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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission file number: 0-25780
PRESIDIO CAPITAL CORP.
(Exact name of registrant as specified in its charter)
British Virgin Islands N/A
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Hemisphere Management (Cayman) Limited
Zephyr House, Mary Street, Grand Cayman,
Cayman Islands, British West Indies N/A
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (441) 295-9166
Former name, former address and former fiscal year, if changed since last report
N/A
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
As of November 2, 1996, there were 8,766,569 Class A Common Shares,
U.S. $0.01 par value, outstanding.
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<PAGE>
PRESIDIO CAPITAL CORP. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Net Assets in Liquidation as of
September 30, 1996 (unaudited) and December 31, 1995 (audited)
Unaudited Consolidated Statements of Changes in Net Assets in
Liquidation for the Three and Nine Month Periods Ended September
30, 1996 and 1995
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Liquidation Activities
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
<TABLE>
<CAPTION>
PRESIDIO CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET ASSETS IN LIQUIDATION
(Expressed in thousands of United States dollars)
September 30, December 31,
1996 1995
(unaudited) (audited)
<S> <C> <C>
Assets:
Cash and cash equivalents (including restricted
cash of $22,108 and $21,603) ............................................... $ 82,473 $120,613
Investments .................................................................... 30,518 32,769
Contract rights ................................................................ 34,233 235,681
Notes and other receivables (net of non-recourse
indebtedness of $0 and $17,599) ............................................ 82,310 76,193
Other assets ................................................................... 3,372 5,519
-------- --------
Total assets ............................................. $232,906 $470,775
======== ========
Liabilities:
Debt ........................................................................... $ 900 $ 4,895
Dividends payable .............................................................. 24,934 10,014
Estimated costs of liquidation ................................................. 47,963 64,638
Estimated tax liability ........................................................ 4,702 6,000
-------- --------
Total liabilities ........................................ 78,499 85,547
-------- --------
Net Assets in Liquidation ........................ $154,407 $385,228
======== ========
See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRESIDIO CAPITAL CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN
NET ASSETS IN LIQUIDATION
(Expressed in thousands of United States dollars)
Three Month Period Nine Month Period
Ended September 30, Ended September 30,
----------------------------- ----------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Assets in Liquidation,
beginning of period ............................. $ 208,987 $ 343,474 $ 385,228 $ 399,396
Dividends paid / accrued ........................ (59,990) -- (252,753) (74,986)
Increase from revaluation of
assets and liabilities ....................... 4,311 9,768 17,388 24,375
Interest income ................................. 1,099 1,346 4,544 5,803
--------- --------- --------- ---------
Net Assets in Liquidation,
end of period ................................... $ 154,407 $ 354,588 $ 154,407 $ 354,588
========= ========= ========= =========
See notes to consolidated financial statements
</TABLE>
<PAGE>
PRESIDIO CAPITAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Presidio Capital Corp. ("Presidio" and, collectively with its subsidiaries, the
"Company") was organized on August 29, 1994, in the British Virgin Islands under
the International Business Companies Act (Cap. 291), to purchase, directly or
through its subsidiaries, substantially all of the assets of Integrated
Resources, Inc. ("Integrated") for the purpose of liquidation and distribution
of capital to shareholders. The Company was formed in accordance with the Sixth
Amended Plan of Reorganization submitted by the Official Committee of
Subordinated Bondholders and the Steinhardt Group, (the "Plan") confirmed by the
United States Bankruptcy Court for the Southern District of New York by order
dated August 8, 1994. The Plan was consummated on November 3, 1994 (the
"Consummation Date").
Reference is made to the notes to the consolidated financial statements for the
year ended December 31, 1995, included in the Company's Annual Report on Form
10-K ( the "Form 10-K") for information with regard to the organization,
significant accounting policies and disclosures made pursuant to the rules and
regulations of the Securities and Exchange Commission.
The interim financial data is unaudited; however, in the opinion of management,
the Company's interim financial data for the three and nine month periods ended
September 30, 1996 and 1995, includes all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the results of the
interim period. These consolidated interim financial statements and notes
thereto should be read in conjunction with the consolidated financial statements
and notes to consolidated financial statements included in the Form 10-K, and
the Form 10-Q filed for the quarters ended March 31, 1996 and June 30, 1996.
