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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(AMENDMENT NO. 1)
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
AMERICAN REAL ESTATE PARTNERS, L.P.,
A DELAWARE LIMITED PARTNERSHIP
(NAME OF SUBJECT COMPANY)
AMERICAN REAL ESTATE PARTNERS, L.P.,
A DELAWARE LIMITED PARTNERSHIP
(NAME OF PERSON(S) FILING STATEMENT)
DEPOSITARY UNITS REPRESENTING LIMITED PARTNER INTERESTS
(TITLE OF CLASS OF SECURITIES)
029169109
(CUSIP NUMBER OF CLASS OF SECURITIES)
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JOHN P. SALDARELLI
VICE PRESIDENT, SECRETARY AND TREASURER
AMERICAN REAL ESTATE PARTNERS, L.P.
100 SOUTH BEDFORD ROAD
MT. KISCO, NEW YORK 10549
(914) 242-7700
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICE AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
------------------------
WITH COPIES TO:
<TABLE>
<S> <C>
MELVIN EPSTEIN CRAIG S. MEDWICK
STROOCK & STROOCK & LAVAN LLP ROGERS & WELLS LLP
180 MAIDEN LANE 200 PARK AVENUE
NEW YORK, NEW YORK 10038-4982 NEW YORK, NEW YORK
(212) 806-5400 (212) 878-8000
</TABLE>
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AMENDMENT NO. 1 TO SCHEDULE 14D-9
This Amendment No. 1 to Schedule 14D-9 ("Amendment No. 1") amends and
restates the Solicitation/Recommendation Statement on Schedule 14D-9, originally
filed on December 7, 1998 (the "Initial Schedule 14D-9"), by American Real
Estate Partners, L.P., a Delaware limited partnership (the "Partnership"),
relating to the tender offer by Leyton LLC (the "Purchaser"), a Delaware limited
liability company, to purchase up to 10,000,000 of the outstanding Depositary
Units at a purchase price of $10.50 per Depositary Unit, net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated November 20, 1998 (the "Offer to Purchase") and
related Letter of Transmittal, including the Instructions thereto (which
collectively constitute the "Offer").
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is American Real Estate Partners, L.P., a
Delaware limited partnership (the "Partnership"). The address of the
Partnership's principal executive offices is 100 South Bedford Road, Mt. Kisco,
New York 10549. The title of the class of equity securities to which this
statement relates is the depositary units representing limited partner interests
in the Partnership (the "Depositary Units").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to an offer by Leyton LLC (the "Purchaser"), a
Delaware limited liability company, to purchase up to 10,000,000 of the
outstanding Depositary Units at a purchase price of $10.50 per Depositary Unit,
net to the seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated November 20, 1998 (the
"Offer to Purchase") and related Letter of Transmittal, including the
Instructions thereto (which collectively constitute the "Offer"). As a result of
the relationship of Carl C. Icahn ("Icahn"), Beckton Corp. ("Beckton"), a
Delaware corporation wholly owned by Icahn, and High Coast Limited Partnership,
a Delaware limited partnership ("High Coast"), with the Purchaser, each of them
may be deemed to be a "co-bidder" with the Purchaser (collectively, the
"Bidders"). A Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1")
with respect to the Offer has been filed by the Purchaser and the other Bidders.
The address of the principal executive offices of the Purchaser, Beckton
and High Coast is 100 South Bedford Road, Mt. Kisco, New York 10549. Icahn's
business address is c/o Icahn & Co., Inc., One Wall Street Court, New York, New
York 10005.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Partnership, which is the person
filing this statement, are set forth in Item 1 above.
(b) The Offer to Purchase states that the Purchaser is a Delaware limited
liability company and that the sole member of the Purchaser is High Coast.
According to the Offer to Purchase, the general partner of High Coast, Beckton,
is wholly owned by Icahn and the limited partners of High Coast are, indirectly,
more than 90% owned by Icahn. The general partner of the Partnership, American
Property Investors, Inc., a Delaware corporation ("API" or the "General
Partner"), also is wholly owned by Icahn.
In addition, as of the date hereof, Icahn beneficially owns approximately
68.4% of the outstanding Depositary Units and approximately 86.5% of the
outstanding 5% cumulative pay-in-kind redeemable preferred units representing
limited partner interests in the Partnership (the "Preferred Units"). Under the
Amended and Restated Limited Partnership Agreement of the Partnership (the
"Partnership Agreement"), all decisions concerning the management of the
Partnership are made by the General Partner which is wholly owned by Icahn.
