SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
Amendment No. 1
To
SCHEDULE TO
Tender Offer Statement Pursuant to Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
-----------------------
BRUNNER COMPANIES INCOME PROPERTIES L.P. I
(Name of Subject Company)
MP FALCON FUND, LLC; MP VALUE FUND 6, LLC; PREVIOUSLY OWNED MORTGAGE
PARTNERSHIP INCOME FUND, L.P.; ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS, LTD.; and MORAGA FUND 1, LLC
(Bidders)
LIMITED PARTNERSHIP UNITS
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
-----------------------
Copy to:
Glen Fuller Paul J. Derenthal, Esq
MacKenzie Patterson, Inc. Derenthal & Dannhauser
1640 School Street One Post Street, Suite 575
Moraga, California 94556 San Francisco, California 94104
(925) 631-9100 (415) 981-4844
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications on Behalf of Bidder)
[X] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: $55.20
Form or Registration Number: Schedule TO-T
Filing Party: Above Bidders
Date Filed: March 1, 2000
[ ] Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[X] third party tender offer subject to Rule 14d-1.
<PAGE>
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going private transaction subject to Rule 13e-3
[ ] amendment to Schedule 13D under Rule 13d-2
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule TO relates to the offer by MP
FALCON FUND, LLC; MP VALUE FUND 6, LLC; PREVIOUSLY OWNED MORTGAGE PARTNERSHIP
INCOME FUND, L.P.; ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.; and
MORAGA FUND 1, LLC (collectively the "Purchasers") to purchase up to 220,800
Class A Units of limited partnership interest (the "Units") of BRUNNER COMPANIES
INCOME PROPERTIES L.P.I , a Delaware limited partnership (the "Issuer"), the
subject company. The Purchasers are offering to purchase the Units at a purchase
price equal to $1.25 per Unit, less the amount of any distributions declared or
made with respect to the Units between March 1, 2000 (the "Offer Date") and
March 31, 2000 or such other date to which this Offer may be extended (the
"Expiration Date"), upon the terms and subject to the conditions set forth in
the Offer to Purchase dated March 1, 2000 (the "Offer to Purchase") and the
related Letter of Transmittal, copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively. The Issuer had 552,000 Units issued and
outstanding held by approximately 423 Unitholders as of September 30, 1999,
according to its quarterly report on Form 10-QSB for the quarter then ended. The
address of the Issuer's principal executive offices is 3632 Wheeler Road, Suite
2 P.0. Box 204227, Augusta, Georgia 30917-4227.
The information in the Offer to Purchase, including all schedules
and annexes thereto, is hereby expressly incorporated herein by reference in
response to all the items of this Statement, except as otherwise set forth
below.
Item 12. Exhibits.
--------
(a)(1) Revised Offer to Purchase dated March 1, 2000
(b)-(h) Not applicable.
1
<PAGE>
SIGNATURES
After due 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.
Dated: March 17, 2000
MP FALCON FUND, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ C.E. PATTERSON
------------------
C.E. Patterson, President
MP VALUE FUND 6, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ C.E. PATTERSON
------------------
C.E. Patterson, President
MORAGA FUND 1, LLC
By Moraga Partners, Inc., Manager
By: /s/ C.E. PATTERSON
------------------
C.E. Patterson, President
PREVIOUSLY OWNED MORTGAGE PARTNERSHIP INCOME FUND, L.P.
By MacKenzie Patterson, Inc., General Partner
By: /s/ C.E. PATTERSON
------------------
C.E. Patterson, President
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.
By MacKenzie Patterson, Inc., General Partner
By: /s/ C.E. PATTERSON
------------------
C.E. Patterson, President
2
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
(a)(1) Revised Offer to Purchase dated March 1, 2000
Exhibit (a)(1)
<PAGE>
OFFER TO PURCHASE FOR CASH UP TO 220,800
CLASS A UNITS OF LIMITED PARTNERSHIP INTEREST
OF
BRUNNER COMPANIES INCOME PROPERTIES L.P. I
AT
$1.25 per Unit
MP FALCON FUND, LLC; MP VALUE FUND 6, LLC; PREVIOUSLY OWNED
MORTGAGE PARTNERSHIP INCOME FUND, L.P.; ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS, LTD.; and MORAGA FUND 1, LLC
(collectively the "Purchasers")
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, PACIFIC STANDARD TIME, ON MARCH 31, 2000, UNLESS THE OFFER IS
EXTENDED.
MP FALCON FUND, LLC; MP VALUE FUND 6, LLC; PREVIOUSLY OWNED MORTGAGE
PARTNERSHIP INCOME FUND, L.P.; ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS,
LTD.; and MORAGA FUND 1, LLC (collectively the "Purchasers") hereby seek to
acquire Class A Units of limited partnership interest (the "Units") in BRUNNER
COMPANIES INCOME PROPERTIES L.P. I, a Delaware limited partnership (the
"Partnership"). The Purchasers are not affiliated with the Partnership or
Brunner Management Limited Partnership, the Partnership's general partner
("General Partner"), or any of its affiliates. The Purchasers hereby offer to
purchase up to 220,800 Units (the "Maximum Offer") at a purchase price equal to
$1.25 per Unit, less the amount of any distributions declared or made with
respect to the Units between March 1, 2000 (the "Offer Date") and March 31,
2000, or such other date to which this Offer may be extended (the "Expiration
Date"), in cash, without interest, upon the terms and subject to the conditions
set forth in this Offer to Purchase (the "Offer to Purchase") and in the related
Letter of Transmittal, as each may be supplemented or amended from time to time
(which together constitute the "Offer"). The Purchasers currently own or have
the right to acquire, an aggregate total of 27,550 Units or approximately 4.9%
of the total outstanding Units.
Holders of Units ("Unitholders") are urged to consider the following factors:
- Unitholders who tender their Units will give up the
opportunity to participate in any future benefits from the
ownership of Units, including potential future distributions
by the Partnership, and the purchase price per Unit payable to
a tendering Unitholder by the Purchasers may be less than the
total amount which might otherwise be received by the
Unitholder with respect to the Unit over the remaining term of
the Partnership.
- The Purchasers are making the Offer for investment purposes
and with the intention of making a profit from the ownership
of the Units. In establishing the purchase price of $1.25 per
Unit, the Purchasers are motivated to establish the lowest
price which might be acceptable to Unitholders consistent with
the Purchasers' objectives. There is no public market for the
Units, and neither the Unit holders nor the Purchasers have
any accurate means for determining the actual present value of
the Units. Although there can be no certainty as to the actual
1
<PAGE>
present value of the Units, the Purchasers have estimated
that the assets of the Partnership could have an estimated
liquidation value of $1.94 per Unit. It should be noted,
however, that the Purchasers have not made an independent
appraisal of the Units or the Partnership's assets, and are
not qualified to appraise real estate. Accordingly, there can
be no assurance that this estimate accurately reflects an
approximate value of the Units or that the actual amounts
which may be realized by holders for the Units may not vary
substantially from this estimate.
- As a result of consummation of the Offer, the Purchasers may
be in a position to significantly influence all Partnership
decisions on which Unitholders may vote. The Purchasers will
vote the Units acquired in the Offer in its own interest,
which may be different from or in conflict with the interests
of the remaining Unitholders.
- The Purchasers may accept only a portion of the Units tendered
by a Unitholder in the event more Units than the Maximum Offer
are tendered.
- The Depositary, MacKenzie Patterson, Inc., is an affiliate of
certain of the Purchasers. No independent party will hold
securities tendered until the offer closes and payment is
made.
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED.
The Purchasers expressly reserve the right, in their sole discretion, at any
time and from time to time, (i) to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Units, (ii) upon the occurrence of any of the conditions specified in
Section 13 of this Offer to Purchase, to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or paid for, or to delay
the acceptance for payment of, or payment for, any Units not theretofore
accepted for payment or paid for, and (iii) to amend the Offer in any respect.
