SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
(AMENDMENT NO. 2)
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INDEPENDENCE TAX CREDIT PLUS L.P. II
(Name of Subject Company)
LEHIGH TAX CREDIT PARTNERS L.L.C.
LEHIGH TAX CREDIT PARTNERS, INC.
(Bidders)
BENEFICIAL ASSIGNMENT CERTIFICATES
(Title of Class of Securities)
45378B 10 4
(CUSIP Number of Class of Securities)
- --------------------------------------------------------------------------------
J. Michael Fried
c/o Related Capital Company
625 Madison Avenue
New York, NY 10022
(212) 421-5333
Copy to:
Peter M. Fass
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
(212) 856-7000
(Name, Address and Telephone Numbers of
Person Authorized to Receive Notices and
Communications on Behalf of Bidder)
Calculation of Filing Fee
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Transaction Amount of
Valuation* Filing Fee
----------- ----------
$10,680,700 $2,136.14
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*For purposes of calculating the filing fee only. This amount assumes the
purchase of 14,732 Beneficial Assignment Certificates (representing assignments
of limited partnership interests) ("BACs") of the subject company for $725 per
BAC in cash.
{x} Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and date of its filing.
Amount Previously Paid: $2,136.14
Form or Registration No.: Schedule 14D-1
Filing Party: Lehigh Tax Credit Partners L.L.C.
Date Filed: November 10, 1997
(Continued on following pages)
(Page 1 of 7 pages)
<PAGE>
CUSIP No.: 45378B 10 4 14D-1 Page 2 of 7
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1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
LEHIGH TAX CREDIT PARTNERS L.L.C.
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2. Check the Appropriate Box if a Member of a Group
(See Instructions) (a) { }
(b) {X}
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3. SEC Use Only
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4. Sources of Funds (See Instructions)
AF; BK
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5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f)
| |
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6. Citizenship or Place of Organization
Delaware
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
85 Beneficial Assignment Certificates (representing assignments of limited
partnership interests)
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares (See
Instructions)
| |
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9. Percent of Class Represented by Amount in Row (7)
Less than 1%
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10. Type of Reporting Person (See Instructions)
OO
<PAGE>
CUSIP No.: 45378B 10 4 14D-1 Page 3 of 7
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1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
LEHIGH TAX CREDIT PARTNERS, INC.
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2. Check the Appropriate Box if a Member of a Group
(See Instructions) (a) { }
(b) {X}
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3. SEC Use Only
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4. Sources of Funds (See Instructions)
AF; BK
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5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f)
| |
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
85 Beneficial Assignment Certificates (representing assignments of limited
partnership interests)
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares
(See Instructions)
| |
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9. Percent of Class Represented by Amount in Row (7)
Less than 1%
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10. Type of Reporting Person (See Instructions)
CO
<PAGE>
AMENDMENT NO. 2 TO SCHEDULE 14D-1
This Amendment No. 2 amends the Tender Offer Statement on Schedule 14D-1
filed with the Securities and Exchange Commission on November 10, 1997 by Lehigh
Tax Credit Partners L.L.C., a Delaware limited liability company (the
"Purchaser"), as amended by Amendment No. 1 dated December 5, 1997, relating to
the tender offer by the Purchaser to purchase up to 14,732 issued and
outstanding Beneficial Assignment Certificates ("BACs") representing assignments
of limited partnership interests ("Limited Partnership Interests") in
Independence Tax Credit Plus L.P. II, a Delaware limited partnership (the
"Partnership"), to include the information set forth below. Terms not otherwise
defined herein shall have the meanings ascribed to them in the Schedule 14D-1
and the Offer to Purchase.
Item 2. Identity and Background.
Items 2(a)-(g) are hereby supplemented and amended to include the
information set forth in Section 10 ("Certain Information Concerning the
Purchaser and Everest") of the Supplement to the Offer to Purchase, a copy of
which is attached hereto as Exhibit (a)(7) (the "Supplement"), and Schedule I to
the Supplement, which information is incorporated herein by reference.
Item 3. Past Contacts, Transactions or Negotiations With the Subject Company.
Item 3(a) is hereby supplemented and amended to include the information
set forth in Section 10 ("Certain Information Concerning the Purchaser and
Everest") of the Supplement, which information is incorporated herein by
reference.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
Items 5(a) and (b) are hereby supplemented and amended to include the
information set forth in Section 8 ("Purpose of the Offer; Future Plans") of the
Supplement, which information is incorporated herein by reference.