Liquidation Basis
The Company's financial statements are prepared on the liquidation basis of
accounting. The liquidation basis of accounting is appropriate when liquidation
appears imminent and the Company is no longer viewed as a going concern. Under
this method of accounting, assets are stated at their estimated net realizable
values and liabilities are stated at their anticipated settlement amounts. The
valuations presented in these financial statements are presented in U.S. dollars
under U.S. generally accepted accounting principles.
The valuation of assets and liabilities requires many estimates and assumptions.
The actual value of any liquidating distributions will depend upon a variety of
factors including, among others, the actual market prices of any assets that may
be distributed in kind, the proceeds from the sale of any of the Company's
assets and the timing of distributions. The valuations presented in the
accompanying Statements of Net Assets in Liquidation represent estimates at the
dates shown, based on current facts and circumstances, of the estimated net
realizable value of assets and estimated costs of implementation of the Plan.
The net values ultimately realized and costs actually incurred could be higher
or lower than the amounts recorded.
<PAGE>
NOTE 2 - INVESTMENTS
During the third quarter, the Company purchased units in certain real estate
limited partnerships, wherein subsidiaries of the Company are the General
Partner. Through September 30, 1996, total investment made in real estate
limited partnerships was approximately $2.5 million. These purchases were
intended to be consistent with, and incidental to the Company's liquidation
strategy, as these purchases have been made to protect and enhance the values of
the respective general partnership positions.
NOTE 3 - CONTRACT RIGHTS
During the three months ended September 30, 1996, one tenant purchased its
leased property from the Company, as permitted under the terms of their lease,
for $2.1 million.
NOTE 4 - NOTES AND OTHER RECEIVABLES
In 1990, Integrated sold the majority of its core financial services businesses
(including its insurance subsidiary Integrated Resources Life Co. ("Life")) to
Broad, Inc. In connection with the sale, certain cash in Life was restricted by
order of the Iowa Insurance Commissioner from being distributed to Integrated.
Approval for distribution was contingent, in part, upon the resolution of
various contingent liabilities, including contingent claims relating to state
guarantee funds for failed insurance companies. The right to this remaining
receivable from Life was transferred to an indirect wholly owned subsidiary of
Presidio, in connection with the consummation of the Plan. On July 1, 1996, the
Iowa Insurance Commissioner concluded that all contingent liabilities had been
satisfied, and approved the transfer of all remaining cash from Life to the
Company. As a result, the Company received approximately $13.4 million on July
2, 1996.
NOTE 5 - DIVIDENDS
On August 9, 1996, dividends of approximately $35 million, or $3.50 per share,
were paid to all shareholders of record as of August 2, 1996. On September 25,
1996, the Board of Directors of Presidio authorized a dividend payable on
October 7, 1996, of approximately $25 million, or $2.49 per share, to all
shareholders of record as of September 30, 1996.
<PAGE>
NOTE 6 - REVALUATION OF ASSETS AND LIABILITIES
The increase in Net Assets in Liquidation resulting from revaluation of assets
and liabilities for the three and nine month periods ended September 30, 1996
and 1995 is as follows:
<TABLE>
<CAPTION>
(000's)
Three Month Period Nine Month Period
Ended September Ended September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Increase in estimated net
realizable value of assets ...................... $ 4,425 $ 8,693 $ 13,269 $ 14,031
Decrease (increase) in
estimated costs of liquidation .................. -- (29) 238 (2,047)
(Payment) Return of overpayments and
bankruptcy settlements .......................... (114) 2,604 3,881 12,891
(Increase) in estimated tax
liability ....................................... -- (1,500) -- (500)
-------- -------- -------- ---------
$ 4,311 $ 9,768 $ 17,388 $ 24,375
======== ======== ======== ========
</TABLE>
The significant components relating to the increase in estimated net realizable
value of assets in the quarter ended September 30, 1996, were an accrual of
approximately $2 million of interest on loans receivable, as well as proceeds
received on assets that were in excess of their carrying values.
