SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
-----------------------
HOST FUNDING, INC.
(Name of Subject Company)
MP VALUE FUND 5, LLC; MORAGA-DEWAAY FUND, LLC; MP INCOME FUND 15, LLC;
ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.; ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS, LTD.; MACKENZIE PATTERSON SPECIAL FUND 3, LLC;
MACKENZIE PATTERSON SPECIAL FUND 4, LLC; PREVIOUSLY OWNED PARTNERSHIPS
INCOME FUND, L.P.; CAL KAN, INC.; MORAGA FUND I, L.P.; ACCELERATED HIGH YIELD
INCOME FUND II, LTD; and SUTTER OPPORTUNITY FUND, LLC
(Bidders)
Shares of Class A Common Stock
(Title of Class of Securities)
-------------
(CUSIP Number of Class of Securities)
-----------------------
Copy to:
C.E. Patterson 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)
Calculation of Filing Fee
Transaction Amount of
Valuation* Filing Fee
$900,000 $180
* For purposes of calculating the filing fee only. Assumes the
purchase of 300,000 Units at a purchase price equal to $3.00 per
Share in cash.
[ ] 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:
Form or Registration Number:
Filing Party:
Date Filed:
<PAGE>
CUSIP NO. None 14D-1 Page 2 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
MORAGA FUND 1, L.P.
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 30,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares (See
Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 1.93%
10. Type of Reporting Person (See Instructions)
PN
<PAGE>
CUSIP NO. None 14D-1 Page 3 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
MP VALUE FUND 5, LLC
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 30,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares (See
Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 1.93%
10. Type of Reporting Person (See Instructions)
OO
<PAGE>
CUSIP NO. None 14D-1 Page 4 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
MACKENZIE PATTERSON SPECIAL FUND 3, LLC
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 30,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares (See
Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 1.93%
10. Type of Reporting Person (See Instructions)
OO
<PAGE>
CUSIP NO. None 14D-1 Page 5 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
MACKENZIE PATTERSON SPECIAL FUND 4, LLC
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 30,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares (See
Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 1.93%
10. Type of Reporting Person (See Instructions)
OO
<PAGE>
CUSIP NO. None 14D-1 Page 6 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
Florida
7. Aggregate Amount Beneficially Owned by Each Reporting Person 30,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares (See
Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 1.93%
10. Type of Reporting Person (See Instructions)
PN
<PAGE>
CUSIP NO. None 14D-1 Page 7 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
Florida
7. Aggregate Amount Beneficially Owned by Each Reporting Person 30,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares (See
Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 1.93%
10. Type of Reporting Person (See Instructions)
PN
<PAGE>
CUSIP NO. None 14D-1 Page 8 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
ACCELERATED HIGH YIELD INCOME FUND II, LTD
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
Florida
7. Aggregate Amount Beneficially Owned by Each Reporting Person 30,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares (See
Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 1.93%
10. Type of Reporting Person (See Instructions)
PN
<PAGE>
CUSIP NO. None 14D-1 Page 9 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
MORAGA-DEWAAY FUND, LLC
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 30,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares (See
Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 1.93%
10. Type of Reporting Person (See Instructions)
OO
<PAGE>
CUSIP NO. None 14D-1 Page 10 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
MP INCOME FUND 15, LLC
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 30,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares (See
Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 1.93%
10. Type of Reporting Person (See Instructions)
OO
<PAGE>
CUSIP NO. None 14D-1 Page 11 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
PREVIOUSLY OWNED PARTNERSHIPS INCOME FUND, L.P.
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 30,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares (See
Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 1.93%
10. Type of Reporting Person (See Instructions)
OO
<PAGE>
CUSIP NO. None 14D-1 Page 12 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
CAL KAN, INC.
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
Kansas
7. Aggregate Amount Beneficially Owned by Each Reporting Person 30,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares (See
Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 1.93%
10. Type of Reporting Person (See Instructions)
CO
<PAGE>
CUSIP NO. None 14D-1 Page 13 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
SUTTER OPPORTUNITY FUND, LLC
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
Florida
7. Aggregate Amount Beneficially Owned by Each Reporting Person 77,318
8. Check if the Aggregate in Row (7) Excludes Certain Shares (See
Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 4.98%
10. Type of Reporting Person (See Instructions)
OO
<PAGE>
Item 1. Security and Subject Company.
(a) This Schedule relates to shares of the Class A Common Stock
(the "Shares") of HOST FUNDING, INC., a Maryland corporation (the "Issuer"), the
subject company. The address of the Issuer's principal executive offices is 6116
N. Central Expressway, Suite 1313, Dallas, Texas 75206.
(b) This Schedule relates to the offer by MP VALUE FUND 5, LLC;
MORAGA-DEWAAY FUND, LLC; MP INCOME FUND 15, LLC; ACCELERATED HIGH YIELD
INSTITUTIONAL FUND, LTD.; ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.;
MACKENZIE PATTERSON SPECIAL FUND 3, LLC; MACKENZIE PATTERSON SPECIAL FUND 4,
LLC; PREVIOUSLY OWNED PARTNERSHIPS INCOME FUND, L.P.; CAL KAN, INC.; MORAGA FUND
I, L.P.; ACCELERATED HIGH YIELD INCOME FUND II, LTD; and SUTTER OPPORTUNITY
FUND, LLC (collectively the "Purchasers") to purchase up to 300,000 Shares
at a purchase price equal to $3.00 per Share, less the amount of any dividends
or other distributions declared or made with respect to the Shares between
February 17, 1999 (the "Offer Date") and March 17, 1999, 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 February
17, 1999 (the "Offer to Purchase") and the related Letter of Transmittal,
copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively.
Tender of Shares will include the tender of any and all securities into which
the Shares may be converted or exchanged, and any securities distributed
with respect to the Shares, by way of stock dividend or otherwise, from and
after the Offer Date. The Issuer had 1,553,569 Shares issued and
outstanding as of September 30, 1998, and Shares were held by approximately
1,264 Shareholders as of December 31, 1997, according to its annual report on
Form 10-K for the year then ended.
(c) The information set forth under the captions "Introduction -
Establishment of the Offer Price" and "Effects of the Offer" in the Offer to
Purchase is incorporated herein by reference.
Item 2. Identity and Background.
(a)-(d) The information set forth in "Introduction," "Certain
Information Concerning the Purchasers" and in Schedule I and the Addendum of the
Offer to Purchase is incorporated herein by reference.
(e)-(g) The information set forth in "Certain Information
Concerning the Purchasers" and Schedule I and the Addendum in the Offer to
Purchase is incorporated herein by reference. During the last five years,
neither the Purchasers nor, to the best of the knowledge of the Purchasers, any
person named on Schedule I and the Addendum to the Offer to Purchaser nor any
affiliate of the Purchasers (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) was a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding were or are subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, Federal or state securities laws or finding any violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations with the Subject Company.
(a)-(b) See the discussion under the caption "Certain Information
Concerning the Purchasers" in the Offer to Purchase for information concerning
purchases of Shares by certain of the Purchasers and their affiliates. Other
than the foregoing, since January 1, 1994, there have been no transactions
between any of the persons identified in Item 2 and the Issuer or, to the
knowledge of the Purchaser, any of the Issuer's affiliates or general partner,
or any directors or executive officers of any such affiliates or general
partner.
Item 4. Source and Amount of Funds or Other Consideration.
(a) The information set forth under the caption "Source of Funds"
of the Offer to Purchase is incorporated herein by reference.
(b)-(c) Not applicable.
