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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CABLE TV FUND 14-A, LTD.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: Limited
Partnership Interests
(2) Aggregate number of securities to which transaction applies: 160,000
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): Pursuant to
Rule 0-11(c)(2), the transaction valuation is based upon the $27,000,000
sales price that is to be paid to Cable TV Fund 14-A, Ltd. in connection
with the transaction that is the subject of the proxy solicitation.
(4) Proposed maximum aggregate value of the transaction to the Registrant:
$27,000,000
(5) Total fee paid: $5,400
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
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9697 East Mineral Avenue
Englewood, Colorado 80112
NOTICE OF VOTE OF THE LIMITED PARTNERS OF CABLE TV FUND 14-A, LTD.
To the Limited Partners of Cable TV Fund 14-A, Ltd.:
A special vote of the limited partners of Cable TV Fund 14-A, Ltd. (the
"Partnership") is being conducted through the mails on behalf of the
Partnership by Jones Intercable, Inc., the general partner of the Partnership
(the "General Partner"), for the purpose of obtaining limited partner approval
of the sale, to Bresnan Communications Company, L.P. or one of its affiliates,
of the cable television system serving areas in and around Buffalo, Minnesota
(the "Buffalo System") owned by the Partnership for $27,000,000 in cash,
subject to customary working capital closing adjustments that may have the
effect of increasing or decreasing the sales price by a non-material amount.
Information relating to this matter is set forth in the accompanying Proxy
Statement.
If the limited partners approve the proposed sale of the Buffalo System and
if the transaction is closed, the Partnership will repay the balance
outstanding on its revolving credit facility, estimated to total $4,255,000,
pay a brokerage fee totaling $675,000 (representing 2.5 percent of the sales
price) to The Jones Group, Ltd., a subsidiary of the General Partner, for
acting as a broker in this transaction, settle working capital adjustments and
deposit $1,200,000 into an indemnity escrow account, and then the Partnership
will distribute the approximate $20,600,000 of net sale proceeds to the
partners of record as of the closing date of the sale of the Buffalo System.
Because at the time of the Buffalo System's sale the distributions expected to
be made to the limited partners from the Buffalo System's sale and from prior
and pending sales of other cable television systems owned by the Partnership
will have returned to limited partners more than 125 percent of the amounts
originally contributed to the Partnership by the limited partners, the General
Partner will receive a general partner distribution from the proceeds of the
sale of the Buffalo System. It is estimated that the limited partners, as a
group, will receive $20,567,000 from the sale of the Buffalo System and that
the General Partner will receive a general partner distribution of $33,000
from the net sale proceeds. The limited partner distribution from the sale of
the Buffalo System will represent $129 for each $500 limited partnership
interest, or $258 for each $1,000 invested in the Partnership. Distributions
will be net of Minnesota non-resident withholding, if applicable, and
distribution checks will be issued to limited partners' account registration
or payment instruction of record.
In addition to the Buffalo System, the Partnership owns and operates the
cable television system serving areas in and around Naperville, Illinois (the
"Naperville System") and the cable television system serving areas in and
around Calvert County, Maryland (the "Calvert County System"), both of which
also are in various stages of being sold. The General Partner currently
anticipates that the Buffalo System will be sold following the sale of the
Calvert County System and prior to the closing of the sale of the Naperville
System, but the actual order of the various closings may change depending upon
a variety of timing factors not in the General Partner's absolute control. The
Partnership also has owned the cable television system serving areas in and
around Turnersville, New Jersey (the "Turnersville System") and cable
television systems serving communities in rural central Illinois (the "Central
Illinois System"), both of which were sold in 1997. The Partnership also has
owned a 27 percent interest in the Cable TV Fund 14-A/B Venture (the
"Venture"). The Venture owned and operated the cable television system serving
certain areas in Broward County, Florida (the "Broward System") until its sale
in March 1998.
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The Partnership has agreed to sell the Calvert County System to a subsidiary
of the General Partner for a sales price of $39,388,667. The closing of the
sale of the Calvert County System, which is expected to occur in the first
quarter of 1999, will be subject to several conditions, including necessary
governmental and other third party consents and the approval of the holders of
a majority of the limited partnership interests in a separate proxy vote to be
conducted by the General Partner in the first quarter of 1999. Upon the sale
of the Calvert County System, the Partnership intends to distribute
approximately $19,500,000 of the net sale proceeds to the Partnership's
limited partners of record as of the closing date of the sale of the Calvert
County System. This distribution will represent $122 for each $500 limited
partnership interest or $244 for each $1,000 invested in the Partnership.
The Partnership has also agreed to sell its Naperville System to an
unaffiliated party for a sales price of $23,000,000, subject to customary
closing adjustments. The closing of the sale of the Naperville System, which
is expected to occur in March 1999, also will be subject to several
conditions, including necessary governmental and other third party consents.
The holders of a majority of the limited partnership interests of the
Partnership already have approved the sale of the Naperville System. Upon the
sale of the Naperville System, which is expected to follow the sale of the
Calvert County System and the sale of the Buffalo System, the Partnership
expects to distribute the net sale proceeds of $20,800,000 to the
Partnership's partners of record as of the closing date of the sale of the
Naperville System. Because at the time of the Naperville System's sale, the
distributions expected to be made to limited partners from prior sales of
cable television systems will have returned to the limited partners more than
125 percent of the amounts originally contributed to the Partnership by the
limited partners, the net proceeds from the sale of the Naperville System will
be allocated 75 percent to the limited partners ($15,600,000) and 25 percent
to the General Partner ($5,200,000). The limited partner distribution from the
sale of the Naperville System will represent $97.50 for each $500 limited
partnership interest, or $195 for each $1,000 invested in the Partnership.
Portions of the proceeds from the Buffalo System sale and the Naperville
System sale will be held in indemnity escrow accounts for varying periods in
1999 following the closings of the sales. After the distribution of the
amounts, if any, remaining in the indemnity escrow accounts, the Partnership
will be liquidated and dissolved, most likely in the fourth quarter of 1999.
Taking into account the distributions that have been or will be made to the
limited partners of the Partnership from all of the prior and pending cable
television system sales (excluding escrowed proceeds), the General Partner
estimates that the limited partners of the Partnership will have received a
total return of $723 for each $500 limited partnership interest or $1,446 for
each $1,000 invested in the Partnership at the time that the Partnership is
liquidated and dissolved.
Only limited partners of record at the close of business on January 15, 1999
are entitled to notice of, and to participate in, this vote of limited
partners. It is very important that all limited partners participate in the
voting. The Partnership's ability to complete the transaction discussed in the
Proxy Statement and the Partnership's ability to make a distribution to its
partners of the net proceeds of the sale of the Buffalo System pursuant to the
terms of the Partnership's limited partnership agreement (the "Partnership
Agreement") are dependent upon the approval of the transaction by the holders
of a majority of the Partnership's limited partnership interests.
The proposal that is the subject of this proxy solicitation will be adopted
only if approved by the holders of a majority of the limited partnership
interests. Each limited partnership interest entitles the holder thereof to
one vote on the proposal. Because the Partnership Agreement requires that the
proposal to sell the Buffalo System be approved by the holders of a majority
of the limited partnership interests, abstentions and non-votes will be
treated as votes against the proposal. A properly executed proxy card returned
to the General Partner on which a limited partner does not mark a vote will be
counted as a vote for the proposed sale of the Buffalo System. Because limited
partners do not have dissenters' or appraisal rights in connection with the
proposed sale of the Buffalo System, if the holders of a majority of the
limited partnership interests approve the proposal, all limited partners will
receive a distribution of the net sale proceeds in accordance with the
procedures prescribed by the Partnership Agreement regardless of how or
whether they vote on the proposal.
ii
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Jones Intercable, Inc., as general partner of the Partnership, urges you to
sign and return the enclosed proxy card as promptly as possible. The proxy
should be returned in the enclosed envelope.
JONES INTERCABLE, INC.
General Partner
/s/ Elizabeth M. Steele
-----------------------
Elizabeth M. Steele
Secretary
Dated: February 5, 1999
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[JONES INTERCABLE, INC. LOGO]
9697 East Mineral Avenue
Englewood, Colorado 80112
PROXY STATEMENT
VOTE OF THE LIMITED PARTNERS
OF CABLE TV FUND 14-A, LTD.
This Proxy Statement is being furnished in connection with the solicitation
of the written consents of the limited partners of Cable TV Fund 14-A, Ltd.
(the "Partnership") by Jones Intercable, Inc., the general partner of the
Partnership (the "General Partner"), on behalf of the Partnership, for the
purpose of obtaining limited partner approval of the sale of the cable
television system serving areas in and around Buffalo, Minnesota (the "Buffalo
System") owned by the Partnership for $27,000,000 in cash, subject to normal
working capital closing adjustments, to Bresnan Communications Company, L.P.
or one of its affiliates ("Bresnan"). Bresnan is not an affiliate of the
Partnership or of the General Partner.