NOTE 7 - LITIGATION
At a hearing in the case of Mark Erwin, Trustee, et. al. v. Resources High
Equity, Inc., et. al. (the "HEP Action"), filed at the Superior Court for the
State of California for the County of Los Angeles (the "Court"), the Court
ordered the parties to brief certain valuation issues, the requisite consents
required from limited partners to approve the Exchange and Settlement and the
applicability of exemptions from the California securities law. Thereafter, in
response to the expert's report, the proposed settlement was further revised to
require independent appraisals of all assets of the HEP Partnerships.
On July 18, 1996, the Court preliminarily approved the proposed, revised
settlement of the HEP Action, and made a preliminary finding that the proposed
revised settlement is fair, adequate and reasonable to the class, and that a
settlement class should be conditionally certified. After a hearing on August
19, 1996, the Court approved the form and method of notice to limited partners
regarding the proposed, revised settlement, which has been sent to limited
partners.
<PAGE>
At a hearing on October 23, 1996, the Court stated that it wished to consider
late-filed briefs from certain objectors which were filed up to and including
the date of the hearing. The Court also invited a further response from the
plaintiffs to such briefs. On November 4, 1996, the Court issued an order
seeking comment on the final version of the settlement from the California
Department of Corporations. The Court requested a response within 17 days of its
order. Upon final approval of the settlement, a Consent Solicitation Statement
concerning the Exchange would be sent to all limited partners. There would be at
least a 60 day solicitation period, and a reorganization of the HEP Partnerships
cannot be consummated unless a majority of the limited partners of the HEP
Partnerships affirmatively vote to approve it.
NOTE 8 - PENDING TRANSACTION
Presidio has initiated efforts to sell in a private securitization transaction,
the Company's rights to a deferred payment stream which was originally generated
by Integrated's tax shelter annuity business (the "TSA Payment Stream"). This
transaction is expected to yield proceeds before expenses of approximately $21
million, and is scheduled to close in the fourth quarter of 1996. The
securitization notes will not and have not been registered under the Securities
Act of 1933, and may not be offered or sold in the United States absent
registration or applicable exemption of registration requirement.
As part of this transaction, certificates evidencing 99% of the entire residual
beneficial interest in the TSA Payment Stream, will be issued (the
"Certificates"), and will be sold to T-Two TSA, LLC (the "Certificateholder")
and Certificates(s) evidencing the remaining 1% beneficial ownership interest
will be sold to T-Two TSA II LLC (the "Affiliated Purchaser"). Each of the
Affiliated Purchaser and the Certificateholder is a Delaware limited liability
company whose members are T-Two Management, LLC and T-Two Holding, LLC,
("Holding"). Holding is also the indirect 99% owner of the residual interests
resulting from the contract right securitization completed in March 1996 and is
obligated to undertake a rights offering of its equity to shareholders of the
Company (the "Rights Offering"). Each of the Certificateholder and the
Affiliated Purchaser will purchase its Certificate(s) for cash equal to the
estimated fair value thereof. PCC and Holding, will enter into a loan and
transaction pursuant to which PCC will loan to Holding $1,000,000 (the "TSA
Loan"), with interest at 15% per annum, the proceeds of which will be
contributed to the Certificateholder and used to acquire the Certificates. The
TSA Loan matures on the earlier of March 31, 2001, or the successful completion
of the Rights Offering. The proceeds from the Rights Offering, which the Company
believes may not occur until 1997, will be used in part to repay Holdings's
obligation to Presidio.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND LIQUIDATION ACTIVITIES
The following section includes a discussion and analysis of financial condition
and liquidation activities of the Company for the three and nine periods ended
September 30, 1996.
Liquidity and Capital Resources
The Company's primary objectives are to liquidate its assets in the shortest
time period possible while realizing the maximum values for such assets and
reduction of operating costs. Although the Company considers its assumptions and
estimates as to the values and timing of such liquidations to be reasonable, the
period of time to liquidate the assets and distribute the proceeds of such
assets is subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Company's control.
Cash available for distributions, defined as cash and cash equivalents less
restricted cash, decreased by approximately $19 million for the quarter ended
September 30, 1996, primarily due to dividends paid of $35 million offset by
proceeds collected on an outstanding receivable of one of its subsidiaries (see
Liquidation Activities - IR Life Co.) and an increase in operating cash flow in
the quarter.
