December 17, 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 December 17, 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 (which ended on June
20, 1996), 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 and one-half 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 January 23, 1998, unless the deadline is extended.
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 December 17, 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 (which ended on June 20, 1996) for up
to four (4) additional years to December 17, 2001; and
(2) Suspend the Liquidation Period by up to four (4) additional years and
delay the end of the Liquidation Period by up to approximately four and
one-half (4 1/2) additional years to December 18, 2005.
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 December 16, 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 record as of December 16, 1997 - the Record Date) must be
received by ICON by January 23, 1998 (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
December 17, 1997
<PAGE>
ICON Cash Flow Partners, L.P., Series C
Consent Solicitation Statement
dated December 17, 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 December 16, 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 (which ended on June 20, 1996) for up
to four (4) additional years to December 17, 2001; and
(2) Suspend the Liquidation Period by up to four (4) additional years and
delay the end of the Liquidation Period by up to approximately four and
one-half (4 1/2) additional years to December 18, 2005.
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
as December 18, 2005 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.............................................11
General Information.................................11
Background for the Proposed Amendments..............11
The Proposed Amendments.............................11
Amendment No. 1...................................21
Amendment No. 2...................................21
General Disclosures.................................21
Detriments and Risks of the Proposed Amendments.....31
Amendment No. 1...................................31
Amendment No. 2...................................51
Benefits of the Amendments..........................51
Amendment No. 1...................................51
Amendment No. 2...................................51
Present Partnership Provisions......................61
Effects of the Amendments...........................71
Incorporation by Reference..........................81
Voting Rights and Solicitation of Consents..........81
ICONs Recommendation................................11
Consent Form
Text of Amendments to the Partnership
Agreement...................................................Exhibit A
<PAGE>
Page 1
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.
Originally, a Consent Solicitation Statement for ICON Cash Flow Partners, L.P.,
Series C was filed with the U.S. Securities and Exchange Commission (the SEC) on
June 17, 1996. Shortly thereafter the control and management of ICON Capital
Corp., the general partner of the Partnership (the General Partner) and ICON
Securities Corp., the dealer manager for the offering of the Partnership,
changed in August 1996. New management needed time to assess the status of each
partnership and proceed appropriately. In connection with the purchase of the
General Partner, there was seller financing provided by the prior owner secured
by a lien granted in the sellers favor in the Management Fees payable by the
Partnership. This lien was discharged in June of 1997 upon the repayment of the
seller financing. Until this lien had been discharged, it was impossible to go
forward with the Proxy which involved a giving up of the Management Fees
otherwise due to the General Partner.
During the period commencing June 20, 1996 through the date of this Consent
Solicitation Statement, the Partnership has not liquidated any of the
Partnerships investments but, in accordance with the Partnership Agreement, has
not reinvested any otherwise distributable cash..
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 for the
period beginning September 1, 1993 and ending with June 20, 2001 (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 which ended on June 20, 1996 (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 December 17, 1997 to not later than December17, 2001); and
(2) Suspend the beginning of the Liquidation Period by up to four (4)
additional years and delay the end of the Liquidation Period by up to
approximately four and one-half (4 1/2) additional years from ending not
later than June 20, 2001 to ending not later than December 18, 2005.
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, 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).
<PAGE>
Detriments and Risks of the Proposed Amendments
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 18, 2005 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 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
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. If the
Partnership is or at any time hereafter becomes taxable as a
corporation, it would be subject to federal income tax at the tax
rates and under the rules applicable to corporations generally. The
major consequences of being treated as a corporation would be that
Partnership losses would not be passed through to the Partners, and
Partnership income could be subject to double tax. Corporations are
required to pay federal income taxes on their taxable income and
corporate distributions are taxable to investors at ordinary income
tax rates to the extent of the corporations earnings and profits and
are not deductible by the corporation in computing its taxable
income. If the Partnership at any time is taxable as a corporation,
and particularly should that occur retroactively, the effects of
corporate taxation could have a substantial adverse effect on the
after-tax investment return of investors. Furthermore, a change in
the tax status of the Partnership from a partnership to an association
taxable as a corporation would be treated by the Service as involving
an exchange. Such an exchange may give rise to tax liabilities for
the Limited Partners under certain circumstances (e.g., if the
Partnerships debt exceeds the tax basis of the Partnerships assets at
the time of such exchange) even though they might not receive cash
distributions from the Partnership to cover such tax liabilities.
. 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 Federal 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.
Benefits of the Amendments
. 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 suspended,
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.
. Reduction of ICONs Management Fee and Requirement that ICON Make an
Additional Capital Contribution.
