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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
IDS/JONES GROWTH PARTNERS 89-B, LTD.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: Limited
Partnership Interests
(2) Aggregate number of securities to which transaction applies: 63,383
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): Pursuant to
Rule 0-11(c)(2), the transaction valuation is based upon the
Registrant's 24.4 percent interest in the $108,500,000 sales price that
is to be paid to IDS/Jones Joint Venture Partners in connection with the
transaction that is the subject of the proxy solicitation.
(4) Proposed maximum aggregate value of the transaction to the Registrant:
$26,474,000
(5) Total fee paid: $5,295
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
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[JONES INTERCABLE, INC. LOGO]
9697 EAST MINERAL AVENUE
ENGLEWOOD, COLORADO 80112
NOTICE OF VOTE OF THE LIMITED PARTNERS OF IDS/JONES GROWTH PARTNERS 89-B, LTD.
To the Limited Partners of IDS/Jones Growth Partners 89-B, Ltd.:
A special vote of the limited partners of IDS/Jones Growth Partners 89-B,
Ltd. (the "Partnership") is being conducted through the mails on behalf of the
Partnership by Jones Cable Corporation, the managing general partner of the
Partnership, for the purpose of obtaining limited partner approval of the
sale, to TCI Communications, Inc. or one of its affiliates, of the cable
television system serving the cities of Aurora, Plano and Sandwich, the
villages of Montgomery, North Aurora, Oswego and Yorkville and certain
unincorporated areas of the counties of Kane and Kendall, all in the State of
Illinois (the "Aurora System") owned by IDS/Jones Joint Venture Partners (the
"Venture"), a joint venture in which the Partnership has a 24.4 percent
ownership interest, for $108,500,000 in cash, subject to customary working
capital closing adjustments that may have the effect of increasing or
decreasing the sales price by a non-material amount. Information relating to
this matter is set forth in the accompanying Proxy Statement.
If the limited partners approve the proposed sale of the Aurora System and
if the transaction is closed, the Venture will repay all of its indebtedness
(including $47,000,000 borrowed under its credit facility, related parties'
notes totaling $1,600,000, the subordinated advance of $1,406,647 to Jones
Intercable, Inc. and capital lease obligations of $72,753), settle working
capital adjustments, deposit $3,283,500 into an indemnity escrow account and
then distribute the approximate $52,000,000 of net sale proceeds to the
Venture's four partners: the Partnership, IDS/Jones Growth Partners II, L.P.,
IDS Management Corporation and Jones Intercable, Inc. The Partnership will
receive approximately $12,700,000, or 24.4 percent, of the $52,000,000
distribution. The Partnership will repay the outstanding balance of $102,393
due Jones Cable Corporation and then the Partnership will distribute the
remaining $12,597,607 to its limited partners of record as of the closing date
of the sale of the Aurora System. Because the distribution to be made on the
sale of the Aurora System will not exceed 125 percent of the amounts
originally contributed to the Partnership by the limited partners, the general
partners will not receive general partner distributions on the sale of the
Aurora System. The $12,597,607 distribution to the limited partners will give
the Partnership's limited partners an approximate return of $199 for each $250
limited partnership interest, or $795 for each $1,000 invested in the
Partnership. Distribution checks will be issued to limited partners' account
registration or payment instruction of record.
There have been no prior distributions to the limited partners and it is
anticipated that there will be no further distributions to the limited
partners other than from the Partnership's portion of any amounts remaining
after November 15, 1999 in the indemnity escrow account. Once the Partnership
has completed the distribution of its portion of the net proceeds from the
sale of the Aurora System, the limited partners of the Partnership will have
received a total of only $199 for each $250 limited partnership interest, or
$795 for each $1,000 invested in the Partnership (excluding escrowed
proceeds). After the closing of the sale of the Aurora System and the
distribution of the Partnership's portion of the net sale proceeds therefrom,
including the Partnership's portion of the amounts, if any, remaining after
November 15, 1999 in an indemnity escrow account, the Partnership will be
liquidated and dissolved, most likely in the fourth quarter of 1999.
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Only limited partners of record at the close of business on August 31, 1998
are entitled to notice of, and to participate in, this vote of limited
partners. It is very important that all limited partners participate in the
voting. The Venture's ability to complete the transaction discussed in the
Proxy Statement and the Partnership's ability to make a distribution to its
limited partners of its portion of the net proceeds of the sale of the Aurora
System are dependent upon the approval of the transaction by the holders of a
majority of the Partnership's limited partnership interests.
The proposal that is the subject of this proxy solicitation will be adopted
only if approved by the holders of a majority of the limited partnership
interests. Each limited partnership interest entitles the holder thereof to
one vote on the proposal. Because the Partnership's limited partnership
agreement (the "Partnership Agreement") requires that the proposal to sell the
Aurora System be approved by the holders of a majority of the limited
partnership interests, abstentions and non-votes will be treated as votes
against the proposal. A properly executed consent returned to the managing
general partner on which a limited partner does not mark a vote will be
counted as a vote for the proposed sale of the Aurora System. Because limited
partners do not have dissenters' or appraisal rights in connection with the
proposed sale of the Aurora System, if the holders of a majority of the
limited partnership interests approve the proposal, all limited partners will
receive a distribution of the net sale proceeds in accordance with the
procedures prescribed by the Partnership Agreement regardless of how or
whether they vote on the proposal.
Jones Cable Corporation, as managing general partner of the Partnership,
urges you to sign and return the enclosed proxy as promptly as possible. The
proxy should be returned in the enclosed envelope.
JONES CABLE CORPORATION
Managing General Partner
/s/ ELIZABETH M. STEELE
Elizabeth M. Steele
Secretary
Dated: September 15, 1998
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[LOGO OF JONES INTERCABLE, INC.]
9697 EAST MINERAL AVENUE
ENGLEWOOD, COLORADO 80112
PROXY STATEMENT
VOTE OF THE LIMITED PARTNERS
OF IDS/JONES GROWTH PARTNERS 89-B, LTD.
This Proxy Statement is being furnished in connection with the solicitation
of the written consents of the limited partners of IDS/Jones Growth Partners
89-B, Ltd. (the "Partnership") by Jones Cable Corporation, the managing
general partner of the Partnership (the "Managing General Partner"), on behalf
of the Partnership, for the purpose of obtaining limited partner approval of
the sale of the cable television system serving the cities of Aurora, Plano
and Sandwich, the villages of Montgomery, North Aurora, Oswego and Yorkville
and certain unincorporated areas of the counties of Kane and Kendall, all in
the State of Illinois (the "Aurora System") owned by IDS/Jones Joint Venture
Partners (the "Venture"), a joint venture in which the Partnership has a 24.4
percent ownership interest, for $108,500,000 in cash, subject to normal
working capital closing adjustments, to TCI Communications, Inc. or one of its
affiliates ("TCI"). The Partnership's supervising general partner is IDS Cable
Corporation (the "Supervising General Partner") and the Managing General
Partner and the Supervising General Partner are referred to in this Proxy
Statement collectively as the "General Partners." TCI is not an affiliate of
the Partnership or of either of the General Partners.
Proxies in the form enclosed, properly executed and duly returned, will be
voted in accordance with the instructions thereon. Limited partners are urged
to sign and return the enclosed proxy as promptly as possible. Proxies cannot
be revoked except by delivery of a proxy dated as of a later date. Officers
and other employees of the Managing General Partner may solicit proxies by
mail, by fax, by telephone or by personal interview. The deadline for the
receipt of proxy votes is October 30, 1998, unless extended, but the vote of
the Partnership's limited partners will be deemed to be concluded on the date,
at least 20 business days from the date the proxy materials are sent to
limited partners, that the Managing General Partner, on behalf of the
Partnership, is in receipt of proxies executed by the holders of a majority of
the limited partnership interests either consenting to or disapproving of the
proposed transaction. The Managing General Partner may extend the deadline for
receipt of proxy votes if a majority of the limited partners fail to express
an opinion on the transaction by October 30, 1998. If the Managing General
Partner extends the deadline for receipt of proxy votes, the limited partners
will be informed by mail of the reason for the extension and the new deadline.
The cost of the proxy solicitation will be paid by the Partnership.
The Partnership has only one class of limited partners and no limited
partner has a right of priority over any other limited partner. The
participation of the limited partners is divided into limited partnership
interests and each limited partner owns one limited partnership interest for
each $250 of capital contributed to the Partnership.
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As of August 31, 1998, the Partnership had 63,383 limited partnership
interests outstanding, held by approximately 2,753 persons. There is no
established trading market for such interests. To the best of the Managing
General Partner's knowledge, no person or group of persons beneficially own
more than five percent of the limited partnership interests. During the past
several years, Smithtown Bay, LLC and Madison Partnership Liquidity Investors
XIII, LLC, two firms unaffiliated with the Partnership, the General Partners
and each other, have conducted tender offers for interests in the Partnership.
