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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Amendment No. 1
to
SCHEDULE 13E-4
Issuer Tender Offer Statement (Pursuant to Section 13(e)(1)
of the Securities Exchange Act of 1934)
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AFG INVESTMENT TRUST D
(Name of Issuer and Name of Person Filing Statement)
CLASS A BENEFICIARY INTERESTS
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
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Copy to:
James A. Coyne Thomas F. Gloster III, Esq.
c/o Equis Financial Group Limited Partnership Peabody & Brown
88 Broad Street 101 Federal Street
Boston, Massachusetts 02110 Boston, Massachusetts 02110
(617) 854-5800 (617) 345-1141
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Person Filing Statement)
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August 7, 1997
(Date Tender Offer First Published, Sent or Given to Securityholders)
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Item 1. SECURITY AND ISSUER.
(b) This Amendment relates to amendments to the Offer to
Purchase dated August 7, 1997, and the related Letter of Transmittal. Copies
of such amendments, in the forms of a Supplement to Offer to Purchase dated
September 12, 1997, and a revised Letter of Transmittal, are attached hereto
as Exhibits (a)(4) and (a)(5), respectively.
Item 7. FINANCIAL INFORMATION.
(a) The information set forth in Exhibit A to the Supplement to
Offer to Purchase dated September 12, 1997, is incorporated herein by reference.
Item 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(4) Supplement to Offer to Purchase dated September 12, 1997.
(a)(5) Revised Letter of Transmittal.
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: September 12, 1997
AFG INVESTMENT TRUST D
By: AFG ASIT Corporation,
its Managing Trustee
By: /s/ James A Coyne
---------------------------
Name: James A. Coyne
Title: Vice President
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EXHIBIT INDEX
Exhibit Sequentially
No. Description Numbered Page
- -------- ----------- -------------
(a)(4) Supplement to Offer to Purchase dated September 12, 1997.
(a)(5) Revised Letter of Transmittal.
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Exhibit (a)(4)
SUPPLEMENT TO
OFFER TO PURCHASE FOR CASH
BY
AFG INVESTMENT TRUST D
OF
UP TO 940,064 OF ITS CLASS A BENEFICIARY INTERESTS
AT
$10.75 NET PER CLASS A INTEREST
THE OFFER, WITHDRAWAL RIGHTS AND THE PRORATION PERIOD WILL
EXPIRE AT 5:00 P.M., EASTERN TIME, ON SEPTEMBER 30, 1997, UNLESS THE
OFFER IS EXTENDED FURTHER.
AFG Investment Trust D, a Delaware business trust (the "Trust"),
hereby supplements and amends its offer to redeem up to 940,064 of its
outstanding Class A Beneficiary Interests (the "Class A Interests"),
at a price of $10.75 per Class A Interest, net to the seller in cash,
without interest, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated August 7, 1997 (the "Offer to
Purchase") and in the related Letter of Transmittal. (Such Offer to
Purchase and Letter of Transmittal, as supplemented by this Supplement
and as they may be further supplemented from time to time, are herein
collectively referred to as the "Offer.") (Capitalized terms used in
this Supplement and not otherwise defined herein have the respective
meanings specified in the Offer to Purchase.)
In addition to the factors set forth in the Offer to Purchase, each
Class A Beneficiary should consider carefully the following factors:
- On August 15, 1997 the Trust made a special distribution of $1.47
per Class A Interest to all Class A Beneficiaries of record as of July
31, 1997. Any distributions from the Trust after August 1, 1997
(excluding the special distribution) with respect to tendered Class A
Interests accepted for payment by the Trust will be retained by the
Trust or, to the extent such distributions are made to tendering Class
A Beneficiaries, will reduce the purchase price for such Class A
Interests.
- Affiliates of the Managing Trustee have obtained a 60%
participation in all matters on which the Beneficiaries of the Trust
may vote as a result of the recent offering by the Trust of its Class
B Subordinated Interests. A lawsuit has recently been filed
asserting, among other things, that such offering was conducted to
ensure that such affiliates would obtain voting control of the Trust
(See "Section 14 - Certain Legal Matters" in the Offer to Purchase for
a description of this lawsuit.)
September 12, 1997
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To the Class A Beneficiaries of
AFG Investment Trust D
On August 7, 1997, AFG Investment Trust D offered to purchase Class A
Beneficiary Interests (the "Class A Interests") for $10.75 per Class A
Interest in cash pursuant to the Offer to Purchase. This document
constitutes a supplement to the Offer to Purchase (this "Supplement") and
should be read in conjunction with the Offer to Purchase.
INTRODUCTION
The following amends and supplements the Introduction to the Offer to
Purchase. (Cross-references in this Supplement are to Sections of the Offer
to Purchase, unless otherwise indicated. To the extent statements are made
in this Supplement which are inconsistent with statements made in the Offer
to Purchase, the statements herein shall control.)
AFG Investment Trust D, a Delaware business trust (the "Trust"), hereby
offers to purchase up to 940,064 of its outstanding Class A Beneficiary
Interests (the "Class A Interests"), at a price of $10.75 per Class A
Interest, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase and in the
related Letter of Transmittal, as each may be supplemented or amended from
time to time (which together constitute the "Offer"). The Offer is made to
Class A Beneficiaries of record prior to the Expiration Date. The 940,064
Class A Interests sought pursuant to the Offer represent approximately 45% of
the Class A Interests outstanding as of August 1, 1997.
At September 11, 1997, 94,400 Class A Interests, representing 4.5% of all
outstanding Class A Interests, had been offered for tender by the Class A
Beneficiaries of the Trust.
The Expiration Date for the Offer to Purchase is hereby extended to
September 30, 1997. If you are interested in accepting the Offer of the
Trust to purchase your Class A Beneficiary Interests and have not already
done so, please execute the enclosed green Letter of Transmittal and mail it
in the enclosed postage paid envelope.
Additional financial information with respect to the Trust for the period
ended June 30, 1997 is attached hereto as Exhibit A.
In addition to the factors set forth in the Offer to Purchase, each Class
A Beneficiary should consider carefully the following factors:
- On August 15, 1997 the Trust made a special distribution of $1.47
per Class A Interest to the Class A Beneficiaries. Any distributions
from the Trust after August 1, 1997 (excluding the special
distribution) with respect to tendered Class A Interests accepted for
payment by the Trust will be retained by the Trust or, to the extent
such distributions are made to tendering Class A Beneficiaries, will
reduce the purchase price for such Class A Interests.
- Affiliates of the Managing Trustee have obtained a 60%
participation in all matters on which the Beneficiaries of the Trust
may vote as a result of the recent offering by the Trust of its Class
B Subordinated Interests. A lawsuit has recently been filed
asserting, among other things, that such offering was conducted to
ensure that such affiliates would obtain voting control of the Trust
(See "Section 14 - Certain Legal Matters" in the Offer to Purchase for
a description of this lawsuit.)
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"SECTION 2. PRORATION: ACCEPTANCE FOR PAYMENT AND PAYMENT FOR
INTERESTS" is hereby supplemented to include the following:
In the event that proration is required because the number of
Interests validly tendered on or prior to the Expiration Date and not
withdrawn exceeds 940,064 (which the Trust does not expect to be the
case), the Trust will announce the results of prorations promptly
after such results become available but in no event more than seven
business days following the Expiration Date.
"SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT" is
hereby supplemented to include the following:
The Purchaser intends to consummate the transactions contemplated
by the Offer if the conditions for closing, in the reasonable judgment
of the Purchaser, are satisfied.