Proxies in the form enclosed, properly executed and duly returned, will be
voted in accordance with the instructions thereon. Limited partners are urged
to sign and return the enclosed proxy as promptly as possible. Proxies cannot
be revoked except by delivery of a proxy dated as of a later date. Officers
and other employees of the General Partner may solicit proxies by mail, by
fax, by telephone or by personal interview. The deadline for the receipt of
proxy votes is February 26, 1999, unless extended, but the vote of the
Partnership's limited partners will be deemed to be concluded on the date that
the General Partner, on behalf of the Partnership, is in receipt of proxies
executed by the holders of a majority of the limited partnership interests
either consenting to or disapproving of the proposed transaction. The General
Partner may extend the deadline for receipt of proxy votes if a majority of
the limited partners fail to express an opinion on the transaction by February
26, 1999. If the General Partner extends the deadline for receipt of proxy
votes, the limited partners will be informed by mail of the reason for the
extension and the new deadline. The cost of the proxy solicitation will be
paid by the Partnership.
The Partnership has only one class of limited partners and no limited
partner has a right of priority over any other limited partner. The
participation of the limited partners is divided into limited partnership
interests and each limited partner owns one limited partnership interest for
each $500 of capital contributed to the Partnership.
<PAGE>
As of January 15, 1999, the Partnership had 160,000 limited partnership
interests outstanding, held by 11,277 persons. There is no established trading
market for such interests. To the best of the General Partner's knowledge, no
person or group of persons beneficially own more than five percent of the
limited partnership interests. During the past several years, CMG Partners,
LLC, Smithtown Bay, LLC and Madison Partnership Liquidity Investors 46, LLC,
three firms unaffiliated with the Partnership, the General Partner and each
other, have conducted tender offers for interests in the Partnership. As of
January 15, 1999, CMG Partners, LLC and its affiliates owned 1,307 limited
partnership interests, or 0.8 percent of the limited partnership interests. As
of such date, Smithtown Bay, LLC and its affiliates owned 1,275 limited
partnership interests, or 0.8 percent of the limited partnership interests. As
of such date, Madison Partnership Liquidity Investors 46, LLC and its
affiliates owned 7,921 limited partnership interests, or 4.95 percent of the
limited partnership interests. Pursuant to the terms of agreements between the
Partnership and the General Partner and such firms, all of the limited
partnership interests held by these firms will be voted in the same manner as
the majority of all limited partners who vote on the sale of the Buffalo
System. Thus, for example, if the limited partnership interests voted in favor
of the transaction constitute a majority of all limited partnership interests
voted but not a majority of all limited partnership interests, these firms
will be required to vote their limited partnership interests in favor of the
transaction, and in such event the votes of these firms could be sufficient to
cause the transaction to be approved by a majority of all limited partnership
interests, which is the vote necessary to cause the transaction to be
approved. The General Partner owns 240 limited partnership interests. The
limited partnership interests owned by the General Partner will be voted in
favor of the sale of the Buffalo System to Bresnan. The officers and directors
of the General Partner do not own any limited partnership interests. Only
limited partners of record at the close of business on January 15, 1999 will
be entitled to notice of, and to participate in, the vote.
Upon the consummation of the proposed sale of the Buffalo System, the
Partnership will repay the balance outstanding on its revolving credit
facility, estimated to total $4,255,000, pay a brokerage fee totaling $675,000
(representing 2.5 percent of the sales price) to The Jones Group, Ltd., a
subsidiary of the General Partner, for acting as a broker in this transaction,
settle working capital adjustments and deposit $1,200,000 into an indemnity
escrow account, and then the Partnership will distribute the approximate
$20,600,000 of net sale proceeds to its partners of record as of the closing
date of the sale of the Buffalo System. Because at the time of the Buffalo
System's sale the distributions expected to be made to the limited partners
from the Buffalo System's sale and from prior and pending sales of other cable
television systems owned by the Partnership will have returned to the limited
partners more than 125 percent of the amounts originally contributed to the
Partnership by the limited partners, the General Partner will receive a
general partner distribution from the proceeds of the sale of the Buffalo
System. It is estimated that the limited partners, as a group, will receive
$20,567,000 from the sale of the Buffalo System and that the General Partner
will receive a general partner distribution of $33,000 from the net sale
proceeds. The limited partner distribution from the sale of the Buffalo System
will represent $129 for each $500 limited partnership interest, or $258 for
each $1,000 invested in the Partnership. Distributions will be net of
Minnesota non-resident withholding, if applicable, and distribution checks
will be issued to limited partners' account registration or payment
instruction of record.
In addition to the Buffalo System, the Partnership owns and operates the
cable television system serving areas in and around Naperville, Illinois (the
"Naperville System") and the cable television system serving areas in and
around Calvert County, Maryland (the "Calvert County System"), both of which
also are in various stages of being sold. The General Partner currently
anticipates that the Buffalo System will be sold following the sale of the
Calvert County System and prior to the closing of the sale of the Naperville
System, but the actual order of the various closings may change depending upon
a variety of timing factors not in the General Partner's absolute control. The
Partnership also has owned the cable television system serving areas in and
around Turnersville, New Jersey (the "Turnersville System") and cable
television systems serving communities in rural central Illinois (the "Central
Illinois System"), both of which were sold in 1997. The Partnership also has
owned a 27 percent interest in the Cable TV Fund 14-A/B Venture (the
"Venture"). The Venture owned and operated the cable television system serving
certain areas in Broward County, Florida (the "Broward System") until its sale
in March 1998.
2
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The Partnership has agreed to sell the Calvert County System to a subsidiary
of the General Partner for a sales price of $39,388,667. The closing of the
sale of the Calvert County System, which is expected to occur in the first
quarter of 1999, will be subject to several conditions, including necessary
governmental and other third party consents and the approval of the holders of
a majority of the limited partnership interests in a separate proxy vote to be
conducted by the General Partner in the first quarter of 1999. Upon the sale
of the Calvert County System, the Partnership intends to distribute
approximately $19,500,000 of the net sale proceeds to the Partnership's
limited partners of record as of the closing date of the sale of the Calvert
County System. This distribution will represent $122 for each $500 limited
partnership interest or $244 for each $1,000 invested in the Partnership.
The Partnership has also agreed to sell its Naperville System to an
unaffiliated party for a sales price of $23,000,000, subject to customary
closing adjustments. The closing of the sale of the Naperville System, which
is expected to occur in March 1999, also will be subject to several
conditions, including necessary governmental and other third party consents.
The holders of a majority of the limited partnership interests of the
Partnership already have approved the sale of the Naperville System. Upon the
sale of the Naperville System, which is expected to follow the sale of the
Calvert County System and the sale of the Buffalo System, the Partnership
expects to distribute the net sale proceeds of $20,800,000 to the
Partnership's partners of record as of the closing date of the sale of the
Naperville System. Because at the time of the Naperville System's sale, the
distributions expected to be made to limited partners from prior sales of
cable television systems will have returned to the limited partners more than
125 percent of the amounts originally contributed to the Partnership by the
limited partners, the net proceeds from the sale of the Naperville System will
be allocated 75 percent to the limited partners ($15,600,000) and 25 percent
to the General Partner ($5,200,000). The limited partner distribution from the
sale of the Naperville System will represent $97.50 for each $500 limited
partnership interest, or $195 for each $1,000 invested in the Partnership.
Portions of the proceeds from the Buffalo System sale and the Naperville
System sale will be held in indemnity escrow accounts for varying periods in
1999 following the closings of the sales. After the distribution of the
amounts, if any, remaining in the indemnity escrow accounts, the Partnership
will be liquidated and dissolved, most likely in the fourth quarter of 1999.
Taking into account the distributions that have been or will be made to the
limited partners of the Partnership from all of the prior and pending cable
television system sales (excluding escrowed proceeds), the General Partner
estimates that the limited partners of the Partnership will have received a
total return of $723 for each $500 limited partnership interest or $1,446 for
each $1,000 invested in the Partnership at the time that the Partnership is
liquidated and dissolved.
The Partnership will continue to be a public entity subject to the
informational reporting requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), until the Partnership is dissolved, which is
expected to occur before the end of 1999. See "Certain Information About the
Partnership, the General Partner and the Purchaser of the Buffalo System."