As of August 31, 1998, Smithtown Bay, LLC and its affiliates owned 2,188
limited partnership interests, or 3.5 percent of the limited partnership
interests. As of such date, Madison Partnership Liquidity Investors XIII, LLC
and its affiliates owned 1,756 limited partnership interests, or 2.8 percent
of the limited partnership interests. Pursuant to the terms of agreements
between the Partnership and the Managing General Partner and such firms, all
of the limited partnership interests held by these firms will be voted in the
same manner as the majority of all limited partners who vote on the sale of
the Aurora System. Thus, for example, if the limited partnership interests
voted in favor of the transaction constitute a majority of all limited
partnership interests voted but not a majority of all limited partnership
interests, these firms will be required to vote their limited partnership
interests in favor of the transaction, and in such event the votes of these
firms could be sufficient to cause the transaction to be approved by a
majority of all limited partnership interests, which is the vote necessary to
cause the transaction to be approved. The Managing General Partner owns no
limited partnership interests. The Supervising General Partner owns 100
limited partnership interests. The limited partnership interests owned by the
Supervising General Partner will be voted in favor of the sale of the Aurora
System to TCI. The officers and directors of the General Partners do not own
any limited partnership interests. Only limited partners of record at the
close of business on August 31, 1998 will be entitled to notice of, and to
participate in, the vote.
Upon the consummation of the proposed sale of the Aurora System, the Venture
will repay all of its indebtedness (including $47,000,000 borrowed under its
credit facility, related parties' notes totaling $1,600,000, the subordinated
advance of $1,406,647 to Jones Intercable, Inc. ("Intercable") and capital
lease obligations of $72,753), settle working capital adjustments, deposit
$3,283,500 into an indemnity escrow account and then distribute the
approximate $52,000,000 of net sale proceeds to the Venture's four partners:
the Partnership, IDS/Jones Growth Partners II, L.P. ("Growth Partners II"),
IDS Management Corporation and Intercable. The Partnership will receive
approximately $12,700,000, or 24.4 percent, of the $52,000,000 distribution.
The Partnership will repay the outstanding balance of $102,393 due the
Managing General Partner and then the Partnership will distribute the
remaining $12,597,607 to its limited partners of record as of the closing date
of the sale of the Aurora System. Because the distribution to be made to the
limited partners on the sale of the Aurora System will not exceed 125 percent
of the amounts originally contributed to the Partnership by the limited
partners, the General Partners will not receive general partner distributions
on the sale of the Aurora System. As a result of the Aurora System's sale, the
limited partners of the Partnership will receive a $12,597,607 distribution,
or $199 for each $250 limited partnership interest, or $795 for each $1,000
invested in the Partnership. Distribution checks will be issued to limited
partners' account registration or payment instruction of record. Once the
Partnership has completed the distribution of its portion of the net proceeds
from the sale of the Aurora System, the limited partners of the Partnership
will have received a total of only $199 for each $250 limited partnership
interest, or $795 for each $1,000 invested in the Partnership (excluding
escrowed proceeds). There have been no prior distributions and it is
anticipated that there will be no further distributions to the limited
partners other than from the Partnership's portion of any amounts remaining
after November 15, 1999 in the indemnity escrow account. Limited partners
should note that there are certain federal income tax consequences of the
proposed transaction. See "Federal Income Tax Consequences."
The Partnership's only asset is its 24.4 percent ownership interest in the
Venture. Growth Partners II has a 65.6 percent ownership interest in the
Venture, IDS Management Corporation has a 5 percent ownership interest in the
Venture, and Intercable has a 5 percent ownership in the Venture. The
Venture's only asset is the Aurora System. After the sale of the Aurora System
and after the termination of the indemnity escrow period on November 15, 1999,
both the Venture and the Partnership will be liquidated and dissolved. The
Partnership will cease to be a public entity subject to the informational
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), when the Partnership is liquidated and dissolved, most likely
before the end of 1999.
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The proposal that is the subject of this proxy solicitation will be adopted
only if approved by the holders of a majority of the limited partnership
interests. Each limited partnership interest entitles the holder thereof to
one vote on the proposal. Because the Partnership's limited partnership
agreement (the "Partnership Agreement") requires that the proposal to sell the
Aurora System be approved by the holders of a majority of the limited
partnership interests, abstentions and non-votes will be treated as votes
against the proposal. A properly executed consent returned to the Managing
General Partner on which a limited partner does not mark a vote will be
counted as a vote for the proposed sale of the Aurora System. Because limited
partners do not have dissenters' or appraisal rights in connection with the
proposed sale of the Aurora System, if the holders of a majority of the
limited partnership interests approve the proposal, all limited partners will
receive a distribution of the net sale proceeds in accordance with the
procedures prescribed by the Partnership Agreement regardless of how or
whether they vote on the proposal.
The Board of Directors of the Managing General Partner approved the proposed
sale of the Aurora System and the Supervising General Partner has given its
consent to the proposed sale of the Aurora System. The General Partners
therefore recommend approval of the transaction by the holders of the
Partnership's limited partnership interests.
The Managing General Partner has also prepared a proxy statement that is
being delivered to the limited partners of Growth Partners II in connection
with their vote to approve the sale of the Aurora System by the Venture. The
closing of the sale of the Aurora System will occur only if the transaction is
approved by the holders of a majority of the limited partnership interests of
each of the Partnership and Growth Partners II. The proxy statement intended
to be delivered to the limited partners of Growth Partners II is on file with
the Securities and Exchange Commission (the "Commission") and can be obtained
either from the Commission, or from the Managing General Partner upon written
request to Elizabeth M. Steele, Secretary, Jones Cable Corporation, 9697 East
Mineral Avenue, Englewood, Colorado 80112, (303) 792-3111.
The approximate date on which this Proxy Statement and Form of Proxy are
being sent to limited partners is September 15, 1998.
PARTNERSHIP INFORMATION
THE PARTNERSHIP'S INVESTMENT OBJECTIVES
The Partnership was formed to acquire, develop, operate and, ultimately,
sell cable television systems. The primary objectives of the Partnership have
been to obtain capital appreciation in the value of the Partnership's cable
television properties; to obtain equity build-up through debt reduction; and
to generate tax losses that could be utilized to offset passive income. It was
contemplated from the outset of the Partnership's existence that capital
appreciation in Partnership cable television properties would be converted to
cash by a sale of such properties at such time as the General Partners
determined that the Partnership's investment objectives had substantially been
achieved and after a holding period of five to seven years.
The Partnership was formed in March 1989 as a Colorado limited partnership
in connection with a public offering of its limited partnership interests.
Sales of limited partnership interests in the Partnership commenced on January
16, 1989 and closed on June 29, 1989. The Partnership raised gross offering
proceeds of $15,845,750. The Partnership invested all of its $14,008,000 of
net offering proceeds in the Venture. The Venture was formed on May 30, 1990
to pool the financial resources of the Partnership and Growth Partners II, two
public partnerships sponsored by the General Partners with identical
investment objectives and to enable them to acquire a greater number of and/or
larger cable television systems than either of the partnerships could acquire
on their own. The Venture acquired the Aurora System on May 31, 1990.
Based upon the track record of prior public partnerships sponsored by
Intercable that had liquidated or were in the process of liquidating their
assets during the period that limited partnership interests in the Partnership
were being sold, and based upon disclosures made to prospective investors
about the Partnership's investment objectives in the IDS/Jones Growth Partners
Limited Partnership Program Prospectus and in the accompanying sales brochure,
investors in the Partnership reasonably could have anticipated that the
Partnership's investment objectives would be achieved and its assets
liquidated after a holding period of approximately five to seven years.
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Due to the uncertain and then adverse regulatory environment that developed in
the mid 1990s for the cable television industry, the resulting decline in the
prices for cable television systems and the subsequent inactivity in the cable
television system marketplace, the Managing General Partner determined that it
would be prudent to delay the sale of the Aurora System until market
conditions improved and, as a result, the Aurora System has been held by the
Venture for over eight years.
The purpose of the sale of the Aurora System, from the Partnership's
perspective, is to convert the Partnership's illiquid investment in the Aurora
System to cash. The sale proceeds will be used to repay all outstanding
indebtedness of the Venture, pay certain fees and expenses of the transaction,
settle working capital adjustments and deposit funds into an indemnity escrow
account, and then the remaining sale proceeds will be distributed to the four
constituent partners of the Venture. The Partnership in turn will distribute
its 24.4 percent portion of the net sale proceeds to the limited partners of
the Partnership of record as of the closing date of the sale of the Aurora
System in accordance with the distribution procedures established by the
Partnership Agreement. The sale of the Aurora System is thus the necessary
final step in the Partnership's accomplishment of its investment objectives
with respect to the Aurora System.
All distributions of the Partnership from the proceeds of the sales of cable
television systems are to be distributed 100 percent to the limited partners
until the limited partners receive amounts equal to 125 percent of their
initial capital contributions, and thereafter all such distributions are to be
shared 75 percent to the limited partners and 25 percent to the General
Partners. The limited partners of the Partnership will not receive
distributions in an amount equal to 125 percent of their initial capital
contributions and thus the sharing arrangement between the limited partners
and the General Partners will never be triggered. The limited partners, as a
group, will receive $12,597,607 of the Aurora System's net sale proceeds. This
distribution will provide the Partnership's limited partners with an
approximate return of $199 for each $250 limited partnership interest, or $795
for each $1,000 invested in the Partnership.