"SECTION 10. CONFLICTS OF INTERESTS IN TRANSACTIONS WITH
AFFILIATES AND RELATED PARTIES" is hereby supplemented to include the
following:
Through their acquisition of 3,140,683 Class B Interests (which
represents 99.9% of all outstanding Class B Interests), Affiliates of
the Managing Trustee have obtained a 60% participation in all matters
on which the Beneficiaries may vote. The relative rights and
limitations of the Class A Interests and the Class B Interests were
described in the prospectus for the offering of the Class B Interests,
an additional copy of which will be provided to each Class A
Beneficiary upon request.
"SECTION 13. CONDITIONS OF THE OFFER" is hereby amended by
replacing the first sentence and the first clause of the second
sentence as follows:
Notwithstanding any other term of the Offer, the Trust shall not be
required to accept for payment or to pay for any Class A Interests
tendered if all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods
imposed by, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign,
necessary for the consummation of the transactions contemplated by the
Offer shall not have been filed, occurred or been obtained prior to
the Expiration Date. Furthermore, notwithstanding any other term of
the Offer, the Trust shall not be required to accept for payment or
pay for any Class A Interests not theretofore accepted for payment or
paid for and may terminate or amend the Offer as to such Class A
Interests if, at any time on or after the date of the Offer prior to
the Expiration Date, any of the following conditions exists:
"SECTION 13. CONDITIONS OF THE OFFER" is hereby further amended as
follows:
References to the "sole judgment of the Trust" are hereby changed
to "reasonable judgment of the Trust".
AFG INVESTMENT TRUST D
September 12, 1997
BOS2: 84528_1
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Exhibit A
AFG Investment Trust D
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
Page
Management's Discussion and Analysis of Financial Condition and Results of Operations .................... 2
Statement of Financial Position at June 30, 1997 and December 31, 1996.................................... F-1
Statement of Operations for the three and six months ended June 30, 1997 and 1996......................... F-2
Statement of Cash Flows for the six months ended June 30, 1997 and 1996................................... F-3
Notes to the Financial Statements......................................................................... F-4
</TABLE>
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Certain statements in this quarterly report that are not historical fact
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and are subject to a variety of risks
and uncertainties. There are a number of important factors that could cause
actual results to differ materially from those expressed in any forward-looking
statements made herein. These factors include, but are not limited to, i) the
ability of the Trust to satisfy its equipment reinvestment requirements and ii)
the ability of EFG to collect all rents due under the attendant lease agreements
and to successfully remarket the Partnership's equipment upon the expiration of
such leases.
Three and six months ended June 30, 1997 compared
to the three and six months ended June 30, 1996:
Overview
As an equipment leasing trust, AFG Investment Trust D ("the Trust") was
organized to acquire a diversified portfolio of capital equipment subject to
lease agreements with third parties. The Trust was designed to progress through
three principal phases: acquisitions, operations, and liquidation. During the
operations phase, a period of approximately six years, all equipment in the
Trust's portfolio will progress through various stages. Initially, all
equipment will generate rental revenues under primary term lease agreements.
During the life of the Trust, these agreements will expire on an intermittent
basis and equipment held pursuant to the related leases will be renewed,
re-leased or sold, depending on prevailing market conditions and the assessment
of such conditions by EFG to obtain the most advantageous economic benefit.
Over time, a greater portion of the Trust's original equipment portfolio will
become available for remarketing and cash generated from operations and from
sales or refinancings will begin to fluctuate. Ultimately, all equipment will
be sold and the Trust will be dissolved. The Trust's operations commenced in
1993.
Results of Operations
For the three and six months ended June 30, 1997, the Trust recognized
lease revenue of $4,830,964 and $9,590,517, respectively, compared to $5,528,992
and $11,129,692 for the same periods in 1996. The decrease in lease revenue
from 1996 to 1997 was primarily attributable to the Trust's sale of its interest
in a vessel to the lessee in December 1996. In the near-term, aggregate rental
revenues are expected to increase due to reinvestment of available proceeds in
other equipment, including proceeds resulting from the Trust's sale of its
interest in the vessel. Over time, the level of lease revenue will decline due
to the expiration of the Trust's primary lease term agreements.
The Trust's equipment portfolio includes certain assets in which the Trust
holds a proportionate ownership interest. In such cases, the remaining
interests are owned by EFG or an affiliated equipment leasing program sponsored
by EFG. Proportionate equipment ownership enables the Trust to further
diversify its equipment portfolio by participating in the ownership of selected
assets, thereby reducing the general levels of risk which could result from a
concentration in any single equipment type, industry or lessee. The Trust and
each affiliate individually report, in proportion to their respective ownership
interests, their respective shares of assets, liabilities, revenues, and
expenses associated with the equipment.
Interest income for the three and six months ended June 30, 1997 was
$124,987 and $246,138, respectively, compared to $33,028 and $46,849 for the
same periods in 1996. Interest income was generated from temporary investment
of available cash in short-term money market instruments. Interest income was
higher in the six months ended June 30, 1997 than in the same period in 1996 due
to interest earned on sale proceeds associated with the vessel discussed above.
The amount of future interest income is expected to fluctuate in relation to
prevailing interest rates and the collection of lease revenue and equipment
sales proceeds.
For the three and six months ended June 30, 1997, the Trust sold equipment
having a net book value of $565,428 and $576,874, respectively, to existing
lessees and third parties. These sales resulted in a net loss for financial
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statement purposes, of $85,952 and $90,898, respectively, compared to a net loss
of $1,442 and $92,007 on equipment having a net book value of $3,000 and
$360,510 for the same periods in 1996.
It cannot be determined whether future sales of equipment will result in a
net gain or a net loss to the Trust, as such transactions will be dependent upon
the condition and type of equipment being sold and its marketability at the time
of sale. In addition, the amount of gain or loss reported for financial
statement purposes is partly a function of the amount of accumulated
depreciation associated with the equipment being sold.
The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG's ability to sell and re-lease
equipment. Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time. EFG attempts to monitor these changes in order to identify
opportunities which may be advantageous to the Trust and which will maximize
total cash returns for each asset.
The total economic value realized upon final disposition of each asset is
comprised of all primary lease term revenue generated from that asset, together
with its residual value. The latter consists of cash proceeds realized upon the
asset's sale in addition to all other cash receipts obtained from renting the
asset on a re-lease, renewal or month-to-month basis. The Trust classifies such
residual rental payments as lease revenue. Consequently, the amount of gain or
loss reported in the financial statements is not necessarily indicative of the
total residual value the Trust achieved from leasing the equipment.
Depreciation and amortization expense for the three and six months ended
June 30, 1997 was $3,070,399 and $6,212,518, respectively, compared to
$3,539,297 and $7,081,212 for the same periods in 1996. For financial reporting
purposes, to the extent that an asset is held on primary lease term, the Trust
depreciates the difference between (i) the cost of the asset and (ii) the
estimated residual value of the asset on a straight-line basis over such term.
For purposes of this policy, estimated residual values represent estimates of
equipment values at the date of primary lease expiration. To the extent that an
asset is held beyond its primary lease term, the Trust continues to depreciate
the remaining net book value of the asset on a straight-line basis over the
asset's remaining economic life.
Interest expense was $651,951 and $1,306,943 or 13.5% and 13.6% of lease
revenue for the three and six months ended June 30, 1997, respectively, compared
to $870,658 and $1,763,330 or 15.8% of lease revenue for each of the same
periods in 1996. Interest expense in the near-term is expected to increase due
to anticipated leveraging to be obtained to finance the acquisition of
reinvestment equipment, discussed above. Thereafter, interest expense will
decline in amount and as a percentage of lease revenue as the principal balance
of notes payable is reduced through the application of rent receipts to
outstanding indebtedness.