Further, the affirmative vote of holders of Depositary Units (herein referred to
as "Unitholders") holding more than 75% of the total number of all Depositary
Units then outstanding, including Depositary Units held by the General Partner
and its affiliates, is required to remove the General Partner.
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Thus, since Icahn beneficially owns more than 25% of the Depositary Units
outstanding, pursuant to the terms of the Partnership Agreement, the General
Partner may not be removed without Icahn's consent.
Moreover, under the Partnership Agreement, the affirmative vote of the
General Partner and Unitholders owning more than 50% of the total number of all
outstanding Depositary Units then held by Unitholders is required to approve,
among other things, selling or otherwise disposing of all or substantially all
of the Partnership's assets in a single sale or in a related series of multiple
sales, dissolving the Partnership, or electing to continue the Partnership in
certain instances, electing a successor general partner, making certain
amendments to the Partnership Agreement or causing the Partnership, in its
capacity as sole limited partner of American Real Estate Holdings Limited
Partnership (the "Subsidiary"), to consent to certain proposals submitted for
the approval of the limited partners of the Subsidiary. Accordingly, as Icahn
currently holds and, upon consummation of the Offer, will continue to hold, in
excess of 50% of the Depositary Units outstanding, Icahn has effective control
over such approval rights.
Pursuant to the Partnership Agreement, the Partnership may also enter into
other transactions with the General Partner and its affiliates, including,
without limitation, buying and selling properties and borrowing and lending
funds from or to the General Partner or its affiliates, joint venture
developments and issuing securities to the General Partner or its affiliates in
exchange for, among other things, assets that they now own or may acquire in the
future, provided that the terms of such transactions are fair and reasonable to
the Partnership. The General Partner is also entitled to reimbursement by the
Partnership for all allocable direct and indirect overhead expenses (including,
but not limited to, salaries and rent) incurred in connection with the conduct
of the Partnership's business. Also, employees of the Partnership may, from time
to time, provide services to affiliates of the General Partner, with the
Partnership being reimbursed therefor.
In addition, under the Partnership Agreement, the General Partner and its
affiliates may receive fees in connection with the acquisition, sale, financing,
development, construction, marketing and management of new properties acquired
by the Partnership. As development properties and other new properties are
acquired, developed, constructed, operated, leased and financed, the General
Partner or its affiliates may perform acquisition functions, including the
review, verification and analysis of data and documentation with respect to
potential acquisitions, and perform development and construction oversight and
other land development services, property management and leasing services,
either on a day-to-day basis or on an asset management basis, and may perform
other services and be entitled to fees and reimbursement of expenses relating
thereto, provided the terms of such transactions are fair and reasonable to the
Partnership in accordance with the Partnership Agreement and customary to the
industry.
Also, pursuant to the terms and conditions of the Partnership Agreement,
the General Partner is entitled to indemnification from and against liabilities
relating to the Partnership. The right to indemnification extends similarly to
the officers, directors, employees and agents of the General Partner in their
respective capacities as such.
Subject to the terms of the Partnership Agreement, the General Partner has
absolute discretion to act on behalf of the Partnership with respect to all
transactions with affiliates, and such transactions may not be the result of
arm's-length negotiations. Pursuant to the Partnership Agreement, the Audit
Committee of the Board of Directors of the General Partner (the "Audit
Committee") meets on an annual basis, or more often if necessary, to review and
approve any conflicts of interest which may arise.
By reason of the relationships and the structure of the management of the
Partnership described in the preceding paragraphs, the Partnership may have
conflicts of interest in considering the Offer.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) No Recommendation.
The Partnership expresses no opinion and is remaining neutral toward the
Offer, based on the unanimous recommendation of the Audit Committee, which has
been appointed by the Board of Directors of the General Partner to consider the
Offer on behalf of the Partnership. The Audit Committee's recommendation is
based on the reasons stated below.
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(b)(1) Background.
The Board of Directors of API authorized and directed the Audit Committee
(whose members are Alfred D. Kingsley, William A. Leidesdorf and Jack G.
Wasserman, the three independent members of the Board(1)) to review the Offer
and to make a determination as to how the Partnership should fulfill its
obligations with respect to the Offer, including without limitation, its
obligations to prepare, file with the Securities and Exchange Commission and
publish a Statement on Schedule 14D-9 under the Securities Exchange Act of 1934,
as amended, disclosing the Partnership's position with respect to the Offer.