14
<PAGE>
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
(a) - (g) The information set forth under the caption "Future
Plans" in the Offer to Purchase is incorporated herein by reference. Other than
as set forth therein, the Purchasers have no plans or proposals that would
relate to or would result in any of the transactions, changes or other results
described in Item 5(a) through (g) of Schedule 14D-1.
(f) Not applicable.
Item 6. Interest in Securities of the Subject Company.
(a) and (b) The information set forth in "Establishment of the
Offer Price" of the Offer to Purchase is incorporated herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with
Respect to the Subject Company's Securities.
The information set forth in "Certain Information Concerning the
Purchasers" of the Offer to Purchase is incorporated herein by reference.
Item 8. Persons Retained, Employed or To Be Compensated.
None.
Item 9. Financial Statements of Certain Bidders.
Not applicable.
Item 10. Additional Information.
(a) None.
(b)-(c) The information set forth in "Certain Legal Matters" of the
Offer to Purchase is incorporated herein by reference.
(d) None.
(e) None.
(f) Reference is hereby made to the Offer to Purchase and the
related Letter of Transmittal, copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively, and which are incorporated herein in their
entirety by reference.
Item 11. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase dated February 17, 1999
(a)(2) Letter of Transmittal
(a)(3) Form of Letter to Shareholders dated February 17, 1999
(a)(4) Advertisement
(b)-(f) Not applicable.
15
<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: February 17, 1999
MP VALUE FUND 5, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ C. E. Patterson
C.E. Patterson, President
MORAGA FUND 1, L.P.
By MacKenzie Patterson, Inc., General Partner
By: /s/ C. E. Patterson
C.E. Patterson, President
MACKENZIE PATTERSON SPECIAL FUND 3, LLC
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
MORAGA-DEWAAY FUND, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ C. E. Patterson
C.E. Patterson, President
MP INCOME FUND 15, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ C. E. Patterson
C.E. Patterson, President
ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.
By MacKenzie Patterson, Inc., General Partner
By: /s/ C. E. Patterson
C.E. Patterson, President
16
<PAGE>
MACKENZIE PATTERSON SPECIAL FUND 4, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ C. E. Patterson
C.E. Patterson, President
PREVIOUSLY OWNED PARTNERSHIPS INCOME FUND, L.P.
By MacKenzie Patterson, Inc., General Partner
By: /s/ C. E. Patterson
C.E. Patterson, President
CAL KAN, INC.
By: /s/ C. E. Patterson
C.E. Patterson, President
ACCELERATED HIGH YIELD INCOME FUND II, LTD
By MacKenzie Patterson, Inc., General Partner
By: /s/ C. E. Patterson
C.E. Patterson, President
SUTTER OPPORTUNITY FUND, LLC
By Sutter Capital Management, LLC
By: /s/ Robert Dixon
Robert Dixon, Manager
17
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
(a)(1) Offer to Purchase dated February 17, 1999
(a)(2) Letter of Transmittal
(a)(3) Form of Letter to Shareholders dated February 17, 1999
(a)(4) Advertisement
18
Exhibit (a)(1)
<PAGE>
OFFER TO PURCHASE FOR CASH UP TO 300,000
SHARES OF CLASS A COMMON STOCK
OF
HOST FUNDING, INC.
AT
$3.00 PER Share
MP VALUE FUND 5, LLC; MORAGA-DEWAAY FUND, LLC; MP INCOME FUND 15,
LLC; ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.; ACCELERATED
HIGH YIELD INSTITUTIONAL INVESTORS, LTD.; MACKENZIE PATTERSON SPECIAL
FUND 3, LLC; MACKENZIE PATTERSON SPECIAL FUND 4, LLC; PREVIOUSLY OWNED
PARTNERSHIPS INCOME FUND, L.P.; CAL KAN, INC.; MORAGA FUND I, L.P.; ACCELERATED
HIGH YIELD INCOME FUND II, LTD; and SUTTER OPPORTUNITY FUND, LLC
(collectively the "Purchasers")
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE
AT 12:00 MIDNIGHT, PACIFIC STANDARD TIME, ON MARCH 17, 1999,
UNLESS THE OFFER IS EXTENDED.
MP VALUE FUND 5, LLC; MORAGA-DEWAAY FUND, LLC; MP INCOME FUND 15, LLC;
ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.; ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS, LTD.; MACKENZIE PATTERSON SPECIAL FUND 3, LLC;
MACKENZIE PATTERSON SPECIAL FUND 4, LLC; PREVIOUSLY OWNED PARTNERSHIPS INCOME
FUND, L.P.; CAL KAN, INC.; MORAGA FUND I, L.P.; ACCELERATED HIGH YIELD INCOME
FUND II, LTD; and SUTTER OPPORTUNITY FUND, LLC (collectively the "Purchasers")
hereby seek to acquire shares of Class A Common Stock (the "Shares") of HOST
FUNDING, INC., a Maryland corporation (the "Company"). The Purchasers are not
affiliated with the Company. The Purchasers hereby offer to purchase up to
300,000 Shares at a purchase price equal to $3.00 per Share, less the amount of
any dividends or other distributions declared or made with respect to the Shares
between February 17, 1999 (the "Offer Date") and March 17, 1999, 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 300,000 Shares sought pursuant to the
Offer represent approximately 20% of the Shares outstanding as of December 31,
1997. Tender of Shares will include the tender of any and all securities into
which the Shares may be converted or exchanged, and any securities distributed
with respect to the Shares, by way of stock dividend or otherwise, from and
after the Offer Date.
Holders of Shares ("Shareholders") are urged to consider the following factors:
- The Purchasers are making the Offer for investment purposes
and with the intention of making a profit from the
ownership of the Shares.
1
<PAGE>
- As a result of consummation of the Offer, the Purchaser may
be in a position to significantly influence all Company
decisions on which Shareholders may vote. The Purchaser
will vote the Shares acquired in the Offer in its own
interest, which may be different from or in conflict with
the interests of the remaining Shareholders.
- The Purchasers may accept only a portion of the Shares
tendered by a Shareholder in the event a total of more than
300,000 Shares are tendered.
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. IF MORE THAN 300,000 SHARES ARE VALIDLY TENDERED AND NOT WITHDRAWN,
THE PURCHASERS WILL ACCEPT FOR PURCHASE 300,000 SHARES FROM TENDERING
SHAREHOLDERS ON A PRO RATA BASIS, SUBJECT TO THE TERMS AND CONDITIONS HEREIN. A
SHAREHOLDER MAY TENDER ANY OR ALL SHARES OWNED BY SUCH SHAREHOLDER.
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 Shares, (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 Shares not theretofore accepted for payment or paid for, or to delay
the acceptance for payment of, or payment for, any Shares 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 Shareholders in a manner reasonably designed to inform
Shareholders 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.
February 17, 1999
2
<PAGE>
IMPORTANT
Any Shareholder desiring to tender any or all of such Shareholder's Shares
should complete and sign the Letter of Transmittal (a copy of which is enclosed
with this Offer to Purchase, printed on pink 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.
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 Company 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 14D-1 (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
INTRODUCTION..................................................................5
TENDER OFFER..................................................................7
Section 1. Terms of the Offer..........................................7
Section 2. Proration; Acceptance for Payment and Payment for Shares....8
Section 3. Procedures for Tendering Shares.............................9
Section 4. Withdrawal Rights..........................................10
Section 5. Extension of Tender Period; Termination; Amendment.........11
Section 6. Federal Income Tax Consequences............................12
Section 7. Effects of the Offer.......................................12
Section 8. Future Plans...............................................13
Section 9. The Business of the Company................................13
Section 10. Conflicts of Interest......................................13
Section 11. Certain Information Concerning the Purchasers..............13
Section 12. Source of Funds............................................15
Section 13. Conditions of the Offer....................................15
Section 14. Certain Legal Matters......................................16
Section 15. Fees and Expenses..........................................17
Section 16. Miscellaneous..............................................17
Schedule I - The Purchasers and Their Respective Principals
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To the Shareholders of HOST FUNDING, INC.
