As filed with the Securities and Exchange Commission on June 17, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [ x ]
Filed by a Party other than Registrant [ ]
Check the appropriate box:
[X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14(a)-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or 240.14a-12
ICON CASH FLOW PARTNERS, L.P., SERIES C
(Exact name of registrant as specified in its charter)
ICON CASH FLOW PARTNERS, L.P., SERIES C
(Name of Person filing Proxy Statement)
Payment of filing fee (check appropriate box):
[ x ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction applies:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and then 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.
Amount previously paid:
Form, schedule or registration statement number:
Filing Party:
Date Filed:
<PAGE>
ICON Cash Flow Partners, L.P., Series C
NOTICE OF ACTION BY CONSENT OF LIMITED PARTNERS
To: The Limited Partners of ICON Cash Flow Partners,
L.P., Series C (the "Partnership"):
Your vote by means of the enclosed Consent is hereby solicited to APPROVE or
DISAPPROVE the following amendments (the "Amendments") to the First Amended and
Restated Agreement of Limited Partnership (the "Partnership Agreement").
ICON has proposed the following two Amendments:
o Amendment No. 1 would:
(1) Extend the Reinvestment Period for up to four (4) additional years;
and
(2) Delay the beginning and end of the Liquidation Period by up to four
(4) additional years.
o Amendment No. 2 would:
(1) Eliminate the Partnership's obligation to pay ICON Capital Corp.
("ICON") $580,117 of the $705,117 of past and future Management Fees,
thereby limiting the total Fees paid to ICON to the amount of $125,000; and
(2) Require ICON to make an additional Capital Contribution to the
Partnership in the amount of $125,000 immediately upon receipt of its
Management Fees (during 1997 or 1998).
By order of the General Partner of the Partnership, only Limited Partners of
record at the close of business on June 20, 1996 are entitled to notice of this
consent action and are entitled to vote by consent.
To ensure that your votes are counted, your Consent Form (completed and signed
by the owner of record as of June 20, 1996 -- the "Record Date") must be
received by ICON by July [ ], 1996 (the "Determination Date"). The Determination
Date may be extended by ICON, at its option, for a period of thirty days.
By order of the General Partner,
ICON Capital Corp.
Peter D. Beekman, President
June [ ], 1996
<PAGE>
ICON Cash Flow Partners, L.P., Series C
Consent Statement
dated June [ ], 1996
This Consent Statement and the enclosed Consent Form are being provided to the
Limited Partners of ICON Cash Flow Partners, L.P., Series C (the "Partnership")
to solicit the vote of Limited Partners holding at least 50% of Limited
Partnership Units (99,235 of the 198,470 Units) (a "Majority") which are
outstanding on June 20, 1996, the Record Date, to APPROVE or DISAPPROVE
amendments to the First Amended and Restated Agreement of Limited Partnership
(the "Partnership Agreement") of the Partnership. Capitalized terms used herein
without definition have the meanings set forth in the Partnership Agreement.
ICON Capital Corp. ("ICON") is proposing two amendments (the "Amendments") to
the Partnership Agreement to do the following:
o Amendment No. 1 would:
(1) Extend the Reinvestment Period for up to four (4) additional years;
and
(2) Delay the beginning and end of the Liquidation Period by up to four
(4) additional years.
o Amendment No. 2 would:
(1) Cap at $125,000 the Management Fees which ICON has earned or will earn,
thereby eliminating the Partnership's obligation to pay ICON (a) $398,754 of
the estimated $523,754 of Management Fees which have already accrued for the
period beginning September 1, 1993 and ending on June 20, 1996 but have not
yet been paid, and (b) $181,363 of Management Fees which ICON estimates
would otherwise accrue for the period from June 21, 1996 to December 20,
1998 (the end of the Liquidation Period under the existing Partnership
Agreement); and
(2) Require ICON to make an additional Capital Contribution to the
Partnership in the amount of $125,000 immediately upon receipt of its
Management Fees (during 1997 or 1998).
Reference is made to Exhibit A for the full text of the Amendments.
The Risks or Detriments of Amendment No. 1 include the following:
o Delay in liquidating Investments and in making liquidation distributions. The
delay of the Liquidation Period could result in the period ending as late as
December 20, 2002 rather than the current ending date which is no later than
December 20, 1998.
o Reinvestment as an alternative to Liquidation will result in lower cash
distributions to Limited Partners in 1996 and 1998, however, it is
estimated that distributions overall through the remaining term of the
Partnership would be increased. If the Partnership reinvests rather than
liquidates, the Limited Partners are expected to receive $927,844 less in
cash distributions in 1996 and $31,836 less in 1998 than they would be
expected to receive if the Partnership liquidates. Total cash
distributions overall are estimated to be higher by approximately $718,721.
o Lack of liquidity of Units. The extension of the Reinvestment Period will
likewise extend the time during which some portion of the Limited Partners'
investment in Units remains invested.
o Rate of Limited Partner Cash Distributions not fixed; return on
Investment not determinable. While it is the Partnership's objective to
continue to make monthly cash distributions from net cash flow from
operations at a rate equal to 9% per annum of the Limited Partners'
original Capital Contributions, ICON may determine that it is in the best
interest of the Partnership to reduce that rate of distribution in order
to allow for additional reinvestments. There are no assurances that
investors will achieve any specified rate of return on the current
Partnership Investments or the additional Investments which the
Partnership might hereafter acquire. To date, the Partnership has made
distributions which under generally accepted accounting principles have
consisted primarily of a return of capital during each year of the
Partnership's operations to date.
