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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [x]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Brauvin Income Plus L.P. III, a Delaware limited partnership
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(Name of Registrant as Specified in its Charter)
Janet Toolson
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applied:
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2) Aggregate number of securities to which transaction applies:
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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):
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5) Total fee paid:
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[x] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act rule
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Revision 1
PRELIMINARY MATERIALS
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JANET TOOLSON
c/o The Mills Firm
300 Drake's Landing
Suite 155
Greenbrae, California 94904
Telephone: 415-464-4770
Fax: 415-464-4777
SOLICITATION STATEMENT
Relating to the Special Meeting of Limited Partners
of Brauvin Income Plus L.P. III
To Be Held November 8, 1996
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Revision 1
PRELIMINARY MATERIALS
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INTRODUCTION
GENERAL
This Solicitation Statement are being first mailed to the beneficial owners
("Limited Partners") of the limited partnership interests ("Units") of Brauvin
Income Plus L.P. III, a Delaware limited partnership (the "Partnership"), on or
about [November 4], 1996 by the undersigned Limited Partner (the "Dissenting
Partner") regarding the revocation of proxies that may have been granted to
Jerome J. Brault and Brauvin Realty Advisors, Inc. (collectively, the "Corporate
General Partners") for use at a special meeting of the Limited Partners (the
"Special Meeting") to be held at the offices of the Partnership, 150 South
Wacker Drive, Chicago, Illinois 60606, on Friday, November 8, 1996, at 10:00
a.m., Central Standard Time. As you are probably aware, together with
Dissenting Partners from Brauvin High Yield fund L.P., Brauvin High Yield Fund
L.P. II, and Brauvin Corporate Lease Program IV L.P., the Dissenting Partner has
commenced class action litigation against the Corporate General Partners and the
Purchaser in the United States District Court, Northern District of Illinois,
Eastern Division, for breach of fiduciary duty (the "Class Action Lawsuit"). As
part of the Class Action Lawsuit, on September 20, 1996, the Court delayed the
original date for the Special Meeting to October 9, 1996 and authorized The
Mills Firm to communicate with the other Limited Partners.
On September 27, 1996, on behalf of the Dissenting Partner, our counsel,
The Mills Firm, sent a letter requesting that you revoke proxies that you may
have granted to the Corporate General Partners of our Partnership regarding
proposals (the "Proposals") to (i) merge the Partnership with Brauvin Real
Estate Funds, LLC, a Delaware limited liability company ("Purchaser") and (ii)
adopt an amendment to the Partnership's Partnership Agreement to permit a
majority vote of the Limited Partners to determine the outcome of the merger
without the vote of the General Partners ("September 27 Letter"). A number of
Limited Partners responded favorably to the September 27 Letter and sent in
revocations ("REVOCATIONS") as requested. The exact number of REVOCATIONS that
were sent in is not known to the Dissenting Partner, but, according to an
October 21, 1996 communication from Jerome J. Brault (the "Managing General
Partner"), the Partnership does not have the necessary votes to consummate the
proposed transactions.
SEC COMPLIANCE
The September 27 Letter was hurriedly prepared in order for the Limited
Partners to have a meaningful opportunity to act before the Special Meeting
rescheduled by the Court to October 9, 1996. This letter was not submitted to
the Securities and Exchange Commission ("SEC") in accordance with its proxy
rules prior to being sent to the Limited Partners by The Mills Firm. This
Solicitation Statement is designed to correct such omission.
The Corporate General Partners have asserted that the September 27 Letter
contained a number of misleading statements or omissions. Those assertions have
been stated in filings made with the Court, and are repeated in October 4, 1996
and October 21, 1996 letters from Mr.
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Brault which have been mailed to the Limited Partners. The validity of those
assertions has not been finally resolved by the Court.
This Solicitation Statement supersedes the September 27 Letter, and has a
threefold purpose: first, to urge Limited Partners not to cancel REVOCATIONS
which have already been submitted to the Corporate General Partners; second, to
correct any omissions from, or misstatements in, the September 27 Letter; and
third, to give Limited Partners a chance to cancel REVOCATIONS submitted in
response to the September 27 Letter, if, after reading this document, they deem
such cancellation appropriate.
For the reasons described in the next section of this Solicitation
Statement, the Dissenting Partner STRONGLY URGES ALL LIMITED PARTNERS WHO HAVE
REVOKED PREVIOUSLY SUBMITTED PROXIES NOT TO CANCEL SUCH REVOCATIONS.
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REASONS TO VOTE AGAINST THE "PROPOSALS"
Conflicts of Interest
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The Corporate General Partners which are recommending the Proposals will
control the entity into which will purchase the assets of the Partnership as
described in the first Proposal. While they assert that ultimately they may own
no more than 20% of the Purchaser, the fact is that today they control 100% and
there is no assurance that they will not maintain effective management control
of, and a significant equity interest in, the Purchaser even after equity
financing is raised.