INTRODUCTION
The Purchasers hereby offer to purchase up to 300,000 Shares at a
purchase price of $3.00 per Share, less the amount of any dividends or other
distributions declared or paid with respect to the Shares 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. Tender of Shares
will include the tender of any and all securities into which the Shares may be
converted or exchanged, and any securities distributed with respect to the
Shares, by way of stock dividend or otherwise, from and after the Offer Date.
Shareholders who tender their Shares will not be obligated to pay any fees,
expenses or commissions in connection with the tender of Shares. 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
Company or with any affiliate of the Company.
Shareholders are urged to consider the following factors:
- The Purchasers are making the Offer for investment purposes
and with the intention of making a profit from the ownership
of the Shares.
- As a result of consummation of the Offer, the Purchaser may be
in a position to significantly influence all Company decisions
on which Shareholders may vote. The Purchaser will vote the
Shares acquired in the Offer in its own interest, which may be
different from or in conflict with the interests of the
remaining Shareholders.
- The Purchasers may accept only a portion of the Shares
tendered by a Shareholder in the event a total of more than
300,000 Shares are tendered.
The Offer will provide Shareholders with an opportunity to liquidate
their investment without the usual transaction costs associated with market
sales. Shareholders may have a more immediate need to use the cash now tied up
in an investment in the Shares and wish to sell them to the Purchasers.
Establishment of the Offer Price
The Purchasers have set the Offer Price at $3.00 per Share, less the
amount of any dividends or other distributions declared or made with respect to
the Shares between the Offer Date and Expiration Date. Tender of Shares will
include the tender of any and all securities into which the Shares may be
converted or exchanged, and any securities distributed with respect to the
Shares, by way of stock dividend or otherwise, from and after the Offer Date.
The Shares are currently traded on the American Stock Exchange ("AMEX") under
the symbol "HFD". The following table shows the range of high and low bid prices
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of the Shares for the years 1997 and 1998 as reported through AMEX. These
quotations represent prices between dealers without any retail markup, markdown
or commissions and may not represent actual transactions.
1997
Quarter High Low
First 10 1/2 7 1/2
Second 9 7/8 8 3/8
Third 9 5/8 8 7/8
Fourth 9 3/16 5
1998
Quarter High Low
First 8 5 1/8
Second 5 9/16 4
Third 4 3/8 1 13/16
Fourth 2 3/8 1 9/16
1999 (through 2/16/99)
High Low
2 5/8 2 1/8
One of the Purchasers, Sutter Opportunity Fund, LLC ("Sutter"), owns a
total of 77,318 Shares, or approximately 4.98% of the currently outstanding
total number of Shares. Sutter acquired a total of 18,583 Shares at gross price
of $1.88 per Share in a tender offer beginning August 25, 1998 and ending
October 14, 1998. Sutter acquired a total of 4,185 Shares at a gross price of
$2.00 per Share during a tender offer commencing December 7, 1998 and ending
January 15, 1999. Sutter has also acquired a total of 54,550 Shares in
open market transactions during the period November 23, 1998 through
February 3, 1999, for prices ranging from $1 5/8 to $2 5/8 per Share. One of the
other Purchasers, MP Value Fund 5, LLC, acquired a total of 30,000 Shares in
February 1999 in an open market transaction for a price of $2 5/8 per Share.
On January 20, 1999, the Company issued a public announcement that it
had entered into a Letter of Intent for the private placement of a total of 2
million new Shares at a price of $3.00 per Share to a private investment group.
None of the Purchasers is affiliated with any member of such private investment
group. The Company stated that the investors have completed due diligence
investigations and the parties are now in the process of completing definitive
documentation. Closing is contemplated to occur prior to March 15, 1999, though
no assurance is given that such date will be met. As the transaction is
currently structured, the shareholders of record prior to completion of the
private placement will receive cash distributions by the Company equal to $0.27
per Share, half within 30 days of the closing of the private placement and half
within 90 days of such closing. If the transaction closes and the distribution
is declared prior to the Expiration Date, selling Shareholders will be entitled
to receive the distribution, and the $3.00 purchase price will be reduced by the
amount of the distribution. If the closing occurs and the distribution is
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declared after the Expiration Date, the Purchasers will be entitled to any
distributions attributable to tendered Shares and the full $3.00 purchase price
will be payable.
In addition to the foregoing transaction, the Company has announced
that it will spin off a separate wholly-owned subsidiary, Host Mortgages, Inc.
("HMI"), which will acquired certain properties using an sale-leaseback
structure. Shares of HMI will be distributed to shareholders of record as of the
closing date. As noted above, tender of Shares will include the tender of any
and all securities into which the Shares may be converted or exchanged, and any
securities distributed with respect to the Shares, by way of stock dividend or
otherwise, from and after the Offer Date.
General Background Information
Certain information contained in this Offer to Purchase which relates
to, or represents, statements made by the Company or the General Partner, has
been derived from information provided in reports filed by the Company with the
Securities and Exchange Commission.
According to publicly available information, there were 1,553,569
Shares issued and outstanding as of September 30, 1998, and 1,535,868 Shares
issued and outstanding held by approximately 926 Shareholders at December 31,
1997.
Tendering Shareholders will not be obligated to pay transfer fees,
brokerage fees or commissions on the sale of the Shares 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 Shares
tendered by each Shareholder.
If, prior to the Expiration Date, the Purchasers increase the
consideration offered to Shareholders pursuant to the Offer, such increased
consideration will be paid with respect to all Shares that are purchased
pursuant to the Offer, whether or not such Shares were tendered prior to such
increase in consideration.
Shareholders are urged to read this Offer to Purchase and the
accompanying Letter of Transmittal carefully before deciding whether to tender
their Shares.
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 Shares 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 17, 1998, 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
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Purchasers reserve the right (but shall not be obligated) to (i) decline to
purchase any of the Shares tendered, terminate the Offer and return all tendered
Shares to tendering Shareholders, (ii) waive all the unsatisfied conditions and,
subject to complying with applicable rules and regulations of the Commission,
purchase all Shares validly tendered, (iii) extend the Offer and, subject to the
right of Shareholders to withdraw Shares until the Expiration Date, retain the
Shares 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 Shares as offered herein.
Section 2. Proration; Acceptance for Payment and Payment for Shares. If the
number of Shares validly tendered prior to the Expiration Date and not withdrawn
is 300,000 or less, the Purchasers, upon the terms and subject to the conditions
of the Offer, will accept for payment all Shares so tendered. If the number of
Shares validly tendered prior to the Expiration Date and not withdrawn exceeds
300,000, the Purchasers, upon the terms and subject to the conditions of the
Offer, will accept for payment Shares 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 Shares 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 Shares 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, Shares
validly tendered and not withdrawn in accordance with Section 4, as promptly as
practicable following the Expiration Date. In all cases, payment for Shares
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 Shares when, as and if the
Purchasers give oral or written notice to the Depositary of the Purchasers'
acceptance for payment of such Shares pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Shares 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 Shareholders for the
purpose of receiving payment from the Purchasers and transmitting payment to
tendering Shareholders.
Under no circumstances will interest be paid on the Offer Price by
reason of any delay in making such payment.