VOTING PROVISION OF THE PARTNERSHIP AGREEMENT
Section 2.2(k) of the Partnership Agreement provides that the sale of all or
substantially all of the Partnership's assets is subject to the approval of
the holders of a majority of the Partnership's limited partnership interests.
Because its investment in the Venture is the Partnership's sole asset and
because the Aurora System is the Venture's sole asset, the proposed sale of
the Aurora System to TCI is being submitted for limited partner approval.
PROPOSED SALE OF ASSETS
GENERAL
Pursuant to the terms and conditions of an asset purchase agreement dated as
of July 10, 1998 (the "Asset Purchase Agreement") by and between the Venture
and TCI, the Venture has agreed to sell the Aurora System to TCI for a sales
price of $108,500,000, subject to customary working capital closing
adjustments. TCI is a Delaware corporation headquartered at 5619 DTC Parkway,
Englewood, Colorado 80111. TCI is not an affiliate of the Partnership or of
either of the General Partners. The Venture has been informed that TCI intends
to finance its acquisition of the Aurora System through cash on hand and
borrowings.
THE CLOSING
The closing of the sale of the Aurora System is scheduled to occur during
the fourth quarter of 1998. Because the closing is conditioned upon, among
other things, the approvals of the limited partners of the Partnership and
Growth Partners II, and the receipt of material third party consents necessary
for the transfer of the Aurora System to TCI, there can be no assurance that
the proposed sale will occur. See "Proposed Sale of Assets, Conditions to
Closing" for a description of the material consents necessary for the transfer
of the Aurora System to TCI.
THE AURORA SYSTEM
The assets to be acquired by TCI consist primarily of the tangible and
intangible assets of the Aurora System. The Aurora System was purchased by the
Venture in May 1990 for an aggregate purchase price of
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$89,000,000, consisting of the Venture's reimbursement of Intercable for the
$81,100,000 purchase price that Intercable paid an unaffiliated third party to
acquire the Aurora System for the Venture's account and a $7,900,000
reimbursement of Intercable for the costs incurred by Intercable for capital
expenditures during the period that it held the Aurora System for Venture's
account and the amount of operating and interest expenses in excess of
operating receipts incurred by Intercable from the date of its acquisition of
the Aurora System (October 4, 1989) through May 31, 1990, the date the Aurora
System was transferred to the Venture. The Venture also paid acquisition fees
to affiliates of the General Partners totalling $3,244,000 as compensation to
such affiliates for acting as brokers and financial advisors in connection
with the transaction.
At acquisition in May 1990, the Aurora System served approximately 30,690
basic subscribers, 33,220 basic equivalent subscribers and 28,830 premium
units using 533 miles of cable plant passing approximately 54,730 homes. At
acquisition in May 1990, the Aurora System's basic penetration rate was 56
percent. The Aurora System currently is operated from two headends, with
approximately 90 percent of the system at 450 MHz and the remaining 10 percent
of the system at 550 MHz. The Aurora System now has a total of 752 miles of
cable plant (with 324 miles underground and 428 miles aerial) passing
approximately 79,000 homes. At closing, the Aurora System is expected to serve
approximately 52,000 basic subscribers and 52,600 basic equivalent subscribers
and have approximately 26,000 premium units. The Aurora System's basic
penetration rate at closing is expected to be 65 percent. The Aurora System
had annual revenues in 1997 of $19,714,000 and annual cash flow of $8,879,000.
The Aurora System is projected to have annual revenues in 1998 of $21,792,000
and annual cash flow of $9,797,000. The $108,500,000 sales price therefore
represents 12.2 times 1997 cash flow and 11.1 times the projected 1998 cash
flow, and it also represents a sales price of $2,057 per subscriber. The most
recent independent appraisal of the Aurora System's fair market value, which
was completed at the direction of the Managing General Partner in July 1997,
valued the Aurora System at $86,135,000. The proposed sales price of
$108,500,000 therefore represents a significant premium over this most recent
independent fair market value appraisal.
TCI will purchase all of the tangible assets of the Aurora System that are
leased or owned by the Venture and used in the operation of the system,
including the system's real estate, vehicles, headend equipment, underground
and aboveground cable distribution systems, towers, earth satellite receive
stations and furniture and fixtures. TCI also will acquire certain of the
intangible assets of the system, including all of the franchises, leases,
agreements, permits, licenses and other contracts and contract rights
necessary for the operation of the system. Also included in the sale are the
subscriber accounts receivable of the system and all of the system's records,
files, schematics, maps, reports, promotional graphics, marketing materials
and reports filed with federal, state and local regulatory agencies. The
foregoing notwithstanding, certain of the Aurora System's assets will be
retained by the Venture, including cash or cash equivalents on hand and in
banks, insurance policies, and any federal, state or local income or other tax
refunds to which the Venture may be entitled.
SALES PRICE
Subject to the closing adjustments described below, the sales price for the
Aurora System is $108,500,000. The Asset Purchase Agreement provides for
closing adjustments that may increase or reduce the sales price by a non-
material amount.
Adjustments on a pro rata basis as of the closing date will be made for all
prepaid expenses (to the extent the full benefit thereof will be realized by
TCI within twelve months after the closing date), accrued expenses (including
real and personal property taxes and the economic value of all accrued
vacation time permitted by TCI's policies to be taken after the closing date
by the employees of the Aurora System hired by TCI), prepaid income,
subscriber prepayments and accounts receivable related to the Aurora System,
all as determined in accordance with GAAP consistently applied and to reflect
the principle that all expenses and income attributable to the Aurora System
for the period prior to the closing date are for the account of the Venture
and all expenses and income attributable to the Aurora System for the period
on and after the closing date are for the account of TCI.
The Venture will receive no credit for any accounts receivable resulting
from (a) cable service sales any portion of which is 60 days or more past due
as of the closing date if the past due amount is greater than $5.00, (b)
subscribers whose accounts are inactive or whose services are pending
disconnection for any reason as of the
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closing date or (c) advertising sales any portion of which is 120 days or more
past due as of the closing date. TCI's account will be credited for the amount
of all advance payments to, or funds of third parties on deposit with, the
Venture as of the closing date, relating to the Aurora System, including
advance payments and deposits by subscribers served by the Aurora System for
converters, encoders, decoders, cable television service and related sales,
and the liability therefore will be assumed by TCI.
If the number of basic equivalent subscribers delivered to TCI at closing is
less than 52,750, the sales price will be reduced by an amount equal to $2,056
multiplied by the number by which the number of basic equivalent subscribers
is less than 52,750. The Venture will not have an obligation to close the sale
if the sales price would be reduced pursuant to this adjustment by an amount
greater than $5,654,000. TCI will not have an obligation to close if the
number of basic equivalent subscribers at closing is less than 50,000.
The Managing General Partner believes that these closing adjustments will
neither increase nor decrease the sales price by a material amount. Please see
the Notes to Unaudited Pro Forma Financial Statements for a detailed
accounting of the Managing General Partner's current best estimate of the
anticipated closing adjustments.
CONDITIONS TO THE CLOSING
The obligations of both the Venture and TCI to consummate the closing are
subject to the satisfaction or waiver of the following conditions: (a) any
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR Act") relating to the transactions contemplated by the
Asset Purchase Agreement shall have expired or been terminated; (b) no action,
suit or proceeding is pending or threatened by or before any governmental
authority and no legal requirement has been enacted, promulgated or issued or
become or deemed applicable to any of the transactions contemplated by the
Asset Purchase Agreement by any governmental authority that would (i) prohibit
TCI's ownership or operation of all or a material portion of the Aurora
System, its business or its assets, (ii) compel TCI to dispose of or hold
separate all or a material portion of the Aurora System, its business or its
assets as a result of any of the transactions contemplated by the Asset
Purchase Agreement, (iii) if determined adversely to TCI's interest,
materially impair the ability of TCI to realize the benefits of the
transactions contemplated by the Asset Purchase Agreement or have a material
adverse effect on the right of TCI to exercise full rights of ownership of the
Aurora System or (iv) prevent or make illegal the consummation of any of the
transactions contemplated by the Asset Purchase Agreement; and (c) the holders
of a majority of the limited partnership interests of both the Partnership and
Growth Partners II shall have voted to approve the Venture's sale of the
Aurora System to TCI.