Following the announcement by the Bidders that the Offer was being
contemplated, the Audit Committee retained Stroock & Stroock & Lavan LLP to act
as its independent legal advisor and Houlihan Lokey Howard & Zukin Financial
Advisors, Inc. ("Houlihan Lokey") to act as its financial advisor for the
limited purposes described below.
Houlihan Lokey is a nationally recognized investment banking firm that is
continually engaged in providing financial advisory services in connection with
mergers and acquisitions, leveraged buyouts, business valuations for a variety
of regulatory and planning purposes, recapitalizations, financial restructuring
and private placements of debt and equity securities. Houlihan Lokey has no
material prior relationship with the Partnership or the Bidders.
At a meeting of the Audit Committee on December 2, 1998, members of senior
management of the Partnership discussed with the Audit Committee and Houlihan
Lokey the methodology, analysis and other information provided by the
Partnership to the Bidders with respect to the estimated liquidation value of
the Depositary Units, as described in the Schedule 14D-1. Partnership management
offered to provide Houlihan Lokey the liquidation analysis information,
information regarding the Unitholders and such other information, documents and
assistance as may be requested by Houlihan Lokey to conduct its analysis.
In the Initial Schedule 14D-9 and in the press release issued by the
Partnership on December 4, 1998 and attached to the Initial Schedule 14D-9 as
Exhibit(a) thereto, the Partnership disclosed that it was unable to take a
position at that time with respect to the Offer and that the Partnership
expected to be able to publish or otherwise inform the Unitholders no later than
December 11, 1998 of its determination whether (i) to recommend acceptance or
rejection of the Offer, (ii) to express no opinion and remain neutral toward the
Offer; or (iii) it is unable to take a position with respect to the Offer.
In the Initial Schedule 14D-9, the Audit Committee stated its belief that,
in determining whether to take a position with respect to the Offer, it would
take into account the report it had requested Houlihan Lokey to provide, which
was limited to the following analyses: (i) a critique of the methodology of the
liquidation analysis presented by the Bidders in the Schedule 14D-1 and the
Offer to Purchase delivered to the Unitholders; and (ii) information with
respect to the current trading activity and market for the Depositary Units
which are the subject of the Offer and the effect that the Offer would likely
have on Depositary Units that remain publicly traded after the completion of the
Offer if it were successful. The Audit Committee also requested that Houlihan
Lokey consider whether the market response to the decision to buy or to sell
interests in Arvida/JMB Partners, L.P. ("Arvida") (the "Arvida Transaction," as
more fully described below) was material to an analysis of the Offer and, if so,
the factors Houlihan Lokey considered important for the Audit Committee to take
into account.
Houlihan Lokey did not, and was not requested by the Audit Committee to,
(i) make any determination as to the fairness, from a financial point of view,
of the consideration to be paid to the limited partners who tender in the Offer
or (ii) make any recommendation as to the form or amount of such consideration.
In addition, Houlihan Lokey was not asked to opine on and did not express any
opinion as to (i) tax consequences of the Offer, including but not limited to
tax consequences to the Unitholders, (ii) alternatives to the Offer or (iii) the
fairness of any aspect of the Offer, including the fairness of the Offer as a
whole.
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(1) Icahn is the fourth member of the Board of Directors of API.
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The "Arvida Transaction" that Houlihan Lokey was asked to consider for the
purposes described above refers to the following: On November 6, 1998, Raleigh
Capital Associates, L.P. ("Raleigh"), The St. Joe Company and Arvida/JMB
Managers, Inc. entered into a Buy/Sell Agreement (the "Buy/Sell Agreement") with
respect to Arvida. The Partnership indirectly owns 70% of Raleigh and Icahn
indirectly owns the balance. Pursuant to the Buy/Sell Agreement, Raleigh was
obligated, by December 10, 1998, to make a determination whether to purchase the
general partner interest in Arvida and make a tender offer for the approximately
297,000 outstanding units of partnership interest of Arvida ("Arvida Units")
that it did not own, at a price per unit of $430, or alternatively, to sell to
The St. Joe Company all of its approximately 106,000 Arvida Units at a price per
unit of $430.