Restricted cash at September 30, 1996 was $22.1 million and is primarily
comprised of reserves for bankruptcy claims of $4.1 million and deposits for
escrow accounts as security for indemnification of certain former officers and
directors of Integrated and the Class A Directors of Presidio of $16.8 million
(see A) and B) below).
A) The indemnity for the former officers and directors of Integrated
("Qualified Indemnity") is collateralized by cash and all the stock and
partnership interests in the Company's non-U.S. subsidiaries under the
Indemnification Agreements (the "Indemnification Agreements"). All
distributions made by the Company are limited by a requirement that the
Company have certain minimum net assets after distribution to discharge
any pending and expected Qualified Indemnity obligations. The balance
in the Qualified Indemnity escrow account at September 30, 1996 was
$11.0 million.
Presidio's ability to make distributions to stockholders remains
limited in accordance with the terms of the indemnification obligations
of the former officers and directors of Integrated and its subsidiaries
under the Indemnification Agreements. Presidio has no basis for
believing that any of those indemnification obligations will be
material and, to date, no claim for such indemnification has been made.
However, pursuant to the terms of the Indemnification Agreements,
Presidio is required to notify beneficiaries thereunder of proposed
dividends and certain other proposed transfers of cash made by certain
subsidiaries of Presidio to Presidio, and by Presidio to its
shareholders, and to retain the value of certain collateral granted as
security for such indemnification obligations. Presidio provided notice
to the beneficiaries of the Indemnification Agreements prior to
distribution of all dividends paid and declared during the nine months
ended September 30, 1996.
<PAGE>
B) The Plan also provided for indemnification of the Class A Directors of
Presidio. The indemnification amounts are secured by an initial escrow
deposit made on the Consummation Date. Presidio is also required to
make quarterly escrow deposits equal to the greater of (i) $750,000, or
(ii) 1% of any amounts distributed to shareholders of Presidio, for
additional indemnification security. In accordance therewith, Presidio
deposited $2,250,000 during the first three quarters of 1996. The
escrowed amounts will not be available for distribution to shareholders
until the indemnification agreement expires. The balance in the Class A
Directors escrow account at September 30, 1996 was $5.8 million.
Presidio believes that cash on hand, revenues generated from interests in
businesses that continue to operate and proceeds from selling businesses and
other assets will be sufficient to support the Company's operations and meet its
obligations.
Liquidation Activities
The Company's cash and cash equivalents decreased by approximately $19.1 and
$38.1 million for the three and nine month period ended September 30, 1996,
respectively, as compared to an increase of $8.6 and a decrease of $60.4 million
for the same periods of the prior year, respectively. The components of the
change in cash and cash equivalents, are as follows:
<TABLE>
<CAPTION>
(Millions)
(unaudited) (unaudited)
Three Month Period Nine Month Period
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash Inflows
Contract rights securitization proceeds, net $ -- $ -- $ 205.1 $ --
Operating cash inflows 23.9 11.4 57.5 48.9
Interest income 1.1 1.3 4.5 5.8
-------- -------- -------- --------
Total Cash Inflows 25.0 12.7 267.1 54.7
-------- -------- -------- --------
Cash Outflows
Dividends paid 35.0 -- 237.8 75.0
Loans to affiliates -- -- 31.5 --
Legal and other expenses - contract rights 0.2 1.5 16.3 2.3
Legal, accounting and consulting fees 1.9 0.4 5.2 5.5
Miscellaneous general and administrative costs 1.9 1.2 8.7 8.9
Bankruptcy claims paid 2.5 1.0 3.0 21.3
Other 2.6 -- 2.6 --
Steinhardt Management Co.
expense reimbursement -- -- 0.1 2.1
-------- -------- -------- --------
Total Cash Outflows 44.1 4.1 305.2 115.1
-------- -------- --------- --------
Increase (decrease) in cash and cash equivalents (19.1) 8.6 (38.1) (60.4)
Cash and cash equivalents, beginning of period 101.6 104.9 120.6 173.9
-------- -------- --------- ---------
Cash and cash equivalents, end of period $ 82.5 $ 113.5 $ 82.5 $ 113.5
======== ======== ========= ========
</TABLE>
<PAGE>
On August 9, 1996, dividends of approximately $35 million, or $3.50 per share,
were paid to all shareholders of record as of August 2, 1996. On September 25,
1996, the Board of Directors of Presidio authorized a dividend payable on
October 7, 1996, of approximately $25 million, or $2.49 per share, to all
shareholders of record as of September 30, 1996.
