Page iv
September 15, 1997
To the Limited Partners of ICON Cash Flow
Partners, L.P., Series C (the Partnership):
Dear Investor:
ICON Capital Corp. (ICON) as the General Partner of the Partnership is
proposing two amendments (the Amendments) to the Partnerships First
Amended and Restated Agreement of Limited Partnership (the Partnership
Agreement). These Amendments are summarized below and explained in
detail in the enclosed materials. ICON as General Partner recommends
that you vote to APPROVE the Amendments.
The documents enclosed with this letter are:
* A Notice of Action by Consent of Limited Partners;
* A Consent Solicitation Statement dated September 15, 1997 which
provides details concerning the Amendments and the effects of
approving or disapproving the Amendments; and
* A Consent Form for Action by Consent of Limited Partners by which to
cast your vote.
The Amendments
A summary of the Amendments are as follows:
* Amendment No. 1 would:
Reinstate the Reinvestment Period of the Partnership, the period
during which the Partnership may continue to reinvest available cash
in additional Partnership equipment, leases and financing
transactions (Investments), for up to four additional years and
thereby delay the beginning and end of the Liquidation Period.
* Amendment No. 2 would:
(1) Eliminate the Partnerships obligation to pay ICON $571,860 of
the $676,860 currently outstanding and estimated future Management
Fees for the period beginning September 1, 1993 and ending with June
20, 2001 (the current end of the Partnerships Liquidation Period)
thereby limiting total Fees paid to ICON to the amount of $105,000
for that period, which would save the Partnership $571,860; and
(2) Require ICON to make an additional Capital Contribution to the
Partnership in the amount of $105,000 immediately upon receipt of
its Management Fees (in 1998).
How to Vote
To cast your vote, please use the Consent Form included as Page 11 in
this package. For your vote to be counted, it must be received by our
office on or before October 15, 1997, unless the deadline is reinstated.
ICONs Role and Related Consent
Please note that in addition to your vote, ICON must also consent to
reducing its Management Fees and to making a required payment of an
additional Capital Contribution. ICON is prepared to do this, but only
if a majority of the Limited Partners vote to APPROVE both Amendments.
If both Amendments are NOT APPROVED, the Partnership will begin
liquidating its current Investments and distributing the proceeds.
Management Fees totaling approximately $668,030 will be paid to ICON
from the liquidation proceeds during 1997, 1998 and 1999.
ICONs Recommendation
ICON believes the proposed Amendments are in the best interest of the
Limited Partners and recommends that you vote to APPROVE both
Amendments. Approval of the Amendments will result in additional cash
availability for the Partnership in the amount of approximately
$650,000, relating to management fees required to be paid to ICON under
the existing Partnership Agreement provisions. ICON also believes that
the reinstated period of reinvestment will permit additional time in
which to maximize the returns to investors from the additional
investments the Partnership acquires.
Very truly yours,
Beaufort J. B. Clarke, President
ICON Capital Corp., General Partner
<PAGE>
As filed with the Securities and Exchange Commission on September 15,
1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Consent Solicitation 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 Consent Solicitation Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14(a) 6(e)(2))
[ ] Definitive Consent Solicitation 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 Consent Solicitation Statement)
Payment of filing fee (check appropriate box):
[ X ] 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:
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:
[ ] 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 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.
<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:
Amendment No. 1 would:
(1) Reinstate the Reinvestment Period for up to four (4) additional
years; and
(2) Suspend the Liquidation Period by up to four (4) additional
years and delay the end of the Liquidation Period by up to one and one
half (1 1/2) additional years.
Amendment No. 2 would:
(1) Eliminate the Partnerships obligation to pay ICON Capital Corp.
(ICON) $571,860 of the $676,860 of past and future Management Fees for
the period of September 1, 1993 through June 20, 2001, thereby
limiting the total Management Fees paid to ICON for that period to the
amount of $105,000; and
(2) Require ICON to make an additional Capital Contribution to the
Partnership in the amount of $105,000 immediately upon receipt of its
Management Fees (in 1998).