o Continued operations would result in additional directly-paid Partnership
Expenses and Administrative Expenses. An estimated additional $57,289 in
directly-paid Partnership Expenses and Administrative Expenses will result
from the approval of Amendment No. 1. These additional expenses are taken
into consideration in the estimated cash distributions.
o Extended exposure to risks inherent in Investments. Amendment No. 1 will
result in ICON having the continued ability to reinvest excess cash flow in
Investments and incur additional indebtedness for that purpose, which will
involve the same risks related to investing in equipment leasing and related
financing transactions as have existed to date with respect to the
Partnership's current Investments. These risk factors are discussed in
further detail within this Consent Statement.
o Additional Investments are currently unspecified. The Partnership is not
permitted to make, or commit to make, additional Investments unless and
until Amendment No. 1 becomes effective.
o Federal income tax risks. The Partnership may cease to be classified as a
limited partnership for federal income tax purposes.
The Risks or Detriments of Amendment No. 2 include the following:
o ICON's consent is required for Amendment No. 2 to become effective. ICON
has conditioned its consent on the approval of Amendment No. 2 to the
APPROVAL of Amendment No. 1 by a Majority of the Limited Partners.
o Reduction by $398,754 of the Partnership's accrued but unpaid liability to
pay Management Fees will increase the Partnership's taxable income in 1996.
The elimination of $523,754 in Management Fees which have accrued and have
been deducted by the Partnership on its federal and state tax returns will
result in a reversal of such deduction in 1996 and the recognition of
$394,766 of additional taxable income.
<PAGE>
------------------------------------------
Table of Contents
Page
Summary ..............................................................1
General Information.....................................................1
Background for the Proposed Amendments..................................1
The Proposed Amendments.................................................1
Amendment No. 1.....................................................2
Amendment No. 2.....................................................2
General Disclosures.....................................................2
Detriments and Risks of the Proposed Amendments
Amendment No. 1.....................................................2
Amendment No. 2.....................................................4
Benefits of the Amendments
Amendment No. 1.....................................................5
Amendment No. 2.....................................................5
Present Partnership Provisions..........................................6
Effects of the Amendments...............................................7
Incorporation by Reference..............................................8
Voting Rights and Solicitation of Consents..............................8
ICON's Recommendation...................................................9
Consent Form
Text of Amendments to the Partnership Agreement.................Exhibit A
<PAGE>
Summary
The following summary is qualified in its entirety by the more detailed
discussion of the proposed Amendments set forth elsewhere in this Consent
Statement and incorporated herein by reference.
General Information
The Partnership was formed on June 22, 1990 as a Delaware limited partnership
and commenced business operations on January 3, 1991. It completed its offering
of units of limited partnership interest in the Partnership ("Units")
aggregating 200,000 Units ($20,000,000 in capital contributions) and had its
final closing on June 20, 1991. Between June 20, 1991 and the Record Date, the
Partnership redeemed 1,530 Units, resulting in a reduction from 200,000 to
198,470 outstanding Units.
The Partnership is managed by its sole general partner, ICON Capital Corp.,
which has full and exclusive discretion in management and control of the
Partnership's business affairs including negotiation and structuring of its
financing arrangements and investment purchases. The Partnership has no direct
employees.
Background for the Proposed Amendments
The Partnership experienced unexpected losses in 1992 as reported in the
Partnership's Form 10-K for that year. Specifically, the Partnership wrote down
its residual position in leases to Phar-Mor, Inc. by $1,412,365 as a result of
its bankruptcy and the alleged fraud by that company.
To seek to recover those losses, ICON took the following steps beginning in 1992
and continuing through the present which have increased the available funds for
reinvestment: (1) waived the reimbursement of Administrative Expense for the
period of July 1, 1991 through September 30, 1993 in the aggregate amount of
$859,961; (2) reduced the Partnership's annual cash distribution rate to 9%
effective September 1, 1993; (3) deferred receipt of Management Fees effective
September 1, 1993 (such deferrals through June 20, 1996 approximate $523,754);
and (4) effective January 31, 1994, refinanced the Partnership's outstanding
line of credit of $1,500,000 on more favorable terms. Because such loss was
sustained so early in the life of the Partnership, it has not yet recovered from
the impact of the 1992 write-off in spite of these measures which have had a
favorable financial effect on the Partnership.
The Proposed Amendments
ICON proposes the extension of the Reinvestment Period to give the Partnership
additional time to recover from the impact of the write-off by maximizing the
revenues of each of the Partnership's current investments and by making
additional reinvestments with its available cash. In addition, ICON proposes
that its past and future Management Fees be capped at $125,000 (foregoing
approximately $580,117 in Fees which are estimated to accrue through the end of
the current Liquidation Period) and that, upon payment of the Management Fees
during 1997 and 1998, ICON will be required to immediately pay that full amount
to the Partnership as an additional Capital Contribution.
More specifically, the proposed Amendments to the Partnership Agreement are as
follows:
<PAGE>
o Amendment No. 1
(1) Extend the Reinvestment Period (the period during which the Partnership
may continue to reinvest available cash in additional Partnership
Investments) for a maximum of four (4) additional years (from June 20, 1996
to not later than June 20, 2000); and
(2) Delay by up to four (4) additional years the beginning and end of the
Liquidation Period (from not later than December 20, 1998 to no later than
December 20, 2002).
o Amendment No. 2
(1) Cap at $125,000 the Management Fees which ICON has earned or will earn,
thereby eliminating the Partnership's obligation to pay ICON (a) $398,754 of
the estimated $523,754 of Management Fees which have already accrued for the
period beginning September 1, 1993 and ending on June 20, 1996 but have not
yet been paid, and (b) $181,363 of Management Fees which ICON estimates
would otherwise accrue for the period from June 21, 1996 to December 20,
1998 (the end of the Liquidation Period under the existing Partnership
Agreement); and
(2) Require ICON to make an additional Capital Contribution to the
Partnership in the amount of $125,000 immediately upon receipt of its
Management Fees (projected to be paid during 1997 or 1998).
