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As filed with the Securities and Exchange Commission on August 16, 1996
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/x/ Preliminary proxy statement / / Confidential, for Use of the
Commission
/ / Definitive proxy statement Only (as permitted by Rule 14a-
6(e)(2))
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MERRILL LYNCH KECALP L.P. 1994
SOUTH TOWER,WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10080-6123
(Name of Registrant as Specified in Its Charter)
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Set forth the amount on which the filing fee is calculated and state how it
was determined.
/F1/
(Name of Person(s) Filing Proxy Statement, if other thanthe Registrant)
Payment of filing fee (Check the appropriate box):
/x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per eachparty to the controversypursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:/F1/
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
Notes:
MERRILL LYNCH KECALP L.P. 1994
NOTICE OF SPECIAL MEETING OF LIMITED PARTNERS
SEPTEMBER 26, 1996
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To The Limited Partners of
Merrill Lynch KECALP L.P. 1994
Notice is hereby given that a Special Meeting of Limited Partners (the
"Meeting") of Merrill Lynch KECALP L.P. 1994 (the "Partnership") will be held
at the offices of Merrill Lynch & Co., Inc. on the 3rd floor of the North
Tower, World Financial Center, New York, New York on Thursday, September 26,
1996 at 1:00 P.M. for the following purposes:
a. To consider and act upon a proposal to approve (a) a new investment
policy described in the attached Proxy Statement regarding
international investments by the Partnership and (b) the investment
policy of the Partnership which allows it to invest its assets in
investment funds to the extent permitted under the Investment
Company Act of 1940; and
b. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The General Partner of the Partnership, KECALP Inc. (the "General
Partner"), has fixed the close of business on August 30, 1996 as the record
date for the determination of limited partners entitled to notice of and to
vote at the Meeting or any adjournment thereof.
A complete list of the limited partners of the Partnership entitled to
vote at the Meeting will be available and open to the examination of any
limited partner of the Partnership for any purpose germane to the Meeting
during ordinary business hours from and after September 16, 1996, at the
office of KECALP Inc., World Financial Center, South Tower, 23rd Floor, New
York, New York 10080-6123.
You are cordially invited to attend the Meeting. Limited partners who
do not expect to attend the Meeting in person are requested to complete, date
and sign the enclosed form of proxy and return it promptly in the envelope
provided for that purpose. The enclosed proxy is being solicited by the
General Partner of the Partnership.
By Order of the General Partner
KECALP Inc.
General Partner
By: John L. Steffens
President
New York, New York
Dated: September 5, 1996
PROXY STATEMENT
MERRILL LYNCH KECALP L.P. 1994
WORLD FINANCIAL CENTER
SOUTH TOWER, 23RD FLOOR
NEW YORK, NEW YORK 10080-6123
SPECIAL MEETING OF LIMITED PARTNERS
SEPTEMBER 26, 1996
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Merrill Lynch KECALP L.P. 1994 (the "Partnership"), a limited
partnership organized under Delaware law, is a registered closed-end
investment company that is an employees' securities company under the
Investment Company Act of 1940 (the "Investment Company Act"). The
Partnership closed its public offering of units of limited partnership
interest ("Units") on September 21, 1994, realizing proceeds of $40,384,000
from the sale of 40,384 Units. KECALP Inc., an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), is the General Partner
of the Partnership and as such manages and controls the business and affairs
of the Partnership and invests the Partnership's funds. The Board of
Directors of the General Partner approves all investments made by the
Partnership and is responsible for the general supervision and administration
of Partnership activities. The General Partner has established an advisory
committee (the "Advisory Committee") to assist the directors and principal
officers in evaluating investment opportunities presented to the Partnership.
This Proxy Statement is furnished in connection with the solicitation of
proxies to be voted at the Special Meeting of Limited Partners of the
Partnership (the "Meeting"), to be held at the offices of ML & Co., on the
3rd floor of the North Tower, World Financial Center, New York, New York on
Thursday, September 26, 1996, at 1:00 P.M. The enclosed proxy is being
solicited on behalf of the General Partner of the Partnership. The
approximate mailing date of this Proxy Statement is September 5, 1996.
All properly executed proxies received prior to the Meeting will be
voted at the Meeting in accordance with the instructions marked thereon or
otherwise as provided therein. Unless instructions to the contrary are
marked, proxies will be voted for the proposal approving (a) a new investment
policy, described below, regarding international investments by the
Partnership and (b) the investment policy of the Partnership which allows it
to invest its assets in investment funds to the extent permitted by the
Investment Company Act. Any proxy may be revoked at any time prior to the
exercise thereof by giving notice to the Partnership at its principal office.