The proposal that is the subject of this proxy solicitation will be adopted
only if approved by the holders of a majority of the limited partnership
interests. Each limited partnership interest entitles the holder thereof to
one vote on the proposal. Because the Partnership's limited partnership
agreement (the "Partnership Agreement") requires that the proposal to sell the
Buffalo System be approved by the holders of a majority of the limited
partnership interests, abstentions and non-votes will be treated as votes
against the proposal. A properly executed proxy card returned to the General
Partner on which a limited partner does not mark a vote will be counted as a
vote for the proposed sale of the Buffalo System. Because limited partners do
not have dissenters' or appraisal rights in connection with the proposed sale
of the Buffalo System, if the holders of a majority of the limited partnership
interests approve the proposal, all limited partners will receive a
distribution of the net sale proceeds in accordance with the procedures
prescribed by the Partnership Agreement regardless of how or whether they vote
on the proposal.
The Board of Directors of the General Partner approved the proposed sale of
the Buffalo System and the General Partner therefore recommends approval of
the transaction by the holders of the Partnership's limited partnership
interests.
The approximate date on which this Proxy Statement and Form of Proxy are
being sent to limited partners is February 5, 1999.
3
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PARTNERSHIP INFORMATION
The Partnership's Investment Objectives
The Partnership was formed to acquire, develop, operate and, ultimately,
sell cable television systems. The primary objectives of the Partnership have
been to obtain capital appreciation in the value of the Partnership's cable
television properties; to obtain equity build-up through debt reduction; and
to generate tax losses that could be utilized to offset passive income. It was
contemplated from the outset of the Partnership's existence that capital
appreciation in Partnership cable television properties would be converted to
cash by a sale of such properties at such time as the General Partner
determined that the Partnership's investment objectives had substantially been
achieved and after a holding period of five to seven years.
The Partnership was formed in February 1987 as a Colorado limited
partnership in connection with a public offering of its limited partnership
interests. Sales of limited partnership interests in the Partnership commenced
on December 3, 1986 and closed on August 14, 1987. The Partnership raised
gross offering proceeds of $80,000,000. The Partnership acquired the Buffalo
System in May 1989.
Based upon the track record of prior public partnerships sponsored by the
General Partner that had liquidated or were in the process of liquidating
their assets during the period that limited partnership interests in the
Partnership were being sold, and based upon disclosures made to prospective
investors about the Partnership's investment objectives in the Cable TV Fund
14 Limited Partnership Program prospectus and in the accompanying sales
brochure, investors in the Partnership reasonably could have anticipated that
the Partnership's investment objectives would be achieved and its assets
liquidated after a holding period of approximately five to seven years. Due to
the uncertain and then adverse regulatory environment that developed in the
mid 1990s for the cable television industry, the resulting decline in the
prices for cable television systems and the subsequent inactivity in the cable
television system marketplace, the General Partner determined that it would be
prudent to delay the sale of the Buffalo System until market conditions
improved and, as a result, the Buffalo System has been held by the Partnership
for almost 12 years.
The purpose of the sale of the Buffalo System, from the Partnership's
perspective, is to attain the Partnership's primary investment objective with
respect to the Buffalo System, i.e., to convert the Partnership's capital
appreciation in the Buffalo System to cash. The sale proceeds will be used to
repay the debts of the Partnership, pay certain fees and expenses of the
transaction, settle working capital adjustments and deposit funds into an
indemnity escrow account, and then the remaining sale proceeds will be
distributed to the partners of the Partnership of record as of the closing
date of the sale of the Buffalo System in accordance with the distribution
procedures established by the Partnership Agreement. The sale of the Buffalo
System is thus the necessary final step in the Partnership's accomplishment of
its investment objectives with respect to the Buffalo System.
All distributions of the Partnership from the proceeds of the sales of cable
television systems are to be distributed 100 percent to the limited partners
until the limited partners receive amounts equal to 125 percent of their
initial capital contributions, and thereafter all such distributions are to be
shared 75 percent to the limited partners and 25 percent to the General
Partner. Because the limited partners of the Partnership are expected to
receive distributions in an amount in excess of 125 percent of their initial
capital contributions from the distribution of the net proceeds of the Buffalo
System's sale, the sharing arrangement between the limited partners and the
General Partner will be triggered. The limited partners, as a group, will
receive $20,567,000 of the Buffalo System's net sale proceeds and the General
Partner will receive $33,000 of the Buffalo System's net sale proceeds. The
distribution to limited partners will provide the limited partners with a
return of $129 for each $500 limited partnership interest or $258 for each
$1,000 invested in the Partnership.
Voting Provision of the Partnership Agreement
Section 2.2(k) of the Partnership Agreement provides that the sale of all or
substantially all of the Partnership's assets is subject to the approval of
the holders of a majority of the Partnership's limited partnership interests.
Because the Buffalo System possibly could be the Partnership's sole remaining
asset at the time of its sale, the proposed sale of the Buffalo System to
Bresnan is being submitted for limited partner approval.
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PROPOSED SALE OF THE BUFFALO SYSTEM
General
Pursuant to the terms and conditions of an Asset Purchase Agreement dated as
of November 6, 1998 (the "Agreement") by and between the Partnership and
Bresnan, the Partnership has agreed to sell the Buffalo System to Bresnan for
a sales price of $27,000,000, subject to customary working capital closing
adjustments that may have the effect of increasing or decreasing the sales
price by a non-material amount. Bresnan is a Michigan limited partnership
headquartered at 709 Westchester Avenue, White Plains, New York, 10604.
Bresnan is not affiliated with the Partnership or with the General Partner.
The Partnership has been informed that Bresnan intends to finance its
acquisition of the Buffalo System through cash on hand and borrowings.
The Closing
The closing of the sale is scheduled to occur on February 26, 1999. Because
the closing is conditioned upon, among other things, the approval of the
limited partners of the Partnership and the receipt of material third party
consents necessary for the transfer of the Buffalo System to Bresnan, there
can be no assurance that the proposed sale will occur. The Agreement may be
terminated by either the Partnership or Bresnan if the closing is not
consummated on or before February 26, 1999.
The Buffalo System
The Buffalo System was acquired by the Partnership in May 1987 for a
purchase price of $8,247,000. At acquisition, the Buffalo System consisted of
333 miles of cable plant passing approximately 15,800 homes and serving
approximately 4,025 basic equivalent subscribers. The Buffalo System now
consists of approximately 660 miles of cable plant passing approximately
28,010 homes and serving approximately 14,545 basic equivalent subscribers.
During the almost 12 year holding period, the Partnership used approximately
$10,457,400 in capital expenditures to expand and/or upgrade the cable plant
of the Buffalo System. The Buffalo System's basic penetration rate is
approximately 52 percent.
Bresnan will purchase all of the tangible assets of the Buffalo System that
are leased or owned by the Partnership and used in the operation of the
system, including the system's real estate, vehicles, headend equipment,
underground and aboveground cable distribution systems, towers, earth
satellite receive stations and furniture and fixtures. Bresnan also will
acquire certain of the intangible assets of the system, including all of the
franchises, leases, agreements, permits, licenses and other contracts and
contract rights necessary for the operation of the system. Also included in
the sale are the subscriber accounts receivable of the system and all of the
system's records, files, schematics, maps, reports, promotional graphics,
marketing materials, and reports filed with federal, state and local
regulatory agencies. The foregoing notwithstanding, certain of the system's
assets will be retained by the Partnership, including cash or cash equivalents
on hand and in banks, insurance policies and any federal, state or local
income or other tax refunds to which the Partnership may be entitled.
Sales Price
Subject to the closing adjustments described below, the sales price for the
Buffalo System is $27,000,000. The Agreement provides for customary closing
adjustments that may either increase or decrease the sales price by a non-
material amount. Bresnan also will pay to the Partnership 100 percent of the
face amount of all accounts receivable (other than from advertising sales)
that are current or 30 days or less past due as of the closing date, plus 80
percent of the face amount of all accounts receivable (other than from
advertising sales) that are between 31 and 60 days past due as of the closing
date, plus 100 percent of the face amount of all direct-billed advertising
accounts receivable that are current or 60 days or less past due as of closing
date, plus 50 percent of the face amount of all direct-billed advertising
accounts receivable that are between 61 and 90 days past due as of the
5
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closing date, plus 100 percent of the face amount of all agency advertising
accounts receivable that are current or 90 days or less past due as of the
closing date, plus 50 percent of all agency advertising accounts receivable
that are between 91 and 120 days past due as of the closing date; provided,
that the Partnership will not receive credit for any accounts receivable (a)
any portion of which is 60 days or more past due as of the closing date (other
than accounts receivable from advertising sales), (b) from subscribers whose
accounts are inactive or whose service is pending disconnection for any reason
as of the closing date or (c) resulting from advertising sales any portion of
which is 120 days or more past due as of the closing date.