If any tendered Shares are not purchased for any reason, the Letter of
Transmittal with respect to such Shares not purchased will be of no force or
effect. If, for any reason whatsoever, acceptance for payment of, or payment
for, any Shares tendered pursuant to the Offer is delayed or the Purchasers are
unable to accept for payment, purchase or pay for Shares tendered pursuant to
the Offer, then, without prejudice to the Purchasers' rights under Section 13
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(but subject to compliance with Rule 14e-1(c) under the Exchange Act), the
Depositary may, nevertheless, on behalf of the Purchasers, retain tendered
Shares, subject to any limitations of applicable law, and such Shares may not be
withdrawn except to the extent that the tendering Shareholders are entitled to
withdrawal rights as described in Section 4.
If, prior to the Expiration Date, the Purchasers shall increase the
consideration offered to Shareholders pursuant to the Offer, such increased
consideration shall be paid for all Shares accepted for payment pursuant to the
Offer, whether or not such Shares were tendered prior to such increase.
Section 3. Procedures for Tendering Shares.
Valid Tender. For Shares 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 pink 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 Shareholder may tender any or all Shares
owned by such Shareholder.
In order for a tendering Shareholder to participate in the Offer,
Shares must be validly tendered and not withdrawn prior to the Expiration Date,
which is 12:00 midnight, Pacific Standard Time, on March 17, 1998, 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 Shareholder 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 Shares purchased pursuant to the Offer, a tendering Shareholder must
provide the Depositary with such Shareholder's correct taxpayer identification
number and make certain certifications that such Shareholder is not subject to
backup federal income tax withholding. Each tendering Shareholder must insert in
the Letter of Transmittal the Shareholder'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 Company
liabilities allocable to each Share tendered, each Shareholder must complete the
FIRPTA Affidavit included in the Letter of Transmittal certifying such
Shareholder's taxpayer identification number and address and that the
Shareholder 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 Shareholder irrevocably appoints the designees of the Purchasers as
such Shareholder's proxies, in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
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Shareholder's rights with respect to the Shares tendered by such
Shareholder and accepted for payment by the Purchasers. Such appointment will be
effective when, and only to the extent that, the Purchasers accept such Shares
for payment. Upon such acceptance for payment, all prior proxies given by such
Shareholder with respect to such Shares 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 Shares,
be empowered to exercise all voting and other rights of such Shareholder as they
in their sole discretion may deem proper at any meeting of Shareholders, by
written consent or otherwise. In addition, by executing a Letter of Transmittal,
a Shareholder also assigns to the Purchasers all of the Shareholder's rights to
receive dividends or other distributions from the Company with respect to Shares
which are accepted for payment and purchased pursuant to the Offer, other than
those dividends or other distributions declared or paid during the period
commencing on the Offer Date and terminating on the Expiration Date.
Determination of Validity; Rejection of Shares; 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 Shares
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 Shares 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 Shares of any
particular Shareholder, 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 Shares or will incur any
liability for failure to give any such notification.
A tender of Shares pursuant to any of the procedures described above
will constitute a binding agreement between the tendering Shareholder and the
Purchasers upon the terms and subject to the conditions of the Offer, including
the tendering Shareholder's representation and warranty that (i) such
Shareholder owns the Shares being tendered within the meaning of Rule 14e-4
under the Exchange Act and (ii) the tender of such Share 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 Shareholders who have granted options to sell or
purchase the Shares, hold option rights to acquire such securities, maintain
"short" positions in the Shares (i.e., have borrowed the Shares) or have loaned
the Shares to a short seller. Because of the nature of limited Company
interests, the Purchasers believe it is unlikely that any option trading or
short selling activity exists with respect to the Shares. In any event, a Share
holder will be deemed to tender Shares in compliance with Rule 14e-4 and the
Offer if the holder is the record owner of the Shares and the holder (i)
delivers the Shares 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 Shares pursuant to the Offer are irrevocable, provided that
Shares tendered pursuant to the Offer may be withdrawn at any time prior
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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 13, 1999.
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 Shares
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, Shares is delayed for any reason or if
the Purchasers are unable to purchase or pay for Shares for any reason, then,
without prejudice to the Purchasers' rights under the Offer, tendered Shares may
be retained by the Depositary on behalf of the Purchasers and may not be
withdrawn except to the extent that tendering Shareholders 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.
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 Shares properly withdrawn will be deemed not to be validly tendered
for purposes of the Offer. Withdrawn Shares 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 Shares 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 Shares not
heretofore accepted for payment or paid for, or to terminate the Offer and not
accept for payment any Shares 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 Shares 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
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to disseminate to Shareholders 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 Shares) are delayed in their
payment for Shares or are unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchasers' rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchasers, and such
Shares may not be withdrawn except to the extent tendering Shareholders are
entitled to withdrawal rights as described in Section 4. However, the ability of
the Purchasers to delay payment for Shares 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,
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. Federal Income Tax Consequences. Sale of Shares will result in
income tax consequences to the selling Shareholder. EACH SHAREHOLDER TENDERING
SHARES SHOULD CONSULT SUCH SHAREHOLDER'S OWN TAX ADVISOR AS TO THE PARTICULAR
TAX CONSEQUENCES TO SUCH SHAREHOLDER OF ACCEPTING THE OFFER, INCLUDING THE
APPLICATION OF FEDERAL, FOREIGN, STATE, LOCAL AND OTHER TAX LAWS.
Section 7. Effects of the Offer.
Limitations on Resales. The Company's governing instruments prohibit the holding
by any one Purchaser of in excess of 9.8% of the outstanding Shares. This
restriction is intended to help the Company comply with REIT qualification
rules, but the Company has not and is not currently qualified under the Internal
Revenue Code as an REIT. This restriction has not been imposed on the holdings
of the Company's principal shareholder, who held 38.48% of the outstanding
Shares as of December 31, 1997. Furthermore, the Company has advised the
Purchasers that it intends to waive this restriction on transfer with respect
to the purchase of Shares pursuant to the Offer.
Effect on Trading Market. See the discussion above under "Establishment of the
Offer Price." The Purchasers are not aware of any specific effect the Offer will
have on the trading market for Shares.
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Voting Power of Purchasers. Depending on the number of Shares 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 Shareholders, though the
maximum number of Shares sought hereunder would not give the Purchasers a
controlling voting interest.
Other Potential Effects. The Shares are registered under the Exchange Act, which
requires, among other things that the Company furnish certain information to its
Shareholders and to the Commission and comply with the Commission's proxy rules
in connection with meetings of, and solicitation of consents from, Shareholders.
Registration and reporting requirements could be terminated by the Company if
the number of record holders falls below 300, or below 500 if the Company's
total assets are below $10 million for three consecutive preceding fiscal years.
The Company reported over 1,200 Shareholders and total assets in excess of $31
million as of its December 31, 1997 fiscal year end, and total assets of in
excess of $33 million as of September 30, 1998. Accordingly, the Purchasers do
not believe that the purchase of Shares pursuant to the Offer will result in the
Shares 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 Shares. 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 Shares
purchased pursuant to the Offer. The Purchasers are seeking to purchase a total
of 300,000 Shares. If the Purchasers acquire fewer than 300,000 Shares pursuant
to the Offer, the Purchasers may seek to make further purchases on the open
market at prevailing prices, or solicit Shares pursuant to one or more future
tender offers at the same price, a higher price or, if the Company's
circumstances change, at a lower price. Alternatively, the Purchasers may
discontinue any further purchases of Shares after termination of the Offer,
regardless of the number of Shares purchased.
The Purchasers are acquiring the Shares pursuant to the Offer solely
for investment purposes. The Purchasers have no present intention to seek
control of the Company or to change the management or operations of the Company.