Notice of any such extension, termination or amendment will promptly be
disseminated to Unitholders in a manner reasonably designed to inform
Unitholders of such change in compliance with Rule 14d-4(c) under the Securities
Exchange Act of 1934 (the "Exchange Act"). In the case of an extension of the
Offer, such extension will be followed by a press release or public announcement
which will be issued no later than 9:00 a.m., Eastern Standard Time, on the next
business day after the scheduled Expiration Date, in accordance with Rule
14e-1(d) under the Exchange Act.
March 1, 2000
IMPORTANT
Any Unitholder desiring to tender any or all of such Unitholder's Units should
complete and sign the Letter of Transmittal (a copy of which is enclosed with
this Offer to Purchase, printed on gray paper) in accordance with the
instructions in the Letter of Transmittal and mail, deliver or telecopy the
Letter of Transmittal and any other required documents to MacKenzie Patterson,
Inc. (the "Depositary"), an affiliate of certain of the Purchasers, at the
address or facsimile number set forth below.
MacKenzie Patterson, Inc.
2
<PAGE>
1640 School Street
Moraga, California 94556
Telephone: 800-854-8357
Facsimile Transmission: 925-631-9119
Questions or requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to the Purchasers at
1-800-854-8357.
- ---------------------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY REPRESENTATION
ON BEHALF OF THE PURCHASERS OR TO PROVIDE ANY INFORMATION OTHER THAN AS
CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH RECOMMENDATION,
INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN AUTHORIZED.
- ---------------------------
The Partnership is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Such reports and other information are available on the
Commission's electronic data gathering and retrieval (EDGAR) system, at its
internet web site at www.sec.gov, may be inspected at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and are available for inspection and
copying at the regional offices of the Commission located in Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can also be obtained from the Public Reference Room of the Commission
in Washington, D.C. at prescribed rates.
The Purchasers have filed with the Commission a Tender Offer Statement on
Schedule TO (including exhibits) pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer. Such statement and any amendments thereto, including
exhibits, may be inspected and copies may be obtained from the offices of the
Commission in the manner specified above.
3
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY TERM SHEET.............................................................5
INTRODUCTION...................................................................7
TENDER OFFER...................................................................9
Section 1. Terms of the Offer...........................................9
Section 2. Proration; Acceptance for Payment and Payment for Units.....10
Section 3. Procedures for Tendering Units..............................11
Section 4. Withdrawal Rights...........................................12
Section 5. Extension of Tender Period; Termination; Amendment..........13
Section 6. Certain Federal Income Tax Consequences.....................14
Section 7. Effects of the Offer........................................16
Section 8. Future Plans................................................17
Section 9. The Business of the Partnership.............................17
Section 10. Conflicts of Interest.......................................18
Section 11. Certain Information Concerning the Purchasers...............18
Section 12. Source of Funds.............................................19
Section 13. Conditions of the Offer.....................................19
Section 14. Certain Legal Matters.......................................21
Section 15. Fees and Expenses...........................................22
Section 16. Miscellaneous...............................................22
Schedule I - The Purchasers and Their Respective Principals
4
<PAGE>
SUMMARY TERM SHEET
The Purchasers are offering to purchase up to 220,800 Units for $1.25 per
Unit in cash. The following are some of the questions that you, as a Unit holder
of the Partnership may have and answers to those questions. The information in
this summary is not complete and we urge you to carefully read the remainder of
this Offer to Purchase and the accompanying Letter of Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
The offer to purchase up to 220,800 Units is being made jointly by MP
FALCON FUND, LLC; MP VALUE FUND 6, LLC; PREVIOUSLY OWNED MORTGAGE PARTNERSHIP
INCOME FUND, L.P.; ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.; and
MORAGA FUND 1, LLC. Each of the Purchasers is a real estate investment fund
managed or advised by MacKenzie Patterson, Inc. a private, independent real
estate investment firm.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase up to 280,000 of the Class A Units, which are the
Units issued to public investors in the Partnership.
HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are offering to pay $1.25 per Unit, net to you in cash. If you tender your
shares to us in the Offer, you will not have to pay brokerage fees or similar
expenses.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
If the total amount of Units sought is purchased, the Purchasers' capital
commitment will be approximately $300,000. The Purchasers have an aggregate of
in excess of $750,000 in cash in their capital reserves available to pay selling
Unit holders.
IS THE FINANCIAL CONDITION OF THE BIDDERS RELEVANT TO MY DECISION ON WHETHER TO
TENDER IN THE OFFER?
Because this is a cash offer, the Purchasers have adequate cash resources and
have no intention to take control of the Partnership, the Purchasers' financial
condition would seem to have little relevance to your decision.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 12:00 midnight, pacific standard time, on March 31,
2000, to decide whether to tender your shares in the Offer.
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
The Offer can be extended in our discretion.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will make a public announcement of the extension, not
later than 9:00 a.m., eastern standard time, on the day after the day on which
the Offer was scheduled to expire.
5
<PAGE>
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
There are no conditions to the offer based on minimum Units tendered or
otherwise determined by the success of the offer. However, we may not be
obligated to purchase any Units in the event certain conditions occur, such as
legal or government actions which would prohibit the purchase. Furthermore, we
are not obligated to purchase any Units which are validly tendered if, among
other things, there is a material adverse change in the Partnership or its
business.
HOW DO I TENDER MY UNITS?
To tender your shares, you must deliver a completed Letter of Transmittal,
to the Depositary at: MacKenzie Patterson, Inc., 1640 School Street, Moraga,
California 94556 (Telephone: 800-854- 8357; Facsimile Transmission:
925-631-9119), no later than the time the Offer expires.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED UNITS?
You can withdraw previously tendered shares at any time until the Offer has
expired and, if we have not agreed to accept your shares for payment by April
30, 2000, you can withdraw them at any time after such time until we do accept
your shares for payment.
HOW DO I WITHDRAW PREVIOUSLY TENDERED UNITS?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the Depositary while you
still have the right to withdraw the shares.
WHAT DOES THE PARTNERSHIP'S GENERAL PARTNER THINK OF THE OFFER?
The Purchasers have not sought the approval or disapproval of the General
Partner. The General Partner may be expected to respond with its position on the
offer in the next two weeks.
WILL THE PARTNERSHIP CONTINUE AS A PUBLIC COMPANY?
The Partnership reported 423 holders of its outstanding Units as of the end of
1998, the most recent year for which it has filed an annual report. Unless the
total number of Unit holders were to fall below 300, the Partnership will
continue as a public reporting company. The Purchasers do not currently
anticipate that the offer will result in such a reduction in the number of Unit
holders, though it cannot now determine the results with any certainty.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
The Purchasers do not anticipate that Units held by non-tendering Unit holders
will be affected by the completion of the offer.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
According to the Partnership, the Units are not traded on any established
securities market, and the Purchasers' research indicates that few Units have
traded during recent years, with no reported market sales during the period from
August through December of 1999.
6
<PAGE>
WHOM CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call MacKenzie Patterson, Inc., toll free, at 800-854-8357.
7
<PAGE>
To the Unitholders of BRUNNER COMPANIES INCOME PROPERTIES L.P. I
INTRODUCTION
The Purchasers hereby offer to purchase up to 220,800 Units at a
purchase price of $1.25 per Unit, less the amount of any distributions declared
or paid with respect to the Units between the Offer Date and the Expiration Date
("Offer Price"), in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer. Unitholders who tender their Units will not
be obligated to pay any Partnership transfer fees, or any other fees, expenses
or commissions in connection with the tender of Units. The Purchasers will pay
all such costs and all charges and expenses of the Depositary, an affiliate of
certain of the Purchasers, as depositary in connection with the Offer.
For further information concerning the Purchasers, see Section 11 below
and Schedule I.