The Audit Committee stated in the Initial Schedule 14D-9 that it would also
take into consideration, among other things, the following: (A) the Purchaser's
statement in the Offer to Purchase to the effect that the Offer is conditioned
(although the Purchaser reserved the right to waive such condition) on the Offer
not resulting in the Depositary Units being held of record by less than 300
persons and not resulting in a delisting of the Depositary Units from the New
York Stock Exchange ("NYSE"), where they should continue to trade; (B) the
Purchaser's statement in the Offer to Purchase that, except to the extent
disclosed in the Offer to Purchase, the Purchaser does not have any present
plans or proposals which relate to or would result in (but reserves the right to
engage in transactions that may relate to or result in) an extraordinary
transaction, such as a merger; any changes in composition of the Partnership's
senior management or personnel or their compensation; any changes in the
Partnership's present capitalization or dividend policy; or any other material
changes in the Partnership's corporate structure or business; (C) the fact that
the Offer will not result in a change in control of the Partnership; and (D) the
Offer requires no approval of the Board of Directors of the General Partner
under the Partnership Agreement or otherwise.
(b)(2) Subsequent Developments.
Since the Initial Schedule 14D-9 was filed, Raleigh decided to sell its
approximately 106,000 Arvida Units to The St. Joe Company pursuant to the
Buy/Sell Agreement. Accordingly, the Partnership is expected to receive
approximately $33 million of proceeds before payment of related indebtedness.
The Audit Committee believes that the Arvida Transaction will have no other
material effect on the Partnership's business.
During the period after the filing of the Initial Schedule 14D-9,
representatives of the Audit Committee requested that the Bidders extend the
expiration date of the Offer beyond December 18, 1998. Subsequently, following
further discussion of this matter by the members of the Audit Committee and
Icahn at a meeting of the full Board of Directors of the General Partner, in
contemplation of the mailing of this Amendment No. 1 to the Unitholders, the
Bidders agreed to extend the expiration date of the Offer to 12:00 midnight, New
York City time on December 28, 1998.
At its meeting on December 10, 1998, the Audit Committee, after considering
the presentation of Houlihan Lokey, and for the other reasons described below,
unanimously resolved that the Partnership should express no opinion and remain
neutral toward the Offer.
(b)(3) Reasons.
(1) Houlihan Lokey Results. On December 10, 1998, at a meeting of the
Audit Committee attended by its counsel, Stroock & Stroock & Lavan LLP,
representatives of Houlihan Lokey presented and summarized the results of its
review and analysis and responded to questions from members of the Audit
Committee. Houlihan Lokey analyzed, among other things: (i) the current trading
of the Depositary Units; (ii) trading patterns and market coverage of securities
of public companies with less than 10% of their outstanding securities publicly
held by non-insiders ("Low-Float Stocks"); (iii) trading patterns and market
coverage of the securities of public companies that are almost completely
private (i.e., 25% or less of their total outstanding shares are publicly
traded) where the majority is controlled by a private equity fund or investor
("Stub Stocks"); and (iv) the methodologies and assumptions underlying the
liquidation analysis described in the Offer to Purchase.
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Houlihan Lokey concluded that the effect a fully subscribed Offer would
have on the trading liquidity and volume of the remaining publicly held
Depositary Units was uncertain. Houlihan Lokey stated that its analysis of the
Low Float Stocks suggested that a fully subscribed Offer would likely have an
adverse impact on trading liquidity. It is possible, however, that the
Depositary Units could continue to trade "actively" (i.e., more than 20,000
shares per day). Houlihan Lokey's sample of Stub Stocks suggests that, while not
always the case, in many cases both individual and institutional investors
remain interested in these companies due to the strong sponsor groups that hold
majority control. Houlihan Lokey also pointed out, however, that, unlike the
Partnership, the issuers of the Stub Stocks Houlihan Lokey reviewed were all
covered by securities analysts. Although the Depositary Units have traded
actively in the absence of securities analyst coverage, there can be no
assurance that they will continue to trade actively.
Houlihan Lokey also concluded that the methodology described in the Offer
to Purchase to arrive at an estimated net liquidation value per Depositary Unit
and an estimated net liquidation value per Depositary Unit on a fully-diluted
basis appears reasonable. According to Houlihan Lokey, the Bidders used
generally accepted valuation approaches and reasonable market data when compared
to widely available pricing information.