The Purchasers do not have any present intention to seek or cause a liquidation
of the Company. The Purchasers nevertheless reserve the right, at an appropriate
time, to exercise their rights as Shareholders to vote on matters subject to a
Shareholder vote.
Section 9. The Business of the Company. Information included herein concerning
the Company is derived from the Company's publicly-filed reports. Information
concerning the Company, 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 Company, and expressly disclaim
any responsibility for the information included in such reports and extracted in
this Offer.
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.
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The Depositary's role is administrative only, however, and any conflict of
interest should not be deemed material to Share holders.
Section 11. Certain Information Concerning the Purchasers. The Purchasers
are MP VALUE FUND 5, LLC; MORAGA-DEWAAY FUND, LLC; MP INCOME FUND 15, LLC;
ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.; ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS, LTD.; MACKENZIE PATTERSON SPECIAL FUND 3, LLC;
MACKENZIE PATTERSON SPECIAL FUND 4, LLC; PREVIOUSLY OWNED PARTNERSHIPS INCOME
FUND, L.P.; CAL KAN, INC.; MORAGA FUND I, L.P.; ACCELERATED HIGH YIELD INCOME
FUND II, LTD; and SUTTER OPPORTUNITY FUND, LLC. 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
securities, particularly real estate- based securities. The principal business
address of each of the Purchasers other than SUTTER OPPORTUNITY FUND, LLC is
1640 School Street, Moraga, California 94556. The principal business address of
SUTTER OPPORTUNITY FUND, LLC is 595 Market Street, Suite 2100, San Francisco,
California 94105.
The Purchasers have made binding commitments to contribute and have
available sufficient amounts of liquid capital necessary to fund the acquisition
of all Shares 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. The Purchasers, their general partners, owners, managers and members
have an aggregate net worth in excess of $15 million, including net liquid
assets of more than $5 million.
The principal of one of the Purchasers advised the Company in advance
of its intention to make this Offer and has discussed the intended tender offer
with the Company. The Purchasers and the Company have not entered into any
understanding or arrangement with respect to this Offer, the Purchasers' holding
of the Shares or any other matter. As noted above, the Purchasers have been
advised that the Company has determined to waive a restriction on transfer that
might have had an impact on the recognition of record ownership of Shares by the
Purchasers, and the Purchasers understand that the Company has determined to
permit the transfer to the Purchasers of the full number of Shares covered by
this Offer.
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
Shares, (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 Shares 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 Company, 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
14
<PAGE>
knowledge of the Purchasers, the persons listed on Schedule I, or any
affiliate of the Purchasers on the one hand, and the Company 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 Company 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 $900,000
would be required to purchase 300,000 Shares, 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.
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 Shares 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 Shares not theretofore accepted for payment or paid for and may terminate or
amend the Offer as to such Shares 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 Shares by the Purchasers, (ii)
imposes or confirms limitations on the ability of the Purchasers effectively to
exercise full rights of ownership of any Shares, including, without limitation,
the right to vote any Shares acquired by the Purchasers pursuant to the Offer or
otherwise on all matters properly presented to the Company's Shareholders, (iii)
requires divestiture by the Purchasers of any Shares, (iv) causes any 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 Company;
(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
15
<PAGE>
Company, which, in the reasonable judgment of the Purchasers, is or may be
materially adverse to the Company, 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 Shares;
(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 Shares
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 Shares beneficially owned by such person or group as
disclosed in such Statement by two percent or more of the outstanding Shares.
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.
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
Shares 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 Shares 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 Company's business, or that certain parts of the Company'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 Shares thereunder. The Purchasers' obligation to purchase and pay for
Shares is subject to certain conditions, including conditions related to the
legal matters discussed in this Section 14.
16
<PAGE>
Antitrust. The Purchasers do not believe that the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, is applicable to the acquisition
of Shares pursuant to the Offer.
Margin Requirements. The Shares 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. The Purchasers, however, 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 Shares 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 Shares 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) SHAREHOLDERS IN ANY JURISDICTION IN WHICH THE
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.
17
<PAGE>
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.
February 17, 1999
MP VALUE FUND 5, LLC;
MORAGA-DEWAAY FUND, LLC;
MP INCOME FUND 15, LLC;
ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.;
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.;
MACKENZIE PATTERSON SPECIAL FUND 3, LLC;
MACKENZIE PATTERSON SPECIAL FUND 4, LLC;
PREVIOUSLY OWNED PARTNERSHIPS INCOME FUND, L.P.;
CAL KAN, INC.;
MORAGA FUND I, L.P.;
ACCELERATED HIGH YIELD INCOME FUND II, LTD;
SUTTER OPPORTUNITY FUND, LLC
18
<PAGE>
SCHEDULE I
THE PURCHASERS AND THEIR RESPECTIVE PRINCIPALS
The Purchasers are MP VALUE FUND 5, LLC; MORAGA-DEWAAY FUND, LLC; MP INCOME
FUND 15, LLC; ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.; ACCELERATED HIGH
YIELD INSTITUTIONAL INVESTORS, LTD.; MACKENZIE PATTERSON SPECIAL FUND 3, LLC;
MACKENZIE PATTERSON SPECIAL FUND 4, LLC; PREVIOUSLY OWNED PARTNERSHIPS INCOME
FUND, L.P.; CAL KAN, INC.; MORAGA FUND I, L.P.; ACCELERATED HIGH YIELD INCOME
FUND II, LTD; and SUTTER OPPORTUNITY FUND, LLC. The Managing Member or Manager
of MP VALUE FUND 5, LLC; MORAGA-DEWAAY FUND, LLC; MP INCOME FUND 15, LLC
MACKENZIE PATTERSON SPECIAL FUND 3, LLC; and MACKENZIE PATTERSON SPECIAL FUND 4,
LLC; and the general partner of each of MORAGA FUND 1, L.P., ACCELERATED HIGH
YIELD INSTITUTIONAL FUND, LTD.; ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS,
LTD.; and PREVIOUSLY OWNED PARTNERSHIPS INCOME FUND, L.P. is MacKenzie
Patterson, Inc. The managing member of SUTTER OPPORTUNITY FUND, LLC is
Sutter Capital Management, LLC. The names of the directors and executive
officers of MacKenzie Patterson, Inc. and the present principal occupations and
five year employment histories of each such person and the manager of Sutter
Capital Management, LLC are set forth below.
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
Shares among them in such manner and proportions as they may determine in the
future. Except as noted below, each individual is a citizen of the United States
of America.
MacKenzie Patterson, Inc.
C.E. Patterson is President 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., 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.
19
<PAGE>
Victoriaann Tacheira is senior vice president of MacKenzie Patterson, Inc.,
which she joined in 1988. Ms. Tacheira has eleven years of experience with the
NASD broker/dealer business and is experienced in all phases of broker/dealer
operations. She is licensed with the NASD as a General Securities Principal. She
is president and owner of North Coast Securities Corporation. Ms. Tacheira has
been certified by the College of Financial Planning in Denver, Colorado, as a
Financial ParaPlanner.
Sutter Capital Management, LLC
Sutter Capital Management, LLC is a California limited liability company
formed in 1998 to serve as the manager for Sutter Opportunity Fund, LLC. The
managing member and controlling interest holder in Sutter Capital Management,
LLC is Robert E. Dixon. Mr. Dixon is a Canadian citizen.