The General Partner has fixed the close of business on August 30, 1996
as the record date for the determination of Limited Partners entitled to
notice of and to vote at the Meeting and at any adjournment thereof. Limited
Partners on the record date will be entitled to one vote for each Unit held
in the Partnership (which represents a $1,000 capital contribution to the
Partnership).
PROPOSAL REGARDING THE INVESTMENT
POLICIES OF THE PARTNERSHIP
It is proposed that the Limited Partners consider and act upon a
proposal to approve (a) a new investment policy authorizing the Partnership
to invest, without limit, on an international basis either directly in
issuers in foreign countries or, to the extent permitted by the Investment
Company Act, through investment funds, and (b) the investment policy of the
Partnership which permits the Partnership to invest its assets in the
securities of other investment funds up to the limits prescribed by the
Investment Company Act. For purposes of the foregoing investment policies,
"investment funds" include investment vehicles that are deemed to be
"investment companies" under the Investment Company Act and similar managed
investment vehicles that are outside the scope of such Act.
BACKGROUND
The investment objective of the Partnership is to seek long-term capital
appreciation. As indicated in the Partnership's prospectus with respect to
the offering of Units, dated April 15, 1994 (the "Prospectus"), it was
expected that a substantial portion of the Partnership's assets would be
invested in privately-offered equity investments in leveraged buyout
transactions and in transactions involving financial restructurings or
recapitalizations of operating companies. The Prospectus also indicated that
the Partnership could make other investments in equity and fixed income
securities that the General Partner deemed appropriate in terms of their
potential for capital appreciation.
Since the Partnership's formation, the Board of Directors of the General
Partner has reviewed a variety of types of transactions in considering
investment opportunities for the Partnership. In its review, the Board of
Directors has been assisted by the members of the Advisory Committee. As of
July 31, 1996, the Partnership had invested or committed $23.1 million of its
initial assets to 12 portfolio investments, with $17.3 million remaining to
be invested or committed at such date. These investments consist of
investments in six leveraged buyout transactions (aggregating $8.8 million),
one financial restructuring and recapitalization (aggregating $4.6 million),
one real estate related transaction (aggregating $2 million) and four other
types of transactions (aggregating $7.7 million).
Based upon its review of available investment opportunities, the General
Partner believes that there are various types of transactions in which the
Partnership may invest the remaining assets of the Partnership consistent
with its investment objective of seeking long-term capital appreciation. In
particular, the General Partner and the Advisory Committee have identified
opportunities in international investments and investments by the Partnership
in other investment funds. At the time of the Partnership's initial
offering, it was not contemplated that significant investments might be made
in issuers outside the United States or in investment funds. As a result,
while the Partnership has the authority to make such investments, details
concerning the types of investments and relevant special considerations were
not provided to investors at the time of the offering. In light of these
circumstances, the General Partner has determined that, prior to pursuing a
significant number of additional opportunities in international investments
and other investment funds, it would be advisable for the Limited Partners to
consider at the Meeting the Partnership's investment policies as they relate
to such investments. In particular, the proposal regarding the investment
policies of the Partnership is being presented for consideration so that the
Limited Partners have the opportunity to review and vote upon such policies
in light of a more detailed description of the Partnership's prospective
investments in this regard, including the associated risks.
INTERNATIONAL INVESTMENTS
Description of Investments. If the proposal regarding the investment
policies of the Partnership is approved at the Meeting, the Partnership may
invest in the securities of foreign corporations and other issuers either
directly or through investment funds. While there will be no prescribed
limits on the geographic allocation of the Partnership's international
investments, it is expected that a substantial portion of such investments
may be made in the developing countries, including, but not limited to,
developing countries located in the Far East, the Indian subcontinent,
Eastern Europe and Latin America. The proposal regarding the investment
policies in respect of international investments does not limit the portion
of the Partnership's assets that may be committed to international
investments, although the Partnership may not invest more than 15% of its
assets in any particular issuer.
In recommending the proposal concerning international investments, the
General Partner has considered in particular the opportunities for private
equity investments in growing companies that can benefit from the development
of emerging market economies. The General Partner believes that private
equity investments in these companies are consistent with the Partnership's
objective of seeking long-term capital appreciation and can provide
attractive opportunities in light of the fact that the emerging capital
markets are not as developed as those in Western Europe or the United States.