Item 6. Interest in Securities of the Subject Company.
Items 6(a) and (b) are hereby supplemented and amended to include the
information set forth in Section 10 ("Certain Information Concerning the
Purchaser and Everest") of the Supplement, which information is incorporated
herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities.
Item 7 is hereby supplemented and amended to include the information set
forth in Section 10 ("Certain Information Concerning the Purchaser and Everest")
of the Supplement, which information is incorporated herein by reference.
Item 10. Additional Information.
Item 10(f) is hereby supplemented and amended as follows:
4
<PAGE>
The information set forth in the Supplement and the press release dated
December 16, 1997, copies of which are attached hereto as Exhibits (a)(7) and
(a)(8), respectively, is incorporated herein by reference.
Item 11. Material to be Filed as Exhibits.
Item 11 is hereby supplemented and amended by adding the following, copies
of which are attached hereto as exhibits:
(a)(7) Supplement to Offer to Purchase dated December 16, 1997.
(a)(8) Press Release dated December 16, 1997.
(d)(1) Opinion of Battle Fowler LLP, dated December 16, 1997,
regarding tax consequences of the Offer to the Partnership.
(d)(2) Consent of Battle Fowler LLP.
5
<PAGE>
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: December 16, 1997
LEHIGH TAX CREDIT PARTNERS L.L.C.
By: Lehigh Tax Credit Partners, Inc.,
its managing member
By: /s/ J. Michael Fried
-----------------------------
Name: J. Michael Fried
Title: President
LEHIGH TAX CREDIT PARTNERS, INC.
By: /s/ J. Michael Fried
---------------------------------
Name: J. Michael Fried
Title: President
6
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. TITLE
- ------- -----
(a)(7) Supplement to Offer to Purchase dated December 16, 1997.
(a)(8) Press Release dated December 16, 1997.
(d)(1) Opinion of Battle Fowler LLP, dated December 16, 1997, regarding tax
consequences of the Offer to the Partnership.
(d)(2) Consent of Battle Fowler LLP.
7
SUPPLEMENT TO THE
OFFER TO PURCHASE
UP TO 14,732
BENEFICIAL ASSIGNMENT CERTIFICATES
in
INDEPENDENCE TAX CREDIT PLUS L.P. II
for
$725 NET PER BAC IN CASH
by
LEHIGH TAX CREDIT PARTNERS L.L.C.
- -----------------------------------------------------------------------
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON DECEMBER 31, 1997, UNLESS EXTENDED.
- -----------------------------------------------------------------------
The Purchaser hereby supplements and amends its offer to purchase up to
14,732 of the issued and outstanding Beneficial Assignment Certificates
("BACs") in Independence Tax Credit Plus L.P. II, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated November 10, 1997, as
amended by the Amendment dated December 5, 1997, this Supplement and the
related Letter of Transmittal, as each may be amended from time to time.
Capitalized terms used but not otherwise defined in this Supplement shall have
the meanings ascribed to them in the Offer to Purchase.
1. Terms of the Offer.
Section 1 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the second sentence of the first paragraph in Section 1 as
follows:
The term "Expiration Date" shall mean 12:00 midnight, New York City time,
on December 31, 1997, unless the Purchaser, in its sole discretion, shall have
further extended the period of time during which the Offer is open, in which
event the term "Expiration Date" shall refer to the latest time and date at
which the Offer, as so extended by the Purchaser, will expire.