Management Fees of in excess $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:
<TABLE>
Under Current Increase/(Decrease Under Current Increase/(Decrease)
Partnership Under the in Cash Payable to Partnership Under the in Fees payable
Year Provisions Amendments Limited Partners Provisions Amendments to ICON
<S> <C> <C> <C> <C> <C> <C>
1997** $1,585,949 $ 892,215 $ (693,734) $ 667,373 $ 37,323 $ (630,050)
1998 1,133,562 1,784,430 650,868 77,785 158,893 1,108
1999
through 2001 1,049,849 1,744,496 694,647 53,561 67,917 14,356
Totals $3,769,360 $4,421,141 $ 651,781 $ 798,719 $ 264,133 $ (534,586)
</TABLE>
*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 ended on June 20, 1996 and that the Liquidation Period began on
June 21, 1996 and would 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
. 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.
Expected increase in amounts realized for residual values.
Delay in liquidating Investments and in making liquidation
distributions.
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.
Lack of liquidity of Units.
Rate of limited partner cash distributions not fixed; return on
investment not determinable.
Continued operations would result in additional directly-paid
Partnership expenses and administrative expenses.
Extended Exposure to Risks Inherent in Investments.
Leveraged Investment-Increased Risk of Loss
Risk of lessee and debtor bankruptcies or defaults
Declining Residual Values
Competition and Conflicts of Interest
Equipment and Lessees Unspecified.
Federal Income Tax Risks.
. Reduction of ICONs Management Fee and Requirement that ICON Make an
Additional Capital Contribution.
Management Fees in excess of $507,726 will be eliminated.
Requirement that ICON make an additional Capital Contribution of the
$105,000 of Management Fees paid to it during 1998.
Increased cash distributions to the Partners. The Limited Partners
would receive approximately $4,420,000 (99%) and ICON would receive
(1) approximately $44,646 (1%), in cash distributions in its capacity
as General Partner.
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).
ICONs Consent Required.
Reduction by $507,726 of the Partnerships accrued but unpaid
liability to pay Management Fees will increase Partnerships taxable
income in 1997.
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 December 31, 1996 and the
Partnerships Quarterly Reports on Forms 10-Q for the quarters ending
March 31, 1997,June 30, 1997 and September 30, 1997and any required
amendments to those filings. 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.
The Partnership will provide by first class mail, without charge, to
each person to whom a proxy statement was delivered, within one business
day of receipt of written or oral request, a copy of any and all of the
information that has been incorporated by reference. Please contact:
Legal Department
ICON Capital Corp.
600 Mamaroneck Avenue
Harrison, New York 10528
(914) 698-0600
Voting Rights and Solicitation of Consents
Vote Required
ICON has set the record date as December 16, 1997. On that date, the
Partnership had 1,748 Limited Partners holding 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. ICON neither owns nor has any voting control over any
Partnership Units.
Vote Procedure
Only Limited Partners of record at the close of business on December 16,
1997 are entitled to notice of, and to vote by means of, the enclosed
Consent. On that date, the Partnership had 1,748 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
January 23, 1998 (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 as of December 17, 1997, if 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. In that case, the Partnership
will begin liquidating its Investments as presently provided by the
Partnership Agreement. ICON will continue to pay monthly distributions
at a rate of 9% until the approval of the Amendments. 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.
Consequences to ICON
If the Amendments are approved the only benefit derived by ICON would be
the support of the current Limited Partners of the Partnership and
future limited partners. ICON has no conflict in recommending the
passage of the Amendments.
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 JANUARY
23,
1998 IF YOU WISH YOUR INTEREST IN THE PARTNERSHIP TO BE REREPRESENTED IN
THIS IMPORTANT VOTE.
Page 4
Page 4
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 (January 23, 1998, 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 which ended June
20, 1996 for up to four (4) additional years (to no later than December
17, 2001) and suspend the Liquidation Period furing that period and
delay the beginning and end of the Liquidation Period for up to four and
one-half (4 1/2) additional years (from not later than June 20, 2001 to
not later than December 18, 2005).
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 January 23, 1998 unless extended).
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)
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 December 17, 1997
1. Section 5.1 of the Partnership Agreement is hereby amended
effective as of December 17, 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 December 17, 1997 to insert the following sentence at
the end of Section 6.4(c):
Notwithstanding the reinstatement of the Reinvestment Period as of
December 17, 1997 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
December 17, 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 December 17, 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 December 18, 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 December 18, 1997.
3. Section 17 of the Partnership Agreement is hereby amended as
follows effective as of December 17, 1997:
(a) to delete the definition of Liquidation Period and
insert the following definition in place thereof:
to substitute the phrase eleven and one-half (11 1/2) years for the
phrase ten (10) years; and
Liquidation Period means the period which originally commenced on June
20, 1996 but was suspended on December 17, 1997 and was reinstated
effective December 18, 2001 for the period deemed necessary by the
General Partner for orderly termination of its operations and
affairs and liquidation or disposition of the Partnerships
Equipment, Financing Transactions and other assets and the
realization of maximum Liquidation Proceeds therefor, which period
must terminate no later than December 18, 2005.
(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
on December 17, 1997, for four (4) additional years and ending on
December 17, 2001.