Reference is made to Exhibit A for the full text of the Amendments.
General Disclosures
o Management of the Partnership; Limited Voting Rights of Limited Partners.
All decisions with respect to management of the Partnership, including the
determination as to which Equipment the Partnership will acquire and which
Leases and Financing Transactions it will enter into or acquire as well as
the level of cash which will be reinvested, set aside in reserves and
distributed to its Partners, will be made exclusively by ICON. Limited
Partners cannot take part in management of the Partnership without
jeopardizing the status of the Partnership as such for tax purposes.
Limited Partners will not have the opportunity to vote except in
extraordinary circumstances (e.g., such as in this Consent Action) and,
therefore, they must rely on ICON's skill, integrity and business
expertise.
o A Majority vote of the Limited Partners will bind all Partners; Limited
Partners have no dissenters' rights. A Majority vote of the Limited Partners
to DISAPPROVE the Amendments or to ABSTAIN from voting will not confer on
the Limited Partners any dissenters' or appraisal rights with respect to
their Units and the Limited Partners will thus have no right to have their
Units repurchased under any other terms than are presently provided in the
Partnership Agreement.
o No independent representative has been retained to represent the Limited
Partners in connection with the preparation and review of this Consent
Statement and the financial information summarized herein.
o Cash Distributions to the Limited Partners are expected to include a partial
return of their Capital Contributions. A substantial portion of the
distributions to be made by the Partnership are expected to be a return of
investors' Capital Contributions, principally due to federal tax deductions
for non-cash expenses (e.g., depreciation) and cash expenses (e.g.,
amortization of acquisition costs).
Detriments and Risks of the Proposed Amendments
Amendment No. 1 Extension of the Reinvestment Period and Delay of the
Liquidation Period for up to Four (4) Additional Years.
o Delay in liquidating Investments and in making liquidation distributions.
The delay of the Liquidation Period could result in the period ending as
late as December 20, 2002 rather than the current ending date which is no
later than December 20, 1998. During the extended Reinvestment Period,
the Partnership would hold and collect gross revenues from its current and
additional Investments rather than liquidating current Investments as
quickly as possible and promptly distributing the proceeds. The estimated
effect of the delay on cash distributions that would be made to the
Limited Partners is illustrated in the table which appears on Page 6 under
"Benefits of the Amendments--Amendment No. 2--Increased Cash Distributions
to the Partners".
o Reinvestment as an alternative to Liquidation will result in lower cash
distributions to Limited Partners in 1996 and 1998. However, it is
estimated that distributions overall through the remaining term of the
Partnership would be increased. Rather than receive distributions
resulting from the proceeds of the liquidation of the Partnership's
current assets, the Partnership will attempt to continue, during the
Reinvestment Period, to make monthly distributions to Limited Partners at
a rate of 9% per annum of the Limited Partners' original Capital
Contributions. Any available cash after distributions will be
reinvested. Therefore, if the Partnership reinvests rather than
liquidates, the Limited Partners will receive $927,844 less in cash
distributions in 1996 and $31,836 less in 1998 than they would receive if
the Partnership liquidates. In 1997, however, cash distributions are
estimated to be higher by $403,975 and total cash distributions to Limited
Partners from 1996 through 2001 overall will be higher by approximately
$718,721 than the Partnership estimates they would be under the existing
Partnership Agreement. (See the table on Page 6 under "Benefits of the
Amendments--Amendment No. 2--Increased Cash Distributions to the
Partners".)
o Lack of liquidity of Units. No public market for Units exists. As a
result, the extension of the Reinvestment Period will likewise extend the
time during which some portion of the Limited Partners' investment in
Units remains invested. Limited Partners' alternatives to holding their
Units for the entire extended Reinvestment Period and Liquidation Period
are to request that the Partnership repurchase their Units under existing
Partnership provisions or to attempt to resell their Units in the
secondary market. In both cases, those repurchases or resales are likely
to result in a transfer at a discount.
o Rate of Limited Partner Cash Distributions Not Fixed; Return on
Investment Not Determinable. While it is the Partnership's objective to
continue to make monthly cash distributions from net cash flow from
operations at a rate equal to 9% per annum of the Limited Partners'
original Capital Contributions, ICON may determine that it is in the best
interest of the Partnership to reduce that rate of distribution in order
to allow for additional reinvestments. Until all cash distributions from
the operations of the Partnership and from sale of all its assets have
been completed, the level of an investor's return on Investments cannot
be determined. There is no assurance that investors will achieve any
specified rate of return on the current Partnership Investments or the
additional Investments which the Partnership might hereafter acquire.
The return can only be determined at the termination of the Partnership
once all residual cash flow have been realized from the proceeds of the
sale and re-leasing of equipment. To date, the Partnership has made
distributions which under generally accepted accounting principles have
consisted primarily of a return of capital during each year of the
Partnership's operations to date.
o Continued operations would result in additional directly-paid Partnership
expenses and Administrative Expenses. An estimated additional $57,289 in
total directly-paid Partnership expenses and Administrative Expenses will
result from the approval of Amendment No. 1. Specifically, Administrative
Expenses are expected to increase by a maximum of $45,000 (to $175,000
from $130,000) and directly-paid Partnership expenses are expected to
increase by $12,829 (to $119,264 from $106,974). The expenses of $130,000
and $106,974 were computed for the period ending December 20, 1998 and the
expenses of $175,000 and $119,264 were computed for the period ending
December 20, 2002. These amounts have been included in estimating the
cash distributions to Limited Partners as discussed in the preceding
paragraph and under the "Benefits of the Amendments--Amendment No.