8. Purpose of the Offer; Future Plans.
Section 8 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the first paragraph in Section 8 in its entirety as follows:
Purpose of the Offer. The purpose of the Offer is to enable the Purchaser
to acquire a significant interest in the Partnership for investment purposes
based on its expectation that the Partnership will continue to generate Tax
Credits and tax losses attributable to the BACs. The Purchaser has previously
conducted tender offers and purchased securities in Liberty Tax Credit Plus III
L.P., Independence Tax Credit Plus L.P. and Freedom Tax Credit Plus L.P., each
of which generates tax credits and tax losses attributable to its securities
and each of which is an affiliate of the Purchaser. The Purchaser intends to
sell, and has begun the process of selling, membership interests in the
Purchaser to third parties (principally corporations) with a need for Tax
Credits and/or tax losses. The aggregate sales price of the Purchaser's
membership interests to third parties will be equal to the aggregate purchase
price for the tendered BACs and all other securities acquired by the Purchaser
pursuant to secondary market transactions and other tender offers conducted to
date, together with the expenses associated therewith, the expenses associated
with the Purchaser's sale of membership interests and the prepayment of certain
fees and expenses in connection with the Purchaser's operations. Neither the
Purchaser nor its current members will derive a profit from the sale of the
Purchaser's membership interests. However, affiliates of the Purchaser expect
to earn substantial fees in connection with such sales, for structuring this
transaction and for performing certain services for the Purchaser. Such fees
may include, without limitation, an offering and organization fee, acquisition
fee, company management fee, tax credit monitoring fee and asset management
fee, and the total fees may be as much as 12% of the entire amount of funded
capital commitments received by the Purchaser in connection with its sale of
membership interests. Because the value of the Purchaser's membership interests
is based on the BACs and the other securities acquired by the Purchaser in
other tender offers, affiliates of the Purchaser are presently seeking capital
commitments of at least $20,000,000 from third parties with a need for Tax
Credits and/or tax losses in exchange for the Purchaser's membership interests.
If third parties commit to fund more than $20,000,000, up to a maximum of
$50,000,000, the Purchaser has indicated that such additional capital
commitments, if called, will fund additional future tender offers.
10. Certain Information Concerning the Purchaser and Everest.
Section 10 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the first paragraph in Section 10 in its entirety as follows:
<PAGE>
The Purchaser was organized for the purpose of acquiring the BACs pursuant
to the Offer, to acquire other securities which generate tax credits and/or tax
losses, and, ultimately, to sell its membership interests to third parties
(principally corporations) with a need for such tax credits and tax losses. The
principal executive office of the Purchaser is at 625 Madison Avenue, New York,
New York 10022. The managing member of the Purchaser (the "Managing Member") is
Lehigh Tax Credit Partners, Inc., a Delaware corporation. Since its inception,
the directors of the Managing Member have been J. Michael Fried, Stuart J.
Boesky and Alan P. Hirmes. The executive officers of the Managing Member are J.
Michael Fried, Stuart J. Boesky, Alan P. Hirmes, Marc D. Schnitzer and Denise
L. Kiley. The business address for each of Messrs. Fried, Boesky, Hirmes and
Schnitzer and Ms. Kiley is 625 Madison Avenue, New York, New York 10022.
Section 10 of the Offer to Purchase is hereby further supplemented and
amended to add the following at the end of the last paragraph of Section 10:
Because the BACs are less valuable with the passage of time since fewer
Tax Credits remain, the Purchaser believes the relationship between the
Purchase Price and the price per BAC of $807.50 paid pursuant to the private
transaction described above can be determined by reducing the price per BAC by
at least $14 for each passing month, or a total of approximately $28 per BAC
from October 1, 1997 to November 30, 1997. Accordingly, the Purchaser believes
the value in December (when the Offer expires) of BACs acquired pursuant to the
private transaction, would be approximately $779.50 per BAC. Therefore, the
price paid in the private transaction, as adjusted for Tax Credits, is higher
than the Purchase Price.
Section 10 of the Offer to Purchase is hereby further supplemented and
amended to include the following, which information was provided by Everest to
the Purchaser:
Everest is a California corporation whose principal business is investing
in real estate partnerships. The principal office of Everest is 199 South Los
Robles Avenue, Suite 440, Pasadena, California 91101. For certain information
concerning the executive officers and directors of Everest, see Schedule I to
this Supplement. The inclusion of information concerning Everest does not
constitute any acknowledgement or agreement that Everest is a co-bidder in the
Offer.
Neither Everest nor any executive officer or director of Everest has,
during the past five years, (a) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (b) been a party to a
civil proceeding in a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, Federal or state securities laws or a finding of any violation of such
laws. Except as otherwise set forth in this Supplement or elsewhere in the
Offer to Purchase: (i) Everest does not beneficially own or have a right to
acquire, and, to the best knowledge of Everest, no associate or majority-owned
subsidiary of Everest or the persons listed in Schedule I to this Supplement,
beneficially owns or has a right to acquire any BACs; (ii) Everest does not
have, and, to the best knowledge of Everest, neither the persons and entities
referred to in clause (i) above nor any of their executive officers, directors
or subsidiaries has, effected any transaction in the BACs within the past 60
days; (iii) Everest does not have, and, to the best knowledge of Everest, none
of the persons listed in Schedule I to this Supplement has, any contract,
arrangement, understanding or relationship with any other person with respect
to any securities of the Partnership, including, but not limited to, contracts,
arrangements, understandings or relationships concerning the transfer or voting
thereof, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies; (iv)
there have been no transactions or business relationships which would be
required to be disclosed under the rules and regulations of the Commission
between the Partnership or any of its affiliates and Everest or any of its
subsidiaries or, to the best knowledge of Everest, any of the persons listed in
Schedule I to this Supplement, on the one hand, and the Partnership or its
affiliates, on the other hand; and (v) there have been no contracts,
negotiations or transactions between the Partnership or any of its affiliates
and Everest or any of its subsidiaries or, to the best knowledge of Everest,
any of the persons listed in Schedule I to this Supplement, on the one hand,
and the Partnership or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets.