Management fees were 4.5% of lease revenue for each of the three and six
months ended June 30, 1997 compared to 4.4% of lease revenue for each of the
same periods in 1996. Management fees are based on 5% of gross lease revenue
generated by operating leases and 2% of gross lease revenue generated by full
payout leases.
Operating expenses consist principally of administrative charges,
professional service costs, such as audit and legal fees, as well as printing,
distribution and remarketing expenses. Collectively, operating expenses
represented 1.8% and 2.4% of lease revenue during the three and six months ended
June 30, 1997 compared to 1.7% and 2.3% of lease revenue during the same periods
in 1996. Operating expenses in 1997 include professional service costs incurred
in connection with the Solicitation and Registration Statements described in
Note 8 to the accompanying financial statements whereas operating expenses in
1996 included remarketing fees incurred related to the sale of certain
equipment. The amount of future operating expenses cannot be predicted with
certainty; however, such expenses are usually higher during the acquisition and
liquidation phases of a trust. Other fluctuations typically occur in relation
to the volume and timing of remarketing activities.
Liquidity and Capital Resources and Discussion of Cash Flows
The Trust by its nature is a limited life entity which was established for
specific purposes described in the preceding "Overview". As an equipment
leasing program, the Trust's principal operating activities derive from asset
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rental transactions. Accordingly, the Trust's principal source of cash from
operations is provided by the collection of periodic rents. These cash
inflows are used to satisfy debt service obligations associated with
leveraged leases, and to pay management fees and operating costs. For the
six months ended June 30, 1997, operating activities generated net cash
inflows of $7,108,240, after reductions for equipment sale proceeds of
approximately $1,618,000 received in connection with the sale of the vessel
and debt proceeds of $1,980,073 which relate to the leveraging of certain
rail equipment in the Trust's portfolio. These sale and debt proceeds were
due from EFG at December 31, 1996 and received by the Trust in January 1997.
For the six months ended June 30, 1996, the Trust generated net cash inflows
from operating activities of $8,271,890. In the near-term, net cash inflows
generated from operating activities are expected to increase due to the
acquisition of reinvestment equipment as described below. Thereafter,
renewal, re-lease and equipment sale activities will cause the Trust's
primary-term lease revenue and corresponding sources of operating cash to
decline. Overall, expenses associated with rental activities, such as
management fees, and net cash flow from operating activities will decline as
the Trust experiences a higher frequency of remarketing events.
Ultimately, the Trust will dispose of all assets under lease. This will
occur principally through sale transactions whereby each asset will be sold to
the existing lessee or to a third party. Generally, this will occur upon
expiration of each asset's primary or renewal/re-lease term. In certain
instances, casualty or early termination events may result in the disposal of an
asset. Such circumstances are infrequent and usually result in the collection
of stipulated cash settlements pursuant to terms and conditions contained in the
underlying lease agreements.
Cash expended for asset acquisitions and cash realized from asset disposal
transactions are reported under investing activities on the accompanying
Statement of Cash Flows. During the six months ended June 30, 1997, the Trust
realized equipment sale proceeds of $458,976, compared to $268,503 during the
same period in 1996 Future inflows of cash from asset disposals will vary in
timing and amount and will be influenced by many factors including, but not
limited to the frequency and timing of lease expirations, the type of equipment
being sold, its condition and age, and future market conditions. The Trust
expended $1,239,741 to acquire equipment during the six months ended
June 30, 1996, pursuant to the reinvestment provisions of the Trust's
prospectus. The reinvestment equipment was financed through a combination of
leveraging and sale proceeds.
The Trust obtained long-term financing in connection with certain equipment
leases. The origination of such indebtedness and the subsequent repayments of
principal are reported as components of financing activities. Cash inflows of
$2,465,737 in 1996 resulted from leveraging a portion of the Trust's equipment
portfolio with third-party lenders. Each note payable is recourse only to the
specific equipment financed and to the minimum rental payments contracted to be
received during the debt amortization period (which period generally coincides
with the lease rental term). As rental payments are collected, a portion or all
of the rental payment is used to repay the associated indebtedness. In the
near-term, the amount of cash used to repay debt obligations is expected to
increase as a result of anticipated leveraging to be obtained in connection with
the acquisition of reinvestment equipment. Thereafter, the amount will decline
as the principal balance of notes payable is reduced through the collection and
application of rents. However, the Trust has balloon payment obligations of
$282,421 and $1,476,981 at the expiration of the primary lease terms related to
the Trust's proportionate ownership interest in an MD-87 jet aircraft leased by
Reno Air, Inc. and certain rail equipment, respectively.
Cash distributions to the Managing Trustee, the Special Beneficiary and the
Beneficiaries are declared and generally paid within fifteen days following the
end of each calendar month. The payment of such distributions is presented as a
component of financing activities. For the six months ended June 30, 1996, the
Trust declared total cash distributions of Distributable Cash From Operations
and Distributable Cash From Sales and Refinancings of $1,885,306. In accordance
with the Trust Agreement, the Beneficiaries were allocated 90.75% of these
distributions, or $1,710,915; the Special Beneficiary was allocated 8.25%, or
$155,538; and the Managing Trustee was allocated 1%, or $18,853.
For financial reporting purposes, the Managing Trustee and the Special
Beneficiary each has accumulated a capital deficit at June 30, 1997. This is
the result of aggregate cash distributions to these Participants being in excess
of their aggregate capital contributions ($1,000 each) and their respective
allocations of financial statement net income or loss. Ultimately, the
existence of a capital deficit for the Managing Trustee or the Special
Beneficiary for financial reporting purposes is not indicative of any further
capital obligations to the Trust by either the Managing Trustee or the Special
Beneficiary. However, for income tax purposes, the Trust Agreement requires
that income be allocated first to those Participants having negative tax capital
account balances so as to eliminate any such balances. In accordance with the
Trust Agreement, upon the dissolution of the Trust, the Managing Trustee will be
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required to contribute to the Trust an amount equal to any negative balance
which may exist in the Managing Trustee's tax capital account. No such
requirement exists with respect to the Special Beneficiary. At
December 31, 1996, the Managing Trustee had a negative tax capital account
balance.
At June 30, 1997, the Trust had aggregate future minimum lease payments
of $40,682,584 from contractual lease agreements (see Note 3 to the financial
statements), of which $27,191,657 will be used to amortize the principal
balance of notes payable (see Note 6 to the financial statements).
Additional cash inflows will be realized from future remarketing activities,
such as lease renewals and equipment sales, as well as from lease revenues
generated by equipment acquisitions from the Trust's anticipated reinvestment
activities. Presently, the Trust expects to acquire approximately $36,000,000
of reinvestment equipment using cash of approximately $9,000,000 and
additional indebtedness, which will be amortized from the associated rental
streams. However, the extent of the Trust's total future reinvestment
activities may exceed this projection as a result of future equipment sales,
the timing and extent of which cannot be predicted with certainty. This is
because the timing and extent of equipment sales is often dependent upon the
needs and interests of the existing lessees. Some lessees may choose to
renew their lease contracts, while others may elect to return the equipment.
In the latter instances, the equipment could be re-leased to another lessee
or sold to a third party. Accordingly, as the Trust matures and a greater
level of its equipment assets become available for remarketing, the cash
flows of the Trust will become less predictable. In addition, the Trust will
have cash outflows to satisfy interest on indebtedness and to pay management
fees and operating expenses. Ultimately, the Trust is expected to meet its
future disbursement obligations and to distribute any excess of cash inflows
over cash outflows to the Participants in accordance with the Trust
Agreement. However, several factors, including month-to-month lease
extensions, lessee defaults, equipment casualty events, and early lease
terminations could alter the Trust's anticipated cash flows as described
herein and in the accompanying financial statements and result in
fluctuations to the Trust's periodic cash distribution payments.