The obligation of TCI to consummate the closing is further subject to the
satisfaction or waiver of other customary conditions, including the following
conditions: (a) all of the representations and warranties of the Venture in
the Asset Purchase Agreement and any related document are, if specifically
qualified by materiality, true and correct in all respects and, if not so
qualified, are true and correct in all material respects, in each case on and
as of the closing date with the same effect as if made at and as of the
closing date, except for changes permitted or contemplated by the Asset
Purchase Agreement; (b) the Venture has performed in all material respects all
obligations and agreements and complied in all material respects with all
covenants and conditions in the Asset Purchase Agreement and any related
document to be performed or complied with by the Venture at or before the
closing; (c) the Venture has delivered to TCI a bill of sale, a special
warranty deed related to the Aurora System's real estate, an assignment and
assumption of contracts, assignments of leases, a guarantee signed by
Intercable, motor vehicle title certificates and such other transfer
instruments as TCI may deem necessary or advisable to transfer the assets of
the Aurora System to TCI and to perfect TCI's rights in such assets, a legal
opinion of the Managing General Partner's general counsel, evidence
satisfactory to TCI that all encumbrances affecting any of the Aurora System's
assets have been terminated and released, title insurance commitments, the
indemnity escrow agreement and such other closing agreements as TCI may
reasonably request in connection with the transactions contemplated by the
Asset Purchase Agreement; (d) the Venture has delivered to TCI evidence, in
form and substance satisfactory to TCI, that all of the required consents to
the transaction, including without limitation, all consents of franchising
authorities, have been obtained or given (or deemed to have been given) and
are in full force and effect; (e) the environmental reports prepared by the
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Venture and delivered to TCI and any other environmental audits or assessments
conducted with respect to the Aurora System's assets do not indicate the
existence of any conditions that could reasonably be expected to give rise to
any material risk of liability; (f) there has not been any material adverse
change in the business or the assets of the Aurora System since the date of
the Asset Purchase Agreement other than any material adverse change caused by
or arising from other multiple channel distribution services or any material
adverse change affecting the United States cable television industry as a
whole, including any change arising from legislation, litigation, rulemaking,
regulation or competition; (g) as of the closing date the Aurora System has no
fewer than 50,000 basic equivalent subscribers; (h) cable television
franchises covering at least 85 percent of the basic equivalent subscribers of
the Aurora System have a term expiring no earlier than March 31, 2001; and (i)
the closing of TCI's sale of certain systems in a separate transaction to
permit TCI to accomplish a like-kind exchange under Section 1031 of the
Internal Revenue Code shall have occurred; provided, however, if this last
condition shall not have occurred on or before the day that is nine months
after the date of the Asset Purchase Agreement, this condition shall no longer
be a condition to the obligations of TCI to consummate the transactions
contemplated by the Asset Purchase Agreement. To the extent that the Venture
must obtain an extension or renewal of any cable television franchise to meet
the condition that cable television franchises covering at least 85 percent of
the basic equivalent subscribers of the Aurora System have a term expiring no
earlier than March 31, 2001, any such extension or renewal shall be on terms
and conditions reasonably satisfactory to TCI and the Venture evaluated in the
context of extensions or renewals of similarly situated franchises in the
greater Chicago metropolitan area that have been extended or renewed (or
granted) for a comparable period of time or duration, and the Venture and TCI
will allocate the costs associated with obtaining such extensions or renewals
between them.
The obligation of the Venture to consummate the closing is further subject
to the satisfaction or waiver of other customary conditions, including the
following conditions: (a) all of the representations and warranties of TCI
contained in the Asset Purchase Agreement and any related document are, if
specifically qualified by materiality, true and correct in all respects and,
if not so qualified, are true and correct in all material respects, in each
case on and as of the closing date with the same effect as if made on and as
of the closing date, except for changes permitted or contemplated by the Asset
Purchase Agreement; (b) TCI has performed in all material respects all
obligations and agreements and has complied in all material respects with all
covenants and conditions in the Asset Purchase Agreement and any related
document to be performed or complied with by TCI at or before the closing; (c)
TCI has delivered to the Venture the purchase price for the Aurora System, a
bill of sale, an assignment and assumption of contracts, a legal opinion of
TCI's counsel, the indemnity escrow agreement and such other documents as the
Venture may reasonably request in connection with the transactions
contemplated by the Asset Purchase Agreement; and (d) as of the closing date,
either the Aurora System shall have no fewer than 50,000 basic equivalent
subscribers or TCI shall agree to limit the sales price reduction due to a
basic equivalent subscriber shortfall to $5,654,000.
GUARANTEE AND COVENANTS TO TCI
In order to induce TCI to enter into the Asset Purchase Agreement,
Intercable will execute and deliver to TCI a guarantee by which Intercable
will guarantee all of the liabilities and obligations of the Venture to TCI
under the Asset Purchase Agreement. TCI informed Intercable that it would be
unwilling to enter into the Asset Purchase Agreement without having received
Intercable's guarantee. Intercable received no payment from either the Venture
or the Partnership in return for giving this guarantee.
The parties have agreed that none of the Venture, the Partnership, the
General Partners or Intercable, nor any of their respective affiliates, nor
any of their respective representatives or agents shall, directly or
indirectly, solicit or initiate discussions or negotiations with or provide
any information to, any entity concerning the sale of the Aurora System so
long as the Asset Purchase Agreement is in effect. The Managing General
Partner agreed with TCI that the Managing General Partner would prepare and,
as soon as practicable, and in any event within 30 days after the date of the
Asset Purchase Agreement, file with the Securities and Exchange Commission
preliminary proxy statements comprising preliminary proxy materials of the
Partnership and Growth
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Partners II under the Exchange Act with respect to the transactions
contemplated by the Asset Purchase Agreement.
In addition, the Venture has agreed with TCI that the Venture will perform
certain customary covenants, including the following covenants: (a) the
Venture has agreed to give TCI and its counsel, accountants and other
representatives full access during normal business hours upon reasonable
notice to all of the premises and books and records of the business and assets
of the Aurora System and to the Aurora System's personnel and the Venture has
agreed to furnish to TCI and its representatives all documents, financial
information and other information regarding the business and assets of the
Aurora System as TCI may reasonably request; (b) the Venture has agreed to
conduct the business and operations of the Aurora System in the usual, regular
and ordinary course consistent with past practices and in material compliance
with the system's 1998 operating and capital budgets; (c) the Venture has
agreed to maintain the assets of the Aurora System in good repair, order and
condition and to maintain equipment and inventory at historical levels
consistent with past practices (and will have at least a 30-day supply of
inventory on hand for the Aurora System at closing) and to maintain in full
force and effect insurance policies with respect to the Aurora System in such
amounts and with respect to such risks as is customarily maintained by
operators of cable television systems of the size and geographic location as
the Aurora System and to continue to implement its procedures for
disconnection and discontinuance of service to subscribers whose accounts are
delinquent in accordance with those procedures in effect on the date of the
Asset Purchase Agreement; (d) the Venture has agreed that without the prior
approval of TCI, the Venture will not (i) change the rates charged for its
cable television services or add, delete, re-tier or repackage any programming
services except to the extent required by law, (ii) make any cost of service
elections with respect to the Aurora System, (iii) sell, transfer or assign
any portion of the assets other than sales in the ordinary course of business
or permit the creation of any encumbrance on any asset of the system other
than an encumbrance that will be released at or prior to closing, (iv) modify
in any material respect, terminate, suspend or abrogate any governmental
permits or any other contract or agreement with respect to the Aurora System,
(v) enter into any contract or commitment or incur any indebtedness or other
liability or obligation of any kind relating to the Aurora System involving an
expenditure in excess of $50,000 under a single contract or commitment, or
$100,000 in the aggregate under all such contracts and commitments, other than
contracts or commitments that are cancelable on 30 days' notice or less
without penalty, (vi) take or omit to take any action that would result in any
of its representations or warranties in the Asset Purchase Agreement or in any
related document not being true and correct when made or as of the closing
date, (vii) engage in any marketing, subscriber installation or collection
practices that are inconsistent with past practices other than marketing
and/or installation practices that are reasonably necessary to match offers
being made by any competitor of the Aurora System or (viii) enter into any
agreement with or commitment to any competitive access providers with respect
to the Aurora System; (e) the Venture has agreed with TCI that it will duly
and timely file a valid notice of renewal with the appropriate governmental
authorities with respect to all cable television franchises of the Aurora
System that will expire within 36 months after any date between the date of
the Asset Purchase Agreement and the closing date; (f) the Venture has agreed
to pay the remaining balances on any leases for vehicles or capital leases on
equipment to be included in the equipment to be delivered at closing and the
Venture has agreed to deliver title to such vehicles and equipment free and
clear of all encumbrances to TCI at the closing; (g) the Venture has agreed
that it will use commercially reasonable efforts to obtain in writing as
promptly as possible and at its expense, all consents, authorizations and
approvals required to be obtained by the Venture in connection with the sale
of the Aurora System to TCI, in form and substance reasonably satisfactory to
TCI, and the Venture has agreed to deliver to TCI copies of such consents,
authorizations and approvals promptly after they are obtained by the Venture;
(h) the Venture has agreed to work with TCI to deliver, no later than 30 days
after the date of the Asset Purchase Agreement, to the appropriate
governmental authority requests for the necessary consents to transfer the
Aurora System's governmental permits to operate the cable television system;
(i) the Venture has agreed that it will use commercially reasonable efforts
and TCI has agreed that it will cooperate with and assist the Venture in all
reasonable respects (including attendance at meetings and hearings before
local franchising authorities) to have cable television franchises covering at
least 85 percent of the basic equivalent subscribers of the Aurora System
extended or renewed so that they expire no earlier than March 31, 2001, on
terms and conditions reasonably satisfactory to TCI and the Venture, which
terms and conditions shall be evaluated by TCI and the Venture in
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the context of extensions and renewals of similarly situated franchises in the
greater Chicago metropolitan area that have been extended or renewed (or
granted) for a comparable period of time or duration and the Venture has
agreed to bear all costs required to remedy any item of noncompliance with the
terms of any franchise or to meet current obligations under the terms of any
franchise in connection with obtaining such extension or renewal and TCI has
agreed to bear all costs associated with commitments made for capital
expenditures to be made after the closing date related to obtaining an
extension or renewal; (j) the Venture has agreed that, within 60 days after
the date of the Asset Purchase Agreement, it will, at its expense, obtain and
deliver to TCI for each parcel of real property owned by the Venture, an
environmental site assessment report prepared by a nationally known
environmental engineering firm reasonably satisfactory to TCI; (k) the Venture
and TCI have agreed that they will cooperate with each other in order that the
transactions contemplated by the Asset Purchase Agreement may be accomplished
as part of a deferred exchange pursuant to Section 1031 of the Internal
Revenue Code and applicable Treasury Regulations; and (l) the Venture has
agreed that prior to closing it will either construct and activate the
institutional network required by the Aurora franchise, or reach an agreement
with the City of Aurora and TCI satisfactory to TCI with respect to the
construction and activation of the institutional network required by the
Aurora franchise, or reach an agreement with the City of Aurora to remove such
requirement from the Aurora franchise and pay all costs associated with such
franchise modification.