Mr. Dixon received his Bachelors degree in economics from the University of
California at Los Angeles in 1992. He worked for Lehman Brothers in equity sales
and trading during 1993 and 1994. In October 1994, he joined MacKenzie
Patterson, Inc. as a securities research analyst. In June 1996, Mr. Dixon left
MacKenzie Patterson, Inc. to go into business buying and selling securities for
his own account and that of the entity he controls, Sutter Opportunity Fund, in
which he has been engaged since that date. Mr. Dixon was a registered
representative of North Coast Securities from 1994 through 1997.
20
Exhibit (a)(2)
<PAGE>
LETTER OF TRANSMITTAL
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL
EXPIRE AT 12:00 MIDNIGHT, PACIFIC STANDARD TIME, ON
MARCH 17, 1999 (THE "EXPIRATION DATE") UNLESS EXTENDED.
Deliver to: MacKenzie Patterson, Inc.
1640 School Street
Moraga, California 94556
Via Facsimile: (925) 631-9119
For assistance: (800) 854-8357
(PLEASE INDICATE CHANGES OR CORRECTIONS TO THE
ADDRESS PRINTED TO THE LEFT)
To participate in the Offer, a duly executed copy of this Letter of
Transmittal and any other documents required by this Letter of Transmittal must
be received by the Depositary on or prior to the Expiration Date. Delivery of
this Letter of Transmittal or any other required documents to an address other
than as set forth above does not constitute valid delivery. The method of
delivery of all documents is at the election and risk of the tendering
Shareholder. Please use the pre-addressed, postage-paid envelope provided.
This Letter of Transmittal is to be completed by holders of Shares of Class
A Common Stock of HOST FUNDING, INC., a Maryland corporation (the "Company"),
pursuant to the procedures set forth in the Offer to Purchase (as defined
below). Capitalized terms used herein and not defined herein have the meanings
ascribed to such terms in the Offer to Purchase.
PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS
Gentlemen:
The undersigned hereby tenders to MP VALUE FUND 5, LLC; MORAGA-DEWAAY FUND,
LLC; MP INCOME FUND 15, LLC; ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.;
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.; MACKENZIE PATTERSON
SPECIAL FUND 3, LLC; MACKENZIE PATTERSON SPECIAL FUND 4, LLC; PREVIOUSLY OWNED
PARTNERSHIPS INCOME FUND, L.P.; CAL KAN, INC.; MORAGA FUND I, L.P.; ACCELERATED
HIGH YIELD INCOME FUND II, LTD; and SUTTER OPPORTUNITY FUND, LLC (collectively
the "Purchasers") all of the Shares of Class A Common Stock ("Shares") of the
Company held by the undersigned as set forth above (or, if less than all such
Shares, the number set forth below in the signature box), at a purchase price
equal to $3.00 per Share, less the amount of any dividends or other
distributions made or declared with respect to the Shares between the Offer Date
and the Expiration Date, and upon the other terms and subject to the conditions
set forth in the Offer to Purchase, dated February 17, 1999 (the "Offer to
Purchase") and in this Letter of Transmittal, as each may be supplemented or
amended from time to time (which together constitute the "Offer"). Receipt of
the Offer to Purchase is hereby acknowledged. It is specifically understood and
agreed that tender of Shares will include the tender of any and all securities
into which the Shares may be converted or exchanged, and any securities
distributed with respect to the Shares, by way of stock dividend or otherwise,
from and after the Offer Date. The undersigned recognizes that, if more than
300,000 Shares are validly tendered prior to or on the Expiration Date and not
properly withdrawn, the Purchasers will, upon the terms of the Offer, accept for
payment from among those Shares tendered prior to or on the Expiration Date
300,000 Shares on a pro rata basis, with adjustments to avoid purchases of
fractional Shares, based upon the number of Shares validly tendered prior to the
1
<PAGE>
Expiration Date and not withdrawn. Subject to and effective upon acceptance
for payment of any of the Shares tendered hereby, the undersigned hereby sells,
assigns and transfers to, or upon the order of, Purchasers all right, title and
interest in and to such Shares which are purchased pursuant to the Offer. The
undersigned hereby irrevocably constitutes and appoints the Purchasers as the
true and lawful agent and attorney-in-fact and proxy of the undersigned with
respect to such Shares, and each of them, with full power of substitution (such
power of attorney and proxy being deemed to be an irrevocable power and proxy
coupled with an interest), to deliver such Shares and transfer ownership of such
Shares, on the books of the Company, together with all accompanying evidences of
transfer and authenticity, to or upon the order of the Purchasers and, upon
payment of the purchase price in respect of such Shares by the Purchasers, to
exercise all voting rights and to receive all benefits and otherwise exercise
all rights of beneficial ownership of such Shares all in accordance with the
terms of the Offer. Upon the purchase of Shares pursuant to the Offer, all prior
proxies and consents given by the undersigned with respect to such Shares will
be revoked and no subsequent proxies or consents may be given (and if given will
not be deemed effective). In addition, by executing this Letter of Transmittal,
the undersigned assigns to the Purchasers all of the undersigned's rights to
receive dividends or other distributions from the Company with respect to Shares
which are purchased pursuant to the Offer, and all rights to receive securities
into which the Shares may be converted or exchanged, and any securities
distributed with respect to the Shares, by way of stock dividend or otherwise,
from and after the Offer Date, other than cash dividends or other distributions
declared or paid through the Expiration Date; and to change the address of
record for such dividends or other distributions on the books of the Company.
Upon request, the Seller will execute and deliver, and hereby irrevocably
directs any custodian to execute and deliver, any additional documents deemed by
the Purchaser to be necessary or desirable to complete the assignment, transfer
and purchase of such Shares.
The undersigned hereby represents and warrants that the undersigned owns
the Shares tendered hereby within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, and has full power and authority to validly
tender, sell, assign and transfer the Shares tendered hereby, and that when any
such Shares are purchased by the Purchasers, the Purchasers will acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges, encumbrances, conditional sales agreements or other
obligations relating to the sale or transfer thereof, and such Shares will not
be subject to any adverse claim. Upon request, the undersigned will execute and
deliver any additional documents deemed by the Purchasers to be necessary or
desirable to complete the assignment, transfer and purchase of Shares tendered
hereby.
The undersigned understands that a tender of Shares to the Purchasers will
constitute a binding agreement between the undersigned and the Purchasers upon
the terms and subject to the conditions of the Offer. The undersigned recognizes
the right of the Purchasers to effect a change of distribution address to
MacKenzie Patterson, Inc. at 1640 School Street, Moraga, California, 94556. The
undersigned recognizes that under certain circumstances set forth in the Offer
to Purchase, the Purchasers may not be required to accept for payment any of the
Shares tendered hereby. In such event, the undersigned understands that any
Letter of Transmittal for Shares not accepted for payment will be destroyed by
the Purchasers. All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and any obligations of the
undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in the Offer to
Purchase, this tender is irrevocable.
===============================================================================
SIGNATURE BOX
(Please complete Boxes A, B, C and D on the following page as necessary)
===============================================================================
- ----------------------------------------------------------------------------
Please sign exactly as your name is printed (or corrected) above, and insert
your Taxpayer Identification Number or Social Security Number in
the space provided below your X_______________________________
signature. For joint owners, (Signature of Owner) Date
each joint owner must sign.
(See Instructions 1) The
signatory hereto hereby certifies X_______________________________
(Signature of Owner) Date
2
<PAGE>
under penalties of perjury the
statements in Box B, Box C and,
if applicable, Box D. If the
undersigned is tendering less Taxpayer I.D. or Social # ___________
than all Shares held, the number Telephone No. (day) __________
of Shares tendered is set forth (eve.)__________
below. Otherwise, all Shares held
by the undersigned are tendered hereby.