By order of the General Partner of the Partnership, only Limited
Partners of record at the close of business on September 12, 1997 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 records as of September 12, 1997 the Record
Date) must be received by ICON by October 15, 1997 (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.
Beaufort J. B. Clarke, President
September 15, 1997
<PAGE>
Page ii
ICON Cash Flow Partners, L.P., Series C
Consent Solicitation Statement
dated September 15, 1997
This Consent Solicitation 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 (99,135 of the 198,270
Units) (a Majority) which were outstanding on September 12, 1997, 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:
Amendment No. 1 would:
(1) Reinstate the Reinvestment Period for up to four (4) additional
years; and
(2) Suspend the Liquidation Period by up to four (4) additional
years and delay the end of the Liquidation Period by up to one and one
half (1 1/2) additional years.
Amendment No. 2 would:
(1) Cap at $105,000 the Management Fees which ICON has earned or
will earn during the period of September 1, 1993 through June 20,
2001, thereby eliminating the Partnerships obligation to pay ICON (a)
$507,726 of the estimated $612,726 of Management Fees which have
already accrued for the period beginning September 1, 1993 and ending
on June 30, 1997 but have not yet been paid, and (b) $64,134 of
Management Fees which ICON estimates would otherwise accrue for the
period from July 1, 1997 to June 20, 2001 (the end of the Liquidation
Period under the existing Partnership Agreement based on the current
portfolio under management); and
(2) Require ICON to make an additional Capital Contribution to the
Partnership in the amount of $105,000 immediately upon receipt of its
Management Fees (in 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:
Delay in liquidating Investments and in making liquidation
distributions. The delay of the Liquidation Period could result in
the period ending as late December 20, 2002 rather than the current
ending date which is not later than June 20, 2001.
Reinvestment as an alternative to Liquidation will result in lower
cash distributions to Limited Partners in 1997, 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 $693,734
less in cash distributions for the remainder of 1997 than they would
be expected to receive if the Partnership liquidates. Total cash
distributions overall are estimated to be higher by approximately
$650,000.
Lack of liquidity of Units. The reinstatement of the Reinvestment
Period will likewise reinstate the time during which some portion of
the Limited Partners investment in Units remains invested.
Rate of Limited Partner Cash Distributions not fixed; return on
Investment not determinable. The Partnership is currently making
monthly cash distributions from net cash flow from operations and
sales 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 Partnerships operations.
Continued operations would result in additional directly paid
Partnership expenses and administrative expenses. An estimated
additional $28,445 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.
Reinstated 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 Partnerships current Investments. These
risk factors are discussed in further detail within this Consent
Solicitation Statement.
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.
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 including the following:
ICONs 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.
Reduction by $507,726 of the Partnerships accrued but unpaid
liability to pay Management Fees will increase the Partnerships
taxable income in 1997. The elimination of $507,726 in Management
Fees which have accrued and have been deducted by the Partnership in
its federal and state tax returns will result in a reversal of such
deduction in 1997 and the recognition of $507,726 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 1
Amendment No. 2 1
General Disclosures 2
Detriments and Risks of the Proposed Amendments 2
Amendment No. 1 2
Amendment No. 2 4
Benefits of the Amendments 5
Amendment No. 1 5
Amendment No. 2 5
Present Partnership Provisions 6
Effects of the Amendments 6
Incorporation by Reference 7
Voting Rights and Solicitation of Consents 7
ICONs Recommendation 9
Consent Form
Text of Amendments to the Partnership
Agreement Exhibit A
<PAGE>
Page 9
Summary
The following summary is qualified in its entirety by the more detailed
discussion of the proposed Amendments set forth elsewhere in this
Consent Solicitation Statement and incorporated herein by reference.