2--Increased Cash Distributions to the Partners" discussion and table on
Page 6. The $45,000 increase in third party expenses is ICON's best
estimate, based on its experience in managing the Partnership and other
affiliated partnerships, of those expenses. Although the increase (or
decrease) in the Partnership's gross revenues from added Investments
cannot be estimated at this time and has not been included in these
estimates, any such increase (or decrease) will not alter the estimated
Administrative Expenses by more than 2%. The Administrative Expenses have
been computed at 2% of estimated gross revenues from normal operations
(not including sales) of the Partnership's current assets. If the
Amendments are APPROVED, the Partnership would continue to collect
receivables from assets which would otherwise have been sold under the
existing provisions of the Partnership Agreement. (See the table on Page
6 under "Benefits of the Amendments--Amendment No. 2--Increased Cash
Distributions to the Partners".)
o Extended Exposure to Risks Inherent in Investments. Amendment No. 1 will
result in ICON having the continued ability to reinvest excess cash flow in
Investments and incur additional indebtedness for that purpose, which will
involve the same risks related to investing in equipment leasing and related
financing transactions as have existed to date with respect to the
Partnership's current Investments, including:
-- Leveraged Investment--Increased Risk of Loss. ICON expects to use the
proceeds of indebtedness to acquire additional Investments during the
extended Reinvestment Period. Although the use of borrowings would permit
the Partnership to acquire a greater number and variety of Investments,
borrowings may also increase the Partnership's risk of loss. For example,
if a lessee or debtor defaults on its obligations which have been assigned
by the Partnership to a lender and the Partnership is either unable to:
(a) remarket the equipment or other collateral on comparable or better
terms or (b) pay the debt it has incurred, the lender could foreclose on
that Equipment and the Partnership could suffer a loss of its investment
therein.
-- Risk of lessee and debtor bankruptcies or defaults. The ownership and
leasing of equipment and provision of financing may be adversely affected
by various economic and business factors, including lessee bankruptcies,
which are beyond the control of ICON (see the discussion in "Background
for the Amendments" above).
-- Declining Residual Values. A small portion of the Partnership's equipment
is leased pursuant to operating leases (that is, leases which do not
recover the full amount of the Partnership's investment from rents payable
during a lease's initial term). The risk exists that, once an operating
lease ends and all scheduled rents have been collected, the Partnership
will not be able to sell or re-lease the equipment which is subject to
those operating leases and recover its remaining investment, or "residual
value." The ability of the Partnership to recover those remaining residual
values may be adversely effected by: (1) the obsolescence of equipment,
(2) general economic conditions, or (3) the supply of, or the demand for,
the equipment and competing equipment; such factors are beyond the control
of ICON and the Partnership. The Partnership's residual value represented
approximately 15% of its total book value of Investments as of December
31, 1995.
--Competition and Conflicts of Interest. The equipment leasing and financing
businesses are highly competitive and the Partnership will be competing
with many established entities having substantially greater financial
resources than the Partnership. The Partnership will be subject to various
conflicts of interest arising out of its relationship to ICON and its
affiliates including the fact that the Partnership may compete with other
public leasing programs sponsored by ICON for the acquisition, lease,
financing or sale of equipment and financing transactions and for
management services (most of which, except the Partnership, have a
liability to pay Management Fees to ICON) and some of which may pay ICON
acquisition fees in connection with acquisition of new investments.
o Equipment and Lessees Unspecified. The Partnership is not permitted to
make, or commit to make, additional Investments unless and until
Amendment No. 1 becomes effective. As a result, the Investments which
the Partnership may purchase and the leases and financing transactions
into which it may enter or it may acquire, if the extension of the
Reinvestment Period is approved, have not been determined. Future
Investments will be determined solely by ICON in its capacity as General
Partner.
o Federal Income Tax Risks. The Partnership may cease to be classified as a
limited partnership for federal income tax purposes.
Amendment No. 2. Reduction of ICON's Management Fee and Requirement that
ICON Make an Additional Capital Contribution
o ICON's Consent Required. Even though a Majority of the Limited Partners
may vote to APPROVE Amendment No. 2, ICON's consent is required for
Amendment No. 2 to take effect. ICON has made its consent to Amendment
No. 2 conditional on a Majority vote to APPROVE both Amendments. As a
result, ICON will withhold its consent to the enactment of Amendment No. 2
if a Majority of the Limited Partners vote to DISAPPROVE Amendment No. 1.
o Reduction by $398,754 of the Partnership's accrued but unpaid liability to
pay Management Fees will increase Partnership's taxable income in 1996.
In calculating taxable income for the 1993, 1994 and 1995 calendar years,
the Partnership deducted the entire amount of its accrued but unpaid
liability for $523,754 of Management Fees which are due ICON, and which
ICON calculates would become payable to ICON during 1997 to 1998, under
the presently existing Partnership Agreement provisions. As a result, the
taxable income reported by the Partnership to its Partners on their Forms
K-1 for 1993, 1994 and 1995 was reduced by their pro rata shares of those
deductions. The elimination of $398,754 of that deduction by Amendment
No. 2, would increase the Partnership's taxable income, and each Partner's
pro rata share of that taxable income, in 1996. The amount of that
additional taxable income would be $394,766 (99%) to the Limited Partners
(or approximately $1.99 for each Unit held by a Limited Partner) and
$3,987 (1%) to ICON in its capacity as General Partner.
