twelve months ended
March 31, 1998 was approximately $26.63 per Unit. The Sierra Fund offer
represents a valuation of only approximately 1.61 times said cash flow
(after adjustment for the excess of current assets over total liabilities
as of March 31, 1998).
* As of the date of this letter, the Corporate General Partner believes that
a reasonable range of valuation per limited partnership Unit is between
$100 and $150 based on the factors noted below. The Corporate General
Partner believes that the Sierra Fund offer is inadequate because it does
not even approach the $100 low end of the range provided. The Corporate
General Partner did not retain a third party to conduct an evaluation of
the Partnership's assets or otherwise obtain any appraisals. Rather, the
per Unit valuations provided were derived by attributing a range of
multiples to the Partnership's cash flow (operating income before
depreciation and amortization) for the twelve months ended March 31, 1998,
adjusted for the excess of current assets over total liabilities. The
Corporate General Partner has selected market multiples based on, among
other things, its understanding of the multiples placed on other
transactions involving comparable cable television properties and the
securities of companies in that industry. The Corporate General Partner's
belief as to the valuation range provided is necessarily based on economic,
industry and financial market conditions as they exist as of the date of
this letter, all of which are subject to change. There can be no assurance
that the Partnership's cable properties could actually be sold at a price
within this range. Additionally, the valuations provided do not give effect
to any brokerage or other transaction fees that might be incurred by the
Partnership in any actual sale of the Partnership's system.
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Furthermore, one of the obligations of the Corporate General Partner is to
endeavor to preserve the status of the Partnership as a partnership under
Federal income tax laws. Failure to maintain this status could have a material
adverse effect on the Partnership and its partners. Among the related legal
requirements imposed upon the Partnership is that its partnership interests not
be traded in an established securities market. As it believes is customary, the
Partnership complies with this requirement by adhering to a safe harbor
provision contained in the Federal income tax regulations which limits most
sales of limited partnership interests to five percent of the outstanding units
in any given year. After five percent of the outstanding units have been
transferred in 1998, no further resales of units, including any attempted sales
related to the Sierra Fund offer, will be recognized by the Partnership for the
balance of 1998.
For the reasons discussed above, the Corporate General Partner believes
that the Sierra Fund offer is not in the best interest of the limited partners
and recommends that you NOT transfer, agree to transfer, or tender any Units in
response to the Sierra Fund offer.
If you have any questions regarding these matters or your investment,
please call our Investor Services Department at (800) 433-4287.
Sincerely,
Enstar Income/Growth Program Five-B, L.P.
A Georgia Limited Partnership
cc: Account Representative
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