General Information
The Partnership was formed on July 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 1,730 Units,
resulting in a reduction from 200,000 to 198,270 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 Partnerships 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
Partnerships 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 the bankruptcy of Phar Mor, Inc. 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 expenses for the period of July 1, 1991 through September
30, 1993 in the aggregate amount of $859,961; (2) reduced the
Partnerships annual cash distribution rate to 9% effective September 1,
1993; (3) deferred receipt of Management Fees effective September 1,
1993 (such deferrals through June 30, 1997 total $612,726); and (4)
effective January 31, 1994, refinanced the Partnerships 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 reinstatement 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 Partnerships 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 $105,000 (foregoing approximately $571,860 in Fees
which are estimated to accrue through the end of the current Liquidation
Period) and that, upon payment of that 105,000 in Management Fees
(expected in 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:
Amendment No.1
(1) Reinstate 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
(effective June 20, 1996 to not later than June 20, 2000); and
(2) Suspend the Liquidation Period by up to four (4) additional
years and delay the end of the Liquidation Period by up to one and
one half (1 1/2) additional years (ending no later than December 20,
2002).
(
Amendment No.2
(1) Cap at $105,000 the Management Fees which ICON has earned or
will earn for the period of September 1, 1993 through June 30, 1997,
<PAGE>
thereby eliminating the Partnerships obligation to pay ICON (a)
$507,726 of the estimated $612,726 of the Management Fees which have
already accrued for the period beginning September 1, 1993 and ending
on June 30, 1997 but have not yet been paid, and (b) $64,134 of
Management Fees which ICON estimates would otherwise accrue for the
period from July 1, 1997 to June 20, 2001 (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 $105,000 immediately upon receipt of its
Management Fees in that consent (projected to be paid during 1998).
(
Reference is made to Exhibit A for the full text of the Amendments.
General Disclosures
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 the skill, integrity and business expertise of ICON.
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.
No independent representative has been retained to represent the
Limited Partners in connection with the preparation and review of this
Consent Solicitation Statement and the financial information
summarized herein.
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 Reinstatement of the Reinvestment Period and Suspension
and Delay of the Liquidation Period for up to Four (4) Additional Years.
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 June 20, 2001. During the
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.
Reinvestment as an alternative to Liquidation will result in lower
cash distributions to Limited Partners in 1997. 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 Partnerships
current assets, the Partnership will continue, during the Reinvestment
Period, to make monthly distributions to Limited Partners. Any
available cash after distributions will be reinvested instead of being
distributed to the Limited Partners. Therefore, if the Partnership
reinvests rather than liquidates, the Limited partners will receive
$693,734 less in cash distributions in 1997 than they would receive if
the Partnership liquidates. In 1998, however, cash distributions are
estimated to be higher by $650,868 and total cash distributions to
<PAGE>
Limited Partners from July 1, 1997 through 2001 overall will be higher
by approximately $650,000 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.)
Lack of liquidity of Units. No public market for Units exists. As a
result, the reinstatement of the Reinvestment Period will likewise
extend to 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 reinstated 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.
Rate of Limited Partner Cash Distributions Not Fixed; Return on
Investment Not Determinable. The Partnership will continue to make
monthly cash distributions from net cash flow from operations and
sales to Limited Partners. Until all cash distributions from the
operations of the Partnership and from sale of all of its assets have
been completed, the level of an investors 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 the 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 Partnerships operations to date.
Continued operations would result in additional directly paid
Partnership Expenses and administrative expenses. An estimated
additional $28,445 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 $2,292 (to $64,134 from $61,842) and directly paid
Partnership Expenses are expected to increase by $26,153 (to $95,000
from $68,847). 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 $25,000 increase in third party expenses is ICONs best
estimate, based on its experience in managing the Partnership and
other affiliated partnerships, of those expenses. Although the
increase (or decrease) in the Partnerships 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 Partnerships current
assets. If the Amendments are APPROVED, the Partnership would
continue to collect receivable 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.)
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 Partnerships current Investments,
including:
Leveraged Investment Increased Risk of Loss. ICON expects to use
the proceeds of indebtedness to acquire additional Investments
during the reinstated 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
Partnerships 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
<PAGE>
affected by various economic and business factors, including lessee
bankruptcies, which are beyond the control of ICON (see the
discussion in Background for the Proposed Amendments above).