Bresnan's account will be credited for the amount of all advance payments
to, or funds of third parties on deposit with, the Partnership as of the
closing date relating to the Buffalo System, including advance payments and
deposits by subscribers served by the system for converters, encoders,
decoders, cable television service and related sales, and the liability
therefor will be assumed by Bresnan. Adjustments to the sales price on a pro
rata basis as of the closing date will be made for all prepaid expenses (but
only to the extent that the full benefit thereof will be realized by Bresnan
within 12 months after the closing date), accrued expenses (including real and
personal property taxes and the economic value of all accrued vacation time
permitted by Bresnan's policies to be taken after the closing date by the
employees of the Buffalo System hired by Bresnan), prepaid income, subscriber
prepayments and accounts receivable relating to the system, all as determined
in accordance with GAAP consistently applied and to reflect the principal that
all expenses and income attributable to the Buffalo System for the period
prior to the closing date are for the account of the Partnership and all
expenses and income attributable to the Buffalo System for the period on and
after the closing date are for the account of Bresnan.
If the number of basic equivalent subscribers delivered to Bresnan at
closing is less than 13,500, the sales price will be reduced by an amount
equal to $2,000 multiplied by the number by which the number of basic
equivalent subscribers is less than 13,500. The Partnership will not have an
obligation to close the sale if the sales price would be reduced pursuant to
this adjustment by an amount greater than $1,000,000.
The General Partner believes that these closing adjustments will neither
increase nor decrease the sales price by a material amount. Please see Note 4
of the Notes to Unaudited Pro Forma Financial Statements for a detailed
accounting of the General Partner's current best estimate of the anticipated
closing adjustments.
Conditions to the Closing of the Sale
The obligations of Bresnan to consummate the closing are subject to the
satisfaction or waiver of certain customary conditions, including the
following conditions: (a) the representations and warranties of the
Partnership in the Agreement shall be true and accurate in all material
respects at and as of the closing date with the same effect as if made at and
as of the closing date; (b) the Partnership shall have performed in all
material respects all obligations and agreements and shall have complied with
all covenants in the Agreement or in any related document to be performed or
complied with by it at or before closing; (c) no action, suit or proceeding is
pending or threatened by or before any governmental authority and no legal
requirement has been enacted, promulgated or issued or become or deemed
applicable to any of the transactions contemplated by the Agreement by any
governmental authority which would prohibit Bresnan's ownership or operation
of all or a material portion of the Buffalo System, which would compel Bresnan
to dispose of or hold separate all or a material portion of the system, which
would, if determined adversely to Bresnan's interest, materially impair the
ability of Bresnan to realize the benefits of the transactions contemplated by
the Agreement (including the ability of Bresnan to acquire the Buffalo System
pursuant to a like-kind exchange under Section 1031 of the Internal Revenue
Code) or have a material adverse effect on Bresnan's right to exercise full
rights of ownership of the system or which would prevent or make illegal the
consummation of any transactions contemplated by the Agreement, (d) Bresnan
shall have received an opinion of the general counsel of the General Partner
addressed to Bresnan and dated as of the closing date in form and substance
reasonably satisfactory to Bresnan; (e) all waiting periods under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") applicable to
the Agreement or the transactions contemplated thereby shall have expired or
been terminated; (f) the Partnership shall have delivered to Bresnan all
material consents to the transfer of the assets of the Buffalo System from the
Partnership to Bresnan and shall have timely issued all notifications
necessary for such transfer; (g) each of the system's cable
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<PAGE>
television franchises that would otherwise have expired prior to September 30,
1999 shall have been extended to a date no earlier than September 30, 2000;
(h) Bresnan shall be satisfied that there are no environmental conditions with
respect to the assets of the Buffalo System that could reasonably be expected
to give rise to a material risk of liability; (i) the Buffalo System shall
have no fewer than 13,000 basic equivalent subscribers as of the closing date;
and (j) there shall have been no material adverse change in the assets or the
financial condition, liabilities or operations of the Buffalo System.
The obligations of the Partnership to consummate the closing are subject to
the satisfaction or waiver of certain customary conditions, including the
following conditions: (a) the representations and warranties of Bresnan in the
Agreement shall be true and accurate in all material respects at and as of the
closing date with the same effect as if made at and as of the closing date;
(b) Bresnan shall have performed in all material respects all obligations and
agreements and shall have complied with all covenants in the Agreement or in
any related document to be performed or complied with by it at or before
closing; (c) no action, suit or proceeding is pending or threatened by or
before any governmental authority and no legal requirement has been enacted,
promulgated or issued or become or deemed applicable to any of the
transactions contemplated by the Agreement by any governmental authority which
would prohibit Bresnan's ownership or operation of all or a material portion
of the Buffalo System, which would compel Bresnan to dispose of or hold
separate all or a material portion of the system, which would, if determined
adversely to Bresnan's interest, materially impair the ability of Bresnan to
realize the benefits of the transactions contemplated by the Agreement
(including the ability of Bresnan to acquire the Buffalo System pursuant to a
like-kind exchange under Section 1031 of the Internal Revenue Code) or have a
material adverse effect on Bresnan's right to exercise full rights of
ownership of the system or which would prevent or make illegal the
consummation of any transactions contemplated by the Agreement, (d) the
Partnership shall have received an opinion of Bresnan's counsel dated as of
the closing date in form and substance reasonably satisfactory to it; (e) all
waiting periods under the HSR Act applicable to the Agreement or the
transactions contemplated thereby shall have expired or been terminated; (f)
the Agreement and the transactions contemplated thereby shall have been
approved by the Partnership's limited partners; and (g) either the Buffalo
System shall have no fewer than 13,000 basic subscribers as of the closing
date or Bresnan shall agree to limit the sales price reduction due to a basic
subscriber shortfall to $1,000,000.
Indemnity Escrow
For a period of 90 days following the closing date, $1,200,000 of the sale
proceeds will remain in escrow as security for the Partnership's agreement to
indemnify Bresnan under the Agreement. Pursuant to the terms of the Agreement,
the Partnership has agreed to indemnify and hold Bresnan harmless from all
losses resulting from or arising out of (i) any breach of any representation
or warranty made by the Partnership in the Agreement or in the related
documents delivered by the Partnership to Bresnan in connection with the
closing of the sale of the Buffalo System, (ii) any breach of any covenant,
agreement or obligation of the Partnership contained in the Agreement or in
any of the related documents delivered by the Partnership to Bresnan in
connection with the closing of the sale of the Buffalo System, (iii) any act
or omission of the Partnership with respect to, or any event or circumstance
related to, the ownership or operation of the Buffalo System or the conduct of
its business, which act, omission, event or circumstance occurred or existed
prior to or at the closing date, without regard to whether a claim with
respect to such matter is asserted before or after the closing date, (iv) any
liability or obligation relating to the Buffalo System not specifically
assumed by Bresnan, (v) any title defect that the Partnership fails to
eliminate as an exception from the title insurance commitment required to be
provided to Bresnan at closing, (vi) any claim that the transactions
contemplated by the Agreement violate the Workers Adjustment Retraining and
Notification Act or any similar state or local law or any bulk transfer or
fraudulent conveyance laws of any jurisdiction, (vii) the presence,
generation, removal or transportation of a hazardous substance on or from any
of the real property relating to the Buffalo System, including the costs of
removal or cleanup of such hazardous substance and other compliance with the
provisions of any environmental laws (whether before or after closing) or
(viii) any rate refund ordered to be made by the Buffalo System by any
governmental authority for periods prior to the closing date. In addition, the
Partnership has agreed to indemnify Bresnan from and against all claims,
actions, suits, proceedings, demands, judgments, assessments, fines, interest,
7
<PAGE>
penalties, costs and expenses (including settlement costs and reasonable
legal, accounting, experts and other fees, costs and expenses) incident or
relating to or resulting from any of the foregoing matters.
The Partnership's primary exposure, if any, will relate to the
representations and warranties made about the Buffalo System in the Agreement.
The Partnership will not be liable for any claim for a breach of a
representation or warranty unless and until the aggregate amount of all claims
is at least $250,000; provided, however, that the Partnership shall be liable
for all rate refunds ordered to be made by the Buffalo System by any
governmental authority for periods prior to the closing date and for all
federal, state or local taxes determined by any governmental authority to be
owing for periods prior to the closing date regardless of whether the
aggregate amount of such rate refunds and/or taxes equals or exceeds the
threshold amount of $250,000. Bresnan will have the right to make claims
against the indemnity escrow account and Bresnan must notify the Partnership
of such claims. If the Partnership objects to the payment of any claims by the
escrow agent, and if Bresnan and the Partnership are unable to agree on how
the escrowed funds should be distributed, the escrow agent will be authorized
to submit the dispute to arbitration.
Any amounts remaining from this indemnity escrow account at the end of the
90-day period and not subject to a claim by Bresnan will be distributed to the
partners of the Partnership. If the entire $1,200,000 escrow amount ultimately
is distributed to the Partnership's partners, of which there can be no
assurance, the limited partners as a group would receive 75 percent ($900,000)
and the General Partner would receive 25 percent ($300,000) of this amount.