As of the date of this Proxy Statement, the General Partner has made a
preliminary approval of two new international investments. The General
Partner has not determined the amounts to be invested in these companies and
it may decline to make investments in one or both of the companies if the
proposal concerning international investments is not approved at the meeting.
The two transactions are direct investments in PT Keramika Indonesia
Assosiasi ("KIA") and R.P. Telekom S.A. ("RPT"). KIA is a publicly-traded
Indonesian company that manufactures ceramic wall, roof and floor tiles, and
ceramic bathroom products. RPT is a privately-owned Polish
telecommunications services company. There can be no assurance that either
of these investments will be completed.
To the extent the proposal regarding the investment policies of the
Partnership is not approved by Limited Partners at the Meeting, the
Partnership intends to limit its future investments in issuers located
outside the United States so that such investments do not exceed 10% of the
Partnership's net assets at the time of investment. As of the date of this
Proxy Statement, the Partnership has made one international investment. MAA
Communications Bozell Limited is an advertising company located in India in
which the Partnership has committed to invest up to $1 million.
The Partnership expects that a substantial portion of the international
investments in which it may invest will be brought to its attention by ML &
Co. and its affiliates, and that ML & Co. or its affiliates may participate
as a placement agent, an investor or otherwise in such transactions. The
Partnership may invest in transactions in which ML & Co. or its affiliates
participate to the extent the Partnership's participation is in compliance
with the Investment Company Act or exemptions therefrom granted by the
Securities and Exchange Commission.
The international investments that the Partnership may make include (i)
the private purchase from an enterprise of an equity interest in the
enterprise in the form of shares of common stock or equity interests in
trusts, partnerships, joint ventures or similar enterprises, and (ii) the
purchase of such an equity interest in an enterprise from a principal
investor in the enterprise. In each case, the Partnership may at the time of
making the investment, enter into a shareholder or similar agreement with the
enterprise or one or more other holders of equity interests in the
enterprise. These agreements may, in appropriate circumstances, provide the
Partnership or an affiliate of the General Partner with the ability to
appoint one or more representatives to the board of directors or similar body
of the enterprise and for eventual disposition of the Partnership's
investment in the enterprise.
Considerations Regarding International Investing. Investments on an
international basis involve certain risks not involved in domestic
investments, including fluctuations in foreign exchange rates, future
political and economic developments, different legal systems and the
existence or possible imposition of exchange controls or other foreign or
U.S. governmental laws or restrictions applicable to such investments.
Investments in different countries are subject to different economic,
financial, political and social factors. Because the Partnership may invest
in securities denominated in currencies other than the U.S. dollar, changes
in foreign currency exchange rates may affect the value of securities owned
by the Partnership and the unrealized appreciation or depreciation of
investments. With respect to certain countries, there may be the possibility
of expropriation of assets, confiscatory taxation, high rates of inflation,
political or social instability, changes in laws and rules or in
interpretations thereof, or diplomatic developments which could adversely
affect investments in issuers in those countries. These risks may be
heightened in countries that have only recently permitted private ownership
(including foreign private ownership) of businesses. In addition, certain
foreign investments may be subject to foreign withholding taxes.
It is expected that international investments made by the Partnership
will be illiquid and may include companies with little or no operating
history. Although these investments may, in some cases, be resold in privately
negotiated transactions, the prices realized from these sales could be less
than those originally paid by the Partnership or less than what may be
considered the fair value of such securities. Further, companies whose
securities are not publicly traded will not be subject to the disclosure and
other investor protection requirements which may be applicable to companies
whose securities are publicly traded. If such securities are required to be
registered under the securities laws of one or more jurisdictions before
being resold, the Partnership may be required to bear the expenses of
registration.
It is expected that the securities purchased by the Partnership in an
international investment will not be registered with the Securities and
Exchange Commission and that the issuers thereof will not be subject to the
reporting requirements of such agency. Accordingly, there will likely be
less publicly available information about a foreign company than about a U.S.
company, and foreign companies may not be subject to accounting, auditing and
financial reporting standards and requirements comparable to those to which
U.S. companies are subject. In addition, certain countries in which the
Partnership may invest may not have a comprehensive system of laws protecting
the rights and interests of investors (particularly foreign investors), and
the enforcement of existing laws may be inconsistent. The profitability of
foreign investments may also be impacted by regulatory burdens, such as
lengthy regulatory approval processes and strict environmental regulation.