11. Background of the Offer.
Section 11 of the Offer to Purchase is hereby supplemented and amended to
add the following sentence at the end of the fourth paragraph of Section 11:
One of these legal opinions (a copy of which has been filed as Exhibit
(d)(1) to Amendment No. 2 of the Purchaser's Tender Offer Statement on Schedule
14D-1 filed with the Commission on December 16, 1997) was rendered on December
16, 1997 and, based on certain assumptions set forth in such legal opinion,
stated that consummation of the Offer will not cause the Partnership to be
treated as a publicly-traded partnership for federal income tax purposes.
<PAGE>
SCHEDULE I
Schedule I is supplemented and amended by adding the following:
EXECUTIVE OFFICERS AND DIRECTORS OF EVEREST PROPERTIES, INC.
The business address of each executive officer and director of Everest
Properties, Inc. is 199 South Los Robles Avenue, Suite 440, Pasadena,
California 91101. Each executive officer and director of Everest Properties,
Inc. is a United States citizen. The name and principal occupation or
employment of each executive officer and director of Everest Properties, Inc.
are set forth below.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment
Name Position and Five-Year Employment History
- ------------------------- --------------------------------------------------------------------------
<S> <C>
W. Robert Kohorst ...... President and Director of Everest Properties, Inc. from 1994-present.
President of Everest Properties II, LLC from 1996-present.
President and Director of KH Financial, Inc. from 1991-present.
David I. Lesser ......... Executive Vice President of Everest Properties, Inc. from 1995-present.
Executive Vice President and Secretary of Everest Properties II, LLC from
1996-present. Principal and member of Feder, Goodman & Schwartz, Inc.
from 1992-1996.
</TABLE>
* * * *
You are reminded that, unless extended by the Purchaser, the Offer will
expire at 12:00 midnight, New York City time, on December 31, 1997. If you have
already tendered your BACs pursuant to the Offer, we appreciate your
participation and no further action is required. If you have not already
tendered and wish to do so now, please complete the Letter of Transmittal
previously distributed to you and forward it to The Herman Group, Inc. prior to
the Expiration Date. Should you have any questions, please contact The Herman
Group, Inc. at (800) 532-5664.
Lehigh Tax Credit Partners L.L.C.
December 16, 1997
<PAGE>
[This page intentionally left blank]
FOR IMMEDIATE RELEASE
Contact: The Herman Group, Inc.
(800) 532-5664
Attention: Sherri M. Herman
LEHIGH TAX CREDIT PARTNERS EXTENDS OFFER
NEW YORK, NEW YORK (December 16, 1997) -- LEHIGH TAX CREDIT
PARTNERS L.L.C. has announced that its offer to purchase Beneficial Assignment
Certificates ("BACs") of Independence Tax Credit Plus L.P. II (the
"Partnership") for $725 per BAC has been extended and is now scheduled to expire
at 12:00 midnight, New York City time, on December 31, 1997. As of the close of
business on December 15, 1997, 4,075.7 BACs had been tendered to Lehigh Tax
Credit Partners and not withdrawn.
For additional information, contact The Herman Group, Inc.,
the Information Agent/Depositary for the Offer by Lehigh Tax Credit Partners, at
(800) 532-5664.
December 16, 1997
Independence Tax Credit Plus L.P. II
625 Madison Avenue
New York, New York 10022
Ladies and Gentlemen:
We have acted as counsel to Lehigh Tax Credit Partners L.L.C.