None of the Purchasers nor the Depositary is affiliated with the
Partnership, the General Partner or any of their affiliates.
Unitholders are urged to consider the following factors:
- Unitholders who tender their Units will give up the
opportunity to participate in any future benefits from the
ownership of Units, including potential future distributions
by the Partnership, and the purchase price per Unit payable to
a tendering Unitholder by the Purchasers may be less than the
total amount which might otherwise be received by the
Unitholder with respect to the Unit over the remaining term of
the Partnership.
- The Purchasers are making the Offer for investment purposes
and with the intention of making a profit from the ownership
of the Units. In establishing the purchase price of $1.25 per
Unit, the Purchasers are motivated to establish the lowest
price which might be acceptable to Unitholders consistent with
the Purchasers' objectives. There is no public market for the
Units, and neither the Unit holders nor the Purchasers have
any accurate means for determining the actual present value of
the Units. Although there can be no certainty as to the actual
present value of the Units, the Purchasers have estimated that
the assets of the Partnership could have an estimated
liquidation value of $1.94 per Unit. It should be noted,
however, that the Purchasers have not made an independent
appraisal of the Units or the Partnership's assets, and are
not qualified to appraise real estate. Accordingly, there can
be no assurance that this estimate accurately reflects an
approximate value of the Units or that the actual amounts
which may be realized by holders for the Units may not vary
substantially from this estimate.
- As a result of consummation of the Offer, the Purchaser may be
in a position to significantly influence all Partnership
decisions on which Unitholders may vote. The Purchaser will
vote the Units acquired in the Offer in its own interest,
which may be different from or in conflict with the interests
of the remaining Unitholders.
- The Purchasers may accept only a portion of the Units tendered
by a Unitholder in the event more Units than the Maximum Offer
are tendered.
8
<PAGE>
- The Depositary, MacKenzie Patterson, Inc., is an affiliate of
the Purchasers. No independent party will hold securities
tendered until the offer closes and payment is made.
The Offer will provide Unitholders with an opportunity to liquidate
their investment without the usual transaction costs associated with market
sales. Unitholders may have a more immediate need to use the cash now tied up in
an investment in the Units and wish to sell them to the Purchasers. Unit holders
who sell all of their Units will also eliminate the need to file form K-1
information for the Partnership with their federal tax returns for years after
2000.
Establishment of the Offer Price
The Purchasers have set the Offer Price at $1.25 per Unit, less the
amount of any distributions declared or made with respect to the Units between
the Offer Date and Expiration Date. In determining the Offer Price, the
Purchasers analyzed a number of quantitative and qualitative factors,
including:(i) the lack of a secondary market for resales of the Units and the
resulting lack of liquidity of an investment in the Partnership; (ii) the
estimated value of the Partnership's real estate assets; and (iii) the costs to
the Purchasers associated with acquiring the Units.
The Partnership made the following statement in its annual report on
Form 10-K for the year ended December 31, 1998: "Neither the Limited Partnership
Units (the Units) nor the Subordinated Interest Units are traded on any
established public trading market, and it is not anticipated that such a market
will develop in the future." The lack of any public market for the sale of Units
means that Unit holders have limited alternatives if they seek to sell their
Units. As a result of such limited alternatives for Unit holders, the Purchasers
may not need to offer as high a price for the Units as they would otherwise. On
the other hand, the Purchasers take a greater risk in establishing a purchase
price as there is no prevailing market price to be used for reference and the
Purchasers themselves will have limited liquidity for the Units upon
consummation of the purchase.
The Purchasers recently completed a tender offer for 27,550 Units, or
less than 5% of the outstanding Units, for a price of $1.25 per Unit. The offer
was fully subscribed, and the Purchasers thereby acquired the rights to purchase
a total of 27,550 Units or approximately 4.9% of the total outstanding Units.
Because the Partnership's Unit holders demonstrated a desire for liquidity at
that price, the Purchasers determined to increase the number of Units sought to
the number in this Offer. In order to assure that all Unit holders who tendered
to the Purchasers in the prior offer receive all of the security holder
protections and disclosures mandated by Section 14(d) under the Securities
Exchange Act of 1934 and the Securities and Exchange Commission's rules
thereunder, the Purchasers are distributing the Offer to all such Unit holders
and will offer those who sold in the prior offer the best price offered Unit
holders in this offer and the right to withdraw their Units at any time through
the close of this Offer. The Purchasers will not submit any such Units to
transfer until after this Offer expires.
The Purchasers are offering to purchase Units which are an illiquid
investment and are not offering to purchase the Partnership's underlying assets.
The assets of the Partnership may not be liquidated for an indefinite period of
time. Accordingly, the underlying asset value of the Partnership is only one
factor used by the Purchasers in arriving at the Offer Price. However, in the
absence of trading price information, the Purchasers estimate of the net asset
value of the Partnership may be relevant to Unit holders review of the Offer
Price. Using publicly available information concerning the Partnership contained
in the Partnership's Form 10-K for the fiscal year ended December 31, 1998, and
the quarterly report on Form 10-Q for the quarter ended September 30, 1999, the
9
<PAGE>
Purchasers derived an estimated net asset value for the Units. The Purchasers
are not qualified as real estate appraisers and have relied solely on publicly
available information in making their estimate of the value of the Partnership's
assets. Their estimated value of Partnership assets was calculated solely for
purposes of formulating their offer and cannot be relied upon as representing an
amount which might actually be realized upon a liquidation of the Partnership's
assets, whether now or at any time in the future.
In determining their estimated value of the Units, the Purchasers first
calculated the "Estimated Net Sales Value" of the Partnership's real properties.
The Estimated Net Sales Value was determined by first determining the
properties' net operating income ("NOI"). The NOI was calculated by subtracting
from rental income the cost of rental income, general and administrative costs,
and an estimate of anticipated near-term capital expenditures and principal
repayments. This NOI was then divided by a 13.75% capitalization rate (the "Cap
Rate") and the result reduced by (i) 5% to take into account the estimated
closing costs which would be incurred upon sale by the Partnership of the
properties, including brokerage commissions, title costs, surveys, appraisals,
legal fees and transfer taxes, and (ii) the mortgage debt encumbering the
property.
The Purchasers believe that the Cap Rate utilized is within a range of
capitalization rates currently employed in the marketplace for properties of
similar type, age and quality. The utilization of different capitalization
rates, however, could also be appropriate. In this regard, Unit holders should
be aware that the use of lower capitalization rate would result in a higher
Estimated Net Sales Value.
To determine the Estimated Liquidation Value of the Partnership's
assets, the Purchaser added to the Estimated Net Sales Value of the
Partnership's properties the net current assets as reported in the Partnership's
most recent Form 10-K. The resulting Estimated Liquidation Value of the
Partnership's assets was approximately $1.94 per Unit. The Purchasers emphasize
that this value was calculated by them solely for purposes of calculating the
Offer Price. There can be no assurance as to the actual liquidation value of
Partnership assets or as to the amount or timing of distributions of liquidation
proceeds which may be received by Unit holders.
The Partnership is in the business of owning and operating three retail
centers: Georgetown Landing, Georgetown, South Carolina; White Horse Plaza,
Greenville, South Carolina; and Hitchcock Plaza, Aiken, South Carolina.
The Offer Price represents the price at which the Purchasers are
willing to purchase Units. No independent person has been retained to evaluate
or render any opinion with respect to the fairness of the Offer Price and no
representation is made by the Purchasers or any affiliate of the Purchasers as
to such fairness. Other measures of the value of the Units may be relevant to
Unitholders. Unitholders are urged to consider carefully all of the information
contained herein and consult with their own advisors, tax, financial or
otherwise, in evaluating the terms of the Offer before deciding whether to
tender Units.