Further, satisfactory custodial services for investment securities may not be
available in some countries having smaller capital markets, which may result
in the Partnership incurring additional costs and delays in transporting and
custodying such securities outside such countries.
Some countries prohibit or impose substantial restrictions on
investments in their countries by foreign entities such as the Partnership.
As illustrations, certain countries require governmental approval prior to
investments by foreign persons, or limit the amount of investment by foreign
persons in a particular company. Certain countries may also limit the
ability of the Partnership to dispose of investments in such countries by
requiring regulatory approvals prior to such disposition or by other means,
including limiting the ability to convert local currencies. It is
anticipated that the Partnership's international investments will be
illiquid.
It is anticipated that a significant portion of the Partnership's
international investments may be in the developing countries of the world,
including, but not limited to, countries located in the Far East, Eastern
Europe and Latin America. The risks noted above are heightened for
investments in developing countries.
INVESTMENT FUNDS
Description of Investment Funds. If the proposal regarding the
investment policies of the Partnership is approved at the Meeting, the
Partnership may make investments in investment funds in the United States or
internationally offering opportunities consistent with the Partnership's
objective of long-term capital appreciation. The Partnership expects that
domestic investment funds in which it invests will generally emphasize the
type of equity securities in which the Partnership has invested directly.
Examples include funds investing in buyout opportunities and
recapitalizations. The Partnership expects that investments in investment
funds organized or operating outside the United States will be made to
facilitate the Partnership's investments in selected regions or industries.
In addition, such investments may be made when it is considered more
efficient to invest in a particular market on an indirect basis rather than
through direct investments in non-U.S. issuers.
In recommending the proposal concerning investments in other investment
funds, the General Partner considered the fact that such investment funds may
have access to certain investment opportunities that are not available to the
Partnership. In addition, the General Partner recognized that the managers
of investment funds may have specialized investment skills regarding certain
industries, types of investment vehicles or regions. The General Partner
also believes that the Partnership may gain access to additional direct
investment opportunities referred by the managers of investment funds as a
result of the Partnership's investments in such funds.
The Partnership expects that a substantial portion of the opportunities
to invest in investment funds will be brought to its attention by ML & Co.
and its affiliates and that ML & Co. or its affiliates may participate as a
placement agent, investor or otherwise in such transactions. The
Partnership may invest in transactions in which ML & Co. or its affiliates
participate to the extent the Partnership's participation is in compliance
with the Investment Company Act or exemptions therefrom granted by the
Securities and Exchange Commission.
The investment funds in which the Partnership may invest include
investment vehicles that are deemed to be "investment companies" under the
Investment Company Act and similar managed investment vehicles that are
outside the scope of such Act. The Investment Company Act contains
limitations on the ability of the Partnership to invest in entities that are
considered "investment companies" for purposes of such Act. Pursuant to the
Investment Company Act, the Partnership may invest generally no more than 10%
of its total assets in shares of other investment companies (as defined in
such Act) and no more than 5% of its total assets in any one investment
company, provided that the investment does not represent more than 3% of the
voting stock of the related acquired investment company. To the extent the
Partnership and its "affiliated persons" (as defined in the Investment
Company Act) own no more than 3% of the outstanding stock of an investment
company, the Partnership's ownership of the securities of such investment
company is not subject to the foregoing 5% and 10% limitations. Although the
Investment Company Act does not limit the extent to which the Partnership may
invest in the shares of such investment companies or of investment funds that
are not deemed to be "investment companies" under such Act, the Partnership's
investment policies provide that the Partnership will not invest more than
15% of its assets in any one portfolio company. There is pending legislation
regarding the Investment Company Act which, if enacted, would cause certain
investment funds no longer to be deemed "investment companies" under such
Act. If such legislation is enacted, the Partnership would be able to
acquire securities issued by such entities without regard to the limits set
forth in the Investment Company Act.
Considerations Regarding Investment Funds. Investments by the
Partnership in investment funds involves considerations or risks not
otherwise present in direct investments. The managers of investment funds
are usually compensated from the assets of the funds based upon a fixed
percentage of assets or capital, and also may receive an incentive
performance component such as a carried interest in the profits generated by
the funds. As a result, the Partnership may incur additional, indirect
expenses with respect to investments in such funds in the form of management
compensation paid to such managers. Prior to making any fund investments,
the General Partner will consider whether the potential returns on
investments in such funds justify the incremental costs of investing through
such entities.