INDEMNITY ESCROW
From the closing date until November 15, 1999, $3,283,500 of the sale
proceeds will remain in escrow as security for the Venture's agreement to
indemnify TCI under the Asset Purchase Agreement. Pursuant to the terms of the
Asset Purchase Agreement, the Venture has agreed to indemnify and hold TCI
harmless from all losses resulting from or arising out of (i) any breach of
any representation or warranty made by the Venture in the Asset Purchase
Agreement or in the related documents delivered by the Venture to TCI in
connection with the closing of the sale of the Aurora System, (ii) any breach
of any covenant, agreement or obligation of the Venture contained in the Asset
Purchase Agreement or in any of the related documents delivered by the Venture
to TCI in connection with the closing of the sale of the Aurora System, (iii)
any act or omission of the Venture with respect to, or any event or
circumstance related to, the ownership or operation of the Aurora System or
the conduct of its business, which act, omission, event or circumstance
occurred or existed prior to or at the closing date, without regard to whether
a claim with respect to such matter is asserted before or after the closing
date, (iv) any liability or obligation relating to the Aurora System not
specifically assumed by TCI, (v) any title defect that the Venture fails to
eliminate as an exception from the title insurance commitment required to be
provided to TCI at closing, (vi) any claim that the transactions contemplated
by the Asset Purchase Agreement violate the Workers Adjustment Retraining and
Notification Act or any similar state or local law or any bulk transfer or
fraudulent conveyance laws of any jurisdiction, (vii) the presence,
generation, removal or transportation of a hazardous substance on or from any
of the real property relating to the Aurora System, including the costs of
removal or cleanup of such hazardous substance and other compliance with the
provisions of any environmental laws (whether before or after closing) or
(viii) any rate refund ordered to be made by the Aurora System by any
governmental authority for periods prior to the closing date. In addition, the
Venture has agreed to indemnify TCI from and against all claims, actions,
suits, proceedings, demands, judgments, assessments, fines, interest,
penalties, costs and expenses (including settlement costs and reasonable
legal, accounting, experts and other fees, costs and expenses) incident or
relating to or resulting from any of the foregoing matters.
The Venture's primary exposure, if any, will arise from the representations
and warranties made about the Aurora System in the Asset Purchase Agreement.
The Venture will not be liable for any claim for a breach of a representation
or warranty unless and until the aggregate amount of all claims is at least
$250,000. TCI will have the right to make claims against the indemnity escrow
account and TCI must notify the Venture of such claims. If the Venture objects
to the payment of any claims by the escrow agent, and if TCI and the Venture
are unable to agree on how the escrowed funds should be distributed, the
escrow agent will be authorized to submit the dispute to arbitration.
Any amounts remaining from this indemnity escrow account at the end of the
escrow period and not subject to a claim by TCI will be returned to the
Venture and distributed to the partners of the Venture. If the entire
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$3,283,500 escrow amount ultimately is distributed to Venture's partners, of
which there can be no assurance, the Partnership would receive $801,174, or
24.4 percent, of this amount, all of which would be distributed to the limited
partners in the fourth quarter of 1999. The limited partners thus would
receive $12.50 for each $250 limited partnership interest, or $50 for each
$1,000 invested in the Partnership, from this portion of the sale proceeds.
The Partnership will continue in existence at least until any amounts
remaining from the indemnity escrow account have been distributed. If any
disputes with respect to indemnification arise, the Partnership would not be
dissolved until such disputes were resolved, which could result in the
Partnership continuing in existence beyond 1999.
REASONS FOR THE TIMING OF THE SALE
The Managing General Partner, through The Jones Group, Ltd., an affiliate of
the Managing General Partner, first marketed the Aurora System for sale in
1996. The Jones Group, Ltd. prepared information books on the Aurora System in
June 1996 and delivered them to six unaffiliated cable television system
operators that the Managing General Partner and The Jones Group, Ltd. deemed
to be the most likely potential buyers of the Aurora System. One of the
prospective purchasers was TCI. The Jones Group, Ltd. communicated to each of
the recipients of the information books that due diligence visits could be
scheduled in August or September 1996 and that bids for the Aurora System
would be accepted and were due by October 15, 1996. Of the prospective
purchasers, only TCI made a due diligence visit to the Aurora System, which
visit occurred in August 1996. The October 15, 1996 deadline passed, however,
without a bid from any of the parties, including TCI.
During 1996, Ameritech, the regional telephone service provider in Illinois
and neighboring states, began construction of cable television systems in
certain communities in the vicinity of the Aurora System, including in certain
communities with cable television systems managed by affiliates of the
Managing General Partner. The threat of competition from Ameritech in the
communities served by the Aurora System was a major factor in the lack of
interest in the Aurora System by other cable television system operators.
During the remainder of 1996 and throughout 1997, The Jones Group, Ltd.
continued to attempt to stimulate potential buyers' interest in the Aurora
System. During most of this period, however, the cable television industry was
facing developing competition from direct broadcast satellite providers, and
Wall Street investors generally were bearish on the industry. The continuing
threat of competition from Ameritech made the market for cable television
properties in the Chicago metropolitan area very soft. Throughout this period,
Ameritech continued to acquire cable franchises in suburban Chicago
communities and it began constructing 750 MHz cable systems in certain of
those communities.
In November 1997, The Jones Group, Ltd. began a second serious dialogue with
TCI about the Aurora System. Through the end of 1997 and the first quarter of
1998, The Jones Group, Ltd. provided TCI with additional information about the
Aurora System, including information specifically requested by TCI to enable
it to evaluate the Aurora System. By that time, TCI had agreed in principle to
acquire the other major cable television systems in the Chicago area that it
did not already own, making the Chicago area a more attractive potential
acquisition market for TCI and diminishing the onus of the potential Ameritech
competition. In February 1998, The Jones Group, Ltd. provided information
about the Aurora System to three other potential purchasers of the system.
While these three companies indicated an interest in an investment in the
suburban Chicago cable system market, they expressed serious reservations
about acquiring the Aurora System due to the potential Ameritech competition.
One of these three potential purchasers made a verbal offer to Intercable to
purchase all of the Chicago-area systems operated by Intercable for
$400,000,000. Because this bidder did not make an offer for such Chicago-area
systems individually, the Managing General Partner does not know what this
potential purchaser would have offered for the Aurora System itself. Because
this offer was lower than the cumulative offer being negotiated with TCI, The
Jones Group, Ltd. did not pursue it.
TCI made its initial formal bid for all of the Chicago-area systems managed
by Intercable on March 3, 1998. TCI offered to purchase the Aurora System for
$100,000,000 conditioned upon the Aurora System having 52,000 basic equivalent
subscribers at closing. This offer equated to a sales price of $1,923 per
subscriber and represented 11.3 times 1997 cash flow and 10.2 times 1998
budgeted cash flow. The Jones Group, Ltd. presented this offer to the Managing
General Partner on March 11, 1998. While the Managing General Partner
concluded
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that this offer was not unreasonable, it instructed The Jones Group, Ltd. to
attempt to negotiate a better price for the Aurora System. After a series of
further negotiations, TCI made a revised offer for the Aurora System on April
8, 1998, increasing its bid to $108,500,000 conditioned on the Aurora System
having 52,750 basic equivalent subscribers at closing. The revised offer for
the Aurora System represented a sales price of $2,057 per subscriber and
represented 12.2 times 1997 cash flow and 11.1 times 1998 budgeted cash flow.
The Managing General Partner deemed this revised offer sufficient and fair,
particularly in light of the fact that the most recent independent fair market
value appraisal of the Aurora System undertaken in July 1997 valued the Aurora
System at only $86,135,000. The Managing General Partner accepted the revised
offer on the Venture's behalf on April 10, 1998.