Benefits of the Amendments
Amendment No. 1. Extension of the Reinvestment Period and Delay of the
Liquidation Period for up to Four (4) Additional Years.
o The Partnership would be permitted to continue to hold all of its current
Investments to maturity. Extension of the Reinvestment Period would
permit the Partnership to hold all of its current Investments to their
maturity. This would enable the Partnership to collect the entire amount
of its receivables in the amounts, and at the times, scheduled in its
leases and financing transactions. In contrast, if the beginning of the
Liquidation Period is not delayed, the Partnership would be required to
begin to promptly liquidate its Investments. The price paid on
liquidation of its remaining, future receivables would, in all likelihood,
be computed by applying a discount rate of approximately 12% per annum or
greater to compute the present value of those receivables. The value to
the Partnership of receiving scheduled payments over time, computed at
market rates (such as might be received from borrowing against those
receivables), is expected to be greater than the value of the proceeds in
a sale of those receivables.
o Expected increase in amounts realized for residual values. Extension of
the Reinvestment Period would permit the Partnership to individually
remarket its Investments at their respective maturity dates (rather than
requiring their sale as a group to another investor at a discounted
present value). All of its current Investments mature prior to December
31, 2001. The additional amounts which could result from continued
holding of its Investments include (i) early termination payments (which
are negotiated on a case by case basis and usually include a premium or
penalty) and (ii) automatic, contractual extensions of leases (which are
usually triggered by a lessee's failure to give sufficient, advance
written notice of its intention to return equipment at the lease end).
Those amounts cannot be estimated, because they are not determinable until
they become due, valued or sold to third parties.
Amendment No. 2. Reduction of ICON's Management Fee and Requirement that
ICON Make an Additional Capital Contribution
o Management Fees of approximately $580,117 will be eliminated. Of the
Partnership's existing obligation to pay to ICON approximately $523,754 in
Management Fees which have accrued through June 20, 1996, $398,754 of the
Fees would be eliminated, thereby reducing the outstanding Fees to
$125,000. It is estimated that $181,363 of additional Fees would accrue
for the period from June 21, 1996 through December 20, 1998 (the existing
Liquidation Period); these Fees would also be eliminated. Therefore, the
maximum Management Fees paid to ICON would be $125,000. The savings from
the reduced Fees (which would be paid to ICON during 1997 to 1998 under
existing Partnership Agreement provisions) will result in the retention
(rather than the expenditure) by the Partnership of that $580,117.
Retention of that $580,117 will permit the Partnership to reinvest that
amount in additional Investments and to distribute the net revenues
produced by that reinvestment (if any) to its Partners (99% to the Limited
Partners and 1% to ICON as General Partner).
o Requirement that ICON make an additional Capital Contribution of the
$125,000 of Management Fees paid to it during 1997 and 1998. Amendment
No. 2 requires ICON to immediately make an additional Capital Contribution
of $125,000 upon its receipt of its Management Fees. That Capital
Contribution is not required under the present Partnership Agreement
provisions. If the Amendments are not adopted, that amount will be paid
to ICON during 1997 and 1998 and ICON will be entitled to keep the entire
amount of those Fees. This results in (1) the preservation of a tax
deduction for the Partnership (and its Partners) of $125,000, and (2) an
additional $125,000 becoming available to the Partnership to reinvest in
additional Investments and to distribute the net revenues produced by that
reinvestment to its Partners.
o Increased cash distributions to the Partners. The following table sets
forth the timing and amount of cash which ICON calculates would be
distributed to the Limited Partners under the existing Partnership
Agreement provisions and under the Amendments. ICON estimates that, under
the Amendments, there would be an increase of $718,721 in cash
distributions to Limited Partners. That increase relates to the retention
of $580,117 not paid to ICON for Management Fees, $125,000 paid by ICON as
an additional Capital Contribution, and estimated revenues (net of
expenses) generated by the Partnership's current assets:
Under Current Increase/(Decrease)
Partnership Under the in Cash Payable to
Year Provisions* Amendments Limited Partners
1996** $1,827,844 $ 900,000 ($927,844)
1997 1,396,025 1,800,000 403,975
1998 1,831,836 1,800,000 (31,836)
1999 through
2001 -0- 1,274,426 1,274,426
Totals $5,055,705 $5,774,426 $ 718,721
========== ========== ===========
*These estimated distributions are based on inherent assumptions made with
respect to the liquidation of receivables and related residuals.
**For the partial year from June 21, 1996 through December 31, 1996.
Note: These amounts do not take into account any increases or decreases in
available cash which may be generated as a result of revenues, or losses (if
any), from (i) the Partnership's current Investments; and/or (ii) the
reinvestment of excess cash retained by the Partnership.
Present Partnership Provisions
The Partnership Agreement presently provides that the Reinvestment Period ends
on June 20, 1996 and that the Liquidation Period will begin on June 21, 1996 and
end no later than December 20, 1998. During the Liquidation Period, the
Partnership must liquidate its current Investments and other assets and
distribute substantially all proceeds thereof within 60 days of the end of each
calendar quarter. The Partnership Agreement also currently provides that
Preferred Cash Distributions (i.e., cash distributions equal to 14% per annum of
the Limited Partners' Capital Contributions) are payable only with respect to
the Reinvestment Period (and not during the Liquidation Period). Payment of
Management Fees is deferred, without interest, until the Limited Partners
receive any accrued but unpaid Preferred Cash Distributions (which total
approximately $2,833,333 as of June 20, 1996).