Houlihan Lokey's analysis is based on the business, economic, market and
other conditions in which the Partnership operates as they existed on December
1, 1998. In conducting its analysis, Houlihan Lokey has relied upon and assumed,
without independent verification, that the historical financial information
provided to Houlihan Lokey by the Partnership has been reasonably and accurately
prepared based upon the best currently available estimates of the financial
results and condition of the Partnership. Houlihan Lokey did not independently
verify the accuracy or completeness of the information supplied to it with
respect to the Partnership and does not assume responsibility for such
information. Houlihan Lokey did not make any physical inspection or independent
appraisal or physical inspection of the specific properties or assets of the
Partnership. Houlihan Lokey did not perform any due diligence with respect to
any of the Partnership's specific properties or assets and made no independent
assessment of the liquidation value.
The summary set forth above describes the material points of more detailed
analyses performed by Houlihan Lokey, which is not readily susceptible to
summary description. In its analyses, Houlihan Lokey made numerous assumptions
with respect to the Partnership, industry performance, general business,
economic, market and financial conditions and other matters, many of which are
beyond the control of the Partnership. Accordingly, such analyses and estimates
are inherently subject to substantial uncertainty.
Houlihan Lokey also concluded that based upon the market's reaction to news
announcements regarding the Arvida Transactions, it appears that investors do
not feel that the Partnership's involvement in Arvida is a material
consideration.
(2) Opportunistic Nature of Operations. The Audit Committee believes that
the intended continuation of the Partnership's operations on the present
opportunistic basis makes the future market value of the Depositary Units
difficult to predict. Accordingly, the Audit Committee believes that the choice
whether to remain a Unitholder should be made by each Unitholder depending on
its own circumstances and expectations and whether such Unitholder intends to
maintain its investment for the long-term or is looking for a shorter term
return.
(3) Premium Over Market Price. The Offer is an all-cash offer that
represents a premium of approximately 44.8% to the last reported sales price of
the Depositary Units on the NYSE on November 13, 1998 (the last full trading day
preceding the first public announcement of the Offer). Although the liquidation
value of a Depositary Unit may be greater, there are no present plans to
liquidate the Partnership and there can be no assurance that the present
liquidation value will be realized in the reasonably near future, if ever.
(4) Continued NYSE Listing. The Audit Committee also considered the
Purchaser's statements in the Offer to Purchase to the effect that it is a
condition to the completion of the Offer that the purchase of the Depositary
Units pursuant to the Offer would not be reasonably likely to result in the
Depositary Units being held of record by less than 300 persons or in delisting
from the NYSE.
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(5) Unitholders' Free Choice. The Unitholders have a free choice to tender
their Depositary Units or not. Moreover, the Audit Committee is advised by the
Partnership's management that all material public information regarding the
Partnership has been disclosed in the Partnership's filings with the Securities
and Exchange Commission. Therefore, the Audit Committee believes that each
Unitholder has access to all material information regarding the Partnership.
(6) Individual Circumstances. The Audit Committee believes that the
Unitholder's decision whether to tender their Depositary Units may depend on
their individual circumstances which may differ materially. In this regard, the
Audit Committee noted that no change in the Partnership's distribution policy
was contemplated, so that Unitholders (other than tax-exempt persons) would
continue to be subject to taxation on the income, if any, of the Partnership,
even though they would not be receiving any distributions.
(7) No Material Changes Proposed. Except to the extent disclosed in the
Offer to Purchase, the Purchaser has stated that it does not have any plans or
proposals which relate to or would result in (but reserves the right to engage
in transactions that may relate to or result in) an extraordinary transaction,
such as a merger, any changes in the composition of the Partnership's senior
management or personnel or their compensation; any changes in the Partnership's
present capitalization or distribution policy; or any other material changes in
the Partnership's corporate structure or business.
(8) No Change in Control. The Offer will not result in a change in control
of the Partnership or change in compensation payable to the General Partner or
its affiliates.
(9) No Approval Required. The Offer requires no approval of the Board of
Directors of the General Partner under the Partnership Agreement or otherwise.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Audit Committee has retained Houlihan Lokey to provide financial
advisory services as described above to assist the Audit Committee with its
analysis of the Offer. The Partnership will pay Houlihan Lokey a fee of $125,000
for its services, and will reimburse it for reasonable out-of-pocket expenses in
connection with rendering such services. No portion of Houlihan Lokey's fees are
dependent upon the results of its analysis. The Partnership has also agreed to
indemnify Houlihan Lokey and certain other parties against certain liabilities
relating to, arising out of or in connection with retention of Houlihan Lokey as
financial advisor in connection with the Offer.