Neither the Corporate General Partners nor the Partnership have taken
additional steps necessary to support the price being paid to the Limited
Partners (such as obtaining confirming appraisals from other than Cushman &
Wakefield), or, indeed, to obtain a higher price for Limited Partners, such as
attempting to market the property to third parties or subjecting the property to
an auction procedure. The Corporate General Partners appear to want to maintain
an equity interest in the Partnership's assets for themselves, creating the
ultimate conflict of interest.
General partners of limited partnerships are obligated to exercise the
highest standard of care in connection with transactions entered into by the
partnership, particularly in connection with related party transactions and
self-dealing. Mere disclosure of self-dealing is not adequate. Thus, a vote
against the merger Proposal would obtain time during which to test alternative
means for determining the value of the Partnership's assets and the Units in
unrelated third party transactions and procedures.
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In addition, if the merger is completed as proposed by the Corporate
General Partners, any significant increase in the value of the Partnership's
assets would inure totally to the benefit of the Corporate General Partner, as
it would in a sale to an unrelated third party. This possibility should be
considered in deciding how to vote. You may want to continue to share in the
potential appreciation. Leaving in place a REVOCATION of any proxies approving
the Proposals will allow you to continue as ultimate "owners" of the
properties.
The Valuation Process
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The Corporate General Partners have obtained an appraisal from Cushman &
Wakefield which is based on only one of the recommended method of appraising
properties. In addition, Cushman & Wakefield was asked to render a financial
"fairness" opinion with respect to the transaction contemplated by the Proposals
as a whole. It would have provided more comfort to the Limited Partners had a
reputable independent investment banking firm been engaged to evaluate the
overall transaction and render the fairness opinion based on Cushman &
Wakefield's appraisal. While the offered price may be "reasonable," the process
selected by the Corporate General Partners was not designed to assure the
Limited Partners of the "best price."
Leaving in place a REVOCATION of your vote for the Proposals would allow
for the process of obtaining a more complete appraisal and a wholly independent
fairness opinion.
Failure of Recommendation by Independent General Partner
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In the August 23, 1996 proxy material prepared by the Corporate General
Partners and distributed to you, disclosure is made that one of the individual
General Partners who is not related to Mr. Brault or Brauvin Realty Advisors,
Inc., Cezar M. Froelich (the "Independent General Partner"), is not recommending
the Proposals "since he believes that the most advantageous methodology for a
fair price for the assets would be to seek third-party offers through an arm's-
length bidding process." In fact, as also disclosed in the August 23, 1996
proxy material, the Independent General Partner has announced his intention to
resign as a General Partner of the Partnership. It is clear from the positions
taken by the Independent General Partners that the Proposals, namely the
amendment to the Partnership Agreement permitting the merger without the consent
of the General Partners, is a bold self-serving tactic to avoid a result which,
because of the announced positions of the Independent General Partners, would
negate the possibility of a successful merger on the terms proposed.
While Limited Partners may, of course, amend the Partnership Agreement, the
affiliated Corporate General Partners are asking for your consent to amend the
Partnership Agreement to eliminate the necessity for the exercise of judgment on
the part of the Independent General Partners of the Partnership. Frankly, they
are also asking you to override the judgment of the Independent General Partner
that this is not the best course of action to be taken now. Presumably, the
provision of the Partnership Agreement requiring both the approval of the
Limited Partners and the General Partners to transactions such as those
contemplated by the Proposals was to satisfy fiduciary obligations on the part
of General Partners to Limited Partners, as well as to obtain the consent and
advice of the persons most affected by and knowledgeable
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about the assets owned by the Partnership. This protection is clearly lost by
virtue of the second Proposal.
Leaving in place the REVOCATION of a prior "yes" vote on the Proposal
therefore, would be a confirmation that you, as Limited Partners, desire the
protections determined to be prudent by the Independent General Partner.
CANCELLATION OF YOUR EARLIER SUBMITTED REVOCATION WILL HAVE THE EFFECT OF
VOTING "YES" FOR THE PROPOSALS. YOU ARE URGED NOT TO CANCEL YOUR REVOCATION.
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PENDING LITIGATION
As noted in the Introduction, the Dissenting Partner has filed the Class
Action Lawsuit to protect the interests of all of the Limited Partners. The
Dissenting Partner has been certified by the Court as the class representative.
The Dissenting Partner has been successful in delaying the original date of the
Special Meeting to allow additional information about the Proposals to be
supplied to the Limited Partners. In such lawsuit, the Corporate General
Partners challenged the September 27 Letter and the revocations submitted in
response to it. They have described their position in the October 4, 1996 and
October 21, 1996 communications to the Limited Partners.
The Court has refused to invalidate REVOCATIONS submitted in response to
the September 27 Letter. The U.S. Circuit Court for the Seventh Circuit has
refused to hear an appeal of this ruling on an emergency basis and the Corporate
General Partners have appealed that ruling.