To the extent the Partnership invests in investment funds, the
Partnership will surrender a significant degree of control over the
underlying investment. Subsequent to the investment by the Partnership, an
investment fund may adopt investment objectives or policies that are
inconsistent with those of the Partnership. In addition, an investment fund
may adopt a time horizon for its underlying investments that differs from
that of the Partnership. It is anticipated that the Partnership's
investments in other investment funds will be illiquid.
If the Partnership invests in investment funds in transactions in which
affiliates of the General Partner participate, such affiliates may benefit
from the Partnership's participation. The Partnership's investment will, in
all cases, be on the same terms as an investment offered to nonaffiliated
parties. In addition, employees of affiliates of the General Partner
(including certain members of the Advisory Committee of the General Partner)
are involved in the origination of investments that may be acquired by the
Partnership and the sale or management of such investment funds, and their
compensation may be determined by or related to the success of such
transactions. Further, to the extent that the Partnership acquires
securities in a transaction in which an affiliate of the General Partner acts
as a selling agent, the Partnership's purchase of such securities or assets
will be counted toward the minimum sales requirements often included as a
condition to "best efforts" offerings and therefore help satisfy conditions
to such affiliate's receipt of any compensation in connection with such
offerings. However, the Partnership will not pay any selling commission or
similar fees to affiliates of the General Partner in connection with such
transactions.
ADDITIONAL INFORMATION
As of August 30, 1996, the Partnership had outstanding 40,384 Units. To
the knowledge of the General Partner, no person owned beneficially more than
5% of its outstanding Units at such date, except for Mr. Matthias B. Bowman,
who is the owner of 2,500, or 6.19%, of the Units. Mr. Bowman's address is
c/o ML & Co., North Tower, World Financial Center, New York, New York 10281.
The expenses of preparation, printing and mailing of the enclosed form
of proxy and accompanying Notice of Proxy Statement will be borne by the
Partnership.
The proposal regarding the Partnership's investment policies will be
adopted only upon the vote of a majority of the outstanding Units. In order
to obtain the necessary quorum at the Meeting, supplementary solicitation may
be made by mail, telephone, telegraph or personal interview. It is
anticipated that the cost of such supplementary solicitation, if any, will be
nominal. The Meeting may be adjourned from time to time without notice to
Limited Partners.
ANNUAL REPORT
The Partnership will furnish, without charge, a copy of its annual
report for the fiscal year ended December 31, 1995, to any Limited Partner
upon request. Such requests should be directed to Merrill Lynch KECALP L.P.
1994, c/o KECALP Inc., South Tower, World Financial Center, New York, New
York 10080-6123, Attention: Robert F. Tully, Vice President (212) 236-7304.
PROPOSALS OF LIMITED PARTNERS
It is not presently anticipated that there will be any subsequent
meetings of Limited Partners and thus Limited Partners will likely not have
an opportunity to present proposals in the future. However, Limited Partners
may call special meetings of Limited Partners in accordance with the terms of
the Partnership Agreement.
By Order of the General Partner
KECALP Inc.
General Partner
By: John L. Steffens
President
Dated: September 5, 1996
(FORM OF PROXY CARD)
MERRILL LYNCH KECALP L.P. 1994
South Tower
World Financial Center
New York, New York 10080-6123
THIS PROXY IS SOLICITED ON BEHALF OF THE GENERAL PARTNER
The undersigned hereby appoints Mr. James V. Caruso and _______________ as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated herein, all units of limited
partnership interest of Merrill Lynch KECALP L.P. 1994 (the "Partnership")
held of record by the undersigned on August 30, 1996 at the special meeting
of the limited partners of the Partnership to be held on September 26, 1996
or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED LIMITED PARTNER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1.
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1. Proposal to approve (a) a new investment policy described in the
Partnership's proxy statement dated September 5, 1996 regarding
international investments by the Partnership and (b) the investment
policy of the Partnership which allows it to invest its assets
in investment funds to the extent permitted under the Investment Company
Act of 1940.
/ /FOR / /AGAINST / /ABSTAIN
2. In the discretion of such proxies, upon such other business as may
properly come before the meeting or any adjournment thereof.
Dated_________________________, 1996
X____________________________________
(signature)
x____________________________________
(signature, if held jointly)
Please sign exactly as name appears
hereon. When units of limited
partnership interest are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title. If a
corporation, please sign in full
corporate name by president or other
authorized officer. If a
partnership, please sign in
partnership name by authorized person.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
PLEASE MARK BOXES - OR /X/
