SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 24, 1998
CNL AMERICAN PROPERTIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)
Florida 0-28380 59-3239115
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
400 East South Street 32801
Orlando, Florida (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (407) 422-1574
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Item 5. Other Events.
A special committee (the "Special Committee") consisting of the
Independent Directors retained the investment banking firms of Merrill Lynch,
Pierce, Fenner & Smith, Incorporated and Smith Barney, Inc. (the "Advising
Firms") to advise the Special Committee regarding strategic alternatives
designed to maximize stockholder value. On July 17, 1998, the Advising Firms
presented their findings and supporting financial information to the Special
Committee. Based on the reports of the Advising Firms and its own analyses, on
July 20, 1998, the Special Committee unanimously agreed to present the
recommendations described below to the full Board of Directors. The full Board
of Directors unanimously adopted the recommendations of the Special Committee at
a meeting held on July 24, 1998.
In summary, the Special Committee concluded that the best means to
maximize stockholder value would be for the Company to (i) significantly
increase the size of the Company by acquiring from affiliates of the Company's
Advisor portfolios of properties similar to those currently held by the Company;
(ii) become internally advised; (iii) acquire internal real estate development
capability by acquiring the Advisor; (iv) expand its mortgage lending
capabilities by acquiring an affiliate of the Advisor, thus allowing the Company
to offer a full range of financing options to restaurant operators; and (v) list
its common stock on a national stock exchange, assuming market conditions are
favorable.
Recommendation to Acquire CNL Funds' Restaurant Portfolios. The Special
Committee recommended that the Company proceed to take the steps necessary to
offer to acquire for securities of the Company the portfolios of restaurant
properties and certain related restaurant businesses owned by 18 CNL Income
Funds and eight CNL Income & Growth Funds (collectively, the "CNL Funds"). The
CNL Funds are Florida limited partnerships that were formed from 1985 to 1997 by
affiliates of CNL Group, Inc. and currently own or have invested in, in the
aggregate, over 775 restaurant properties. Similar to the restaurant properties
owned by the Company, the restaurant properties owned by the CNL Funds are
generally leased on a triple-net basis to operators of selected national and
regional fast-food, family-style, and casual dining restaurant chains. The
acquisition of the CNL Funds' restaurant portfolios would result in the Company
becoming one of the largest owners of restaurant properties in the United States
with over $1.3 billion in assets.
Recommendation to Acquire CNL Restaurant Related Entities. The Special
Committee also recommended that the Company become an internally advised
restaurant REIT and become a full-service development and financing entity by
acquiring, in exchange for securities of the Company, the restaurant related
activities conducted by CNL affiliates. The Special Committee recommended the
Company acquire CNL Fund Advisors, Inc. (the "Advisor") and CNL Financial
Corporation ("CFC"). Their businesses are described below.
Since its inception, the Advisor has been the Company's advisor and, as
such, has been responsible for the day-to-day operations of the Company,
including investment analysis, acquisitions, due diligence, asset management and
accounting services. CNL Restaurant Development, Inc., a company which develops
restaurant properties for the Company and some of the CNL Funds, recently was
merged with and into the Advisor. As a result of that merger, the Advisor now
has restaurant development capabilities. The acquisition by the Company of the
Advisor would give the Company internal administrative, management, acquisition
and development capability.
CFC funds mortgage loans on restaurant properties comparable to the
restaurant properties currently owned by the Company. After funding the mortgage
loans, CFC "securitizes" such loans by contributing them to a securitization
entity which subsequently issues trust certificates representing beneficial
ownership interests in the pool of mortgage loans and the proceeds received by
the securitization entity are remitted to CFC. The acquisition of CFC would
permit the Company to significantly expand its mortgage lending capabilities,
thus allowing the Company to offer a full range of financing alternatives to
restaurant operators.
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Recommendation to List Company Shares. The Special Committee also
recommended that the Company provide increased liquidity and a trading market
for its securities by listing its common stock on a national stock exchange. The
Special Committee recommended that the Company seek to list its common stock
either concurrently with the acquisitions described above or as shortly
thereafter as market conditions are deemed to be favorable for such listing. The
Special Committee further recommended that the Company evaluate a public
offering of its common stock concurrently with the listing of its shares.
The acquisitions of the CNL Funds' portfolios and the CNL restaurant
related entities are subject to the Company negotiating acceptable purchase
prices and other acquisition terms with each of the sellers and to obtain
approval of the acquisitions by the limited partners of the CNL Funds and the
shareholders of the other CNL restaurant related entities. Accordingly, the
acquisition of such entities is not assured.
In addition, in order to effect the acquisitions, the Company will need
to increase its authorized common stock, which requires the approval of the
Company's stockholders. It is expected that the request for a vote on such
increase will be presented to the stockholders in early 1999. In connection with
such vote, complete information on the proposed transaction will be delivered to
the Company's stockholders. Prior to seeking that vote, the Company will obtain
and furnish to the stockholders an opinion of a third party that the
consideration proposed to be paid by the Company for the acquisitions is fair to
the Company from a financial point of view.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be filed on its behalf by
the undersigned thereunto duly authorized.
CNL AMERICAN PROPERTIES FUND, INC.
Dated: July 24, 1998 By: /s/ Robert A. Bourne
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ROBERT A. BOURNE, President
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