Declining Residual Values. A small portion of the Partnerships
equipment is leased pursuant to operating leases (that is, leases
which do not recover the full amount of the Partnerships investment
from rents payable during a leases 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 Partnerships residual
value represented approximately 27% of its total book value of
Investments as of June 30, 1997.
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.
Equipment and Lessees Unspecified. The Partnership is not permitted
to make, or commit to make, additional Investment 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 reinstatement of the
Reinvestment Period is approved, have not been determined. Future
Investments will be determined solely by ICON in its capacity as
General Partner.
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 ICONs Management Fee and Requirement that
ICON Make an Additional Capital Contribution
ICONs Consent Required. Even though a Majority of the Limited
Partners may vote to APPROVE Amendment No. 2, ICONs 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.
Reduction by $507,726 of the Partnerships accrued but unpaid
liability to pay Management Fees will increase Partnerships taxable
income in 1997. In calculating taxable income for the 1993, 1994,
1995 and 1996 calendar years, the Partnership deducted the entire
amount of its accrued but unpaid liability for $612,726 of Management
Fees which are due ICON, and which ICON calculates would become
payable to ICON during 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, 1995
and 1996 was reduced by their pro rata shares of those deductions.
The elimination of $507,726 of that deduction by Amendment No. 2,
would increase the Partnerships taxable income, and each Partners pro
rata share of that taxable income, in 1997. The amount of that
additional taxable income would be $502,649 (99%) to the Limited
Partners (or approximately $2.53 for each Unit held by a Limited
Partner) and $5,077 (1%) to ICON in its capacity as General Partner.
<PAGE>
Benefits of the Amendments
Amendment No.1. Reinstatement of the Reinvestment Period and Delay of
the Liquidation Period for up to Four (4) Additional Years.
The Partnership would be permitted to continue to hold all of its
current Investments to maturity. Reinstatement 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 commence the orderly termination
of its operations and liquidation of the Partnerships Equipment,
Financing Transactions and other assets. 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.
Expected increase in amounts realized for residual values.
Reinstatement 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
reinstatements of leases (which are usually triggered by a lessees
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.
AmendmentNo.2. Reduction of ICONs Management Fee and Requirement that
ICON Make an Additional Capital Contribution.
Management Fees of $507,726 will be eliminated. Of the Partnerships
existing obligation to pay to ICON approximately $612,726 in
Management Fees which have accrued through June 30, 1997, $507,726 of
the Fees would be eliminated, thereby reducing the outstanding Fees to
$105,000. It is estimated that $64,134 of additional Fees would
accrue for the period from July 1, 1997 through June 20, 2001 (the
existing Liquidation Period); these Fees would also be eliminated.
Therefore, the maximum Management Fees paid to ICON would be
$105,000. The savings from the reduced Fees (which would be paid to
ICON during 1998 under existing Partnership Agreement provisions) will
result in the retention (rather than the expenditure) by the
Partnership of that $571,860. Retention of that $571,860 will permit
the Partnership to reinvest that amount in additional Investments and
to distribute the revenues produced by that reinvestment (if any) to
its Partners (99% to the Limited Partners and 1% to ICON as General
Partner).
Requirement that ICON make an additional Capital Contribution of the
$105,000 of Management Fees paid to it during 1998. Amendment No. 2
requires ICON to immediately make an additional Capital Contribution
of $105,000 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 1998 and ICON will be entitled to keep the entire
amount of those Fees. Adoption of Amendment No. 2 results in (1) the
preservation of a tax deduction for the Partnership (and its Partners)
of $105,000, and (2) an additional $612,726 becoming available to the
Partnership to reinvest in additional Investments and to distribute
the net revenues produced by that reinvestment to its Partners.