According to the Partnership's most recent annual report on Form
10-KSB, "The Partnership will continue in existence until December 31, 2008,
unless earlier dissolved or terminated." The Purchasers do not have access to
the original prospectus under which the Units were offered, so cannot state the
date the Partnership was originally expected to liquidate. The Partnership's
public reports have not provided any information regarding an intended
liquidation plan. Accordingly, the Purchasers can make no representation
concerning the prospects or timing of a potential liquidation of the
Partnership.
10
<PAGE>
General Background Information
Certain information contained in this Offer to Purchase which relates
to, or represents, statements made by the Partnership or the General Partner,
has been derived from information provided in reports filed by the Partnership
with the Securities and Exchange Commission.
According to publicly available information, there were 552,000 Units
issued and outstanding as of September 30, 1999, held by approximately 422 Unit
holders at December 31, 1998
Tendering Unitholders will not be obligated to pay transfer fees,
brokerage fees or commissions on the sale of the Units to the Purchasers
pursuant to the Offer. The Purchasers will pay all charges and expenses incurred
in connection with the Offer. The Purchasers desire to purchase all Units
tendered by each Unitholder.
If, prior to the Expiration Date, the Purchasers increase the
consideration offered to Unitholders pursuant to the Offer, such increased
consideration will be paid with respect to all Units that are purchased pursuant
to the Offer, whether or not such Units were tendered prior to such increase in
consideration.
Unitholders are urged to read this Offer to Purchase and the
accompanying Letter of Transmittal carefully before deciding whether to tender
their Units.
TENDER OFFER
Section 1. Terms of the Offer. Upon the terms and subject to the conditions of
the Offer, the Purchasers will accept for payment and pay for Units validly
tendered on or prior to the Expiration Date and not withdrawn in accordance with
Section 4 of this Offer to Purchase. The term "Expiration Date" shall mean 12:00
midnight, Pacific Standard Time, on March 31, 2000, unless and until the
Purchasers shall have extended the period of time for which the Offer is open,
in which event the term "Expiration Date" shall mean the latest time and date on
which the Offer, as so extended by the Purchasers, shall expire.
The Offer is conditioned on satisfaction of certain conditions. See
Section 13, which sets forth in full the conditions of the Offer. The Purchasers
reserve the right (but shall not be obligated), in their sole discretion and for
any reason, to waive any or all of such conditions. If, by the Expiration Date,
any or all of such conditions have not been satisfied or waived, the Purchasers
reserve the right (but shall not be obligated) to (i) decline to purchase any of
the Units tendered, terminate the Offer and return all tendered Units to
tendering Unitholders, (ii) waive all the unsatisfied conditions and, subject to
complying with applicable rules and regulations of the Commission, purchase all
Units validly tendered, (iii) extend the Offer and, subject to the right of
Unitholders to withdraw Units until the Expiration Date, retain the Units that
have been tendered during the period or periods for which the Offer is extended
or (iv) to amend the Offer.
The Purchasers do not anticipate and have no reason to believe that any
condition or event will occur that would prevent the Purchasers from purchasing
tendered Units as offered herein.
Section 2. Proration; Acceptance for Payment and Payment for Units.
11
<PAGE>
If the number of Units validly tendered prior to the Expiration Date
and not withdrawn is less than or equal to the Maximum Offer, the Purchasers,
upon the terms and subject to the conditions of the Offer, will accept for
payment all Units so tendered. If the number of Units validly tendered prior to
the Expiration Date and not withdrawn exceeds the Maximum Offer, the Purchasers,
upon the terms and subject to the conditions of the Offer, will accept for
payment Units so tendered on a pro rata basis.
In the event that proration is required, because of the difficulty of
immediately determining the precise number of Units to be accepted, the
Purchasers will announce the final results of proration as soon as practicable,
but in no event later than five business days following the Expiration Date. The
Purchasers will not pay for any Units tendered until after the final proration
factor has been determined.
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any extension
or amendment), the Purchasers will accept for payment, and will pay for, Units
validly tendered and not withdrawn in accordance with Section 4, as promptly as
practicable following the Expiration Date. In all cases, payment for Units
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by the Letter of
Transmittal.
For purposes of the Offer, the Purchasers shall be deemed to have
accepted for payment (and thereby purchased) tendered Units when, as and if the
Purchasers give oral or written notice to the Depositary of the Purchasers'
acceptance for payment of such Units pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Units purchased pursuant to
the Offer will in all cases be made by deposit of the Offer Price with the
Depositary, which will act as agent for the tendering Unitholders for the
purpose of receiving payment from the Purchasers and transmitting payment to
tendering Unitholders.
Under no circumstances will interest be paid on the Offer Price by
reason of any delay in making such payment.
If any tendered Units are not purchased for any reason, the Letter of
Transmittal with respect to such Units not purchased will be of no force or
effect. If, for any reason whatsoever, acceptance for payment of, or payment
for, any Units tendered pursuant to the Offer is delayed or the Purchasers are
unable to accept for payment, purchase or pay for Units tendered pursuant to the
Offer, then, without prejudice to the Purchasers' rights under Section 13 (but
subject to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary
may, nevertheless, on behalf of the Purchasers, retain tendered Units, subject
to any limitations of applicable law, and such Units may not be withdrawn except
to the extent that the tendering Unitholders are entitled to withdrawal rights
as described in Section 4.
If, prior to the Expiration Date, the Purchasers shall increase the
consideration offered to Unitholders pursuant to the Offer, such increased
consideration shall be paid for all Units accepted for payment pursuant to the
Offer, whether or not such Units were tendered prior to such increase.
12
<PAGE>
Section 3. Procedures for Tendering Units.
Valid Tender. For Units to be validly tendered pursuant to the Offer, a properly
completed and duly executed Letter of Transmittal (a copy of which is enclosed
with this Offer to Purchase, printed on gray paper) with any other documents
required by the Letter of Transmittal must be received by the Depositary at its
address set forth on the back cover of this Offer to Purchase on or prior to the
Expiration Date. A Unitholder may tender any or all Units owned by such
Unitholder.
In order for a tendering Unitholder to participate in the Offer, Units
must be validly tendered and not withdrawn prior to the Expiration Date, which
is 12:00 midnight, Pacific Standard Time, on March 31, 2000, or such date to
which the Offer may be extended.
The method of delivery of the Letter of Transmittal and all other required
documents is at the option and risk of the tendering Unitholder and delivery
will be deemed made only when actually received by the Depositary.
Backup Federal Income Tax Withholding. To prevent the possible application of
31% backup federal income tax withholding with respect to payment of the Offer
Price for Units purchased pursuant to the Offer, a tendering Unitholder must
provide the Depositary with such Unitholder's correct taxpayer identification
number and make certain certifications that such Unitholder is not subject to
backup federal income tax withholding. Each tendering Unitholder must insert in
the Letter of Transmittal the Unitholder's taxpayer identification number or
social security number in the space provided on the front of the Letter of
Transmittal. The Letter of Transmittal also includes a substitute Form W-9,
which contains the certifications referred to above. (See the Instructions to
the Letter of Transmittal.)
FIRPTA Withholding. To prevent the withholding of federal income tax in an
amount equal to 10% of the sum of the Offer Price plus the amount of Partnership
liabilities allocable to each Unit tendered, each Unitholder must complete the
FIRPTA Affidavit included in the Letter of Transmittal certifying such
Unitholder's taxpayer identification number and address and that the Unitholder
is not a foreign person. (See the Instructions to the Letter of Transmittal and
"Section 6. Certain Federal Income Tax Consequences.")