The limited partners thus would receive $6 for each $500 limited partnership
interest, or $12 for each $1,000 invested in the Partnership, from this
portion of the sale proceeds. The Partnership will continue in existence at
least until any amounts remaining from the indemnity escrow account have been
distributed. If any disputes with respect to indemnification arise, the
Partnership would not be dissolved until such disputes were resolved, which
could result in the Partnership continuing in existence beyond 1999.
Reasons for the Timing of the Sale
The Partnership has a finite legal existence of 17 years, almost 12 of which
have passed. It was not intended or expected, however, that the Partnership
would hold its cable systems for as long as 17 years. Although it was not
possible at the outset of the Partnership to determine precisely how quickly
the investment objectives with respect to any particular system would be
achieved, investors were informed that past experience with prior partnerships
had shown that five to seven years was the average length of time from the
acquisition of a cable system to its sale. Investors in the Partnership also
were able to examine the track record of prior partnerships because such track
record was set forth in the prospectus delivered in connection with the
Partnership's initial public offering. At the time of the formation of the
Partnership, the track record showed that prior partnerships had rarely held
their cable systems for any longer than six years.
When investing in the Partnership, by virtue of the provisions of the
Partnership Agreement, the limited partners vested in the General Partner the
right and the responsibility to determine when the Partnership's investment
objectives had been achieved. The Buffalo System was acquired because, in the
opinion of the General Partner at the time of its acquisition, it had the
potential for capital appreciation within a reasonable period of time. It is
the General Partner's opinion that during the almost 12 years that the Buffalo
System has been held by the Partnership, the Partnership's investment
objectives with respect to the system have been achieved. The General Partner
determined that now rather than later was the appropriate time for the
Partnership to sell. The General Partner used no specific benchmarks or
measurement tools in determining that now was the time for the Partnership to
sell. The General Partner conducted a subjective evaluation of a variety of
factors including the length of the holding period and the prospects for
future growth as compared to the potential risks of a decline in the value of
the Buffalo System.
The General Partner generally considered the benefits to the limited
partners that might be derived by holding the Buffalo System for an additional
period of time. On the one hand, the General Partner assumed that the Buffalo
System might appreciate in value and that as a result the Buffalo System might
be able to be sold for a greater sales price in the future. The General
Partner weighed these assumptions against the potential risks to investors
from a longer holding period, i.e., the risk that regulatory, technology
and/or competitive developments could cause the Buffalo System to decline in
value, which would result in a lesser sales price in the future, and
8
<PAGE>
the risk that, if the offer from Bresnan were not accepted, no other potential
buyer of the Buffalo System could be found or no other offer would be at such
a fair price. A longer holding period would expose investors to the risk that
competition from direct broadcast satellite companies, telephone companies
and/or neighboring cable companies could diminish the number of subscribers to
the Buffalo System's basic and premium services, thereby decreasing the value
of the Buffalo System. A longer holding period also would expose investors to
the risk that changes in the regulations promulgated by the governmental
agencies that oversee cable operations could make cable systems a less
desirable investment, thereby decreasing the value of the Buffalo System.
Weighing all of these factors, the General Partner concluded that now rather
than later was the time to sell the Buffalo System.
Recommendation of the General Partner and Fairness of the Proposed Sale of
Assets
The General Partner believes that the proposed sale of the Buffalo System
and the distribution of the net proceeds therefrom are fair to all partners of
the Partnership, and it recommends that the limited partners approve the
transaction. In determining the fairness of the proposed transaction, the
General Partner considered each of the following factors, all of which had a
positive effect on its fairness determination:
(i) the limited partnership interests are at present illiquid and the
cash to be distributed to limited partners as a result of the proposed sale
of the Buffalo System will provide limited partners with liquidity;
(ii) the sales price represents the fair market value of the Buffalo
System because the sales price was determined in an arm's-length
negotiation between the General Partner, representing the Partnership, and
Bresnan ;
(iii) the Partnership has held the Buffalo System for almost 12 years, a
holding period beyond that originally anticipated;
(iv) the conditions and prospects of the cable television industry in
which the Partnership is engaged, including the developing threat of
competition from DBS services and telephone companies, and the working
capital and other financial needs of the Partnership if it were to continue
to operate and upgrade the Buffalo System, portions of which may need to be
upgraded and portions of which may need to be rebuilt as a condition to the
renewal of certain of the Buffalo System's cable franchises; and
(v) the terms and conditions of the Asset Purchase Agreement by and
between the Partnership and Bresnan, including the fact that the sales
price will be paid in cash and the fact that Bresnan's obligation to close
is not contingent upon its ability to obtain financing.
The General Partner negotiated the terms of the Asset Purchase Agreement and
the sales price and, based on its general knowledge of cable television system
transactions undertaken by cable television companies, the General Partner has
concluded that the sales price and other transaction terms were fair and were
within industry norms for comparable transactions.
Certain Effects of the Sale
Upon the consummation of the proposed sale of the Buffalo System, the
proceeds of the sale will be used to repay the balance outstanding on the
Partnership's revolving credit facility, estimated to total $4,255,000, pay a
brokerage fee totaling $675,000 (representing 2.5 percent of the sales price)
to The Jones Group, Ltd., a subsidiary of the General Partner, for acting as a
broker in this transaction, settle working capital adjustments and deposit
$1,200,000 into an indemnity escrow account, and then the Partnership will
distribute the approximate $20,600,000 of net sale proceeds to its partners of
record as of the closing date of the sale of the Buffalo System. Because at
the time of the Buffalo System's sale in the first quarter of 1999 the
distributions expected to be made to the limited partners from the Buffalo
System's sale and from prior and pending sales of other cable television
systems owned by the Partnership will have returned to the limited partners
more than 125 percent of the amounts originally contributed to the Partnership
by the limited partners, the General Partner will receive a general partner
distribution from the proceeds of the Buffalo System's sale. As a result of
the sale of the Buffalo System, the limited partners of the Partnership will
receive a $20,567,000 distribution. The limited partners will be subject to
federal and state income tax on the income resulting from the sale of the
Buffalo System. See the detailed information below under the caption "Federal
and State Income Tax Consequences."
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<PAGE>
Neither Colorado law nor the Partnership Agreement afford dissenters' or
appraisal rights to limited partners in connection with the proposed sale of
the Buffalo System. If the proposed transaction is approved by the holders of
a majority of limited partnership interests, all limited partners will receive
a distribution in accordance with the procedures prescribed by the Partnership
Agreement regardless of how or whether they vote on the proposal. It is
anticipated that if the proposed transaction is not consummated, the General
Partner's current management team will continue to manage the Buffalo System
on behalf of the Partnership until such time as the Buffalo System can be
sold.
All distributions to the limited partners of the Partnership from the
proceeds of the sale of the Buffalo System will be made to the Partnership's
limited partners of record as of the closing date of the sale of the Buffalo
System, which is expected to be February 26, 1999. Because transferees of
limited partnership interests following the closing date of the sale of the
Partnership's final cable television system would not be entitled to any
distributions from the Partnership, a transfer of limited partnership
interests following the closing date of the sale of the Partnership's final
cable television system would have no economic value. The General Partner
therefore has determined that, pursuant to the authority granted to it by
Section 3.5 of the Partnership Agreement, it will approve no transfers of
limited partnership interests following the closing of the sale of the
Partnership's final cable television system. Sales of limited partnership
interests pursuant to tender offers, in the secondary market or otherwise will
not be possible following the closing of the sale of the Partnership's final
cable television system.
FEDERAL AND STATE INCOME TAX CONSEQUENCES
The purpose of the following discussion of the income tax consequences of
the proposed transaction is to inform the limited partners of the Partnership
of the 1999 federal and state income tax consequences to the Partnership and
to its partners arising from the proposed 1999 sale of the Buffalo System as
well as from the proposed 1999 sales of the Calvert County System and the
Naperville System. These tax consequences are expected to be incurred in 1999,
the year in which the sales are expected to close. The tax information
included herein was prepared by the tax department of the General Partner. The
tax information is taken from tax data compiled by the General Partner in its
role as the Partnership's tax administrator and is not based upon the advice
or formal opinion of counsel. The tax discussion that follows is merely
intended to inform the limited partners of factual and projected information
and should not be considered tax advice.
Partnership Allocation of Gain from Sale
Section 5.4 of the Partnership Agreement specifies that Partnership cash
distributions of cable television system net sale proceeds shall be allocated
100 percent to limited partners until they have received a return in an amount
equal to 125 percent of their initial capital contributions and thereafter
such distributions will be made 75 percent to the limited partners and 25
percent to the General Partner.