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 $651,781 in cash
distributions to Limited Partners. That increase relates to the
retention of $571,860 not paid to ICON for Management Fees, $105,000
paid by ICON as an additional Capital Contribution, less $25,079
related to increased operating and administrative expenses:
<PAGE>
Under Current Increase/(Decrease)
Partnership Under the in Cash Payable to
Year Provisions Amendments Limited Partners
1997** 1,585,949 892,215 (693,734)
1998 1,133,562 1,784,430 650,868
1999 through
2001 1,049,849 1,744,496 694,647
Totals $3,769,360 $ 4,421,141 $ 651,781
*These estimated distributions are based on inherent assumptions
made with respect to the liquidation of receivables and related residuals.
**For the partial year from July 1, 1997 through December 31, 1997.
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 Partnerships 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 end on June 20, 1996 and that the Liquidation Period begin on
June 21, 1996 and end no later than June 20, 2001. 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 First 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 First Cash Distributions
(which total approximately $1,033,000 as of July 1, 1997).
ICON estimates that the cumulative unpaid First Cash Distributions of
$1,033,000 will be paid to the Limited Partners in 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 Partnerships cash distributions after those unpaid First
Cash Distributions have been paid and until ICON has received (i)
approximately $612,726 in Management Fees for the period ending June 30,
1997 and (ii) Management Fees which will accrue from July 1, 1997
through the end of the original Liquidation Period in June 2001 which is
estimated to be $64,134. 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 Partnerships 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., June 20, 2001 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 $3,769,360, and ICON would receive approximately (1)
$38,074 of cash distributions as General Partner, (2) approximately
$668,030 in Management Fees, and (3) approximately $61,842 in
administrative expense reimbursements. ICON also estimates that the
Partnership would pay approximately $70,000 in directly paid Partnership
expenses to parties unrelated to ICON (such as mailing, printing,
auditing and legal expenses).
Effects of the Amendments
ICON estimates that, if both Amendments are APPROVED, the Limited
Partners would receive approximately $4,420,000 (99%), and ICON would
<PAGE>
receive (1) approximately $44,646 (1%), in cash distributions in its
capacity as General Partner, (2) approximately $105,000 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 $64,134 of administrative expense
reimbursements (or $2,292 more than if the Amendments were
DISAPPROVED). The cash distribution amounts include the effect of ICONs
required additional Capital Contribution which is already reflected in
the available cash as stated above. ICON also estimates that the
Partnership would pay approximately $95,000 (or $26,153 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 $105,000 of taxable income to ICON and an increase in
ICONs 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 Partnerships 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; then 99% to the Limited Partners and 1% to the General Partner
until the Capital Account of the Limited Partnres is equal to the amount
of cash which would be required to be distributed to the Limited
Partners in order to achieve Payout, and then, thereafter, 90% to the
Limited Partners and 10% to the General Partner. ICONs capital account
deficit balance equals the excess of (1) prior cash distributions to
ICON plus (2) ICONs allocable share of Partnership income minus (3)
ICONs 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.
Earlier sale of assets and those receivables would eliminate ICONs right
to receive the related Administrative Expense reimbursements. Since
ICONs Administrative Expense reimbursements are limited to a maximum 2%
of the Partnerships annualized gross revenues from operations (but not
from sales of its Investments), in the absence of an reinstatement of
the Reinvestment Period, gross revenues from operations, and ICONs
ability to be reimbursed for any of those expenses, would cease after
June 20, 2001. The preceding estimates have disregarded the effect of
any increase (or decrease) in gross revenues which might result from
reinvestment during the proposed reinstated 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 the Partnerships
Annual Report on Form 10 K for the year ended March 31, 1997 and the
Partnerships 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 (October 15, 1997 unless extended by
ICON). 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 Solicitation Statement to the extent
that a statement contained in a subsequently dated document that is
considered part of this Consent Solicitation 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 Solicitation Statement. The term Financial Information shall
mean any financial statements, supplementary financial information and
managements discussion and analysis of financial condition and results
of operations. The Partnerships Exchange Act file number of 0 27904.