Other Requirements. By executing a Letter of Transmittal as set forth above, a
tendering Unitholder irrevocably appoints the designees of the Purchasers as
such Unitholder's proxies, in the manner set forth in the Letter of Transmittal,
each with full power of substitution, to the full extent of such Unitholder's
rights with respect to the Units tendered by such Unitholder and accepted for
payment by the Purchasers. Such appointment will be effective when, and only to
the extent that, the Purchasers accept such Units for payment. Upon such
acceptance for payment, all prior proxies given by such Unitholder with respect
to such Units will, without further action, be revoked, and no subsequent
proxies may be given (and if given will not be effective). The designees of the
Purchasers will, with respect to such Units, be empowered to exercise all voting
and other rights of such Unitholder as they in their sole discretion may deem
proper at any meeting of Unitholders, by written consent or otherwise. In
addition, by executing a Letter of Transmittal, a Unitholder also assigns to the
Purchasers all of the Unitholder's rights to receive distributions from the
Partnership with respect to Units which are accepted for payment and purchased
pursuant to the Offer, other than those distributions declared or paid during
the period commencing on the Offer Date and terminating on the Expiration Date.
13
<PAGE>
Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation
to Give Notice of Defects. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Units
pursuant to the procedures described above will be determined by the Purchasers,
in their sole discretion, which determination shall be final and binding. The
Purchasers reserve the absolute right to reject any or all tenders if not in
proper form or if the acceptance of, or payment for, the absolute right to
reject any or all tenders if not in proper form or if the acceptance of, or
payment for, the Units tendered may, in the opinion of the Purchasers' counsel,
be unlawful. The Purchasers also reserve the right to waive any defect or
irregularity in any tender with respect to any particular Units of any
particular Unitholder, and the Purchasers' interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
Instructions thereto) will be final and binding. Neither the Purchasers, the
Depositary, nor any other person will be under any duty to give notification of
any defects or irregularities in the tender of any Units or will incur any
liability for failure to give any such notification.
A tender of Units pursuant to any of the procedures described above
will constitute a binding agreement between the tendering Unitholder and the
Purchasers upon the terms and subject to the conditions of the Offer, including
the tendering Unitholder's representation and warranty that (i) such Unitholder
owns the Units being tendered within the meaning of Rule 14e-4 under the
Exchange Act and (ii) the tender of such Unit complies with Rule 14e-4. Rule
14e-4 requires, in general, that a tendering security holder actually be able to
deliver the security subject to the tender offer, and is of concern particularly
to any Unitholders who have granted options to sell or purchase the Units, hold
option rights to acquire such securities, maintain "short" positions in the
Units (i.e., have borrowed the Units) or have loaned the Units to a short
seller. Because of the nature of limited partnership interests, the Purchasers
believe it is unlikely that any option trading or short selling activity exists
with respect to the Units. In any event, a Unit holder will be deemed to tender
Units in compliance with Rule 14e-4 and the Offer if the holder is the record
owner of the Units and the holder (i) delivers the Units pursuant to the terms
of the Offer, (ii) causes such delivery to be made, (iii) guarantees such
delivery, (iv) causes a guaranty of such delivery, or (v) uses any other method
permitted in the Offer (such as facsimile delivery of the Transmittal Letter).
Section 4. Withdrawal Rights. Except as otherwise provided in this Section 4,
all tenders of Units pursuant to the Offer are irrevocable, provided that Units
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment as provided in this
Offer to Purchase, may also be withdrawn at any time on or after April 30, 2000.
For withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at the address or
the facsimile number set forth in the attached Letter of Transmittal. Any such
notice of withdrawal must specify the name of the person who tendered the Units
to be withdrawn and must be signed by the person(s) who signed the Letter of
Transmittal in the same manner as the Letter of Transmittal was signed.
If purchase of, or payment for, Units is delayed for any reason or if
the Purchasers are unable to purchase or pay for Units for any reason, then,
without prejudice to the Purchasers' rights under the Offer, tendered Units may
be retained by the Depositary on behalf of the Purchasers and may not be
withdrawn except to the extent that tendering Unitholders are entitled to
withdrawal rights as set forth in this Section 4, subject to Rule 14e-1(c) under
the Exchange Act, which provides that no person who makes a tender offer shall
fail to pay the consideration offered or return the securities deposited by or
on behalf of security holders promptly after the termination or withdrawal of
the tender offer.
14
<PAGE>
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Purchasers, in their sole
discretion, which determination shall be final and binding. Neither the
Purchasers, the Depositary, nor any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
will incur any liability for failure to give any such notification.
Any Units properly withdrawn will be deemed not to be validly tendered
for purposes of the Offer. Withdrawn Units may be re-tendered, however, by
following the procedures described in Section 3 at any time prior to the
Expiration Date.
Section 5. Extension of Tender Period; Termination; Amendment. The Purchasers
expressly reserve the right, in their sole discretion, at any time and from time
to time, (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Units by
giving oral or written notice of such extension to the Depositary, (ii) upon the
occurrence or failure to occur of any of the conditions specified in Section 13,
to delay the acceptance for payment of, or payment for, any Units not heretofore
accepted for payment or paid for, or to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or paid for, by giving
oral or written notice of such termination to the Depositary, and (iii) to amend
the Offer in any respect (including, without limitation, by increasing or
decreasing the consideration offered or the number of Units being sought in the
Offer or both or changing the type of consideration) by giving oral or written
notice of such amendment to the Depositary. Any extension, termination or
amendment will be followed as promptly as practicable by public announcement,
the announcement in the case of an extension to be issued no later than 9:00
a.m., Eastern Standard Time, on the next business day after the previously
scheduled Expiration Date, in accordance with the public announcement
requirement of Rule 14d-4(c) under the Exchange Act. Without limiting the manner
in which the Purchasers may choose to make any public announcement, except as
provided by applicable law (including Rule 14d-4(c) under the Exchange Act), the
Purchasers will have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by issuing a release to the
Dow Jones News Service. The Purchasers may also be required by applicable law to
disseminate to Unitholders certain information concerning the extensions of the
Offer and any material changes in the terms of the Offer.
If the Purchasers extend the Offer, or if the Purchasers (whether
before or after its acceptance for payment of Units) are delayed in their
payment for Units or are unable to pay for Units pursuant to the Offer for any
reason, then, without prejudice to the Purchasers' rights under the Offer, the
Depositary may retain tendered Units on behalf of the Purchasers, and such Units
may not be withdrawn except to the extent tendering Unitholders are entitled to
withdrawal rights as described in Section 4. However, the ability of the
Purchasers to delay payment for Units that the Purchasers have accepted for
payment is limited by Rule 14e-1 under the Exchange Act, which requires that the
Purchasers pay the consideration offered or return the securities deposited by
or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer.
If the Purchasers make a material change in the terms of the Offer or
the information concerning the Offer or waive a material condition of the Offer,
the Purchasers will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an
offer must remain open following a material change in the terms of the offer or
information concerning the offer, other than a change in price or a change in
percentage of securities sought, will depend upon the facts and circumstances,
including the relative materiality of the change in the terms or information.
With respect to a change in price or a change in percentage of securities sought
(other than an increase of not more than 2% of the securities sought), however,
15
<PAGE>
a minimum ten business day period is generally required to allow for adequate
dissemination to security holders and for investor response. As used in this
Offer to Purchase, "business day" means any day other than a Saturday, Sunday or
a federal holiday, and consists of the time period from 12:01 a.m. through 12:00
midnight, Pacific Standard Time.
Section 6. Certain Federal Income Tax Consequences. THE FEDERAL INCOME TAX
DISCUSSION SET FORTH BELOW IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY AND
DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF TAXATION THAT MAY BE RELEVANT TO A
PARTICULAR UNITHOLDER. For example, this discussion does not address the effect
of any applicable foreign, state, local or other tax laws other than federal
income tax laws. Certain Unitholders (including trusts, foreign persons, tax-
exempt organizations or corporations subject to special rules, such as life
insurance companies or S corporations) may be subject to special rules not
discussed below. This discussion is based on the Internal Revenue Code of 1986,
as amended (the "Code"), existing regulations, court decisions and Internal
Revenue Service ("IRS") rulings and other pronouncements. EACH UNITHOLDER
TENDERING UNITS SHOULD CONSULT SUCH UNITHOLDER'S OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH UNITHOLDER OF ACCEPTING THE OFFER, INCLUDING
THE APPLICATION OF THE ALTERNATIVE MINIMUM TAX AND FEDERAL, FOREIGN, STATE,
LOCAL AND OTHER TAX LAWS.