______________ Shares
=============================================================================
BOX A
==============================================================================
Medallion Signature Guarantee
(Required for all Sellers)
(See Instruction 1)
Name and Address of Eligible Institution: ____________________________________
Authorized Signature _____________________________ Title _________________
Name ________________________________ Date _______________,199___
===============================================================================
===============================================================================
BOX B
SUBSTITUTE FORM W-9
(See Instruction 3 - Box B)
- -------------------------------------------------------------------------------
The person signing this Letter of Transmittal hereby certifies the
following to the Purchasers under penalties of perjury:
(i) The TIN set forth in the signature box on the front of
this Letter of Transmittal is the correct TIN of the Shareholder, or if this box
[ ] is checked, the Shareholder has applied for a TIN. If the Shareholder has
applied for a TIN, a TIN has not been issued to the Shareholder, and either: (a)
the Shareholder has mailed or delivered an application to receive a TIN to the
appropriate IRS Center or Social Security Administration Office, or (b) the
Shareholder intends to mail or deliver an application in the near future (it
being understood that if the Shareholder does not provide a TIN to the
Purchasers within sixty (60) days, 31% of all reportable payments made to the
Shareholder thereafter will be withheld until a TIN is provided to the
Purchasers); and
(ii) Unless this box [ ] is checked, the Shareholder is not
subject to backup withholding either because the Shareholder: (a) is exempt from
backup withholding, (b) has not been notified by the IRS that the Shareholder is
subject to backup withholding as result of a failure to report all interest or
dividends, or (c) has been notified by the IRS that such Shareholder is no
longer subject to backup withholding.
Note: Place an "X" in the box in (ii) if you are unable to certify that the
Shareholder is not subject to backup withholding.
===============================================================================
3
<PAGE>
===============================================================================
BOX C
FIRPTA AFFIDAVIT
(See Instruction 3 - Box C)
- -------------------------------------------------------------------------------
Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg.
1.1445-11T(d), a transferee must withhold tax equal to 10% of the amount
realized with respect to certain transfers of an interest in a Company if 50% or
more of the value of its gross assets consists of U.S. real property interests
and 90% or more of the value of its gross assets consists of U.S. real property
interests plus cash equivalents, and the holder of the Company interest is a
foreign person. To inform the Purchasers that no withholding is required with
respect to the Shareholder's interest in the Company, the person signing this
Letter of Transmittal hereby certifies the following under penalties of perjury;
(i) Unless this box [ ] is checked, the Shareholder, if an
individual, is a U.S. citizen or a resident alien for purposes of U.S. income
taxation, and if other than an individual, is not a foreign corporation, foreign
Company, foreign estate or foreign trust (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations); (ii) the Shareholder's U.S.
social security number (for individuals) or employer identification number (for
non-individuals) is correctly printed in the signature box on the front of this
Letter of Transmittal; and (iii) the Shareholder's home address (for
individuals), or office address (for non-individuals), is correctly printed (or
corrected) on the front of this Letter of Transmittal. If a corporation, the
jurisdiction of incorporation is __________.
The person signing this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchasers and that any false
statements contained herein could be punished by fine, imprisonment, or both.
===============================================================================
===============================================================================
BOX D
SUBSTITUTE FORM W-8
(See Instruction 4 - Box D)
- -------------------------------------------------------------------------------
By checking this box [ ], the person signing this Letter of
Transmittal hereby certifies under penalties of perjury that the Shareholder is
an "exempt foreign person" for purposes of the backup withholding rules under
the U.S. federal income tax laws, because the Shareholder:
(i) Is a nonresident alien individual or a foreign corporation,
Company, estate or trust;
(ii) If an individual, has not been and plans not to be present in the
U.S. for a total of 183 days or more during the calendar year; and
(iii) Neither engages, nor plans to engage, in a U.S. trade or business
that has effectively connected gains from transactions with a
broker or barter exchange.
===============================================================================
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Tender, Signature Requirements; Delivery. After carefully reading and
completing this Letter of Transmittal, in order to tender Shares a Shareholder
must sign at the "X" on the bottom of the first page of this Letter of
Transmittal and insert the Shareholder's correct Taxpayer Identification Number
or Social Security Number ("TIN") in the space provided below the signature. The
signature must correspond exactly with the name printed (or corrected) on the
front of this Letter of Transmittal without any change whatsoever. If this
Letter of Transmittal is signed by the registered Shareholder of the Shares a
Medallion signature guarantee on this Letter of Transmittal is required.
Similarly, if Shares are tendered for the account of a member firm of a
registered national security exchange, a member firm of the National Association
of Securities Dealers, Inc. or a commercial bank, savings bank, credit union,
savings and loan association or trust company having an office, branch or agency
in the United States (each an "Eligible Institution"), a Medallion signature
guarantee is required. In all other cases, signatures on this Letter of
Transmittal must be Medallion guaranteed by an Eligible Institution, by
4
<PAGE>
completing the Signature guarantee set forth in BOX A of this Letter of
Transmittal. If any tendered Shares are registered in the names of two or more
joint holders, all such holders must sign this Letter of Transmittal. If this
Letter of Transmittal is signed by trustees, administrators, guardians,
attorneys-in-fact, officers of corporations, or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and must
submit proper evidence satisfactory to the Purchasers of their authority to so
act. For Shares to be validly tendered, a properly completed and duly executed
Letter of Transmittal, together with any required signature guarantees in BOX A,
and any other documents required by this Letter of Transmittal, must be received
by the depositary prior to or on the Expiration Date at its address or facsimile
number set forth on the front of this Letter of Transmittal. No alternative,
conditional or contingent tenders will be accepted. All tendering Shareholders
by execution of this Letter of Transmittal waive any right to receive any notice
of the acceptance of their tender.
2. Transfer Taxes. The Purchasers will pay or cause to be paid all transfer
taxes, if any, payable in respect of Shares accepted for payment pursuant to the
Offer.
3. U.S. Persons. A Shareholder who or which is a United States citizen or
resident alien individual, a domestic corporation, a domestic Company, a
domestic trust or a domestic estate (collectively "United States persons") as
those terms are defined in the Internal Revenue Code and Income Tax Regulations,
should complete the following:
Box B - Substitute Form W-9. In order to avoid 31% federal income tax
backup withholding, the Shareholder must provide to the Purchasers the
Shareholder's correct Taxpayer Identification Number or Social Security
Number ("TIN") in the space provided below the signature line and
certify, under penalties of perjury, that such Shareholder is not
subject to such backup withholding. The TIN that must be provided is
that of the registered Shareholder indicated on the front of this
Letter of Transmittal. If a correct TIN is not provided, penalties may
be imposed by the Internal Revenue Service ("IRS"), in addition to the
Shareholder being subject to backup withholding. Certain Shareholders
(including, among others, all corporations) are not subject to backup
withholding. Backup withholding is not an additional tax. If
withholding results in an overpayment of taxes, a refund may be
obtained from the IRS.
Box C - FIRPTA Affidavit. To avoid potential withholding of tax
pursuant to Section 1445 of the Internal Revenue Code, each Shareholder
who or which is a United States Person (as defined Instruction 3 above)
must certify, under penalties of perjury, the Shareholder's TIN and
address, and that the Shareholder is not a foreign person. Tax withheld
under Section 1445 of the Internal Revenue Code is not an additional
tax. If withholding results in an overpayment of tax, a refund may be
obtained from the IRS.