The gain from the sales of the cable systems in 1999 will be allocated in
accordance with Section 5.3 of the Partnership Agreement. This allocation
methodology follows the underlying economic gain of the partners and hence
satisfies the "substantial economic effect" test enacted in Internal Revenue
Code ("IRC") Section 704(b) regarding special partnership allocations.
Application of the allocation provisions of Section 5.3 ensures that the
limited partners' net sum of allocable partnership loss and income during the
Partnership's life will equal the net economic gain or loss realized from
their investment in the Partnership. The estimated allocable limited partner
income from the sales reported below incorporates the application of the
special partnership allocation rules of Section 5.3.
Historical Partnership Losses and Tax Benefits
The Tax Reform Act of 1986 enacted a limitation on a limited partner's
ability to currently deduct allocable partnership losses, which were deemed to
be passive losses. The law phased in the disallowance of passive loss
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<PAGE>
deductions until 1994, when no passive losses were allowable except to the
extent of passive income or a disposition of the passive activity. To the
extent the losses were deductible under the passive loss limitation rules,
limited partners enjoyed an income tax benefit from annual partnership loss
allocations. By the expected date of the sales in 1999, most of the limited
partners will have received certain tax benefits from their investment in the
Partnership. Assuming maximum federal income tax rates and no other sources of
passive income, original limited partners of the Partnership will have
received $3,110,654 ($39 per $1,000 invested) of tax benefits from historical
Partnership losses.
Allocable Partnership losses which were not currently deductible because of
the passive loss limitation rules were carried forward to future years when
the Partnership or the limited partner incurred passive income. All historical
Partnership passive loss carryforwards should have been completely utilized in
1997 and 1998 when the Partnership's Turnersville System, Central Illinois
System and Broward County System were sold, respectively. Accordingly, the
General Partner does not anticipate that any Partnership-generated passive
loss carryforwards will be available to offset allocable income from the
proposed 1999 cable system sales.
Projected 1999 Tax Results
The sale of the three cable systems in 1999 will result in a gain
allocation to the limited partners of $62,925,830 ($786 per $1,000 invested).
The General Partner estimates that $53,079,708 ($663 per $1,000 invested) will
be characterized as ordinary income from IRC Section 1245 recapture of
depreciation and amortization on Partnership operating assets. The remainder
of the gain, $9,846,122 ($123 per $1,000 invested) will be treated as long
term capital gain under IRC Section 1231. The General Partner does not
anticipate that limited partners will have any Partnership generated passive
loss carryforwards to offset any of the 1999 allocable gains.
The separate gains originating from each cable system sale are detailed
below.
The Buffalo System Sale
The proposed 1999 sale of the Buffalo System will generate taxable gain that
will be allocable to the limited partners in an amount approximating
$20,395,216 ($254 per $1,000 invested). The General Partner estimates that
$15,716,711 ($196 per $1,000 invested) will be characterized as ordinary
income from IRC Section 1245 recapture of depreciation and amortization on
Partnership operating assets. The remainder of the gain, $4,678,505 ($58 per
$1,000 invested), will be treated as long term capital gain under IRC Section
1231.
The Calvert County System Sale
The proposed 1999 sale of the Calvert County System will generate taxable
gain that will be allocable to the limited partners in an amount approximating
$33,658,973 ($421 per $1,000 invested). The General Partner estimates that
$28,491,356 ($356 per $1,000 invested) will be characterized as ordinary
income from IRC Section 1245 recapture of depreciation and amortization on
Partnership operating assets. The remainder of the gain, $5,167,617 ($65 per
$1,000 invested), will be treated as long term capital gain under IRC Section
1231.
The Naperville System Sale
The proposed 1999 sale of the Naperville System will generate taxable gain
that will be allocable to the limited partners in an amount approximating
$8,871,641 ($111 per $1,000 invested). The General Partner estimates that all
of the gain will be characterized as ordinary income from IRC Section 1245
recapture of depreciation and amortization on Partnership operating assets. It
is not anticipated that any of the allocable gain will be treated as long term
capital gain under IRC Section 1231.
Syndication Costs
Syndication costs represent the sales commissions paid by limited partners
on their purchase of the limited partnership interests and other allocable
costs associated with forming the Partnership. These costs were
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capitalized on the Partnership books and are reflected in the limited
partners' capital account balance. Upon liquidation of the Partnership in
1999, the syndication costs can be deducted by the limited partners of the
Partnership as a long term capital loss under IRC Section 731. Limited
partners will have a positive ending capital balance on their final Form 1065,
Schedule K-1 which represents their allocable syndication costs. The
Partnership has syndication costs of $11,000,000 ($138 per $1,000 invested)
that will be deductible by limited partners on their 1999 income tax returns.
Secondary Market Purchasers
Limited partners that have recently acquired their partnership interests in
the limited partnership secondary market or through tender offers will have
allocable income from the cable system sales in the amounts reported above.
Because the Partnership does not have an IRC Section 754 election in effect,
the purchase of a limited partnership interest in the Partnership places the
new investor in the same position as the limited partner from whom the
interest was purchased. However, the new investor will not have the prior
investors' passive loss carryforwards (if any) or tax basis in the
Partnership.
Newer investors in the Partnership will likely have a greater reportable net
taxable income from the system sales than investors who have held their
partnership interests for a longer period of time. Also, recent investors will
not have their net tax basis in their partnership interests reflected on their
annual Schedule K-1. Such limited partners must track their tax basis by
adjusting their original cost by allocable income or loss and partnership
distributions. Their adjusted tax basis will be deductible as a long term
capital loss under IRC Section 731 in a manner similar to the Partnership
syndication costs discussed above.
Federal Tax Withholding on Sale Proceeds
Limited partners who are non-resident aliens or foreign corporations
("foreign persons") are subject to a federal withholding tax on their share of
the Partnership's income from the system sales. The withholding rates are 39.6
percent for individual partners and 35 percent for corporate partners. The tax
withheld will be remitted to the Internal Revenue Service and the foreign
persons will receive a credit on their 1999 U.S. tax return for the amount of
the tax withheld by the Partnership. The withheld tax will be treated as a
distribution to the foreign limited partners on their 1999 Schedule K-1.
State Tax Withholding on Sale Proceeds
The 1999 sale of the Buffalo System will require all limited partners to
report their Minnesota allocable taxable income to the State of Minnesota. The
state laws of Minnesota impose requirements on the General Partner to withhold
8.5 percent of each non-resident individual partner's allocable Minnesota
income without consideration of loss carryforwards. This withholding
requirement does not apply to tax exempt entities such as trusts and
Individual Retirement Accounts (IRAs).
The 1999 sale of the Calvert County System will require all limited partners
to report their Maryland allocable taxable income to the State of Maryland.
The state laws of Maryland impose requirements on the General Partner to
withhold 5 percent of each non-resident individual partner's allocable
Maryland income without consideration of loss carryforwards. This withholding
requirement does not apply to tax exempt entities such as trusts and
Individual Retirement Accounts (IRAs).
Limited partners are required to file non-resident state tax returns in the
above-referenced states to compute the appropriate state tax liability.
Documentation of withheld taxes will be reported on state specified forms to
limited partners in January 2000. The General Partner anticipates that most
partners will likely receive a partial refund from this reporting process. As
a service to limited partners, the General Partner will provide reporting
instructions and blank state income tax forms to affected limited partners
with the annual tax reporting package.
Federal Income Tax Reporting by Tax Exempt Entities
The 1999 Partnership cable system sales will generate Unrelated Business
Taxable Income (UBTI) to tax exempt entities, which will require the filing of
Form 990-T. Although many trust administrators complete the
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required tax returns, responsibility for completion of the Form 990-T
ultimately rests with the beneficiaries of trusts, IRAs and other tax exempt
entities. Because this is an area in which there is a variance of policy among
trust administrators, each limited partner who is a beneficiary is advised to
confirm with his or her trust administrator that this filing requirement will
be fulfilled.
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CERTAIN INFORMATION ABOUT THE PARTNERSHIP, THE GENERAL
PARTNER AND THE PURCHASER OF THE BUFFALO SYSTEM
The principal executive offices of the Partnership and the General Partner
are located at 9697 East Mineral Avenue, Englewood, Colorado 80112, and their
telephone number is (303) 792-3111. The principal executive offices of Bresnan
are located at 709 Westchester Avenue, White Plains, New York 10604.