The following discussion is based on the assumption that the
Partnership is treated as a partnership for federal income tax purposes and is
not a "publicly traded partnership" as that term is defined in the Code.
Gain or Loss. A taxable Unitholder will recognize a gain or loss on the sale of
such Unitholder's Units in an amount equal to the difference between (i) the
amount realized by such Unitholder on the sale and (ii) such Unitholder's
adjusted tax basis in the Units sold. The amount realized by a Unitholder will
include the Unitholder's share of the Partnership's liabilities, if any (as
determined under Code section 752 and the regulations thereunder). If the
Unitholder reports a loss on the sale, such loss generally could not be
currently deducted by such Unitholder except against such Unitholder's capital
gains from other investments. In addition, such loss would be treated as a
passive activity loss. (See "Suspended Passive Activity Losses" below.)
The adjusted tax basis in the Units of a Unitholder will depend upon
individual circumstances. (See also "Partnership Allocations in Year of Sale"
below.) Each Unitholder who plans to tender hereunder should consult with the
Unitholder's own tax advisor as to the Unitholder's adjusted tax basis in the
Unitholder's Units and the resulting tax consequences of a sale.
If any portion of the amount realized by a Unitholder is attributable
to such Unitholder's share of "unrealized receivables" or "substantially
appreciated inventory items" as defined in Code section 751, a corresponding
portion of such Unitholder's gain or loss will be treated as ordinary gain or
loss. It is possible that the basis allocation rules of Code Section 751 may
result in a Unitholder's recognizing ordinary income with respect to the portion
of the Unitholder's amount realized on the sale of a Unit that is attributable
to such items while recognizing a capital loss with respect to the remainder of
the Unit.
A tax-exempt Unitholder (other than an organization described in Code
Section 501(c)(7) (social club), 501(c)(9) (voluntary employee benefit
association), 501(c)(17) (supplementary unemployment benefit trust), or
501(c)(20) (qualified group legal services plan)) should not be required to
recognize unrelated trade or business income upon the sale of its Units pursuant
16
<PAGE>
to the Offer, assuming that such Unitholder does not hold its Units as a
"dealer" and has not acquired such Units with debt financed proceeds.
Partnership Allocations in Year of Sale. A tendering Unitholder will be
allocated the Unitholder's pro rata share of the annual taxable income and
losses from the Partnership with respect to the Units sold for the period
through the date of sale, even though such Unitholder will assign to the
Purchasers their rights to receive certain cash distributions with respect to
such Units. Such allocations and any Partnership distributions for such period
would affect a Unitholder's adjusted tax basis in the tendered Units and,
therefore, the amount of gain or loss recognized by the Unitholder on the sale
of the Units.
Possible Tax Termination. The Code provides that if 50% or more of the capital
and profits interests in a partnership are sold or exchanged within a single
12-month period, such partnership generally will terminate for federal income
tax purposes. It is possible that the Partnership could terminate for federal
income tax purposes as a result of consummation of the Offer. Although the
likelihood is remote, as the Maximum Offer is to be calculated as an amount
which will not cause such a termination, a tax termination of the Partnership
could have an effect on a corporate or other non-individual Unitholder whose tax
year is not the calendar year, as such a Unitholder might recognize more than
one year's Partnership tax items in one tax return, thus accelerating by a
fraction of a year the effects from such items.
Suspended "Passive Activity Losses". A Unitholder who sells all of the
Unitholder's Units would be able to deduct "suspended" passive activity losses
from the Partnership, if any, in the year of sale free of the passive activity
loss limitation. As a limited partner of the Partnership, which was engaged in
real estate activities, the ability of a Unitholder, who or which is subject to
the passive activity loss rules, to claim tax losses from the Partnership was
limited. Upon sale of all of the Unitholder's Units, such Unitholder would be
able to use any "suspended" passive activity losses first against gain, if any,
on sale of the Unitholder's Units and then against income from any other source.
Foreign Unitholders. Gain realized by a foreign Unitholder on a sale of a Unit
pursuant to the Offer will be subject to federal income tax. Under Section 1445
of the Code, the transferee of a partnership interest held by a foreign person
is generally required to deduct and withhold a tax equal to 10% of the amount
realized on the disposition. The Purchasers will withhold 10% of the amount
realized by a tendering Unitholder from the purchase price payment to be made to
such Unitholder unless the Unitholder properly completes and signs the FIRPTA
Affidavit included as part of the Letter of Transmittal certifying the
Unitholder's TIN, that such Unitholder is not a foreign person and the
Unitholder's address. Amounts withheld would be creditable against a foreign
Unitholder's federal income tax liability and, if in excess thereof, a refund
could be obtained from the Internal Revenue Service by filing a U.S. income tax
return.
Section 7. Effects of the Offer.
Limitations on Resales. The Purchasers do not believe the provisions of the
Partnership Agreement should restrict transfers of Units pursuant to the Offer.
Effect on Trading Market. There is no established public trading market for the
Units and, therefore, a reduction in the number of Unitholders should not
materially further restrict the Unitholders' ability to find purchasers for
their Units on any secondary market.
17
<PAGE>
Voting Power of Purchasers. Depending on the number of Units acquired by
the Purchasers pursuant to the Offer, the Purchasers may have the ability to
exert certain influence on matters subject to the vote of Unitholders, though
the maximum number of Units sought hereunder would not give the Purchasers a
controlling voting interest.
Other Potential Effects. The Units are registered under the Exchange Act, which
requires, among other things that the Partnership furnish certain information to
its Unitholders and to the Commission and comply with the Commission's proxy
rules in connection with meetings of, and solicitation of consents from,
Unitholders. Registration and reporting requirements could be terminated by the
Partnership if the number of record holders falls below 300, or below 500 if the
Partnership's total assets are below $10 million for three consecutive preceding
fiscal years. The Partnership reported total assets in excess of $18 million as
of its most recent fiscal year end, and a total of 422 limited partners.
Although it is possible that the Offer could result in the purchase of up to 40%
of the outstanding Units, based on their experience in conducting offers of this
type the Purchasers do not expect to acquire a number of Units pursuant to the
Offer that would reduce the number of record Unit holders below 300.
Accordingly, the Purchasers do not believe that the purchase of Units pursuant
to the Offer will result in the Units becoming eligible for deregistration under
the Exchange Act.
Section 8. Future Plans. Following the completion of the Offer, the Purchasers,
or their affiliates, may acquire additional Units. Any such acquisitions may be
made through private purchases, one or more future tender offers or by any other
means deemed advisable or appropriate. Any such acquisitions may be at a
consideration higher or lower than the consideration to be paid for the Units
purchased pursuant to the Offer. The Purchasers are seeking to purchase up to
220,800 Units. If the Purchasers acquire fewer than 220,800 Units pursuant to
the Offer, the Purchasers may seek to make further purchases on the open market
at prevailing prices, or solicit Units pursuant to one or more future tender
offers at the same price, a higher price or, if the Partnership's circumstances
change, at a lower price. Alternatively, the Purchasers may discontinue any
further purchases of Units after termination of the Offer, regardless of the
number of Units purchased. The Offer is not made with any current view toward or
plan or purpose of acquiring Units in a series of successive and periodic
offers. Nevertheless, as noted above, the Purchasers reserve the right to gauge
the response to this solicitation, and, if not successful in achieving the
Maximum Offer, may consider future offers.