The Partnership has a finite legal existence of 17 years, over nine of which
have passed. It was not intended or expected, however, that the Partnership
would hold its cable systems for as long as 17 years. Although it was not
possible at the outset of the Partnership to determine precisely how quickly
the investment objectives with respect to any particular system would be
achieved, investors were informed that past experience with prior partnerships
had shown that five to seven years was the average length of time from the
acquisition of a cable system to its sale. Investors in the Partnership also
were able to examine the track record of prior partnerships because such track
record was set forth in the prospectus delivered in connection with the
Partnership's initial public offering. At the time of the formation of the
Partnership, the track record showed that prior partnerships had rarely held
their cable systems for any longer than six years.
When investing in the Partnership, by virtue of the provisions of the
Partnership Agreement, the limited partners vested in the Managing General
Partner the right and the responsibility to determine when the Partnership's
investment objectives had been achieved. The Aurora System was acquired by the
Venture because, in the opinion of the General Partners at the time of the
Aurora System's acquisition, it had the potential for capital appreciation
within a reasonable period of time. Due to the developing threat of
competition from Ameritech in the suburban Chicago area, the rate re-
regulation of the cable television industry during the early 1990s and the
general decline in the values of cable television systems since the Aurora
System was acquired in May 1990, the Aurora System has not significantly
appreciated in value during the holding period. The Managing General Partner
determined nevertheless that now rather than later was the appropriate time
for the Venture to sell the Aurora System. The Managing General Partner used
no specific benchmarks or measurement tools in determining that now was the
time for the Venture to sell the Aurora System. The Managing General Partner
conducted a subjective evaluation of a variety of factors including the length
of the holding period and the prospects for future growth as compared to the
potential risks of a decline in the size and/or value of the system.
The Managing General Partner generally considered the benefits to the
limited partners that might be derived by holding the Aurora System for an
additional period of time. On the one hand, the Managing General Partner
assumed that the Aurora System probably would continue to appreciate in value
and that as a result the Aurora System might be able to be sold for a greater
sales price in the future. The Managing General Partner weighed these
assumptions against the potential risks to investors from a longer holding
period, i.e., the risk that regulatory, technology and/or competitive
developments could cause the Aurora System to decline in value, which would
result in a lesser sales price in the future, and the risk that, if the offer
from TCI were not accepted, no other potential buyer of the Aurora System
could be found or no other offer would be at such a fair price. A longer
holding period would expose investors to the risk that competition from direct
broadcast satellite companies, telephone companies, especially Ameritech,
and/or neighboring cable companies could diminish the number of subscribers to
the Aurora System's basic and premium services, thereby decreasing the value
of the Aurora System. A longer holding period also would expose investors to
the risk that changes in the regulations promulgated by the governmental
agencies that oversee cable operations could make cable systems a less
desirable investment, thereby decreasing the value of the Aurora System.
Weighing all of these factors, the Managing General Partner concluded that now
rather than later was the time to sell the Aurora System.
RECOMMENDATION OF THE MANAGING GENERAL PARTNER AND FAIRNESS OF THE PROPOSED
SALE OF ASSETS
The Managing General Partner believes that the proposed sale of the Aurora
System and the distribution of the net proceeds therefrom are fair to all
partners of the Partnership, and it recommends that the limited partners
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approve the transaction. In determining the fairness of the proposed
transaction, the Managing General Partner considered each of the following
factors, all of which had a positive effect on its fairness determination:
(i) The limited partnership interests are at present illiquid and the
cash to be distributed to limited partners as a result of the proposed sale
of the Aurora System will provide limited partners with liquidity and with
the means to realize the appreciation in the value of the Aurora System;
(ii) The sales price represents the fair market value of the Aurora
System because the sales price was determined in an arm's-length
negotiation between the Managing General Partner, representing the Venture,
and TCI;
(iii) The Venture has held the Aurora System for eight years, a holding
period beyond that originally anticipated;
(iv) The conditions and prospects of the cable television industry in
which the Venture is engaged, including the developing threat of
competition from DBS services and telephone companies, especially
Ameritech, and the working capital and other financial needs of the Venture
if it were to continue to operate and upgrade the Aurora System, portions
of which may need to be rebuilt as a condition to the renewal of certain of
the system's cable franchises; and
(v) The terms and conditions of the Asset Purchase Agreement by and
between the Venture and TCI, including the fact that the sales price will
be paid in cash and the fact that TCI's obligation to close is not
contingent upon its ability to obtain financing.
The Managing General Partner negotiated the terms of the Asset Purchase
Agreement and the sales price and, based on its general knowledge of cable
television system transactions undertaken by cable television companies, the
Managing General Partner has concluded that the sales price and other
transaction terms were fair and were within industry norms for comparable
transactions.
CONSENT OF THE SUPERVISING GENERAL PARTNER
Pursuant to Section 2.3(c)(ii) of the Partnership Agreement, the Venture
could not proceed with the sale of the Aurora System unless the Supervising
General Partner consents to the transaction. After an independent review of
all of the terms and conditions of the proposed sale of the Aurora System to
TCI, the Supervising General Partner consented to the transaction in July
1998.
CERTAIN EFFECTS OF THE SALE
Upon the consummation of the proposed sale of the Aurora System, the
proceeds of the sale will be used to repay all indebtedness of the Venture
(including $47,000,000 borrowed under its credit facility, related parties'
notes totaling $1,600,000, the subordinated advance of $1,406,647 to
Intercable and capital lease obligations of $72,753), settle working capital
adjustments and deposit $3,283,500 into an indemnity escrow account, and then
the Venture will distribute the approximate $52,000,000 net sale proceeds to
the Venture's four partners: the Partnership, Growth Partners II, IDS
Management Corporation and Intercable. The Partnership will receive
approximately $12,700,000, or 24.4 percent, of the $52,000,000 distribution.
The Partnership will repay the outstanding balance of $102,393 due the
Managing General Partner and then the Partnership will distribute the
remaining $12,597,607 to its limited partners of record as of the closing date
of the sale of the Aurora System. Because the distribution to be made to the
limited partners on the sale of the Aurora System will not exceed 125 percent
of the amounts originally contributed to the Partnership by the limited
partners, the General Partners will not receive general partner distributions
on the sale of the Aurora System. As a result of this distribution, the
limited partners of the Partnership will receive $12,597,607 of the net
proceeds from the sale of the Aurora System. The limited partners will be
subject to federal income tax on the income resulting from the sale of the
Aurora System. See the detailed information below under the caption "Federal
Income Tax Consequences."
After the sale of the Aurora System and the distribution of the net proceeds
therefrom and after the termination of the indemnity escrow period on November
15, 1999, the Partnership will be liquidated and
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dissolved, most likely in 1999. Neither Colorado law nor the Partnership
Agreement afford dissenters' or appraisal rights to limited partners in
connection with the proposed sale of the Aurora System. If the proposed
transaction is approved by the holders of a majority of limited partnership
interests, all limited partners will receive a distribution in accordance with
the procedures prescribed by the Partnership Agreement regardless of how or
whether they vote on the proposal. It is anticipated that if the proposed
transaction is not consummated, the Managing General Partner's current
management team will continue to manage the Aurora System on behalf of the
Venture until such time as the Aurora System can be sold.
All distributions of the Partnership from the proceeds of the sale of the
Aurora System will be made to the Partnership's limited partners of record as
of the closing date of the sale of the Aurora System. This includes the
distribution of the Partnership's portion of the net sale proceeds to be made
shortly following the closing of the sale and the distribution of the amounts
remaining, if any, from the indemnity escrow account to be made late in 1999.
Because transferees of limited partnership interests following the closing
date of the sale of the Aurora System would not be entitled to any
distributions from the Partnership, a transfer of limited partnership
interests following the closing date of the sale of the Aurora System would
have no economic value. The Managing General Partner therefore has determined
that, pursuant to the authority granted to it by Section 3.5 of the
Partnership Agreement, it will not approve any transfers of limited
partnership interests following the closing of the sale of the Aurora System.
Sales of limited partnership interests pursuant to limited tender offers, in
the secondary market or otherwise will not be possible following the closing
of the sale of the Aurora System.
FEDERAL INCOME TAX CONSEQUENCES
The purpose of the following discussion of the income tax consequences of
the proposed transaction is to inform the limited partners of the Partnership
of the federal income tax consequences to the Partnership and to its partners
arising from the sale of the Aurora System. The tax information included
herein was prepared by the tax department of the Managing General Partner. The
tax information is taken from tax data compiled by the Managing General
Partner in its role as the Partnership's tax administrator and is not based
upon the advice or formal opinion of counsel. The tax discussion that follows
is merely intended to inform the limited partners of factual information and
should not be considered tax advice.
PROJECTED 1998 TAX RESULTS
By the expected date of the Aurora System's sale, the limited partners will
have been allocated ordinary taxable losses of approximately $21,645,905
($1,366 per $1,000 invested). Except for 1990, when a 10 percent deduction of
current allocated losses was allowed, application of the passive activity loss
rules has fully limited the deduction of Partnership losses except against
passive income from other investments. Assuming that limited partners have not
utilized their previously limited Partnership passive losses, the Managing
General Partner estimates that passive loss carryforwards of $21,300,099
($1,344 per $1,000 invested) will be available to fully offset the current
year allocated income from the sale of the Aurora System.