Except as disclosed herein, neither the Partnership nor any person acting
on its behalf has employed, retained or compensated, or currently intends to
employ, retain or compensate, any other person to make solicitations or
recommendations to the Unitholders on its behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTEREST WITH RESPECT TO SECURITIES.
(a) Except as described in Schedule I attached hereto, no transactions in
the Depositary Units have been effected during the past 60 days by the
Partnership or the General Partner or, to the knowledge of the General Partner,
by any of its current or former executive officers, directors or affiliates.
(b) To the knowledge of the Partnership, neither the General Partner nor
any of its current or former executive officers, directors or affiliates intends
to tender pursuant to the Offer any Depositary Units beneficially owned by them.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) No negotiation is being undertaken or is underway by the Partnership in
response to the Offer which relates to or would result in (i) an extraordinary
transaction such as a merger or reorganization, involving the Partnership or any
subsidiary of the Partnership; (ii) a purchase, sale or transfer of a material
amount of assets by the Partnership or any subsidiary of the Partnership; (iii)
a tender offer for or other acquisition of securities
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by or of the Partnership; or (iv) any material change in the present
capitalization or distribution policy of the Partnership.
(b) There are no transactions, board resolutions, agreements in principle
or signed contracts in response to the Offer which relate to or would result in
one or more of the matters referred to in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
LITIGATION.
Amanda & Kimberly Kahn v. Carl C. Icahn, et al., C.A. No. 15916 (Del.
Ch.). Two Unitholders of the Partnership brought a derivative action against
the Partnership, the General Partner, its directors and one of its officers,
alleging breach of fiduciary duties by the defendants in connection with, inter
alia, the Partnership's investments in Arvida/JMB Partners, L.P. and
Stratosphere Corporation. Plaintiffs claimed that defendant Icahn improperly
diverted opportunities to participate in these investments from the Partnership
to himself. Plaintiffs sought damages arising from these alleged breaches of
fiduciary duty, attorneys' fees and other relief. On November 12, 1998, the
Court of Chancery of the State of Delaware granted the defendants' motion to
dismiss all of plaintiffs' claims against the defendants. Plaintiffs have until
December 16, 1998 to appeal the Court's grant of defendants' motion to dismiss.
Miller v. American Real Estate Partners, L.P., et.al., C.A. No. 16788NC
(Del. Ch.). On November 18, 1998, Ruth Ellen Miller filed a Class Action
Complaint bearing the caption Ruth Ellen Miller, on behalf of herself and all
others similarly situated v. American Real Estate Partners, L.P., High Coast
Limited Partnership, American Property Investors, Inc., Carl C. Icahn, Alfred
Kinglsey, Mark H. Rachesky, William A. Leidesdorf, Jack G. Wasserman and John P.
Saldarelli in the Delaware Chancery Court in New Castle County (the
"Complaint"). The Complaint purports to state claims on behalf of a putative
class of all holders of Units sounding in breach of fiduciary duty, aiding and
abetting breaches of fiduciary duty, injunction and breach of the Partnership
Agreement. The Complaint seeks to have Ms. Miller appointed as class
representative and that the putative class be certified. The Complaint also
seeks an unspecified amount in damages and injunctive relief: (i) dissolving the
Partnership; (ii) enjoining API from continuing to act as general partner of the
Partnership; (iii) enjoining the Partnership from engaging in any transaction in
which Icahn has either a direct or indirect interest, absent an affirmative vote
of a majority of the outstanding Units held by the putative class, including
this Offer; and (iv) ordering API to exercise its fiduciary obligations. The
Complaint also seeks costs and attorneys' fees.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)
(a)(1) Letter to Unitholders, dated December 11, 1998.
(a)(2) Press release issued on December 11, 1998.
(b) None.
(c) None.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
AMERICAN REAL ESTATE PARTNERS L.P.
By: AMERICAN PROPERTY INVESTORS, INC.,
General Partner
By: /s/ JOHN P. SALDARELLI
------------------------------------
John P. Saldarelli
Vice President, Secretary and
Treasurer
Dated: December 11, 1998
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EXHIBIT INDEX
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Exhibit
No. Description
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(a)(1) Letter to Unitholders, dated December 11, 1998.
(a)(2) Press release issued on December 11, 1998.
<PAGE> 1
EXHIBIT (a)
[American Real Estate Partners Logo]
American Real Estate Partners, L.P.