ICON estimates that the cumulative unpaid Preferred Cash Distributions of
$2,833,333 will be paid to the Limited Partners prior to the end of 1998 (both
under the present Partnership Agreement provisions as well as under the proposed
Amendments). If the Amendments are DISAPPROVED, ICON will be entitled to 100% of
the Partnership's cash distributions after those unpaid Preferred Cash
Distributions have been paid and until ICON has received (i) approximately
$523,754 in Management Fees for the period which ends June 20, 1996 and (ii)
Management Fees which will accrue from June 21, 1996 through the end of the
original Liquidation Period in December 1998 which is estimated to be $181,363.
Only when those Management Fee obligations have been satisfied would monthly
cash distributions resume to the Limited Partners. For purposes of its
calculations of Management Fees, ICON has assumed that the Partnership's
receivables would be collected when scheduled to be paid and that Leases and the
related equipment and financing transactions would be transferred either at
maturity or near the end of the present Liquidation Period (i.e., December 20,
1998 under the present Partnership Agreement provisions).
ICON estimates that, if the Amendments are DISAPPROVED, the Limited Partners
would receive during the current Liquidation Period approximately $5,055,705,
and ICON would receive approximately (1) $51,068 of cash distributions as
General Partner, (2) approximately $705,117 in Management Fees, and (3)
approximately $106,594 in Administrative Expense reimbursements. ICON also
estimates that the Partnership would pay approximately $130,000 in directly-paid
Partnership expenses to parties unrelated to ICON (such as mailing, printing,
auditing and legal expenses). In addition, for purposes of calculating $523,754
of existing Management Fee liability and the estimated $181,363 in those Fees
for the period from June 21, 1996 forward under the existing Partnership
Agreement provisions, ICON computed such amounts by applying the standard rates
of 2% to 5% of the Partnership's gross revenues from operations and sales to the
calculation of such Fees for the period from September 1, 1993 through June 20,
1996 (the same rate at which ICON elected to accrue those Fees for that period)
and used the standard rates of 2% to 5% of gross revenues, as permitted by the
existing Partnership Agreement provisions, for the period beginning June 21,
1996.
Effects of the Amendments
ICON estimates that, if both Amendments are APPROVED, the Limited Partners would
receive approximately $5,774,426 (99%), and ICON would receive (1) approximately
$58,328 (1%), in cash distributions in its capacity as General Partner, (2)
approximately $125,000 of Management Fees (which, however, would be required to
be paid by ICON to the Partnership as an additional Capital Contribution when
received by ICON), and (3) approximately $119,264 of Administrative Expense
reimbursements (or $12,889 more than if the Amendments were DISAPPROVED). The
cash distribution amounts include the effect of ICON's required additional
Capital Contribution which is already reflected in the available cash as stated
above. ICON also estimates that the Partnership would pay approximately $175,000
(or $45,000 more than if the Amendments were DISAPPROVED) in operating expenses
to parties unrelated to ICON (such as mailing, printing, auditing and legal
expenses).
One of the features of Amendment No. 2 is that it results in an allocation of
$125,000 of taxable income to ICON and an increase in ICON's capital account
balance (reducing or eliminating its current capital account deficit) when ICON
makes an additional capital contribution of that amount when paid to it by the
Partnership. Those provisions provide the same type of capital account
adjustment for ICON as it estimates would have occurred if the Partnership's
Investments had been liquidated and gain therefrom for tax purposes was
allocated as provided in the Partnership Agreement, first to those Partners (at
this time ICON is the only such Partner) which have a capital account deficit
balance and then to all Partners in proportion to their relative positive
capital account balances. ICON's capital account deficit balance equals the
excess of (1) prior cash distributions to ICON plus (2) ICON's allocable share
of Partnership income minus (3) ICON's allocable share of Partnership losses
minus (4) its original Capital Contribution. All cash distributions and
allocations of Partnership income and losses have been made 1% to ICON as
General Partner and 99% to the Limited Partners and such allocation of cash
distributions and of income and loss are expected to continue through the
balance of the life of the Partnership except with regard to cash distributions
during periods that Management Fees are given priority of payment, as discussed
in this Section and the preceding Section, and the special allocation of gains
on liquidation of Partnership investments, as discussed in the preceding
Section. Earlier sale of assets and those receivables would eliminate ICON's
right to receive the related Administrative Expense reimbursements. Since ICON's
Administrative Expense reimbursements are limited to a maximum 2% of the
Partnership's annualized gross revenues from operations (but not from sales of
its Investments), in the absence of an extension of the Reinvestment Period,
gross revenues from operations, and ICON's ability to be reimbursed for any
those expenses, would cease after December 20, 1998. The preceding estimates
have disregarded the effect of any increase (or decrease) in gross revenues
which might result from reinvestment during the proposed extended Reinvestment
Period (which would equal 2% of the increase or decrease in the related gross
revenues).
Incorporation by Reference
The Partnership hereby incorporates by reference the Financial Information (as
hereinafter defined) appearing in: (i) the Partnership's Annual Report on Form
10-K for the year ended December 31, 1995, (ii) the Partnership's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996, and (iii) the
Partnership's periodic reports filed with the Commission under the Exchange Act
after the date hereof but prior to the date on which the vote on the Amendments
is taken (July [ ], 1996 unless extended by ICON) (copies of which as filed with
the U.S. Securities and Exchange Commission are enclosed herewith). Any
statement contained herein or in a document incorporated by reference herein,
however, shall be deemed to be modified or superseded for the purposes of this
Consent Statement to the extent that a statement contained in a subsequently
dated document that is considered part of this Consent Statement is inconsistent
therewith. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Consent Statement.