The limited partnership interests of the Partnership are registered pursuant
to Section 12(g) of the Exchange Act. As such, the Partnership currently is
subject to the informational reporting requirements of the Exchange Act and,
in accordance therewith, is obligated to file periodic reports, proxy
statements and other information with the Securities and Exchange Commission
relating to its business, financial condition and other matters. Reports and
other information filed by the Partnership can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the following regional offices
of the Commission: 7 World Trade Center, Suite 1300, New York, New York 10048
and Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The SEC also maintains a World Wide Web site on the Internet
that contains reports, proxy statements and other information of registrants
(including the Partnership and the General Partner) that file electronically
with the SEC at http://www.sec.gov. After the net proceeds from the sales of
the Buffalo System, the Calvert County System and the Naperville System,
including amounts to be held in an indemnity escrow account until November 15,
1999, finally are distributed to the Partnership's partners, the Partnership
will be liquidated and dissolved. The Partnership's registration and reporting
requirements under the Exchange Act will be terminated upon the dissolution of
the Partnership, most likely before the end of 1999.
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USE OF PROCEEDS FROM THE SALE OF THE BUFFALO SYSTEM
The following is a brief summary of the Partnership's estimated use of the
proceeds from the sale of the Buffalo System. All of the following selected
financial information is based upon amounts as of September 30, 1998 and
certain estimates of liabilities at closing. Final results may differ from
these estimates. A more detailed discussion of the financial consequences of
the sale of the Buffalo System is set forth below under the caption "Unaudited
Pro Forma Financial Information." All limited partners are encouraged to
review carefully the unaudited pro forma financial statements and notes
thereto.
If the holders of a majority of limited partnership interests of the
Partnership approve the proposed sale of the Buffalo System and the
transaction is closed, the Partnership will repay debt, pay certain fees and
expenses of the transaction, settle working capital adjustments, deposit funds
into an indemnity escrow account and then the remaining sale proceeds will be
distributed to the Partnership's partners of record as of the closing date of
the sale of the Buffalo System pursuant to the terms of the Partnership
Agreement. The estimated uses of the sale proceeds are as follows:
<TABLE>
<S> <C>
Contract Sales Price of the Buffalo System...................... $27,000,000
Add: Cash on Hand.............................................. 101,694
Less: Estimated Net Closing Adjustments........................ (203,660)
Outstanding Debt to Third Parties............................ (4,423,034)
Brokerage Fee................................................ (675,000)
Portion of Proceeds to be Held in Indemnity Escrow........... (1,200,000)
-----------
Cash Available for Distribution by the Partnership......... $20,600,000
===========
Limited Partners' Share.................................... $20,567,000
===========
General Partner's Share.................................... $ 33,000
===========
</TABLE>
Based upon financial information available at September 30, 1998, below is
an estimate of all cash distributions (excluding escrowed proceeds) that will
have been made to limited partners after the distribution of the proceeds from
the three pending system sales are completed:
Summary of Estimated Cash Distributions to Limited Partners:
<TABLE>
<S> <C>
Partial Return of 125 percent of the Limited Partners' Initial
Capital on the 1997 Sale of the Partnership's Turnersville,
New Jersey System............................................. $ 25,000,000
Partial Return of 125 percent of the Limited Partners' Initial
Capital on the 1997 Sale of the Partnership's Central Illinois
System ....................................................... 9,547,500
Partial Return of 125 percent of the Limited Partners' Initial
Capital on the 1998 Sale of the Venture's Broward System ..... 25,484,569
Partial Return of 125 percent of the Limited Partners' Initial
Capital on the 1999 Sale of the Partnership's Calvert County
System ....................................................... 19,500,000
Return of 125 percent of the Limited Partners' Initial Capital
on the 1999 Sale of the Partnership's Buffalo System.......... 20,468,000
Limited Partners' Share of Residual Proceeds on the 1999 Sale
of the Partnership's Buffalo System........................... 99,000
Limited Partners' Share of Proceeds on the 1999 Sale of the Na-
perville System............................................... 15,600,000
------------
Total Estimated Cash Received by Limited Partners.............. $115,699,069
============
Total Cash Received per $1,000 of Limited Partnership Capital.. $ 1,446
============
Total Cash Received per $500 Limited Partnership Interest...... $ 723
============
</TABLE>
15
<PAGE>
Based on financial information available at September 30, 1998, the following
table presents the estimated results of the Partnership when it has completed
the sales of its three remaining systems:
<TABLE>
<S> <C>
Dollar Amount Raised......................................... $ 80,000,000
Number of Cable Television Systems Purchased Directly........ Five
Number of Cable Television Systems Purchased Indirectly...... One
Date of Closing of Offering.................................. August 1987
Date of First Sale of Properties............................. January 1997
Tax and Distribution Data per $1,000 of Limited Partnership
Capital:
Federal Income Tax Results
Ordinary Income (Loss)
--from operations........................................ $ (1,236)
--from recapture......................................... $ 1,373
Capital Gain (Loss)...................................... $ 309
Cash Distributions to Investors
Source (on GAAP basis)
--investment income...................................... $ 446
--return of capital...................................... $ 1,000
Source (on cash basis)
--sales.................................................. $ 1,446
</TABLE>
16
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF CABLE TV FUND 14-A, LTD.
The following unaudited pro forma balance sheet assumes that as of September
30, 1998, the Partnership had sold the Calvert County System for $39,388,667,
the Buffalo System for $27,000,000 and the Naperville System for $23,000,000.
The funds available to the Partnership from the Buffalo System's sale,
adjusting for the estimated net closing adjustments of the Buffalo System, are
expected to total approximately $26,796,340. Such funds will be used to repay
debt, pay certain fees and expenses of the transaction and settle working
capital adjustments, and then the balance remaining will be distributed to the
Partnership's partners of record as of the closing date of the sale of the
Buffalo System. As a result of the sale of the Calvert County System, the
limited partners of the Partnership will receive $122 for each $500 limited
partnership interest, or $244 for each $1,000 invested in the Partnership. As
a result of the sale of the Buffalo System, the limited partners of the
Partnership will receive $129 for each $500 limited partnership interest, or
$258 for each $1,000 invested in the Partnership. As a result of the sale of
the Naperville System, the limited partners of the Partnership will receive
$97.50 for each $500 limited partnership interest, or $195 for each $1,000
invested in the Partnership. Taking into account the distributions to the
limited partners of the Partnership that have been made from all of the prior
cable television system sales by the Venture and the Partnership and the
anticipated distribution to limited partners from the pending sales of the
Calvert County System, the Buffalo System and the Naperville System (excluding
escrowed proceeds), the General Partner expects that the Partnership's limited
partners will have received a total return of $723 for each $500 limited
partnership interest, or $1,446 for each $1,000 invested in the Partnership,
at the time the Partnership is liquidated and dissolved.
The unaudited pro forma balance sheet should be read in conjunction with the
appropriate notes to the unaudited pro forma balance sheet.
ALL OF THE FOLLOWING UNAUDITED PRO FORMA FINANCIAL INFORMATION IS BASED UPON
AMOUNTS AS OF SEPTEMBER 30, 1998 AND CERTAIN ESTIMATES OF LIABILITIES AT
CLOSING. FINAL RESULTS MAY DIFFER FROM SUCH INFORMATION.
17
<PAGE>
CABLE TV FUND 14-A, LTD.
UNAUDITED PRO FORMA BALANCE SHEET
September 30, 1998
<TABLE>
<CAPTION>
Pro Forma Pro Forma
As Reported Adjustments Balance
----------- ------------ -----------
<S> <C> <C> <C>
ASSETS
Cash and Cash Equivalents............... $ 329,891 $ 20,270,109 $20,600,000
Trade Receivables, net.................. 444,931 (444,931) --
Investment in Cable Television Proper-
ties:
Property, plant and equipment, net.... 35,329,501 (35,329,501) --
Franchise costs and other intangibles,
net.................................. 1,771,163 (1,771,163) --
----------- ------------ -----------
Total investment in cable television
properties......................... 37,100,664 (37,100,664) --
Deposits, Prepaid Expenses and Deferred
Charges................................ 1,692,926 (1,692,926) --
----------- ------------ -----------
Total Assets............................ $39,568,412 $(18,968,412) $20,600,000
=========== ============ ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Debt.................................. $24,345,178 $(24,345,178) $ --
Trade accounts payable and accrued li-
abilities............................ 1,995,420 (1,995,420) --
Subscriber prepayments................ 123,154 (123,154) --
Accrued distribution to limited part-
ners................................. -- 20,567,000 20,567,000
Accrued distribution to General Part-
ner.................................. -- 33,000 33,000
----------- ------------ -----------
Total Liabilities................... 26,463,752 (5,863,752) 20,600,000
----------- ------------ -----------
Partners' Capital:
General Partner....................... (12,839) 12,839 --
Limited Partners...................... 13,117,499 (13,117,499) --
----------- ------------ -----------
Total Partners' Capital............. 13,104,660 (13,104,660) --
----------- ------------ -----------
Total Liabilities and Partners' Capi-
tal.................................. $39,568,412 $(18,968,412) $20,600,000
=========== ============ ===========
</TABLE>
The accompanying notes to unaudited pro forma financial statements are an
integral part of this unaudited balance sheet.