December 11, 1998
Dear Unitholder:
Enclosed is the Amendment No. 1 to Schedule 14D-9 which was filed by
American Real Estate Partners, L.P. (the "Partnership") with the Securities and
Exchange Commission relating to the tender offer by Leyton LLC, a Delaware
limited liability company (the "Purchaser"), to purchase up to 10,000,000 of the
outstanding depositary units representing limited partner interests (the
"Depositary Units") in the Partnership at a purchase price of $10.50 per
Depositary Unit, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated November 20,
1998 (the "Offer to Purchase") and related Letter of Transmittal, including the
Instructions thereto (which collectively constitute the "Offer"). The Amendment
No. 1 amends and restates the Schedule 14D-9 originally filed by the Partnership
on December 7, 1998 in which the Partnership disclosed that it was unable to
take a position at the time with respect to the Offer.
The Offer to Purchase states that the Purchaser is a Delaware limited
liability company and that the sole member of the Purchaser is High Coast
Limited Partnership, a Delaware limited partnership ("High Coast"). According to
the Offer to Purchase, the general partner of High Coast, Beckton Corp., is
wholly owned by Carl C. Icahn ("Icahn") and the limited partners of High Coast
are, indirectly, more than 90% owned by Icahn. The general partner of the
Partnership, American Property Investors, Inc., a Delaware corporation (the
"General Partner") is also wholly owned by Icahn. Due to the affiliation between
the General Partner and the Purchaser, the Partnership may have conflicts of
interest in considering the Offer.
The members of the Audit Committee of the Board of Directors of the General
Partner (Messrs. Alfred D. Kingsley, William A. Leidesdorf and Jack G.
Wasserman) were appointed by the Board of Directors of the General Partner to
consider the Offer on behalf of the Partnership. Based on the unanimous
recommendation of the Audit Committee, the Partnership expresses no opinion and
is remaining neutral toward the Offer. The Audit Committee's recommendation is
based on the reasons set forth under Item 4 of the enclosed Amendment No. 1 to
Schedule 14D-9.
Unitholders are advised to carefully read the enclosed Amendment No. 1 to
Schedule 14D-9.
American Real Estate Partners, L.P.
/s/ Signature of John P. Saldarelli
John P. Saldarelli
Vice President, Secretary and Treasurer
10
<PAGE> 1
EXHIBIT (A)2
[AMERICAN REAL ESTATE PARTNERS, L.P. LETTERHEAD]
Contact: John P. Saldarelli
Secretary and Treasurer
914-242-7700
FOR IMMEDIATE RELEASE
AMERICAN REAL ESTATE PARTNERS, L.P.
ANNOUNCES FILING OF AMENDED TENDER OFFER
DISCLOSURE DOCUMENT
MT. KISCO, NEW YORK -- December 11, 1998 -- American Real Estate Partners,
L.P. (the "Partnership") (NYSE: ACP) announced today that it filed with the
Securities and Exchange Commission an amended and restated Schedule 14D-9
("Amendment No. 1") to report that the Partnership expresses no opinion and is
remaining neutral toward the tender offer by Leyton LLC (the "Purchaser"), a
Delaware limited liability company and an affiliate of Carl C. Icahn ("Icahn"),
to purchase up to 10,000,000 of the outstanding Depositary Units representing
limited partner interests in the Partnership at a price of $10.50 per Depositary
Unit (the "Offer"). Unitholders and other interested parties may obtain a copy
of Amendment No. 1 directly from the Partnership or from the web site of the
Securities and Exchange Commission at http://www.sec.gov.
The Audit Committee of the Board of Directors of American Property
Investors, Inc., the General Partner of the Partnership, has been appointed by
the Board of Directors of the General Partner to consider the Offer on behalf of
the Partnership. The Audit Committee's recommendation to express no opinion and
remain neutral toward the Offer is based on the reasons stated below.
(1) Houlihan Lokey Results. The Audit Committee retained Houlihan Lokey
Howard & Zukin Financial Advisors, Inc. ("Houlihan Lokey") to act as its
financial advisor for limited purposes in connection with the Offer. Houlihan
Lokey analyzed, among other things: (i) the current trading of the Depositary
Units; (ii) trading patterns and market coverage of securities of public
companies with less than 10% of their outstanding securities publicly held by
non-insiders ("Low-Float Stocks"); (iii) trading patterns and market coverage of
the securities of public companies that are almost completely private (i.e., 25%
or less of their total outstanding shares are publicly traded) where the
majority is controlled by a private equity fund or investor ("Stub Stocks"); and
(iv) the methodologies and assumptions underlying the liquidation analysis
described in the Purchaser's Offer to Purchase.