The sale of the Aurora System will result in a gain for federal income tax
purposes. The amount of this gain allocated to limited partners is
approximately $19,042,879 ($1,202 per $1,000 invested). The Managing General
Partner estimates that all of this gain will be treated as ordinary income.
This ordinary income characterization results from the recapture of
depreciation on personal property under Internal Revenue Code ("IRC") Section
1245. The Managing General Partner does not estimate that any of the gain will
be treated as long term capital gain under IRC Section 1231. The reported gain
should be completely offset by the deduction of passive loss carryforwards of
the limited partners. If prior year passive losses were deducted by limited
partners, their tax results will vary accordingly.
Assuming the 31 percent tax rate applies to ordinary income and the limited
partners have the maximum amount of passive loss carryforwards, a limited
partner will not be subject to federal income taxes as a result of the sale of
the Aurora System. The taxable income will be reported in the year of the
closing of the sale, which is expected to be 1998.
13
<PAGE>
FEDERAL TAX WITHHOLDING ON FOREIGN LIMITED PARTNERS
Limited partners who are non-resident aliens or foreign corporations
("foreign persons") are subject to a withholding tax on their share of the
Partnership's income from the sale of the Aurora System without consideration
of loss carryforwards. The withholding rates are 39.6 percent for individual
partners and 35 percent for corporate partners. The tax withheld will be
remitted to the Internal Revenue Service and the foreign person will receive a
credit on their U.S. tax return for the amount of the tax withheld by the
Partnership. The tax withheld will be treated as a distribution to the limited
partner.
SECONDARY MARKET PURCHASERS
Limited partners that have recently acquired their partnership interests in
the limited partnership secondary market or through tender offers will have
allocable income from the Aurora System sale in the amounts reported above.
Because the Partnership does not have an IRC Section 754 election in effect,
the purchase of a limited partnership interest in the Partnership places the
new investor in the same position as the limited partner from whom the
interest was purchased.
Newer investors in the Partnership will not have their net tax basis in
their partnership interests reflected on their annual Schedule K-1. Such
limited partners must track their tax basis by adjusting their original cost
by allocable income or loss and partnership distributions. Their adjusted tax
basis will be deductible as a long term capital loss under IRC Section 731 in
a manner similar to the Partnership syndication costs discussed below.
FEDERAL REPORTING BY TAX EXEMPT ENTITIES
The 1998 Aurora System sale will generate Unrelated Business Taxable Income
(UBTI) to tax exempt entities, which will require the filing of Form 990-T.
Although many trust administrators complete the required tax returns,
responsibility for completion of the Form 990-T ultimately rests with the
beneficiaries of trusts, IRAs and other tax exempt entities. Because this is
an area in which there is a variance of policy among trust administrators,
each limited partner who is a beneficiary is advised to confirm with his or
her trust administrator how this filing requirement will be fulfilled.
The Managing General Partner has learned that some trust administrators will
file a Form 990-T without consideration of prior year loss carryforwards. If
your plan administrator employs this methodology, your tax exempt plan will be
subject to significant tax liabilities that would not be incurred if prior
year losses were reported. Each limited partner who is a beneficiary of a tax
exempt entity is advised to inquire about the reporting methodology employed
by his or her trust administrator if the trust administrator is filing the
Form 990-T for 1998.
PROJECTED 1999 TAX CONSEQUENCES
As previously reported, a portion of the proceeds from the sale of the
Aurora System will remain in an indemnity escrow account from the closing date
until November 15, 1999. At that time, the Partnership's portion of the escrow
account will be distributed to the limited partners in liquidation of the
Partnership. The final capital account balance reported on the 1999 Schedule
K-1 of each limited partner is anticipated to reflect a positive amount
approximating $32 per $1,000 invested. This balance represents partnership
syndication costs that may be deducted on the limited partners' tax return as
a long term capital loss under IRC Section 731. The deduction of long term
capital losses may be limited depending on each partners' specific income tax
situation.
14
<PAGE>
CERTAIN INFORMATION ABOUT THE PARTNERSHIP, THE GENERAL
PARTNERS AND THE PURCHASER OF THE SYSTEM
The principal executive offices of the Partnership and the Managing General
Partner are located at 9697 East Mineral Avenue, Englewood, Colorado 80112,
and their telephone number is (303) 792-3111. The principal executive offices
of the Supervising General Partner are located at IDS Tower 10, 733 Marquette
Avenue, Minneapolis, Minnesota 55402, and its telephone number is (612) 671-
2927. The principal executive offices of TCI are located at 5619 DTC Parkway,
Englewood, Colorado 80111.
The limited partnership interests of the Partnership are registered pursuant
to Section 12(g) of the Exchange Act. As such, the Partnership currently is
subject to the informational reporting requirements of the Exchange Act and,
in accordance therewith, is obligated to file periodic reports, proxy
statements and other information with the Securities and Exchange Commission
relating to its business, financial condition and other matters. Reports and
other information filed by the Partnership can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the following regional offices
of the Commission: 7 World Trade Center, Suite 1300, New York, New York 10048
and Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The SEC also maintains a World Wide Web site on the Internet
that contains reports, proxy statements and other information of registrants
(including the Partnership) that file electronically with the SEC at
http://www.sec.gov. After the net proceeds from the sale of the Aurora System,
including amounts to be held in an indemnity escrow account until November 15,
1999, finally are distributed to the Partnership's limited partners of record
as of the closing date of the sale of the Aurora System, the Partnership will
be liquidated and dissolved. The Partnership's registration and reporting
requirements under the Exchange Act will be terminated upon the dissolution of
the Partnership, most likely before the end of 1999.
USE OF PROCEEDS FROM THE AURORA SYSTEM'S SALE
The following is a brief summary of the Venture's estimated use of the
proceeds and of the Partnership's estimated use of its portion of the proceeds
from the sale of the Aurora System. All of the following selected financial
information is based upon amounts as of June 30, 1998 and certain estimates of
liabilities at closing. Final results may differ from these estimates. A more
detailed discussion of the financial consequences of the sale of the system is
set forth below under the caption "Unaudited Pro Forma Financial Information."
All limited partners are encouraged to review carefully the unaudited pro
forma financial statements and notes thereto.
If the holders of a majority of limited partnership interests of the
Partnership and Growth Partners II approve the proposed sale of the Aurora
System and the transaction is closed, the Venture will pay all of its
indebtedness, pay certain fees and expenses of the transaction, settle working
capital adjustments, deposit funds into an indemnity escrow account and then
the remaining sale proceeds will be distributed to the four partners of the
Venture. The Partnership will receive 24.4 percent of the net sale proceeds
and the Partnership will distribute its portion of the net sale proceeds to
its limited partners of record as of the closing date pursuant to the terms of
the Partnership Agreement. The estimated uses of the sale proceeds are as
follows:
<TABLE>
<S> <C>
Contract Sales Price of the Aurora System.................... $108,500,000
Add: Cash on Hand........................................... 98,323
Less: Estimated Net Closing Adjustments...................... (2,898,254)
Repayment of Debt...................................... (50,416,569)
Indemnity Escrow....................................... (3,283,500)
------------
Cash Available for Distribution to Joint Venturers. 52,000,000
Cash Distributed to Growth Partners II, IDS
Management Corporation and Intercable............ 39,300,000
------------
Cash Distributed to the Partnership................ 12,700,000
Less: Repayment of Amount Due Managing General Partner....... (102,393)
------------
Cash Available for Distribution by the Partnership. $ 12,597,607
============
</TABLE>
15
<PAGE>
Based on financial information available at June 30, 1998, the following
table presents the estimated results of the Partnership when the Venture has
completed the sale of the Aurora System:
<TABLE>
<S> <C>
Dollar Amount Raised......................................... $ 15,845,750
Number of Cable Television Systems Purchased................. One
Date of Closing of Offering.................................. June 1989
Tax and Distribution Data per $1,000 of Limited Partnership
Capital:
Federal Income Tax Results
Ordinary Income (Loss)
--from operations........................................ $ (1,366)
--from recapture......................................... $ 1,202
Capital Gain (Loss)...................................... $ (32)
Cash Distributions to Investors
Source (on GAAP basis)
--investment income...................................... $ 0
--return of capital...................................... $ 795
Source (on cash basis)
--sales.................................................. $ 795
</TABLE>
16
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF IDS/JONES GROWTH PARTNERS 89-B, LTD.
The following unaudited pro forma balance sheet assumes that as of June 30,
1998, the Venture had sold the Aurora System for $108,500,000. The funds
available to the Venture, adjusting for the estimated net closing adjustments
of the Aurora System, are expected to total approximately $105,601,746. Such
funds will be used to repay all indebtedness of the Venture, pay certain fees
and expenses of the transaction, settle working capital adjustments and
deposit funds into an indemnity escrow account, and then the balance remaining
will be distributed to the four partners of the Venture. The Partnership will
receive $12,700,000, or 24.4 percent, of the $52,000,000 of net sale proceeds.