The Purchasers are acquiring the Units pursuant to the Offer primarily
for investment purposes. The Purchasers reserve the right to exercise their
discretion in all matters subject to a limited partner vote, including, but not
limited to, any vote to cause the sale of the Partnership's properties and the
liquidation and dissolution of the Partnership.
Section 9. The Business of the Partnership. Information included herein
concerning the Partnership is derived from the Partnership's publicly-filed
reports and the filed information relating to the tender offer by an affiliate
of the General Partner. Information concerning the Partnership, its assets,
operations and management is contained in its Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q and other filings with the Securities and
Exchange Commission. Such reports and filings are available on the Commission's
EDGAR system, at its internet website at www.sec.gov, and are available for
inspection at the Commission's principal office in Washington, D.C. and at its
regional offices in New York, New York and Chicago, Illinois. The Purchasers
have relied on such information to the extent information is presented herein
concerning the Partnership, and expressly disclaim any responsibility for the
information included in such reports and extracted in this Offer.
18
<PAGE>
Section 10. Conflicts of Interest. The Depositary is affiliated with
certain Purchasers. Therefore, by virtue of this affiliation, the Depositary may
have inherent conflicts of interest in acting as Depositary for the Offer. The
Depositary's role is administrative only, and any conflict of interest should
not be deemed material to Unit holders.
Section 11. Certain Information Concerning the Purchasers. The Purchasers are MP
FALCON FUND, LLC (MPFF); MP VALUE FUND 6, LLC (MPVF6); PREVIOUSLY OWNED MORTGAGE
PARTNERSHIP INCOME FUND, L.P. (POMPI); ACCELERATED HIGH YIELD INSTITUTIONAL
INVESTORS, LTD. (AHYII); and MORAGA FUND 1, LLC (MF1). For information
concerning the Purchasers and their respective principals, please refer to
Schedule I attached hereto. The principal business of each of the Purchasers is
investment in interests in real estate, particularly real estate-based
securities. The principal business address for all Purchasers is 1640 School
Street, Moraga, California 94556.
The Purchasers have made binding commitments to contribute and have
available sufficient amounts of liquid capital necessary to fund the acquisition
of all Units subject to the Offer, the expenses to be incurred in connection
with the Offer, and all other anticipated costs of the Purchasers. The
Purchasers are not public companies and have not prepared audited financial
statements. Set forth below is summary of total net assets and total current
assets (defined for this purpose as cash, cash equivalents and marketable
securities) for each of the entity Purchasers (numbers are expressed in
thousands of dollars and are rounded to the nearest thousand):
Net Current
Purchaser Assets Assets
AHYII $2,212 63
MF1 940 115
POMPI 577 82
MPV6 1,678 424
MPFF 1,377 234
- ------ ------- -------
Total $6,784 $918
The Purchasers recently completed a tender offer for 27,550 Units, or
less than 5% of the outstanding Units, for a price of $1.25 per Unit. The offer
was fully subscribed, and the Purchasers thereby acquired the rights to purchase
a total of 27,550 Units or approximately 4.9% of the total outstanding Units.
Because the Partnership's Unit holders demonstrated a desire for liquidity at
that price, the Purchasers determined to increase the number of Units sought to
the number in this Offer. In order to assure that all Unit holders who tendered
to the Purchasers in the prior offer receive all of the security holder
protections and disclosures mandated by Section 14(d) under the Securities
Exchange Act of 1934 and the Securities and Exchange Commission's rules
thereunder, the Purchasers are distributing the Offer to all such Unit holders
and will offer those who sold in the prior offer the best price offered Unit
holders in this offer and the right to withdraw their Units at any time through
the close of this Offer. The Purchasers will not submit any such Units to
transfer until after this Offer expires. The conditional rights to acquire the
27,550 Units tendered in the prior offer constitute the only Units beneficially
owned by the Purchasers and their affiliates.
19
<PAGE>
Except as otherwise set forth herein, (i) neither the Purchasers nor,
to the best knowledge of the Purchasers, the persons listed on Schedule I nor
any affiliate of the Purchasers beneficially owns or has a right to acquire any
Units, (ii) neither the Purchasers nor, to the best knowledge of the Purchasers,
the persons listed on Schedule I nor any affiliate of the Purchasers, or any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Units within the past 60 days, (iii) neither the
Purchasers nor, to the best knowledge of the Purchasers, the persons listed on
Schedule I nor any affiliate of the Purchasers has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Partnership, including but not limited to, contracts,
arrangements, understandings or relationships concerning the transfer or voting
thereof, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies,
consents or authorizations, (iv) there have been no transactions or business
relationships which would be required to be disclosed under the rules and
regulations of the Commission between any of the Purchasers or, to the best
knowledge of the Purchasers, the persons listed on Schedule I, or any affiliate
of the Purchasers on the one hand, and the Partnership or its affiliates, on the
other hand, and (v) there have been no contracts, negotiations or transactions
between the Purchasers, or to the best knowledge of the Purchasers any affiliate
of the Purchasers on the one hand, the persons listed on Schedule I, and the
Partnership or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets.
Section 12. Source of Funds. The Purchasers expect that approximately $276,000
would be required to purchase Units in the Maximum Offer, if tendered, and an
additional $15,000 may be required to pay related fees and expenses. The
Purchasers anticipate funding all of the purchase price and related expenses
through their existing liquid capital reserves. The cash to complete the entire
purchase is in the bidders' hands and is committed to that purpose. Accordingly,
there are no financing arrangements to fall through and no alternative financing
plans.
Section 13. Conditions of the Offer. Notwithstanding any other term of the
Offer, the Purchasers shall not be required to accept for payment or to pay for
any Units tendered if all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
court, administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, necessary for the consummation of the
transactions contemplated by the Offer shall not have been filed, occurred or
been obtained on or before the Expiration Date.
The Purchasers shall not be required to accept for payment or pay for
any Units not theretofore accepted for payment or paid for and may terminate or
amend the Offer as to such Units if, at any time on or after the date of the
Offer and before the Expiration Date, any of the following conditions exists:
(a) a preliminary or permanent injunction or other order of any federal
or state court, government or governmental authority or agency shall have been
issued and shall remain in effect which (i) makes illegal, delays or otherwise
directly or indirectly restrains or prohibits the making of the Offer or the
acceptance for payment of or payment for any Units by the Purchasers, (ii)
imposes or confirms limitations on the ability of the Purchasers effectively to
exercise full rights of ownership of any Units, including, without limitation,
the right to vote any Units acquired by the Purchasers pursuant to the Offer or
otherwise on all matters properly presented to the Partnership's Unitholders,
(iii) requires divestiture by the Purchasers of any Units, (iv) causes any
20
<PAGE>
material diminution of the benefits to be derived by the Purchasers as a result
of the transactions contemplated by the Offer or (v) might materially adversely
affect the business, properties, assets, liabilities, financial condition,
operations, results of operations or prospectus of the Purchasers or the
Partnership;
(b) there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed applicable
to the Offer by any federal or state court, government or governmental authority
or agency, other than the application of the waiting period provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which might,
directly or indirectly, result in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) any change or development shall have occurred or been threatened
since the date hereof, in the business, properties, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Partnership, which, in the reasonable judgment of the Purchasers, is or may be
materially adverse to the Partnership, or the Purchasers shall have become aware
of any fact that, in the reasonable judgment of the Purchasers, does or may have
a material adverse effect on the value of the Units;
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange or
in the over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any governmental authority on, or other
event which might affect, the extension of credit by lending institutions or
result in any imposition of currency controls in the United States, (iv) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States, (v) a material
change in United States or other currency exchange rates or a suspension of a
limitation on the markets thereof, or (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof; or
(e) it shall have been publicly disclosed or the Purchasers shall have
otherwise learned that (i) more than fifty percent of the outstanding Units have
been or are proposed to be acquired by another person (including a "group"
within the meaning of Section 13(d)(3) of the Exchange Act), or (ii) any person
or group that prior to such date had filed a Statement with the Commission
pursuant to Sections 13(d) or (g) of the Exchange Act has increased or proposes
to increase the number of Units beneficially owned by such person or group as
disclosed in such Statement by two percent or more of the outstanding Units.