Cash distributions paid to the Participants consist of both a return of
and a return on capital. Cash distributions do not represent and are not
indicative of yield on investment. Actual yield on investment cannot be
determined with any certainty until conclusion of the Trust and will be
dependent upon the collection of all future contracted rents, the generation
of renewal and/or re-lease rents, and the residual value realized for each
asset at its disposal date. Future market conditions, technological changes,
the ability of EFG to manage and remarket the assets, and many other events
and circumstances, could enhance or detract from individual asset yields and
the collective performance of the Trust's equipment portfolio.
It is the intention of the Managing Trustee to maintain a cash
distribution level that is consistent with the operating cash flows of the
Trust and to optimize the long-term value of the Trust. A distribution level
that is higher than the Trust's operating cash flows could compromise the
Trust's working capital position, as well as its ability to refurbish or
upgrade equipment in response to lessee requirements or other market
circumstances and, during its reinvestment period, to purchase replacement
equipment as original equipment is remarketed. Accordingly, in order to
better align monthly cash distributions with the Trust's operating cash
flows, the Managing Trustee reduced the level of monthly cash distributions
from an annualized rate of $2.52 per Beneficiary Interest (the rate
established and paid from the Trust's inception through September 1995) to an
annualized rate of $1.26 per Beneficiary Interest commencing in October 1995.
In October 1996, the Managing Trustee increased the annualized distribution
rate to $1.64 per Beneficiary Interest and expects that the Trust will be
able to sustain this distribution rate throughout 1997. However, the nature
of the Trust's principal cash flows gradually will shift from rental receipts
to equipment sale proceeds as the Trust matures. As this occurs, the Trust's
cash flows will become more volatile in that certain of the Trust's equipment
leases will be renewed and certain of its assets will be sold. In some cases,
the Trust may be required to expend funds to refurbish or otherwise improve
the equipment being remarketed in order to make it more desirable to a
potential lessee or purchaser. The Trust's Advisor, EFG, and the Managing
Trustee will attempt to monitor and manage these events to maximize the
residual value of the Trust's equipment and will consider these factors, in
addition to the collection of contractual rents, the retirement of scheduled
indebtedness and the Trust's future working capital and equipment
requirements, in establishing future cash distribution rates. Ultimately,
the Participants should expect that cash distribution rates will fluctuate
over the long term as a result of future remarketing activities.
On February 12, 1997, the Trust filed a Registration Statement on Form S-1
with the SEC, which became effective June 10, 1997. The Registration Statement
covered the issuance and sale of a new class of beneficiary interests in the
Trust (the "Class B Interests"). The characteristics of the Class B Interests,
associated risk factors and other matters of importance to the Beneficiaries and
purchasers of the Class B Interests were set forth in a Prospectus sent to the
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Beneficiaries. On July 17, 1997, the offering closed and on July 18, 1997 the
Trust issued 3,142,083 Class B Interests at $5.00 per interest, thereby
generating $15,710,415 in aggregate Class B capital contributions. Class A
Beneficiaries purchased 1,400 Class B Interests, generating $7,000 of such
aggregate capital contributions, and the Special Beneficiary, EFG, purchased
3,140,683 Class B Interests, generating $15,703,415 of such aggregate capital
contributions.
As described in the Prospectus for the offering of the Class B Interests,
the Managing Trustee intends to use a portion of the net cash proceeds realized
from the offering of the Class B Interests to pay a one-time special cash
distribution to the Class A Beneficiaries of the Trust. The Managing Trustee
expects to declare and pay this special cash distribution on or before August
31, 1997.
On August 7, 1997, the Trust commenced an offer to purchase up to 45% of
the outstanding Class A Beneficiary Interests of the Trust by filing a Form
13E-4, Issuer Tender Offer Statement, with the SEC and distributing to the
Class A Beneficiaries information (the "Tender Documents") concerning the
offer. The Trust will use a portion of the net proceeds realized from the
offering of the Class B Interests to purchase the Class A Beneficiary
Interests tendered as a result of the offer. The Tender Documents describe,
among other things, the terms of the offer and the purchase price per Class A
Beneficiary Interest being offered by the Trust.
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AFG INVESTMENT TRUST D
STATEMENT OF FINANCIAL POSITION
JUNE 30, 1997 AND DECEMBER 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
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<S> <C> <C>
ASSETS
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Cash and cash equivalents.......................................................... $ 10,311,010 $ 6,640,347
Rents receivable................................................................... 3,777,756 3,347,306
Accounts receivable--affiliate..................................................... 377,226 3,845,655
Equipment at cost, net of accumulated depreciation of $34,384,660 and $29,093,445
at June 30, 1997 and and December 31, 1996, respectively......................... 54,568,599 61,357,491
Organization costs, net of accumulated amortization of $3,750 and $3,250 at June
30, 1997 and December 31, 1996, respectively..................................... 1,250 1,750
------------- -------------
Total assets.................................................................. $ 69,035,841 $ 75,192,549
------------- -------------
------------- -------------
LIABILITIES AND PARTICIPANTS' CAPITAL
- -------------------------------------
Notes payable...................................................................... $ 27,191,657 $ 32,827,977
Accrued interest................................................................... 698,586 727,187
Accrued liabilities................................................................ 16,225 23,250
Accrued liabilities--affiliate..................................................... 98,413 214,247
Deferred rental income............................................................. 154,822 200,836
Cash distributions payable to participants......................................... 314,216 314,216
------------- -------------
Total liabilities............................................................. 28,473,919 34,307,713
------------- -------------
Participants' capital (deficit):
Managing Trustee.................................................................. (66,094) (62,865)
Special Beneficiary............................................................... (552,524) (525,884)
Beneficiary Interests (2,089,030 Interests; initial purchase price of $25 each)... 41,180,541 41,473,585
------------- -------------
Total participants' capital................................................... 40,561,922 40,884,836
------------- -------------
Total liabilities and participants' capital................................... $ 69,035,841 $ 75,192,549
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-1
<PAGE>
AFG INVESTMENT TRUST D
STATEMENT OF OPERATIONS
for the three and six months ended june 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------ ---------------------------
1997 1996 1997 1996
------------ ---------- ------------ -------------
<S> <C> <C> <C> <C>
Income:
Lease revenue......................................... $ 4,830,964 $5,528,992 9,590,517 $ 11,129,692
Interest income....................................... 124,987 33,028 246,138 46,849
Loss on sale of equipment............................. (85,952) (1,442) (90,898) (92,007)
------------ ---------- ------------ -------------
Total income........................................ 4,869,999 5,560,578 9,745,757 11,084,534
------------ ---------- ------------ -------------
Expenses:
Depreciation and amortization......................... 3,070,399 3,539,297 6,212,518 7,081,212
Interest expense...................................... 651,951 870,658 1,306,943 1,763,330
Equipment management fees--affiliate.................. 216,036 243,544 435,717 490,472
Operating expenses--affiliate......................... 87,585 96,648 228,187 260,243
------------ ---------- ------------ -------------
Total expenses...................................... 4,025,971 4,750,147 8,183,365 9,595,257
------------ ---------- ------------ -------------