Current Operations
Operating cash inflows from period to period are not comparable due to the
timing of liquidation activities.
Interest income decreased in the quarter and nine months ended September 30,
1996 as compared to the same periods of the prior year due to lower cash
balances resulting from increased distributions made to shareholders in 1996.
During the quarter ended September 30, 1996, payments were made in connection
with the resolution of certain remaining disputed bankruptcy claims against the
Integrated Estate of $2.5 million. The payments were made in accordance with the
Plan.
Legal, accounting and consulting fees, and miscellaneous general and
administrative expenses increased in the quarter ended September 30, 1996, but
is slightly less for the nine months ended for the current period, as compared
to the same periods of the prior year due to timing of various liquidating
activities.
For the three months ended September 30, 1996
Investments
During the third quarter, the Company purchased units in certain real estate
limited partnerships, wherein subsidiaries of the Company are the General
Partner. Through September 30, 1996 total investment is approximately $2.5
million. These purchases were intended to be consistent with, and incidental to
the Company's liquidation strategy, as these purchases have been made to protect
and enhance the values of the respective general partnership positions.
IR Life Co.
In 1990, Integrated sold the majority of its core financial services businesses
(including its insurance subsidiary Integrated Resources Life Co. ("Life")) to
Broad, Inc. In connection with the sale, certain cash in Life was restricted by
order of the Iowa Insurance Commissioner from being distributed to Integrated.
Approval for distribution was contingent, in part, upon the resolution of
various contingent liabilities, including contingent claims relating to state
guarantee funds for failed insurance companies. The right to this remaining
receivable from Life was transferred to an indirect wholly owned subsidiary of
Presidio, in connection with the consummation of the Plan. On July 1, 1996, the
Iowa Insurance Commissioner concluded that all contingent liabilities had been
satisfied, and approved the transfer of all remaining cash from Life to the
Company. As a result, the Company received approximately $13.4 million on July
2, 1996.
Contract Rights
During the three months ended September 30, 1996, one tenant purchased its
leased property from the Company, as permitted under the terms of their lease,
for $2.1 million.
<PAGE>
For the nine months ended September 30, 1996
Contract Rights
In May 1995, Presidio hedged future Contract Right transactions through the
short sales of ten-year U.S. government Notes maturing in February and March
2005, and having an aggregate notional value of $225 million. In March 1996 the
Company settled its position with regard to the Hedges realizing a loss of $2.6
million.
In a private securitization transaction completed on March 28, 1996, the Company
sold 117 of the 123 Contract Rights owned directly or indirectly by the Company.
Such securitized transaction, which was unanimously approved by Presidio's Board
of Directors, yielded proceeds before expenses and reserves of approximately
$233 million, approximately $205 million of which has been distributed to
Presidio or one of its subsidiaries.
The securitization certificates that were sold are secured by substantially all
of the payment stream from the primary term of the related Contract Rights. The
certificates sold in the securitization are not backed by the Company. Most of
the remaining payment stream, which is effectively subordinated to the
certificates sold in the securitization, will be used to make payment to the
holder of another certificate, (the "T-Two Holder") 99% of which was sold to a
newly formed company, T-Two Holding, LLC ("the LLC"), an entity owned by certain
affiliates of Presidio (the "Affiliates"). These Affiliates are controlled by
the Chairman of the Board and the President of Presidio. On the Closing Date,
Presidio made a $31.5 million recourse loan to the Affiliates; the proceeds of
which were used to purchase the Affiliates interests in the LLC. This loan
accrues interest at 25% per annum, and is reflected in the Company's Notes and
Receivables balance at September 30, 1996. As of September 30, 1996 interest
accrued on the loan is approximately $4.1 million. The LLC will conduct a rights
offering directed to the Company's shareholders as soon as practicable, which
the Company believes may not occur until early 1997, enabling the Company's
shareholders to acquire all of the LLC.