18
<PAGE>
CABLE TV FUND 14-A, LTD.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
Pro Forma Pro Forma
As Reported Adjustments Balance
----------- ------------ -----------
<S> <C> <C> <C>
REVENUES............................... $26,642,247 $(26,642,247) $ --
COSTS AND EXPENSES:
Operating expenses................... 16,385,590 (16,385,590) --
Management fees and allocated over-
head from
the General Partner................. 2,858,405 (2,858,405) --
Depreciation and amortization........ 10,111,635 (10,111,635) --
----------- ------------ -----------
OPERATING LOSS......................... (2,713,383) 2,713,383 --
----------- ------------ -----------
OTHER INCOME (EXPENSE):
Interest expense..................... (1,923,226) 1,923,226 --
Gain on sale of cable television sys-
tems................................ 69,973,972 (69,973,972) --
Other, net........................... (1,976,233) 1,976,233 --
----------- ------------ -----------
Total other income (expense), net.. 66,074,513 (66,074,513) --
----------- ------------ -----------
INCOME BEFORE EQUITY IN NET LOSS OF
CABLE TELEVISION JOINT VENTURE........ 63,361,130 (63,361,130) --
EQUITY IN NET LOSS OF CABLE TELEVISION
JOINT VENTURE......................... (626,089) 626,089 --
----------- ------------ -----------
NET INCOME............................. $62,735,041 $(62,735,041) $ --
=========== ============ ===========
NET INCOME PER LIMITED PARTNERSHIP IN-
TEREST................................ $ 387.70 $ --
=========== ===========
</TABLE>
The accompanying notes to unaudited pro forma financial statements are an
integral part of this unaudited statement.
19
<PAGE>
CABLE TV FUND 14-A, LTD.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 1998
<TABLE>
<CAPTION>
Pro Forma Pro Forma
As Reported Adjustments Balance
------------ ------------ ---------
<S> <C> <C> <C>
REVENUES................................ $17,433,880 $(17,433,880) $--
COSTS AND EXPENSES:
Operating expenses.................... 11,152,221 (11,152,221) --
Management fees and allocated overhead
from
the General Partner.................. 1,895,792 (1,895,792) --
Depreciation and amortization......... 6,354,958 (6,354,958) --
------------ ------------ -----
OPERATING LOSS.......................... (1,969,091) 1,969,091 --
------------ ------------ -----
OTHER INCOME (EXPENSE): --
Interest expense...................... (1,250,737) 1,250,737 --
Other, net............................ 14,271 (14,271) --
------------ ------------ -----
Total other income (expense), net... (1,236,466) 1,236,466 --
------------ ------------ -----
LOSS BEFORE EQUITY IN NET INCOME OF
CABLE TELEVISION JOINT VENTURE......... (3,205,557) 3,205,557 --
EQUITY IN NET INCOME OF CABLE TELEVISION
JOINT VENTURE.......................... 22,599,271 (22,599,271) --
------------ ------------ -----
NET INCOME.............................. $19,393,714 $(19,393,714) $--
============ ============ =====
NET INCOME PER LIMITED PARTNERSHIP
INTEREST............................... $ 120.84 $--
============ =====
</TABLE>
The accompanying notes to unaudited pro forma financial statements are an
integral part of this unaudited statement.
20
<PAGE>
CABLE TV FUND 14-A, LTD.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1) The following calculations present the sale of the Buffalo System and the
resulting estimated proceeds expected to be received by the Partnership.
2) The unaudited pro forma balance sheet of the Partnership assumes that the
Partnership had sold the Calvert County System, the Buffalo System and the
Naperville System as of September 30, 1998. The unaudited pro forma statements
of operations of the Partnership assume that the Venture had sold the Broward
System and the Partnership had sold the Central Illinois System, the
Turnersville System, the Calvert County System, the Buffalo System and the
Naperville System as of January 1, 1997.
3) The net proceeds from the sale of the Buffalo System will be distributed
to the partners of the Partnership. The limited partners' distribution of
$20,567,000 represents $129 for each $500 limited partnership interest or $258
for each $1,000 invested in the Partnership.
4) The estimated gain recognized from the sale of the Buffalo System and
corresponding estimated distribution to limited partners as of September 30,
1998 has been computed as follows:
Gain on Sale of Assets:
<TABLE>
<S> <C>
Contract sales price.............................................. $27,000,000
Less: Net book value of investment in cable television properties
at September 30, 1998....................................... (10,171,858)
Brokerage fee to The Jones Group, Ltd. ........................... (675,000)
-----------
Gain on sale of assets............................................ $16,153,142
===========
Distribution to Partners:
Contract sales price.............................................. $27,000,000
Working Capital Adjustment:
Add:Trade receivables, net........................................ 134,427
Prepaid expenses.................................................. 95,141
Less:Accrued liabilities.......................................... (380,469)
Subscriber prepayments............................................ (52,759)
-----------
Adjusted cash received............................................ 26,796,340
Add: Cash on hand................................................. 101,694
Less:Outstanding debt to third parties............................ (4,423,034)
Brokerage fee.................................................. (675,000)
-----------
Cash available from sale proceeds................................. 21,800,000
-----------
Portion of sale proceeds to be held in indemnity escrow........... (1,200,000)
-----------
Cash available for distribution by the Partnership................ $20,600,000
===========
Limited partners' share........................................... $20,567,000
===========
General Partner's share........................................... $ 33,000
===========
</TABLE>
21
<PAGE>
AVAILABLE INFORMATION
The Partnership's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and the Partnership's Quarterly Reports on Form 10-Q for the
fiscal quarters ended March 31, 1998, June 30, 1998, and September 30, 1998
are being mailed to the limited partners of the Partnership together with this
Proxy Statement.
INCORPORATION BY REFERENCE
The following documents, which have been filed by the Partnership with the
Securities and Exchange Commission pursuant to the requirements of the
Exchange Act are hereby incorporated by reference: (i) the Partnership's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997, (ii)
the Partnership's Current Report on Form 8-K dated April 8, 1998, (iii) the
Partnership's Current Report on Form 8-K dated June 29, 1998, (iv) the
Partnership's Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1998, (v) the Partnership's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1998 and (vi) the Partnership's Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30, 1998.
22
<PAGE>
[JONES INTERCABLE, INC. LOGO]
9697 East Mineral Avenue
Englewood, Colorado 80112
PROXY
This Proxy is Solicited on Behalf of the Partnership by the General Partner
The undersigned Limited Partner of Cable TV Fund 14-A, Ltd., a Colorado
limited partnership, hereby votes on the sale of the Partnership's Buffalo,
Minnesota cable television system to Bresnan Communications Company, L.P. or
one of its affiliates for a sales price of $27,000,000 in cash, subject to
normal closing adjustments, pursuant to the terms and conditions of that
certain Asset Purchase Agreement dated as of November 6, 1998, as follows:
[_] CONSENTS [_] WITHHOLDS CONSENT [_] ABSTAINS
(You must sign on the reverse side of this proxy card for your vote to count.)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED LIMITED PARTNER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE PROPOSED SALE TRANSACTION.
Please sign exactly as name
appears.
DATED: _____________________, 1999
__________________________________
Beneficial Owner Signature
(Investor)
__________________________________
Authorized Trustee/Custodian
Signature
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
[JONES INTERCABLE, INC. LOGO]
9697 East Mineral Avenue
Englewood, Colorado 80112
PROXY
This Proxy is Solicited on Behalf of the Partnership by the General Partner
The undersigned Limited Partner of Cable TV Fund 14-A, Ltd., a Colorado
limited partnership, hereby votes on the sale of the Partnership's Buffalo,
Minnesota cable television system to Bresnan Communications Company, L.P. or
one of its affiliates for a sales price of $27,000,000 in cash, subject to
normal closing adjustments, pursuant to the terms and conditions of that
certain Asset Purchase Agreement dated as of November 6, 1998, as follows:
[_] CONSENTS [_] WITHHOLDS CONSENT [_] ABSTAINS
(You must sign on the reverse side of this proxy card for your vote to count.)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED LIMITED PARTNER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE PROPOSED SALE TRANSACTION.
All owners must sign exactly as
name(s) appear on label.
When limited partnership inter-
ests are held by more than one
person, all owners must sign.
When signing as attorney, as ex-
ecutor, administrator, trustee or
guardian, please give full title
as such. If a corporation, please
sign in full corporation name by
authorized officer. If a partner-
ship, please sign in partnership
name by authorized person.
DATED: _____________________, 1999
__________________________________
Signature--Investor 1
__________________________________
Signature--Investor 2
__________________________________
Signature--Investor 3
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