(the "Purchaser") in connection with an offer made by the Purchaser on November
10, 1997 (the "Offer") to acquire beneficial assignment certificates,
representing assignments of limited partnership interests in Independence Tax
Credit Plus L.P. II (the "Partnership"). The Offer is being made in compliance
with Schedule 14D-1 of the Securities Exchange Act of 1934. This opinion
addresses whether the acquisition by the Purchaser or its designee of interests
in the Partnership representing up to approximately a 25% interest in the
Partnership (the "Transfers") will, either by itself or in conjunction with
other transfers that have occurred and transfers that are expected to occur,
cause the Partnership to be treated as a publicly traded partnership within the
meaning of Section 7704 of the Internal Revenue Code of 1986, as amended (the
"Code").
In rendering this opinion, we have assumed, without regard to
the Transfers, that (a) the Partnership has properly been treated, and will
continue to be properly treated, for federal income tax purposes, as a
partnership other than a publicly traded partnership, (b) less than 5% of the
outstanding interests in the Partnership have been and will be transferred each
year, and (c) transfers of interests in the Partnership have been made, and any
future transfers of interests in the Partnership will be made, in a manner that
is not consistent with a readily available, regular and ongoing opportunity to
sell Partnership interests. We have also assumed that the Partnership qualified
for the 10-year grandfathering provision for existing partnerships set forth in
<PAGE>
2
Independence Tax Credit Plus L.P. II December 16, 1997
Section 10211(c) of the Revenue Act of 1987, P.L. 100-203 and Treas.
Reg. s.1.7704-2.
The tender offer to acquire interests in the Partnership,
which has been made on Schedule 14D-1 and in compliance with the rules
applicable thereto, is for a fixed price (rather than pursuant to any negotiated
price) and will remain outstanding for only a limited amount of time. All
interests in the Partnership that will be sold pursuant to the tender offer will
be sold at the same time, and there will be no broker-dealer or market maker
involved in the tender. Thus, the restrictive nature of the tender offer, which
is consistent with the parameters of Section 14(d) of the Securities Exchange
Act and the rules promulgated thereunder, is fundamentally inconsistent with the
"readily available, regular, and ongoing opportunity to sell or exchange" that
must be present in order for interests in the Partnership to be readily tradable
on a secondary market or the substantial equivalent thereof.
It should be noted that this opinion is not a representation
or a guarantee of the tax results discussed herein and has no binding effect or
official status of any kind. Rather, it represents our views as to the
interpretation of existing law. No assurance can be given that the conclusions
reached in this opinion would be sustained by a court if contested by the
Internal Revenue Service ("IRS").
Section 7704(a) of the Code provides generally that a publicly
traded partnership shall be treated as a corporation. The term "publicly traded
partnership" is defined in Section 7704(b) of the Code to mean any partnership
if (1) interests in the partnership are traded on an established securities
market or (2) interests in such partnership are readily tradable on a secondary
market (or the substantial equivalent thereof).
There is no statutory definition of the terms "established
securities market" or "readily tradable on a secondary market (or the
substantial equivalent thereof)." In Notice 88-75, 1988-2 C.B. 386, the IRS
issued guidance concerning rules under which a partnership would not be
considered publicly traded. Notice 88-75 did not provide guidance as to the
meaning of the term "traded on an established securities market," but did
provide guidance concerning the circumstances in which interests in a
partnership would be
<PAGE>
3
Independence Tax Credit Plus L.P. II December 16, 1997
treated as readily tradable on a secondary market or the substantial equivalent
thereof. The Notice states that a secondary market is generally indicated by the
existence of a person standing ready to make a market in the interest, and that
an interest is treated as readily tradable if the interest is regularly quoted
by persons such as brokers or dealers who are making a market in the partnership
interest. The substantial equivalent of a secondary market is present if there
is not a market maker but either the holder of an interest has a readily
available, regular, and ongoing opportunity to transfer his interest through a
public means of obtaining or providing information of offers to buy, sell or
exchange interests or buyers and sellers have the opportunity to transfer
interests in a time frame and with the regularity and continuity that the
existence of a market maker would provide. Notice 88-75 also provides for a
number of "safe harbors," none of which is applicable to the Transfers, but also
states that the failure of a partnership to satisfy the safe harbors is not
intended to establish or give rise to a presumption that the interests in the
partnership will be treated as readily tradable on a secondary market or the
substantial equivalent thereof.