The Partnership will repay the outstanding balance of $102,393 due the
Managing General Partner and then the Partnership will distribute the
remaining $12,597,607 to its limited partners of record as of the closing date
of the sale of the Aurora System. Because the distribution to be made to the
limited partners on the sale of the Aurora System will not exceed 125 percent
of the amounts originally contributed to the Partnership by the limited
partners, the General Partners will not receive general partner distributions
on the sale of the Aurora System.
The unaudited pro forma balance sheet should be read in conjunction with the
appropriate notes to the unaudited pro forma balance sheet.
ALL OF THE FOLLOWING UNAUDITED PRO FORMA FINANCIAL INFORMATION IS BASED UPON
AMOUNTS AS OF JUNE 30, 1998 AND CERTAIN ESTIMATES OF LIABILITIES AT CLOSING.
FINAL RESULTS MAY DIFFER FROM SUCH INFORMATION.
17
<PAGE>
IDS/JONES GROWTH PARTNERS 89-B, LTD.
UNAUDITED PRO FORMA BALANCE SHEET
JUNE 30, 1998
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
AS REPORTED ADJUSTMENTS BALANCE
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Distribution receivable from cable
television joint venture................ $ -- $12,597,607 $12,597,607
---------- ----------- -----------
Total Assets............................. $ -- $12,597,607 $12,597,607
========== =========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Loss in excess of investment in cable
television joint venture.............. $5,465,866 $(6,267,040) (801,174)
Accounts payable-affiliate............. 102,393 (102,393) --
Accrued distribution to limited
partners.............................. -- 12,597,607 12,597,607
---------- ----------- -----------
Total Liabilities.................... 5,568,259 6,228,174 11,796,433
---------- ----------- -----------
Partners' Capital:
Managing General Partner............... (97,207) 97,207 --
Supervising General Partner............ (97,208) 97,208 --
Limited Partners....................... (5,373,844) 6,175,018 801,174
---------- ----------- -----------
Total Partners' Capital.............. (5,568,259) 6,369,433 801,174
---------- ----------- -----------
Total Liabilities and Partners'
Capital............................... $ -- $12,597,607 $12,597,607
========== =========== ===========
</TABLE>
The accompanying notes to unaudited pro forma financial statements are an
integral part of this unaudited balance sheet.
18
<PAGE>
IDS/JONES GROWTH PARTNERS 89-B, LTD.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
AS REPORTED ADJUSTMENTS BALANCE
------------ ----------- ----------
<S> <C> <C> <C>
EQUITY IN NET LOSS OF CABLE TELEVISION
JOINT VENTURE........................... $ (1,495,617) $1,495,617 $ --
NET LOSS................................. $ (1,495,617) $1,495,617 $ --
============ ========== ==========
NET LOSS PER LIMITED PARTNERSHIP
INTEREST................................ $ (23.36) $ --
============ ==========
</TABLE>
The accompanying notes to unaudited pro forma financial statements are an
integral part of this unaudited statement.
19
<PAGE>
IDS/JONES GROWTH PARTNERS 89-B, LTD.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
AS REPORTED ADJUSTMENTS BALANCE
----------- ----------- ---------
<S> <C> <C> <C>
EQUITY IN NET LOSS OF CABLE TELEVISION JOINT
VENTURE.................................... $(576,224) $576,224 $ --
--------- -------- --------
NET LOSS.................................... $(576,224) $576,224 $ --
========= ======== ========
NET LOSS PER LIMITED PARTNERSHIP INTEREST... $ (9.00) $ --
========= ========
</TABLE>
The accompanying notes to unaudited pro forma financial statements are an
integral part of this unaudited statement.
20
<PAGE>
IDS/JONES GROWTH PARTNERS 89-B, LTD.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1) The Partnership has a 24.4 percent ownership interest in the Venture
through a capital contribution made in 1990 of $14,008,000. The following
calculations present the sale of the Aurora System and the resulting estimated
proceeds expected to be received by the Partnership.
2) The unaudited pro forma balance sheet of the Partnership assumes that the
Venture had sold the Aurora System for $108,500,000 as of June 30, 1998. The
unaudited pro forma statements of operations of the Partnership assume that
the Venture had sold the Aurora System for $108,500,000 as of January 1, 1997.
3) The Partnership will receive $12,700,000 from the Venture, of which
$102,393 will be used to repay the outstanding balance due the Managing
General Partner and the remainder will be distributed to the limited partners
of the Partnership. The limited partners' distribution of $12,597,607
represents $199 for each $250 limited partnership interest, or $795 for each
$1,000 invested in the Partnership.
4) The estimated gain recognized from the sale of the Aurora System and
corresponding estimated distribution to limited partners as of June 30, 1998
has been computed as follows:
GAIN ON SALE OF ASSETS:
<TABLE>
<S> <C>
Contract sales price............................................. $108,500,000
Less: Net book value of investment in cable television properties
at June 30, 1998........................................... (39,265,471)
------------
Gain on sale of assets........................................... $ 69,234,529
============
DISTRIBUTION TO PARTNERS:
Contract sales price............................................. $108,500,000
Working Capital Adjustment:
Add: Trade receivables, net..................................... 565,921
Prepaid expenses........................................... 342,755
Less: Accrued liabilities........................................ (3,755,446)
Subscriber prepayments..................................... (51,484)
------------
Adjusted cash received........................................... 105,601,746
Less: Outstanding debt to third parties.......................... (47,072,753)
Outstanding advances from the Managing General Partner..... (337,169)
Outstanding note from the Managing General Partner......... (600,000)
Outstanding subordinated advance from Intercable........... (1,406,647)
Outstanding note from IDS Management Corporation........... (1,000,000)
Add: Cash on hand............................................... 98,323
------------
Cash available from sale proceeds.......................... 55,283,500
------------
Portion of sale proceeds to be held in indemnity escrow.... (3,283,500)
------------
Cash available for distribution to joint venturers......... 52,000,000
Cash distributed to Growth Partners II, IDS Management
Corporation and Intercable................................. 39,300,000
------------
Cash distributed to the Partnership.............................. 12,700,000
Less: Repayment of amount due Managing General Partner........... (102,393)
------------
Cash available for distribution by the Partnership......... $ 12,597,607
============
</TABLE>
21
<PAGE>
AVAILABLE INFORMATION
The Partnership's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and the Partnership's Quarterly Reports on Form 10-Q for the
fiscal quarters ended March 31, 1998 and June 30, 1998 are being mailed to the
limited partners of the Partnership together with this Proxy Statement.
INCORPORATION BY REFERENCE
The Partnership's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and the Partnership's Quarterly Reports on Form 10-Q for the
fiscal quarters ended March 31, 1998 and June 30, 1998 are incorporated by
reference in their entirety in this proxy statement.
22
<PAGE>
[JONES INTERCABLE, INC. LOGO]
9697 EAST MINERAL AVENUE
ENGLEWOOD, COLORADO 80112
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE PARTNERSHIP BY THE MANAGING GENERAL
PARTNER
The undersigned Limited Partner of IDS/Jones Growth Partners 89-B, Ltd., a
Colorado limited partnership, hereby votes on the sale of the Venture's Aurora,
Illinois cable television system to TCI Communications, Inc. or one of its
affiliates for a sales price of $108,500,000 in cash, subject to normal closing
adjustments, pursuant to the terms and conditions of that certain Asset
Purchase Agreement dated as of July 10, 1998, as follows:
[_] CONSENTS [_] WITHHOLDS CONSENT [_] ABSTAINS
(You must sign on the reverse side of this proxy card for your vote to count.)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED LIMITED PARTNER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE PROPOSED SALE TRANSACTION.
PLEASE SIGN EXACTLY AS NAME
APPEARS.
DATED: _____________________, 1998
__________________________________
Beneficial Owner Signature
(Investor)
__________________________________
Authorized Trustee/Custodian
Signature
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
[JONES INTERCABLE, INC. LOGO]
9697 EAST MINERAL AVENUE
ENGLEWOOD, COLORADO 80112
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE PARTNERSHIP BY THE MANAGING GENERAL
PARTNER
The undersigned Limited Partner of IDS/Jones Growth Partners 89-B, Ltd., a
Colorado limited partnership, hereby votes on the sale of the Venture's Aurora,
Illinois cable television system to TCI Communications, Inc. or one of its
affiliates for a sales price of $108,500,000 in cash, subject to normal closing
adjustments, pursuant to the terms and conditions of that certain Asset
Purchase Agreement dated as of July 10, 1998, as follows:
[_] CONSENTS [_] WITHHOLDS CONSENT [_] ABSTAINS
(You must sign on the reverse side of this proxy card for your vote to count.)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED LIMITED PARTNER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE PROPOSED SALE TRANSACTION.
All owners must sign exactly as
name(s) appear on label.
When limited partnership inter-
ests are held by more than one
person, all owners must sign.
When signing as attorney, as ex-
ecutor, administrator, trustee or
guardian, please give full title
as such. If a corporation, please
sign in full corporation name by
authorized officer. If a partner-
ship, please sign in partnership
name by authorized person.
DATED: _____________________, 1998
__________________________________
Signature--Investor 1
__________________________________
Signature--Investor 2
__________________________________
Signature--Investor 3
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