4. Box D - Foreign Persons. In order for a Shareholder who is a foreign
person (i.e., not a United States Person as defined in 3 above) to qualify as
exempt from 31% backup withholding, such foreign Shareholder must certify, under
penalties of perjury, the statement in BOX D of this Letter of Transmittal
attesting to that foreign person's status by checking the box preceding such
statement. However, such person will be subject to withholding of tax under
Section 1445 of the Code.
5. Additional Copies of Offer to Purchase and Letter of Transmittal.
Requests for assistance or additional copies of the Offer to Purchase and this
Letter of Transmittal may be obtained from the Purchasers by calling
800-854-8357.
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Exhibit (a)(3)
<PAGE>
February 17, 1999
TO: SHARE HOLDERS OF HOST FUNDING, INC.
SUBJECT: OFFER TO PURCHASE SHARES
Dear Shareholder:
As described in the enclosed Offer to Purchase and related Letters of
Transmittal (the "Offer"), MP VALUE FUND 5, LLC; MORAGA-DEWAAY FUND, LLC; MP
INCOME FUND 15, LLC; ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.;
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.; MACKENZIE PATTERSON
SPECIAL FUND 3, LLC; MACKENZIE PATTERSON SPECIAL FUND 4, LLC; PREVIOUSLY OWNED
PARTNERSHIPS INCOME FUND, L.P.; CAL KAN, INC.; MORAGA FUND I, L.P.; ACCELERATED
HIGH YIELD INCOME FUND II, LTD; and SUTTER OPPORTUNITY FUND, LLC (collectively
the "Purchasers") are offering to purchase up to 300,000 Shares of Class A
Common Stock (the "Shares") in HOST FUNDING, INC., a Maryland corporation (the
"Company") at a purchase price equal to:
$3.00 per Share
The Offer will provide you with an opportunity to liquidate all, or a
portion of, your investment in HOST FUNDING, INC. without the usual transaction
costs associated with market sales or Company transfer fees.
After carefully reading the enclosed Offer, if you elect to tender your
Shares, mail (using the enclosed pre-addressed, postage paid envelope) or
telecopy a duly completed and executed copy of the Letter of Transmittal (the
pink form) and Change of Address forms, and any other documents required by the
Letter of Transmittal, to the Depositary for the Offer at:
MacKenzie Patterson, Inc.,
1640 School Street
Moraga, California 94556
Telecopy: (925) 631-9119
If you have any questions or need assistance, please call the
Depository at 800-854-8357.
This Offer expires (unless extended) March 17, 1999
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Exhibit (a)(4)
<PAGE>
This announcement is neither an offer to buy nor a solicitation of an offer to
sell Shares. The Offer is being made solely by the formal Offer to Purchase
forwarded to Shareholders of record and is not being made to, nor will tenders
be accepted from or on behalf of, Shareholders residing in any jurisdiction in
which making or accepting the Offer would violate that jurisdiction's laws. In
those jurisdictions where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of Purchasers only by one or more registered dealers licensed
under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
up to 300,000 Shares of Class A Common Stock ("Shares") of
HOST FUNDING, INC., a Maryland corporation (the "Company") at a price of $3.00
per Share, by:
MP VALUE FUND 5, LLC; MORAGA-DEWAAY FUND, LLC; MP INCOME FUND 15, LLC;
ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.; ACCELERATED HIGH
YIELD INSTITUTIONAL INVESTORS, LTD.; MACKENZIE PATTERSON SPECIAL FUND 3,
LLC; MACKENZIE PATTERSON SPECIAL FUND 4, LLC; PREVIOUSLY OWNED PARTNERSHIPS
INCOME FUND, L.P.; CAL KAN, INC.; MORAGA FUND I, L.P.; ACCELERATED HIGH YIELD
INCOME FUND II, LTD; and SUTTER OPPORTUNITY FUND, LLC
(collectively the "Purchasers")
The Purchasers are offering to purchase for cash up to 300,000 Shares held by
the Shareholders of HOST FUNDING, INC. at $3.00 per Share upon the terms and
subject to the conditions set forth in Purchasers' Offer to Purchase and in the
related Letter of Transmittal (which together constitute the "Offer" and the
"Tender Offer Documents"). THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, PACIFIC DAYLIGHT TIME, ON MARCH 17, 1999, UNLESS THE OFFER IS
EXTENDED.
Funding for the purchase of the Shares will be provided through the
Purchasers' existing working capital. The Offer will expire at 12:00
midnight, Pacific Standard Time on March 17, 1999, unless and until
Purchasers, in their sole discretion, shall have extended the period of time for
which the Offer is open (such date and time, as extended the "Expiration Date").
If Purchasers make a material change in the terms of the Offer, or if they
waive a material condition to the Offer, Purchasers will extend the Offer and
disseminate additional tender offer materials to the extent required by Rules
14d-4(c) and 14d-6(d) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The minimum period during which an offer must remain open
following any material change in the terms of the Offer, other than a change in
price or a change in percentage of securities sought or a change in any dealer's
soliciting fee, will depend upon the facts and circumstances including the
materiality of the change with respect to a change in price or, subject to
certain limitations, a change in the percentage of securities ought or a change
in any dealer's soliciting fee. A minimum of ten business days from the date of
such change is generally required to allow for adequate dissemination to
Shareholders. Accordingly, if prior to the Expiration Date, Purchasers increase
(other than increases of not more than two percent of the outstanding Shares) or
decrease the number of Shares being sought, or increase or decrease the
consideration offered pursuant to the Offer, and if the Offer is scheduled to
expire at any time earlier than the period ending on the tenth business day from
the date that notice of such increase or decrease is first published, sent or
given to Shareholders, the Offer will be extended at least until the expiration
of such ten business days. For purposes of the Offer, a "business day" means any
day other than a Saturday, Sunday or federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, Pacific Standard Time.
In all cases payment for the Shares purchased pursuant to the Offer will be
made only after timely receipt of the Letters of Transmittal (or facsimiles
thereof), properly completed and duly executed, with any required signature
guarantees, and any other documents required by such Letters of Transmittal.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shareholders who tender their Shares in response to the Offer will have the
right to withdraw their tendered Shares at any time prior to the Expiration Date
by sending a written or facsimile transmission notice of withdrawal to
Purchasers specifying the name of the person who tendered the Shares to be
withdrawn. In addition, tendered Shares may be withdrawn at any time on or
1
<PAGE>
after April 13, 1999, unless the tender has theretofore been accepted for
payment as provided above.
If tendering Shareholders tender more than the number of Shares that
Purchasers seek to purchase pursuant to the Offer, Purchasers will take into
account the number of Shares so tendered and take up and pay for as nearly as
may be pro rata, disregarding fractions, according to the number of Shares
tendered by each tendering Shareholder during the period during which the
Offer remains open.
The terms of the Offer are more fully set forth in the formal Tender Offer
Documents which are available from Purchasers. The Offer contains terms and
conditions and the information required by Rule 14d-6(e)(1)(vii) under the
Exchange Act which are incorporated herein by reference.
The Tender Offer Documents contain important information which should be
read carefully before any decision is made with respect to the Offer.
The Tender Offer Documents may be obtained by written request to Purchasers
or as set forth below. A request has been made to the Company pursuant to
Rule 14d-5 under the Exchange Act for the use of
its list of Shareholders for the purpose of disseminating the Offer to
Shareholders. Upon compliance by the Company with such request, the Tender Offer
Documents and, if required, other relevant materials will be mailed to record
holders of Shares or persons who are listed as participants in a clearing
agency's security position listing, for subsequent transmittal to beneficial
owners of Shares.
For Copies of the Tender Offer Documents Call Purchasers at 1-800-854-8357
or Make a Written Request Addressed to 1640 School Street, Moraga, California
94556
February 17, 1999
2