On November 29, 1995, the IRS issued regulations which set forth the
circumstances in which a partnership will be treated as a publicly traded
partnership. The regulations include a definition of "established securities
market," which does not include the Transfers, as well as an interpretation of
the term "readily tradable on a secondary market or the substantial equivalent
thereof," which is substantively similar to the interpretation set forth in
Notice 88-75, but which restricts the availability of safe harbors. The
regulations generally provide that interests in a partnership are readily
tradable on a secondary market or the substantial equivalent thereof "if, taking
into account all of the facts and circumstances, the partners are readily able
to buy, sell, or exchange their partnership interests in a manner that is
comparable economically to trading on an established securities market," Treas.
Reg. s.1.7704-1(c)(1), and that this standard will be met if partners have a
"readily available, regular, and ongoing opportunity to sell or exchange" their
partnership interests. Treas. Reg. s.1.7704-1(c)(2)(iii). The regulations are
effective for taxable years beginning after December 31, 2005 for partnerships
that were engaged in an activity before December 4, 1995 and do not add a
substantial new line of business; such partnerships may
<PAGE>
4
Independence Tax Credit Plus L.P. II December 16, 1997
continue to rely on Notice 88-75 for guidance concerning the definition of
"readily tradable on a secondary market or the substantial equivalent thereof."
Treas. Reg. s.1.7704-1(l).
In Private Letter Ruling 9111023 (December 14, 1990), a
partnership permitted limited partners to redeem their interests in accordance
with NASAA Guidelines for Commodity Pool Programs, which require the redemption
of interests at least quarterly. The partnership agreement prohibited the sale
of additional units after the earlier of the sale of $7,500,000 of units or two
years after the initial effective date of the registration statement (the
"Prohibition Date"). The IRS ruled that after such date transfers of partnership
interests through the redemption plan would be disregarded in determining
whether the partnership was a PTP because such transfers were done through a
closed-end redemption plan. With respect to the period prior to the Prohibition
Date, the IRS stated that it need not decide whether the partnership was a
closed end partnership because any redemptions that might occur "do not
constitute the regular plan of redemptions that Congress intended to prohibit.
Because the redemption period is effectively limited to a time frame that cannot
exceed 12 months . . . these redemptions . . . do not provide holders of
interests with a readily available, regular and ongoing opportunity to dispose
of their interests in a manner that is substantially equivalent to a secondary
market." The redemption period of 12 months in Private Letter Ruling 9111023 far
exceeds the time period investors in the Partnership are being granted to accept
or reject the Offer. In addition, quarterly redemptions are clearly more regular
and ongoing than the Offer, which is a discrete event.
Based on our review of Section 7704 of the Code, its
legislative history, Notice 88-75, and the regulations pursuant to Section 7704,
we believe the Transfers and the other transactions described in the second
paragraph of this opinion will not constitute trading on an established
securities market and, because of the absence of a readily available, regular,
and ongoing opportunity to transfer interests in the Partnership, will also not
cause interests in the Partnership to be readily tradable on a secondary market
or the substantial equivalent thereof. Accordingly, based upon the foregoing, we
are of the opinion that, for federal income tax purposes, the Partnership will
not be treated as a publicly traded partnership as a result of the Transfers and
<PAGE>
5
Independence Tax Credit Plus L.P. II December 16, 1997
the other transactions described in the second paragraph of this letter. Our
opinion is based upon the facts and assumptions set forth in the second
paragraph of this opinion.
This opinion does not constitute an opinion, representation or
comment on any issue not expressly addressed herein. We can provide no assurance
that the Code or regulations, or existing administrative or judicial
interpretations thereof, will not be amended, revoked or modified (with or
without retroactive effect) in a manner which affects our conclusions. We
disclaim any responsibility to update this opinion or advise you of any changes
in either law or fact. This opinion is delivered to the Partnership, may not be
relied on by anyone else and may not be published to anyone else without our
prior written consent. This opinion is limited to the matters set forth herein,
and no opinions are intended to be implied or may be inferred beyond those
expressly stated herein.
Very truly yours,
/s/ Battle Fowler LLP
CONSENT OF BATTLE FOWLER LLP
Battle Fowler LLP hereby consents to the filing of its opinion regarding
tax consequences of the Offer to Independence Tax Credit Plus L.P. II as an
exhibit to Amendment No. 2 to the Schedule 14D-1 filed by Lehigh Tax Credit
Partners L.L.C. dated November 10, 1997 (the "Schedule 14D-1"). Terms not
otherwise defined herein shall have the meanings ascribed to them in the
Schedule 14D-1 and the Offer to Purchase.
/s/Battle Fowler LLP
December 16, 1997