Net income.............................................. $ 844,028 $ 810,431 $ 1,562,392 $ 1,489,277
------------ ---------- ------------ -------------
------------ ---------- ------------ -------------
Net income per Beneficiary Interest..................... $ 0.37 $ 0.35 $ 0.68 $ 0.65
------------ ---------- ------------ -------------
------------ ---------- ------------ -------------
Cash distributions declared per Beneficiary Interest.... $ 0.41 $ 0.31 $ 0.82 $ 0.63
------------ ---------- ------------ -------------
------------ ---------- ------------ -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
AFG INVESTMENT TRUST D
STATEMENT OF CASH FLOWS
for the six months ended june 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Cash flows from (used in) operating activities:
Net income....................................................................... $ 1,562,392 $ 1,489,277
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization.................................................. 6,212,518 7,081,212
Loss on sale of equipment...................................................... 90,898 92,007
Changes in assets and liabilities
Decrease (increase) in:
rents receivable............................................................. (430,450) 4,061
accounts receivable--affiliate............................................... 3,468,429 (270,241)
Increase (decrease) in:
accrued interest............................................................. (28,601) 73,579
accrued liabilities.......................................................... (7,025) (7,498)
accrued liabilities--affiliate............................................... (115,834) (14,966)
deferred rental income....................................................... (46,014) (175,541)
------------- -------------
Net cash from operating activities......................................... 10,706,313 8,271,890
------------- -------------
Cash flows from (used in) investing activities:
Purchase of equipment.......................................................... -- (1,239,741)
Proceeds from equipment sales.................................................. 485,976 268,503
------------- -------------
Net cash from (used in) investing activities............................... 485,976 (971,238)
------------- -------------
Cash flows from (used in) financing activities:
Proceeds from notes payable.................................................... -- 2,465,737
Principal payments--notes payable.............................................. (5,636,320) (6,342,684)
Distributions paid............................................................. (1,885,306) (1,450,234)
------------- -------------
Net cash used in financing activities...................................... (7,521,626) (5,327,181)
------------- -------------
Net increase in cash and cash equivalents........................................ 3,670,663 1,973,471
Cash and cash equivalents at beginning of period................................. 6,640,347 669,998
------------- -------------
Cash and cash equivalents at end of period....................................... $ 10,311,010 $ 2,643,469
------------- -------------
------------- -------------
Supplemental disclosure of cash flow information:
Cash paid during the period for interest..................................... $ 1,335,544 $ 1,689,751
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
AFG INVESTMENT TRUST D
NOTES TO THE FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
NOTE 1--BASIS OF PRESENTATION
The financial statements presented herein are prepared in conformity with
generally accepted accounting principles and the instructions for preparing
Form 10-Q under Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission and are unaudited. As such, these financial statements do not
include all information and footnote disclosures required under generally
accepted accounting principles for complete financial statements and,
accordingly, the accompanying financial statements should be read in
conjunction with the footnotes presented in the 1996 Annual Report. Except as
disclosed herein, there has been no material change to the information
presented in the footnotes to the 1996 Annual Report.
In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position at June 30, 1997 and December 31, 1996 and results of operations for
the three and six month periods ended June 30, 1997 and 1996 have been made and
are reflected.
NOTE 2--CASH
At June 30, 1997, the Trust had $10,205,000 invested in reverse repurchase
agreements secured by U. S. Treasury Bills or interests in U.S. Government
securities. Approximately $9,000,000 of the Trust's cash is expected to be used
to acquire reinvestment equipment during the remainder of 1997 and 1998.
NOTE 3--REVENUE RECOGNITION
Rents are payable to the Trust monthly, quarterly or semi-annually and no
significant amounts are calculated on factors other than the passage of time.
Rents from Reno Air, Inc. ("Reno Air"), as provided for in the lease agreement,
are adjusted monthly for changes in the London Inter-Bank Offered Rate
("LIBOR"). Future rents from Reno Air, included below, reflect the most recent
LIBOR effected rental payment. The leases are accounted for as operating leases
and are noncancellable. Rents received prior to their due dates are deferred.
Future minimum rents of $40,682,584 are due as follows:
For the year ending June 30, 1998 $15,900,201
1999 10,965,117
2000 7,517,492
2001 3,288,172
2002 2,539,203
Thereafter 472,399
----------
Total $40,682,584
----------
----------
NOTE 4--EQUIPMENT
The following is a summary of equipment owned by the Trust at June 30, 1997.
In the opinion of Equis Financial Group ("EFG"), the acquisition cost of the
equipment did not exceed its fair market value.
F-4
<PAGE>
Remaining
Lease Term Equipment
Equipment Type (months) at Cost
-------------- ------------- ------------
Aircraft 6-68 $ 22,779,945
Locomotives 23-37 17,205,933
Vessels 64 13,875,360
Computers & peripherals 1-20 6,311,939
Construction & mining 9-43 6,205,962
Materials handling 6-58 6,124,032
Retail store fixtures 1-31 4,930,049
Manufacturing 11-18 3,849,128
Miscellaneous 6-42 3,564,568
Communications 6-11 1,834,800
Tractors & heavy duty truck 1-19 1,043,013
Research & test 1-34 664,901
Furniture & fixtures 6-8 271,945
Trailers/intermodal containers 12-34 187,474
Photocopying -- 65,711
Motor vehicles 18 38,499
-------------
Total equipment cost 88,953,259
Accumulated depreciation (34,384,660)
-------------
Equipment, net of accumulated depreciation $ 54,568,599
-------------
-------------
At June 30, 1997, the Trust's equipment portfolio included equipment having
a proportionate original cost of $15,368,258, representing approximately 17% of
total equipment cost.
The summary above includes equipment held for sale or re-lease which had an
original cost and net book value of approximately $464,000 and $182,000,
respectively. The Managing Trustee is actively seeking the sale or re-lease of
all equipment not on lease.
NOTE 5--RELATED PARTY TRANSACTIONS
All operating expenses incurred by the Trust are paid by EFG on behalf of
the Trust and EFG is reimbursed at its actual cost for such expenditures.
Fees and other costs incurred during the six month periods ended June 30,
1997 and 1996, which were paid or accrued by the Trust to EFG or its
Affiliates, are as follows:
1997 1996
------ ------
Equipment acquisition fees........ -- $ 36,109
Equipment management fees......... $ 435,717 490,472
Administrative charges............ 36,327 10,500
Reimbursable operating expenses
due to third parties........... 191,860 249,743
--------- ---------
Total $ 663,904 $ 786,824
---------- ----------
---------- ----------
All rents and the proceeds from the sale of equipment are paid directly to
either EFG or to a lender. EFG temporarily deposits collected funds in a
separate interest-bearing escrow account prior to remittance to the Trust. At
June 30, 1997, the Trust was owed $377,226 by EFG for such funds and the
interest thereon. These funds were remitted to the Trust in July 1997.
F-5
<PAGE>
NOTE 6--NOTES PAYABLE
Notes payable at June 30, 1997 consisted of installment notes of $27,191,657
payable to banks and institutional lenders. The notes bear interest rates
ranging between 5.1% and 13.75%, except for one note which bears a fluctuating
interest rate based on LIBOR plus a margin (5.69% at June 30, 1997). All of the
installment notes are non-recourse, and are collateralized by the equipment and
assignment of the related lease payments. Generally, the installment notes will
be fully amortized by noncancellable rents. However, the Trust has balloon
payment obligations of $282,421 and $1,476,981 at the expiration of the primary
lease terms related to the Reno Air Aircraft and certain rail equipment,
respectively. The carrying value of notes payable approximates fair value at
June 30, 1997.