The foregoing conditions are for the sole benefit of the Purchasers and
may be asserted by the Purchasers regardless of the circumstances giving rise to
such conditions or may be waived by the Purchasers in whole or in part at any
time and from time to time in their sole discretion. Any termination by the
Purchasers concerning the events described above will be final and binding upon
all parties.
21
<PAGE>
Section 14. Certain Legal Matters.
General. Except as set forth in this Section 14, the Purchasers are not aware of
any filings, approvals or other actions by any domestic or foreign governmental
or administrative agency that would be required prior to the acquisition of
Units by the Purchasers pursuant to the Offer. Should any such approval or other
action be required, it is the Purchasers' present intention that such additional
approval or action would be sought. While there is no present intent to delay
the purchase of Units tendered pursuant to the Offer pending receipt of any such
additional approval or the taking of any such action, there can be no assurance
that any such additional approval or action, if needed, would be obtained
without substantial conditions or that adverse consequences might not result to
the Partnership's business, or that certain parts of the Partnership's business
might not have to be disposed of or held separate or other substantial
conditions complied with in order to obtain such approval or action, any of
which could cause the Purchasers to elect to terminate the Offer without
purchasing Units thereunder. The Purchasers' obligation to purchase and pay for
Units is subject to certain conditions, including conditions related to the
legal matters discussed in this Section 14.
Antitrust. The Purchasers do not believe that the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, is applicable to the acquisition
of Units pursuant to the Offer.
Margin Requirements. The Units are not "margin securities" under the regulations
of the Board of Governors of the Federal Reserve System and, accordingly, such
regulations are not applicable to the Offer.
State Takeover Laws. A number of states have adopted anti-takeover laws which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets, security holders, principal executive offices or principal places of
business therein. These laws are directed at the acquisition of corporations and
not partnerships. The Purchasers, therefore, do not believe that any anti-
takeover laws apply to the transactions contemplated by the Offer.
Although the Purchasers have not attempted to comply with any state
anti-takeover statutes in connection with the Offer, the Purchasers reserve the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer nor any action taken in
connection herewith is intended as a waiver of such right. If any state anti-
takeover statute is applicable to the Offer, the Purchasers might be unable to
accept for payment or purchase Units tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer. In such case, the Purchasers
may not be obligated to accept for purchase or pay for any Units tendered.
Section 15. Fees and Expenses. The Purchasers have retained MacKenzie Patterson,
Inc., an affiliate of certain Purchasers, to act as Depositary in connection
with the Offer. The Purchasers will pay the Depositary reasonable and customary
compensation for its services in connection with the Offer, plus reimbursement
for out-of-pocket expenses, and will indemnify the Depositary against certain
liabilities and expenses in connection therewith, including liabilities under
the federal securities laws. The Purchasers will also pay all costs and expenses
of printing, publication and mailing of the Offer and all costs of transfer.
Section 16. Miscellaneous. THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS
BE ACCEPTED FROM OR ON BEHALF OF) UNITHOLDERS IN ANY JURISDICTION IN WHICH THE
22
<PAGE>
MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE LAWS OF SUCH JURISDICTION. THE PURCHASERS ARE NOT AWARE OF ANY
JURISDICTION WITHIN THE UNITED STATES IN WHICH THE MAKING OF THE OFFER OR THE
ACCEPTANCE THEREOF WOULD BE ILLEGAL.
No person has been authorized to give any information or to make any
representation on behalf of the Purchasers not contained herein or in the Letter
of Transmittal and, if given or made, such information or representation must
not be relied upon as having been authorized.
March 1, 2000
MP FALCON FUND, LLC; MP VALUE FUND 6, LLC; PREVIOUSLY OWNED MORTGAGE
PARTNERSHIP INCOME FUND, L.P.; ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS,
LTD.; and MORAGA FUND 1, LLC
23
<PAGE>
SCHEDULE I
THE PURCHASERS AND THEIR RESPECTIVE PRINCIPALS
The Purchasers are MP FALCON FUND, LLC (MPFF); MP VALUE FUND 6, LLC
(MPVF6); PREVIOUSLY OWNED MORTGAGE PARTNERSHIP INCOME FUND, L.P. (POMPI);
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD. (AHYII); and MORAGA FUND 1,
LLC (MF1). The General Partner of each of POMPI and AHYII is MacKenzie
Patterson, Inc. The Manager of each of MPFF and MPVF6, is MacKenzie Patterson,
Inc. and the manager of MF1 is Moraga Partners, Inc.
.
The names of the directors and executive officers of MacKenzie
Patterson, Inc. are set forth below. Each of the Purchasers is managed or
advised by affiliates of MacKenzie Patterson, Inc. The Purchasers have jointly
made the offer and are jointly and severally liable for satisfying its terms.
Other than the foregoing, the Purchasers' relationship consists of an informal
agreement to share the costs associated with making the offer and to allocate
any resulting purchases of Units among them in such manner and proportions as
they may determine in the future. AHYII is a Florida partnership, and each of
the other entities is organized in California.
MacKenzie Patterson, Inc.
C.E. Patterson is President and a director of MacKenzie Patterson, Inc. He
is the co-founder and President of Patterson Financial Services, Inc. In 1981,
Mr. Patterson founded PFS with Berniece A. Patterson, as a financial planning
firm. Mr. Patterson founded Patterson Real Estate Services, a licensed
California Real Estate Broker, in 1982. As President of PFS, Mr. Patterson is
responsible for all investment counseling activities. He supervises the analysis
of investment opportunities for the clients of the firm. He is a trustee of
Consolidated Capital Properties Trust, a liquidating trust formed out of the
bankruptcy court proceedings involving Consolidated Capital Properties, Ltd. Mr.
Patterson is also an officer and controlling shareholder of Cal-Kan, Inc., a
director and executive officer of Host Funding, Inc., an executive officer and
controlling shareholder of Moraga Partners, Inc., and trustee of the Pat
Patterson Western Securities, Inc. Profit Sharing Plan. Mr. Patterson, through
his affiliates, manages a number of investment and real estate partnerships.
Berniece A. Patterson is a director of MacKenzie Patterson, Inc. In 1981,
Ms. Patterson and C.E. Patterson established Patterson Financial Services, Inc.
She serves as Chair of the Board and Vice President of PFS. Her responsibilities
with PFS include oversight of administrative matters and monitoring of past
projects underwritten by PFS. Ms. Patterson is Chief Executive Officer of an
affiliate, Pioneer Health Care Services, Inc., and is responsible for the
day-to-day operations of three nursing homes and over 300 employees.
Christine Simpson is vice president of MacKenzie Patterson, Inc. and is
responsible for the day-to-day management of research, and securities purchases
and sales on behalf of the entities managed by MacKenzie Patterson, Inc. Ms.
Simpson has been employed by MacKenzie Patterson, Inc. since 1990.
Glen W, Fuller is assistant vice president and a director of MacKenzie
Patterson, Inc., with responsibility for new product development. Prior to
joining MacKenzie Patterson, Inc., Mr. Fuller was a registered options principal
at Morgan Fuller Capital Group, a registered broker dealer. Before joining
Morgan Fuller Capital Group, he was an assistant specialist on the floor of the
Pacific Stock Exchange.
24
<PAGE>
Moraga Partners, Inc.
Moraga Partners, Inc. is a California corporation owned by C. E. Patterson.
Mr. Patterson is also an executive officer and director of Moraga Partners, Inc.
Information regarding Mr. Patterson is set forth above.
25