The term "Financial Information" shall mean any financial statements,
supplementary financial information and management's discussion and analysis of
financial condition and results of operations. The Partnership's Exchange Act
file number is 0-27904.
Voting Rights and Solicitation of Consents
Vote Required
ICON has set the record date as June 20, 1996. On that date, the Partnership had
198,470 Units outstanding and entitled to vote by means of the enclosed Consent
and, to the knowledge of ICON, no person owned beneficially more than five
percent of the outstanding Units at that date. As a result, Consents
representing more than 99,235 Limited Partnership Units constitutes the
requisite quorum (a "Majority") necessary to approve each proposed Amendment.
Voting Procedure
Only Limited Partners of record at the close of business on June 20, 1996 are
entitled to notice of, and to vote by means of, the enclosed Consent. On
that date, the Partnership had 1,753 Limited Partners.
Limited Partners are entitled to one vote for each Unit held.
To vote on the Amendments, each Limited Partner of record must check a box below
each proposed Amendment to either vote to APPROVE, DISAPPROVE or ABSTAIN from
voting and then sign and return his or her Consent to ICON. Failure to return a
Consent Form, or signing and returning it with boxes marked ABSTAIN, has the
effect of, and will be equivalent to, a vote to DISAPPROVE. A signed Consent
which is returned without any boxes checked next to an Amendment will be deemed
a vote to APPROVE that Amendment.
Consents should be mailed to ICON at its offices at 600 Mamaroneck Avenue,
Harrison, New York 10528 for its receipt by the Determination Date (as defined
below). You may revoke your vote to APPROVE, DISAPPROVE or to ABSTAIN at any
time by signing and sending a later-dated Consent in time for ICON's receipt by
the close of business on the Determination Date (as defined below).
ICON's Consent Required for Enactment of Amendment No. 2.
Since Amendment No. 2 reduces ICON's compensation, and requires it to make an
additional Capital Contribution, ICON must consent to Amendment No. 2 for it
to take effect (even if a Majority votes to APPROVE that Amendment). ICON
has conditioned its consent to Amendment No. 2 on a Majority vote to APPROVE
both Amendments and, therefore, will withhold its consent to the enactment of
Amendment No. 2 if a Majority votes to APPROVE Amendment No. 2 but a Majority
votes to DISAPPROVE Amendment No. 1.
No Appraisal Rights
Limited Partners voting to DISAPPROVE an Amendment or to ABSTAIN from voting
thereon will not possess any appraisal rights with respect to their Units.
Determination Date
The date on which voting by Consents will be tabulated by ICON shall be [July ,
1996] (the "Determination Date"). The Determination Date may be extended by
ICON, at its option, for period of thirty (30) days.
Effective Date of Amendments
Each Amendment will become effective, retroactively to June 20, 1996, when a
Majority of Limited Partners vote to APPROVE that Amendment (except as discussed
in the third preceding paragraph with respect to ICON's consent).
Consequences if the Amendments are Not Approved
If the Partnership does not receive Consents representing a Majority vote to
APPROVE Amendment No. 1 by the Determination Date, neither of the Amendments
will become effective as of June 20, 1996. In that case, the Partnership will
begin liquidating its Investments as presently provided by the Partnership
Agreement. Until the Limited Partners have had an opportunity to vote by means
of their Consents and the results of that voting are tabulated by ICON on July [
], 1996 (or August [ ], 1996, if that date is extended), ICON intends to
withhold the Partnership's initial liquidating distribution (which would
normally be made on or about [July , 1996]) so as to permit the Amendments to
take effect retroactively, as intended. In the event that a Majority then vote
to DISAPPROVE both Amendments (or they do not take effect because only Amendment
No. 2 was APPROVED by a Majority of the Limited Partners and ICON withholds its
consent thereto), the Partnership's initial liquidating distribution will occur
within three (3) business days of the Determination Date.
Right to Partner List
Each Limited Partner of record may request a current list of the name and last
known address of each Limited Partner, provided that (1) the purpose of that
Limited Partner in requesting the Partner List is reasonably related to the
Limited Partner's interest in the Partnership and (2) the Limited Partner pays
ICON's expense of copying and forwarding that List.
Expenses of Consent
The expenses of preparing this Consent Statement and soliciting Consents Forms
and postage for returning the Consent Forms in the enclosed envelope will be
paid by the Partnership. Following the original mailing of the Consent Forms and
other soliciting materials, representatives of the Partnership may request
custodians, nominees, and other records holders to forward copies of the Consent
Form and other soliciting materials to persons for whom they hold Units and to
request authority for the exercise of the Consent Forms.
ICON's Recommendation
ICON recommends in its capacity as General Partner that you vote to APPROVE the
Amendments because they will result in an estimated additional $718,721 in cash
distributions to the Limited Partners ($5,774,426 less $5,055,705).
Although there can be no assurance that it will be successful in doing so, ICON
intends to seek to make additional Partnership Investments during the extended
Reinvestment Period which it estimates will generate sufficient cash from
operations, after payment of the Partnership's expenses, to both reinvest a
material portion of cash available to the Partnership in additional Investments
and continue making monthly cash distributions to the Limited
<PAGE>
Partners at a rate equal to 9% per annum of their Capital Contributions so long
as it is prudent and possible to do so.