The annual maturities of the notes payable are as follows:
For the year ending June 30, 1998 $10,340,627
1999 6,298,891
2000 4,577,476
2001 3,535,795
2002 1,815,022
Thereafter 623,846
----------
Total $27,191,657
----------
----------
NOTE 7--LEGAL PROCEEDINGS
On July 27, 1995, EFG, on behalf of the Trust and other EFG-sponsored
investment programs, filed an action in the Commonwealth of Massachusetts
Superior Court Department of the Trial Court in and for the County of
Suffolk, for damages and declaratory relief against a lessee of the Trust,
National Steel Corporation ("National Steel"), under a certain Master Lease
Agreement ("MLA") for the lease of certain equipment. EFG is seeking the
reimbursement by National Steel of certain sales and/or use taxes paid to the
State of Illinois and other remedies provided by the MLA. On August 30, 1995,
National Steel filed a Notice of Removal which removed the case to the United
States District Court, District of Massachusetts. On September 7, 1995,
National Steel filed its Answer to EFG's Complaint along with Affirmative
Defenses and Counterclaims, seeking declaratory relief and alleging breach of
contract, implied covenant of good faith and fair dealing and specific
performance. EFG filed its Answer to these counterclaims on September 29,
1995. Though the parties have been discussing settlement with respect to this
matter for some time, to date, the negotiations have been unsuccessful.
Notwithstanding these discussions, EFG recently filed an Amended and
Supplemental Complaint alleging a further default by National Steel under the
MLA and EFG recently filed a Summary Judgment on all claims and
counterclaims. The matter remains pending before the Court. The Trust has not
experienced any material losses as a result of this action.
On June 24, 1997, four plaintiffs (the "Plaintiffs") owning limited partner
units or beneficiary interests in eight investment programs sponsored by EFG
filed a lawsuit, as a derivative action, on behalf of the Trust and 27 other
investment programs (collectively, the "Nominal Defendants") in the Superior
Court of the Commonwealth of Massachusetts for the County of Suffolk against EFG
and certain of EFG's affiliates, including the Managing Trustee of the Trust and
four other wholly-owned subsidiaries of EFG which are the general partner or
managing trustee of one or more of the investment programs, (collectively, the
"Managing Defendants"), and certain other entities and individuals that have
control of the Managing Defendants and the Nominal Defendants (the "Controlling
Defendants"). The Plaintiffs assert claims of breach of fiduciary duty, breach
of contract, unjust enrichment, and equitable relief and seek various remedies,
including compensatory and punitive damages to be determined at trial.
The Managing Trustee and EFG are in the early stages of evaluating the
nature and extent of the claims asserted in this lawsuit and cannot predict its
outcome with any degree of certainty. However, based upon all of the facts
presently being considered by management, the Managing Trustee and EFG do not
believe that any likely outcome will have a material adverse effect on the
Trust. The Managing Trustee, EFG and their affiliates intend to vigorously
defend against the lawsuit.
F-6
<PAGE>
NOTE 8--ISSUANCE OF CLASS B INTERESTS AND OFFER TO REDEEM CLASS A INTERESTS
On October 26, 1996, the Trust filed a Solicitation Statement with the
United States Securities and Exchange Commission (the "SEC") which
subsequently was sent to the Beneficiaries pursuant to Regulation 14A of
Section 14 of the Securities Exchange Act. The Solicitation Statement sought
the consent of the Beneficiaries to a proposed amendment (the "Amendment") to
the Amended and Restated Declaration of Trust (the "Trust Agreement") which
would (i) amend the provisions of the Trust Agreement governing the
redemption of Beneficiary Interests to permit the Trust to offer to redeem
outstanding Beneficiary Interests at such times, in such amounts, in such
manner and at such prices as the Managing Trustee might determine from time
to time, in accordance with applicable law; and (ii) add a provision to the
Trust Agreement that would permit the Trust to issue, at the discretion of
the Managing Trustee and without further consent or approval of the
Beneficiaries, an additional class of security with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties as the Managing Trustee might affix. The funds obtained
through the issuance of such a security would be used by the Trust to (a)
expand redemption opportunities for Beneficiaries without using Trust funds
which might otherwise be available for cash distributions; and (b) make a
special one-time cash distribution to the Beneficiaries.
Pursuant to the Trust Agreement, the adoption of the Amendment required the
consent of the Beneficiaries holding more than 50% in the aggregate of the
Beneficiary Interests held by all Beneficiaries. A majority of Beneficiary
Interests, representing 1,210,746 or 58% of all Beneficiary Interests, voted in
favor of the Amendment; 229,836 or 11% of all Beneficiary Interests voted
against the Amendment; and 39,233 or 2% of all Beneficiary Interests abstained.
Approximately 71% of all Beneficiary Interests participated in the vote.
Accordingly, the Trust Agreement was amended.
On February 12, 1997, the Trust filed a Registration Statement on Form
S-1 with the SEC, which became effective June 10, 1997. The Registration
Statement covered the issuance and sale of a new class of beneficiary
interests in the Trust (the "Class B Interests"). The characteristics of the
Class B Interests, associated risk factors and other matters of importance to
the Beneficiaries and purchasers of the Class B Interests were set forth in a
Prospectus sent to the Beneficiaries. On July 17, 1997, the offering closed
and on July 18, 1997 the Trust issued 3,142,083 Class B Interests at $5.00
per interest, thereby generating $15,710,415 in aggregate Class B capital
contributions. Class A Beneficiaries purchased 1,400 Class B Interests,
generating $7,000 of such aggregate capital contributions, and the Special
Beneficiary, EFG, purchased 3,140,683 Class B Interests, generating
$15,703,415 of such aggregate capital contributions.
Subsequently, EFG transferred its Class B Interests to a special-purpose
company, Equis II Corporation, a Delaware corporation. EFG also transferred its
ownership of AFG ASIT Corporation, the Managing Trustee of the Trust, to Equis
II Corporation. As a result, Equis II Corporation has voting control of the
Trust through its ownership of the majority of all of the Trust's outstanding
voting interests, as well as its ownership of AFG ASIT Corporation. Equis II
Corporation is controlled by EFG's President and Chief Executive Officer, Gary
D. Engle. Accordingly, control of the Managing Trustee did not change as a
result of the foregoing transactions.
As described in the Prospectus for the offering of the Class B Interests,
the Managing Trustee intends to use a portion of the net cash proceeds realized
from the offering of the Class B Interests to pay a one-time special cash
distribution to the Class A Beneficiaries of the Trust. The Managing Trustee
expects to declare and pay this special cash distribution on or before August
31, 1997.
On August 7, 1997, the Trust commenced an offer to purchase up to 45% of the
outstanding Class A Beneficiary Interests of the Trust by filing a Form 13E-4,
Issuer Tender Offer Statement, with the SEC and distributing to the Class A
Beneficiaries information (the "Tender Documents") concerning the offer. The
Trust will use a portion of the net proceeds realized from the offering of the
Class B Interests to purchase the Class A Beneficiary Interests tendered as a
result of the offer. The Tender Documents describe, among other things, the
terms of the offer and the purchase price per Class A Beneficiary Interest being
offered by the Trust.
F-7
<PAGE>
Exhibit (a)(5)
AFG INVESTMENT TRUST A
AFG INVESTMENT TRUST B
AFG INVESTMENT TRUST C
AFG INVESTMENT TRUST D
LETTER OF TRANSMITTAL
THE OFFERS, WITHDRAWAL RIGHTS AND PRORATION PERIODS WILL EXPIRE AT 5:00
P.M., EASTERN TIME, ON SEPTEMBER 30, 1997, UNLESS EXTENDED (such date, as it may
be extended, the "Expiration Date").