In the meantime, on October 17, 1996, the Dissenting Partner filed a motion
for partial summary judgment to invalidate the proxies solicited by the
Corporation General Partners to vote in favor of the Proposals. The basis for
such motion is that a proxy voting procedure is not authorized by Delaware law
absent specific language in the partnership agreement which does not exist in
the Partnership's Partnership Agreement. The Corporate General Partners'
response is due November 4, 1996, with the Dissenting Partner having the right
to submit a reply by November 12, 1996. If the Court rules favorably on this
motion, the entire special meeting voting process will be invalidated, and all
solicitations to date from the Corporate General Partners and the Dissenting
Partner would be of no effect.
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CORRECTIONS AND CLARIFICATIONS OF SEPTEMBER 27 LETTER
In order to bring this solicitation into compliance with the SEC's proxy
rules, in addition to other clarifications in "Reasons To Vote Against the
Proposals," the following corrections to, or clarifications of, the September
27, 1996 Letter should be noted:
1. As previously stated in the September 30 Letter from The Mills Firm,
the Court did not review or approve or disapprove the text of the September 27
Letter.
2. The statement in the September 27 Letter that the cover letter to the
August 23, 1996 solicitation statement implies that the appraisal and the
fairness opinion come from separate entities was inaccurate. The September 27
Letter was not intended to impugn the integrity of Cushman & Wakefield, or
misrepresent its appraisal. The key point was that, while "reasonable," the
price was not necessarily the best available.
3. In asserting that the Partnership's assets may be worth more than the
pending offer from the Purchaser, no projection of future value of Partnership
assets was intended. However, the Dissenting Partner is aware of at least one
offer from a third party for the Partnership's assets at a higher price which
offer has been rejected by the Corporate General Partners. This offer has not
been disclosed to the Limited Partners. The Corporate General Partners contend
that the basis for the rejection is that normally a sale to a third party must
take into account possible outstanding liabilities of the Partnership, which
would not be true for a sale to the proposed Brauvin Purchaser.
INFORMATION ABOUT DISSENTING PARTNER
The Dissenting Partner is Janet Toolson of Kent, Washington. She is a
Customer Service Representative for the City of Kent, Washington., and hold 500
Units of the Partnership. She has been certified as class representatives for
the Limited Partners of the Partnership in the above described Class Action
Lawsuit. Her only interest in the Proposals is to see that the value of the
Units is maximized by the General Partners of the Partnership in any
transaction, or series of transactions, in which the Partnership properties are
disposed of.
INFORMATION CONCERNING THE MILLS FIRM
The Mills Firm is a law firm located in Greenbrae, California, specializing
in litigation matters. It began its involvement in this transaction as counsel
for the Dissenting Partner in the commencement of the Class Action Lawsuit.
Prior to the Dissenting Partner being certified as
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a class representative for the other Limited Partners in the Class Action
Lawsuit, The Mills Firm had a contingent fee agreement with the Dissenting
Partner. As a part of that agreement, The Mills Firm agreed to advance the costs
of the preparation and dissemination of this Solicitation Statement and the
September 27 Letter. If such Class Action Lawsuit is successful, The Mills Firm
will be entitled to such fee for its services as the Court deems appropriate to
be paid out of any recovery from the defendants or out of any proceeds from the
sale of the Partnership's assets at a price in excess of that proposed by the
Corporate General Partners. Except for the potential receipt of such attorneys'
fees, The Mills Firm has no interest in the transactions described in the
Proposals. The Mills Firm has no interest in the outcome of the vote being
sought by the Corporate General Partners. If the vote sought by the Corporate
General Partners is obtained, and if there is no recovery against the Corporate
General Partners and other defendants in such Class Action Lawsuit, The Mills
Firm will receive no compensation for its efforts in representing either the
Dissenting Partner or the class of Limited Partners of the Partnership.
GENERAL
The REVOCATION was solicited by and on behalf the Dissenting Partner. The
Dissenting Partner encourages you not to revoke it. This Solicitation Statement
will be transmitted to Limited Partners by mail.
Each Unit is entitled to one vote. The number of Units outstanding is as
stated in the General Partners' August 23, 1996 Solicitation Statement. A
majority of the Units must be voted in favor of the Proposals for them to be
approved. Revocation of a "yes" vote, as well as failure to vote affirmatively,
is effectively a "NO" vote. The effect of a cancellation of a REVOCATION will
be a "yes" vote for the Proposals.
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"Dissenting Partner"
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SPECIAL MEETING - NOVEMBER 8, 1996
THE REVOCATION OF YOUR APPROVAL VOTE IS EXTREMELY IMPORTANT
YOU ARE STRONGLY URGED NOT TO CANCEL IT.
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1. If you wish to cancel a Revocation previously submitted in response to the
September 27 Letter, you must submit a Cancellation of Revocation to The
Herman Group, Inc. at or before the time of the special meeting or November
8, 1996.
2. If you have any questions or require any additional information concerning
this Solicitation Statement, please contact :
The Mills Firm
300 Drake's Landing
Suite 155
Greenbrae, California 94904
Telephone: 415-464-4770
Fax: 415-464-4777
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