Sincerely,
ICON Capital Corp.,
General Partner
Peter D. Beekman,
President
PLEASE MARK, SIGN AND DATE AND RETURN YOUR CONSENT FORM IN THE ENCLOSED ENVELOPE
FOR ICON'S RECEIPT OF SAME BY ITS CLOSE OF BUSINESS ON JULY [ ], 1996 IF YOU
WISH YOUR INTEREST IN THE PARTNERSHIP TO BE REPRESENTED IN THIS IMPORTANT VOTE.
<PAGE>
ICON Cash Flow Partners, L.P., Series C
CONSENT FORM FOR ACTION BY CONSENT OF LIMITED PARTNERS
The undersigned, by completing, signing and returning this Consent Form to the
offices of the Partnership and ICON Capital Corp. ("ICON") at 600 Mamaroneck
Avenue, Harrison, New York 10528 on or before the Determination Date (July [ ],
1996, except as described in the Consent Statement), thereby takes action by
consent to APPROVE, DISAPPROVE or ABSTAIN from voting on the proposed amendments
(the "Amendments") to the First Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement") of ICON Cash Flow Partners, L.P.,
Series C (the "Partnership") which are described below.
ICON recommends in its capacity as General Partner that you APPROVE Amendment
Nos. 1 and 2. To APPROVE both those Amendments, you may sign and return this
Consent with no boxes checked or putting an "X" or your initials in both boxes
marked APPROVE.
Amendment No. 1 To extend the Reinvestment Period for up to four (4) additional
years (to no later than June 20, 2000) and delay the beginning and end of the
Liquidation Period for up to four (4) additional years (to no later than
December 20, 2002).
APPROVE (__) DISAPPROVE (__) ABSTAIN (__)
Amendment No. 2 To (i) eliminate the Partnership's duty to pay an estimated
$580,117 of $705,117 of Management Fees ($398,754 of $523,754 for the period
ending June 20, 1996 and $181,363 of $181,363 for the period from June 21, 1996
forward), and (ii) require that the remaining $125,000 ($523,754 less $398,754)
of Management Fees, when paid to ICON, be required to be immediately paid back
by ICON as an additional Partnership Capital Contribution.
APPROVE (__) DISAPPROVE (__) ABSTAIN (__)
(please place an "X" or your initials in only one box)
Please mark, sign and date and then promptly return this Consent Form to ICON in
the enclosed envelope, which is pre-addressed and requires no postage if mailed
within the United States. If you mark the box to the right of the word ABSTAIN,
your vote will be counted as a vote to DISAPPROVE and if you sign and return
this Consent without marking any box, your Consent Form will be treated as if
you had marked the box to APPROVE both Amendments.
To be counted in this important vote, your Consent Form must be received by July
[ ], 1996 (unless extended to August [ ], 1996, as described above).
CONSENT FORM INSTRUCTIONS
1. Please sign exactly as the name or names appear on your Consent Statement
materials.
2. If Units of limited partnership interest are held by two or more persons, all
of them should sign the Consent Statement materials.
3. A Consent Form executed by a corporation should be signed in its name by
an authorized officer.
4. Executors, administrators, trustees and partners should so indicate when
signing this Consent Form.
---------------------------------------
(please sign above and date)
---------------------------------------
(please type or print your name above)
<PAGE>
Exhibit A
Text of Proposed Amendments
to the First Amended and Restated Agreement of Limited Partnership
of ICON Cash Flow Partners, L.P., Series C
to be effective as of June 21, 1996
1. Section 5.1 of the Partnership Agreement is hereby amended effective as of
June 20, 1996 by adding the following sentence:
"Notwithstanding anything to the contrary in this Section 5.1, the General
Partner shall make an additional Capital Contribution equal to the amount of
any Management Fees which are hereafter paid to the Partnership to the
General Partner or any affiliate acting as Manager of the Partnership and
which has accrued or may hereafter accrue and relate to the period commencing
September 1, 1993."
2. Section 6.4(c) of the Partnership Agreement is hereby amended effective as of
June 20, 1996 to insert the following sentence at the end of Section 6.4(c):
"Notwithstanding the extension of the Reinvestment Period after June 20, 1996
and any contrary provision in this Section 6.4(c), (i) the Partnership's
obligation to pay deferred Management Fees for the portion of the
Reinvestment Period from September 1, 1993 through June 20, 1996 shall be
limited to a maximum of $125,000 (and the entire balance of any of those
accrued but unpaid fees shall be deemed to be forgiven); (ii) the Partnership
shall be authorized to, and shall forthwith, pay those deferred Management
Fees after the entire unpaid balance of deferred Preferred Cash Distributions
for the period ending June 20, 1996 (including interest or return which has
accrued or which may hereafter accrue up to the date paid to the Limited
Partners) have been paid to the Limited Partners (but specifically excluding
any Preferred Cash Distributions which may accrue on or after June 21, 1996
as a result of the extension of the Reinvestment Period and any interest or
return which may accrue thereon for purposes of determining when those
Management Fees may be paid); and (iii) the Partnership shall have no
obligation to pay Management Fees for any period on or after June 21, 1996."
3. Section 17 of the Partnership Agreement is hereby amended as follows
effective as of June 20, 1996:
(a)to amend the definition of "Liquidation Period" to substitute the phrase
"eleven and one-half (11 1/2) years" for the phrase "ten (10) years"; and
(b) to delete the definition of "Reinvestment Period" and insert the
following definition in place thereof:
"'Reinvestment Period' means the period commencing with the Initial
Closing Date and ending not more than nine (9) years after the Final
Closing Date."