To Depositary:
TRUST COMPANY OF AMERICA
By First Class Mail, Overnight Courier or Hand:
c/o Trust Company of America
7103 South Revere Parkway
Englewood, CO 80112
Attn: AFG Investment Trust
By Facsimile:
(800) 387-7365
Confirm Facsimile by Telephone:
(800) 387-7391
To participate in the Offers, a duly executed copy of this Letter of
Transmittal (or facsimile hereof) must be received by the Depositary on or prior
to the Expiration Date. Delivery of this Letter of Transmittal or any other
required documents to an address or facsimile number other than as set forth
above does not constitute valid delivery. The method of delivery of all
documents is at the election and risk of the tendering Class A Beneficiary.
ALTHOUGH A PRE-ADDRESSED POSTAGE-PAID ENVELOPE TO THE DEPOSITARY HAS BEEN
PROVIDED FOR THE CONVENIENCE OF TENDERING CLASS A BENEFICIARIES, THE METHOD OF
DELIVERY OF THIS LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS IS AT
THE OPTION AND SOLE RISK OF THE TENDERING CLASS A BENEFICIARY, AND DELIVERY WILL
BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL, WITH RETURN RECEIPT REQUESTED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
This Letter of Transmittal is to be completed by Class A Beneficiaries of
record of AFG Investment Trusts A, B, C and D, each a Delaware business trust
(the "Trusts"), pursuant to the procedures set forth in the respective Offer to
Purchase (as defined below) of each Trust.
PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS
Gentlemen:
Upon the terms and subject to the conditions set forth in the applicable
Offer to Purchase dated August 7, 1997, as supplemented September 12, 1997, and
as may be further supplemented from time to time (with respect to each Trust,
the "Offer to Purchase"), and this Letter of Transmittal (which together
constitute the "Offer" with respect to each Trust and collectively constitute
the "Offers"), the undersigned hereby tenders to the appropriate Trust(s) the
following-described Class A Interests at the respective prices per Class A
Interest, net to the seller in cash, set forth in the applicable Offer to
Purchase. Receipt of the Offer to Purchase of each Trust with respect to which
the undersigned is tendering Class A Interests is hereby acknowledged.
NUMBER OF CLASS A INTERESTS TENDERED
<TABLE>
<S> <C>
Name(s) and Address(es) of Registered Number of Class A Interests Tendered(1)
Holder(s) (Please fill in, if blank) (i) All / /
(Please check box if all
Class A Interests tendered)
OR
(ii) Number Tendered:
Trust A:
Trust B:
Trust C:
Trust D:
</TABLE>
<PAGE>
- ------------------------
(1) In order for the tender to be valid, a Class A Beneficiary must tender with
respect to any Trust either (i) all Class A Interests owned by such Class A
Beneficiary in such Trust OR (ii) a portion of the Class A Interests owned
by such Class A Beneficiary in such Trust but not fewer than 200 Class A
Interests (80 Class A Interests for IRAs or other Qualified Plans) (the
"Minimum Investment Amount"). If a Class A Beneficiary does not indicate the
number of Class A Interests tendered, the Trusts will assume that such Class
A Beneficiary has tendered all Class A Interests owned of record by him. If
a Class A Beneficiary who tenders only a portion of his Class A Interests
indicates a number of Class A Interests tendered that is less than the
Minimum Investment Amount, the applicable Trust will assume that such Class
A Beneficiary has tendered the Minimum Investment Amount.
Subject to and effective upon acceptance for payment of any of the Class A
Interests tendered hereby, the undersigned hereby sells, assigns and transfers
to, or upon the order of, each applicable Trust all right, title and interest in
and to such Class A Interests tendered hereby. The undersigned hereby
irrevocably (i) constitutes and appoints each applicable Trust as the true and
lawful agent and attorney-in-fact of the undersigned with respect to such Class
A Interests, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to the full extent
of such Class A Beneficiary's rights with respect to the Class A Interests
tendered by such Class A Beneficiary and accepted for payment by such Trust and
(ii) assigns to each applicable Trust all future distributions from such Trust
with respect to such Class A Interests (excluding the Special Distribution as
defined in the Offer) for periods ending after August 1, 1997, to the extent
such distributions are not paid to the undersigned (the undersigned recognizes
that future distributions with respect to such Class A Interests for periods
ending after August 1, 1997, that are paid to the undersigned will automatically
reduce the purchase price for such Class A Interests by a like amount), all in
accordance with the terms of the Offers. Upon the purchase of Class A Interests
pursuant to the Offers, all prior proxies, assignments and consents given by the
undersigned with respect to such Class A Interests will be revoked and no
subsequent proxies, assignments or consents may be given (and if given will not
be deemed effective).
The undersigned recognizes that, with respect to each Trust, if more than
the maximum number of Class A Interests that such Trust is offering to redeem
are validly tendered prior to or on the Expiration Date and not properly
withdrawn, such Trust will, upon the terms of the applicable Offer, accept for
payment from among those Class A Interests tendered prior to or on the
Expiration Date such maximum number of Class A Interests on a pro rata basis,
with adjustments to avoid purchases of certain fractional Class A Interests,
based upon the number of Class A Interests validly tendered prior to the
Expiration Date and not withdrawn. The undersigned further recognizes that if no
more than such maximum number of Class A Interests are validly tendered prior to
the Expiration Date and not withdrawn, such Trust will, upon the terms of the
applicable Offer, accept for payment all such Class A Interests.
ALLOCATION OF PURCHASE PRICE. The undersigned understands and agrees that
the purchase price to be paid by each applicable Trust for the Class A Interests
tendered hereby will be allocated for federal income tax purposes as follows:
first, to Trust cash, second, to Trust assets and, finally, to goodwill and
going concern value.
The undersigned hereby represents and warrants that the undersigned owns the
Class A Interests tendered hereby within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, and has full power and authority to
validly tender, sell, assign and transfer the Class A Interests tendered hereby,
and that when any such Class A Interests are accepted for payment by the
applicable Trust, such Trust will acquire good, marketable and unencumbered
title thereto, free and clear of all liens, restrictions, charges, encumbrances,
conditional sales agreements or other obligations relating to the sale or
transfer thereof, and such Class A Interests will not be subject to any adverse
claim. Upon request, the undersigned will execute and deliver any additional
documents deemed by the applicable Trust to be necessary or desirable to
complete the assignment, transfer and purchase of Class A Interests tendered
hereby.
The undersigned understands that a tender of Class A Interests to the
Trust(s) will constitute a binding agreement between the undersigned and the
applicable Trust(s) upon the terms and subject to the conditions of the
applicable Offer. The undersigned recognizes that in certain circumstances set
forth in the Offers to Purchase, the Trusts may not be required to accept for
payment any of the Class A Interests tendered hereby. In such event, the
undersigned understands that any Letter of Transmittal for Class A Interests not
accepted for payment will be destroyed by the Depositary. All authority herein
conferred or agreed to be conferred shall survive the death or incapacity of the
undersigned and any obligations of the undersigned shall be binding upon the
heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
THERE ARE NO CERTIFICATES TO BE INCLUDED
WITH THIS LETTER OF TRANSMITTAL
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED ON THE FOLLOWING PAGES, PLEASE READ THE
ACCOMPANYING INSTRUCTIONS CAREFULLY
The Class A Beneficiary hereby tenders Class A Interests pursuant to the
terms of the Offers. The Class A Beneficiary hereby certifies, under penalties
of perjury, that the information and representations provided herein, including
in Box A of this Letter of Transmittal, which has been duly completed by the
Class A Beneficiary, are true, complete and correct as of the date hereof.
SIGNATURE BOX (ALL OWNERS)
(Attach additional sheets, if necessary)
(See Instruction 1)
Please sign exactly as your name(s) appear(s) above on this Letter of
Transmittal. For joint owners, each joint owner must sign. General partners,
corporate officers or other persons acting in a fiduciary or representative
capacity, please complete this box and see Instruction 1.