Houlihan Lokey concluded that the effect a fully subscribed Offer would
have on the trading liquidity and volume of the remaining publicly held
Depositary Units was uncertain. Houlihan Lokey stated that its analysis of the
Low Float Stocks suggested that a fully subscribed Offer would likely have an
adverse impact on trading liquidity. It is possible, however, that the
Depositary Units could continue to trade "actively" (i.e., more than 20,000
shares per day). Houlihan Lokey's sample of Stub Stocks suggests that, while not
always the case, in many cases both individual and institutional investors
remain interested in these companies due to the strong sponsor groups that hold
majority control. Houlihan Lokey also pointed out, however, that, unlike the
Partnership, the issuers of the Stub Stocks Houlihan Lokey reviewed were all
covered by securities analysts. Although the Depositary Units have traded
actively in the absence of securities analyst coverage, there can be no
assurance that they will continue to trade actively.
Houlihan Lokey also concluded that the methodology described in the Offer
to Purchase to arrive at an estimated net liquidation value per Depositary Unit
and an estimated net liquidation value per Depositary Unit on a fully-diluted
basis appears reasonable. According to Houlihan Lokey, the Bidders used
generally accepted valuation approaches and reasonable market data when compared
to widely available pricing information.
<PAGE> 2
(2) Opportunistic Nature of Operations. The Audit Committee believes that
the intended continuation of the Partnership's opportunistic investment strategy
makes the future market value of the Depositary Units difficult to predict.
Accordingly, the Audit Committee believes that the choice whether to remain a
Unitholder should be made by each Unitholder depending on its own circumstances
and expectations and whether such Unitholder intends to maintain its investment
for the long-term or is looking for a shorter term return.
(3) Premium Over Market Price. The Offer is an all-cash offer that
represents a premium of approximately 44.8% to the last reported sales price of
the Depositary Units on the NYSE on November 13, 1998 (the last full trading day
preceding the first public announcement of the Offer). Although the liquidation
value of a Depositary Unit may be greater, there are no present plans to
liquidate the Partnership and there can be no assurance that the present
liquidation value will be realized in the reasonably near future, if ever.
(4) Continued NYSE Listing. The Audit Committee also considered the
Purchaser's statements in the Offer to Purchase to the effect that it is a
condition to the completion of the Offer that the purchase of the Depositary
Units pursuant to the Offer would not be reasonably likely to result in the
Depositary Units being held of record by less than 300 persons or in delisting
from the NYSE.
(5) Unitholders' Free Choice. The Unitholders have a free choice to tender
their Depositary Units or not. Moreover, the Audit Committee is advised by the
Partnership's management that all material public information regarding the
Partnership has been disclosed in the Partnership's filings with the Securities
and Exchange Commission. Therefore, the Audit Committee believes that each
Unitholder has access to all material information regarding the Partnership.
(6) Individual Circumstances. The Audit Committee believes that the
Unitholder's decision whether to tender their Depositary Units may depend on
their individual circumstances which may differ materially. In this regard, the
Audit Committee noted that no change in the Partnership's distribution policy
was contemplated, so that Unitholders (other than tax-exempt persons) would
continue to be subject to taxation on the income, if any, of the Partnership,
even though they would not be receiving any distributions.
(7) No Material Changes Proposed. Except to the extent disclosed in the
Offer to Purchase, the Purchaser has stated that it does not have any plans or
proposals which relate to or would result in (but the Purchaser reserves the
right to engage in transactions that may relate to or result in) an
extraordinary transaction, such as a merger, any changes in the composition of
the Partnership's senior management or personnel or their compensation; any
changes in the Partnership's present capitalization or distribution policy; or
any other material changes in the Partnership's corporate structure or business.
(8) No Change in Control. The Offer will not result in a change in control
of the Partnership or change in compensation payable to the General Partner or
its affiliates.
(9) No Approval Required. The Offer requires no approval of the Board of
Directors of the General Partner under the Partnership Agreement or otherwise.
NO SOLICITATION OR RECOMMENDATION
RESPECTING THE OFFER IS INTENDED OR MADE HEREBY.
American Real Estate Partners, L.P. is a master limited partnership
primarily engaged in acquiring and managing real estate investments with a
primary focus on office, retail, industrial, hotel and residential properties.