Voting Rights and Solicitation of Consents
Vote Required
ICON has set the record date as September 12, 1997. 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.
<PAGE>
Vote Procedure
Only Limited Partners of record at the close of business on September
12, 1997 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 ICONs receipt by the close of business on the
Determination Date (as defined below).
ICONs Consent Required for Enactment of Amendment No. 2
Since Amendment No. 2 reduces ICONs 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
October 15, 1997 (the Determination Date). The Determination Date may
be extended by ICON, at its option, for a 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
ICONs 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 October 15, 1997 (or November 15,
1997, if that date is reinstated), ICON intends to withhold the
Partnerships initial liquidating distribution (which would normally be
made on or about October 1, 1997) so as to permit the Amendments to take
effect retroactively, as intended. In the event that a Majority do not
vote to APPROVE 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 Partnerships initial
liquidating distribution will occur within three (3) business days of
the Determination Date.
Expenses of Consent
The expenses of preparing this Consent Solicitation Statement and
soliciting Consent 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.
ICONs Recommendation
ICON recommends in its capacity as General Partner that you vote to
APPROVE the Amendments because it is expected that they will result in
an estimated additional $650,000 in cash distributions to the Limited
Partners.
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 reinstated Reinvestment period which it estimates will
generate sufficient cash from operations, after payment of the
Partnerships 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 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
Beaufort J. B. Clarke,
President
PLEASE MARK, SIGN AND DATE AND RETURN YOUR CONSENT FORM IN THE ENCLOSED
ENVELOPE FOR ICONS RECEIPT OF SAME BY ITS CLOSE OF BUSINESS ON OCTOBER
15, 1997 IF YOU WISH YOUR INTEREST IN THE PARTNERSHIP TO BE
REREPRESENTED IN THIS IMPORTANT VOTE.
<PAGE>
ICON Cash Flow Partners, L.P., Series C
CONSENT FORM FOR ACTION BY CONSENT OF LIMITED PARTNERS
[SOLICITATED ON BEHALF OF THE GENERAL PARTNER]
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 (October 15, 1997, except as described in the Consent
Solicitation 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
initial in both boxes marked APPROVE.
Amendment No. 1 To reinstate 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 one and one half
(1 1/2) additional years (to no later than December 20, 2002).
APPROVE (__) DISAPPROVE (__) ABSTAIN (__)
Amendment No. 2 To (i) eliminate the Partnerships duty to pay an
estimated $571,860 of $676,860 of Management Fees ($507,726 of $612,726
for the period ending June 30, 1997 and $64,134 for the period from July
1, 1997 forward to June 20, 2001), and (ii) require that the remaining
$105,000 ($676,860 less $571,860) 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 October 15, 1997 (unless reinstated to November 15, 1997).
<PAGE>
CONSENT FORM INSTRUCTIONS.
1. Please sign exactly as the name or names appear on your Consent
Solicitation Statement materials.
2. If Units of limited partnership interest are held by two or more
persons, all of them should sign the Consent Solicitation 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 September 15, 1997
1. Section 5.1 of the Partnership Agreement is hereby amended
effective as of September 15, 1997 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 September 15, 1997 to insert the following sentence at
the end of Section 6.4(c):
Notwithstanding the reinstatement of the Reinvestment Period as of
June 20, 1996 and any contrary provision in this Section 6.4(c), (i)
the Partnerships obligation to pay deferred Management Fees for the
portion of the Reinvestment Period from September 1, 1993 through
September 15, 1997 shall be limited to a maximum of $105,000 (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 First Cash Distributions for the period
ending September 15, 1997 (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 First Cash Distributions which may accrue
on or after September 15, 1997 as a result of the reinstatement 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 September 16, 1997.
3. Section 17 of the Partnership Agreement is hereby amended as
follows effective as of September 15, 1997:
(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, ending on June 20, 1996 and being reinstated effective
June 20, 1996, for four (4) additional years and ending on June 20,
2000.
<PAGE>