X ____________________________________
(Signature of owner)
X ____________________________________
(Signature of joint owner)
Fiduciary: X ____________________________________
Print Name and Title (Fiduciaries only): ____________________________________
Address (Fiduciaries only): ________________________________________________
________________________________________________________________________
Date:_____________________________________________
Tel.: (Day) (__) ____________________________________
Tel.: (Eve) (__) ____________________________________
3
<PAGE>
BOX A
SUBSTITUTE FORM W-9
Department of the Treasury
Internal Revenue Service
(See Instruction 3)
The Class A Beneficiary submitting this Letter of Transmittal hereby certifies
the following under penalties of perjury:
Social Security Number or Employer Identification Number:
__________________________
(1) THE TAXPAYER IDENTIFICATION NUMBER ("TIN") SHOWN ABOVE IS THE CORRECT TIN OF
THE CLASS A BENEFICIARY WHO IS SUBMITTING THIS LETTER OF TRANSMITTAL; OR IF NO
TIN IS PROVIDED ABOVE AND THIS BOX / / IS CHECKED, THE CLASS A BENEFICIARY HAS
APPLIED FOR A TIN. If the Class A Beneficiary has applied for a TIN, a TIN has
not been issued to the Class A Beneficiary, and either (a) the Class A
Beneficiary has mailed or delivered an application to receive a TIN to the
appropriate IRS Center or Social Security Administration Office, or (b) the
Class A Beneficiary intends to mail or deliver an application in the near
future. The Class A Beneficiary understands that if such Class A Beneficiary
does not provide a TIN to the appropriate Trust within sixty (60) days, 31% of
all reportable payments made to the Class A Beneficiary thereafter will be
withheld until a TIN is provided to the Trust; and
(2) UNLESS THIS BOX / / IS CHECKED, SUCH CLASS A BENEFICIARY IS NOT SUBJECT TO
BACKUP WITHHOLDING EITHER BECAUSE SUCH CLASS A BENEFICIARY HAS NOT BEEN NOTIFIED
BY THE IRS THAT SUCH CLASS A BENEFICIARY IS SUBJECT TO BACKUP WITHHOLDING AS A
RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR BECAUSE THE IRS HAS
NOTIFIED SUCH CLASS A BENEFICIARY THAT SUCH CLASS A BENEFICIARY IS NO LONGER
SUBJECT TO BACKUP WITHHOLDING.
(NOTE: YOU MUST PLACE AN "X" IN THE BOX IN (2) ABOVE IF YOU HAVE BEEN NOTIFIED
BY THE IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE YOU HAVE
FAILED TO REPORT ALL INTEREST AND DIVIDENDS ON YOUR TAX RETURN.)
Tendering Class A Beneficiaries who are "Foreign Persons," i.e., who are not
U.S. citizens or resident alien individuals, domestic corporations, domestic
partnerships, domestic trusts or domestic estates, must make a certification to
qualify as exempt from 31% backup withholding. If you are a Foreign Person,
please contact the Information Agent to obtain a copy of the certification.
4
<PAGE>
BOX B
NOTARIZATION OF SIGNATURE
(If required. See Instruction 1)
STATE OF _________________________________)
)
COUNTY OF _______________________________)
On this day of , 1997, before me came personally
to me known to be the person who executed the foregoing Letter of Transmittal.
--------------------------------------------------------------------------
Notary Public
OR
GUARANTEE OF SIGNATURE
(If required. See Instruction 1)
Name of Firm: _______________________________________________________
5
<PAGE>
AFG Investment Trust
LETTER OF TRANSMITTAL INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. TENDER, SIGNATURE REQUIREMENTS; DELIVERY. After carefully reading and duly
completing this Letter of Transmittal, to tender Class A Interests a Class A
Beneficiary must sign in the signature block on the front of this Letter of
Transmittal. If this Letter of Transmittal is signed by the registered Class A
Beneficiary(ies) of the Class A Interests as printed on the front of this Letter
of Transmittal without any change whatsoever, no notarization or signature
guarantee on this Letter of Transmittal is required. Similarly, if Class A
Interests are tendered for the account of a member firm of a registered national
security exchange, a member firm of the National Association of Securities
Dealers, Inc., or a commercial bank, savings bank, credit union, savings and
loan association or trust company having an office, branch or agency in the
United States (each, an "Eligible Institution"), no notarization or signature
guarantee is required on this Letter of Transmittal. In all other cases,
signatures on this Letter of Transmittal must either be notarized or guaranteed
by an Eligible Institution, by completing the Notarization or Guarantee of
Signature set forth in BOX B of this Letter of Transmittal. If any tendered
Class A Interests are registered in the names of two or more joint holders, all
such holders must sign this Letter of Transmittal. If this Letter of Transmittal
is signed by trustees, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Trust of their authority to so act. For Class A Interests to
be validly tendered, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required notarizations or
signature guarantees in BOX B and any other documents required by this Letter of
Transmittal must be received by the Depositary prior to or on the Expiration
Date at its address or to its facsimile number set forth herein. No alternative,
conditional or contingent tenders will be accepted. All tendering Class A
Beneficiaries by execution of this Letter of Transmittal waive any right to
receive any notice of the acceptance of their tender.
2. TRANSFER TAXES. Each Trust will pay or cause to be paid all transfer taxes,
if any, payable on the transfer to it of Class A Interests pursuant to the
Offer.
3. SUBSTITUTE FORM W-9. In order to avoid 31% federal income tax backup
withholding on the payment of the purchase price for Class A Interests
purchased, the tendering Class A Beneficiary must provide to the Trust(s) the
Class A Beneficiary's correct Taxpayer Identification Number ("TIN") and
certify, under penalties of perjury, that such Class A Beneficiary is not
subject to such backup withholding by completing the Substitute Form W-9 set
forth in BOX A of this Letter of Transmittal. If a correct TIN is not provided,
penalties may be imposed by the Internal Revenue Service ("IRS") in addition to
the Class A Beneficiary being subject to backup withholding. Certain Class A
Beneficiaries (including, among others, all corporations) are not subject to
backup withholding. Backup withholding is not an additional tax. If withholding
results in an overpayment of taxes, a refund may be obtained from the IRS.
6
<PAGE>
The TIN that must be provided on the Substitute Form W-9 is that of the
registered Class A Beneficiary(ies) indicated on the front of this Letter of
Transmittal. If the tendering Class A Beneficiary has applied for but has not
been issued a TIN or intends to apply for a TIN in the near future and the
appropriate Trust is not provided with the Class A Beneficiary's TIN within 60
days, the Trust will withhold 31% of all subsequent payments, if any, of the
purchase price for the Class A Interests until such TIN is provided to the
Trust.
Tendering Class A Beneficiaries who are "Foreign Persons," i.e., who are not
U.S. citizens or resident alien individuals, domestic corporations, domestic
partnerships, domestic trusts or domestic estates, must make a certification to
qualify as exempt from 31% backup withholding. If you are a Foreign Person,
please contact the Information Agent to obtain a copy of the certification.
4. ADDITIONAL COPIES OF OFFER TO PURCHASE AND LETTER OF TRANSMITTAL. Requests
for assistance or additional copies of the Offer to Purchase and this Letter of
Transmittal may be obtained from the Information Agent at the address or
telephone number set forth below:
The Information Agent is:
Corporate Investor Communications, Inc.
111 Commerce Road
Carlstadt, NJ 07072-2586
(800) 631-0988
IMPORTANT: IN ORDER TO PARTICIPATE IN THE OFFER, THIS LETTER OF
TRANSMITTAL (OR FACSIMILE HEREOF) MUST BE RECEIVED BY THE
DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE.
7