The proceeds of such rights offering will be used in part by the LLC to
repurchase the membership interests initially acquired by the Affiliates, who
will in turn, be obligated at that time to repay the $31.5 million Presidio loan
plus accrued interest.
HEP Action
At a hearing in the case of Mark Erwin, Trustee, et. al. v. Resources High
Equity, Inc., et. al. (the "HEP Action"), filed at the Superior Court for the
State of California for the County of Los Angeles (the "Court"), the Court
ordered the parties to brief certain valuation issues, the requisite consents
required from limited partners to approve the Exchange and Settlement and the
applicability of exemptions from the California securities law. Thereafter, in
response to the expert's report, the proposed settlement was further revised to
require independent appraisals of all assets of the HEP Partnerships.
On July 18, 1996, the Court preliminarily approved the proposed, revised
settlement of the HEP Action, and made a preliminary finding that the proposed
revised settlement is fair, adequate and reasonable to the class, and that a
settlement class should be conditionally certified. After a hearing on August
19, 1996, the Court approved the form and method of notice to limited partners
regarding the proposed, revised settlement, which has been sent to limited
partners.
<PAGE>
At a hearing on October 23, 1996, the Court stated that it wished to consider
late-filed briefs from certain objectors which were filed up to and including
the date of the hearing. The Court also invited a further response from the
plaintiffs to such briefs. On November 4, 1996, the Court issued an order
seeking comment on the final version of the settlement from the California
Department of Corporations. The Court requested a response within 17 days of its
order. Upon final approval of the settlement, a Consent Solicitation Statement
concerning the Exchange would be sent to all limited partners. There would be at
least a 60 day solicitation period, and a reorganization of the HEP Partnerships
cannot be consummated unless a majority of the limited partners of the HEP
Partnerships affirmatively vote to approve it.
PENDING TRANSACTION
Presidio has initiated efforts to sell in a private securitization transaction,
the Company's rights to a deferred payment stream which was originally generated
by Integrated's tax shelter annuity business (the "TSA Payment Stream"). This
transaction is expected to yield proceeds before expenses of approximately $21
million, and is scheduled to close in the fourth quarter of 1996. The
securitization notes will not and have not been registered under the Securities
Act of 1933, and may not be offered or sold in the United States absent
registration or applicable exemption of registration requirement.
As part of this transaction, certificates evidencing 99% of the entire residual
beneficial interest in the TSA Payment Stream, will be issued (the
"Certificates"), and will be sold to T-Two TSA, LLC (the "Certificateholder")
and Certificates(s) evidencing the remaining 1% beneficial ownership interest
will be sold to T-Two TSA II LLC (the "Affiliated Purchaser"). Each of the
Affiliated Purchaser and the Certificateholder is a Delaware limited liability
company whose members are T-Two Management, LLC and T-Two Holding, LLC,
("Holding"). Holding is also the indirect 99% owner of the residual interests
resulting from the contract right securitization completed in March 1996 and is
obligated to undertake a rights offering of its equity to shareholders of the
Company (the "Rights Offering"). Each of the Certificateholder and the
Affiliated Purchaser will purchase its Certificate(s) for cash equal to the
estimated fair value thereof. PCC and Holding, will enter into a loan and
transaction pursuant to which PCC will loan to Holding $1,000,000 (the "TSA
Loan"), with interest at 15% per annum, the proceeds of which will be
contributed to the Certificateholder and used to acquire the Certificates. The
TSA Loan matures on the earlier of March 31, 2001, or the successful completion
of the Rights Offering. The proceeds from the Rights Offering, which the Company
believes may not occur until 1997, will be used in part to repay Holdings's
obligation to Presidio.
<PAGE>
PRESIDIO CAPITAL CORP. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The following information should be read in conjunction with Item 3. "Legal
Proceedings" of the Company's December 31, 1995 Form 10-K.
Mark Erwin, Trustee, et al v. Resources High Equity, Inc., et al (the "HEP
Action")
Reference is made to Note 7 of the Consolidated Financial Statements in Part I,
Item 1, Financial Statements.
Item 6. Exhibits and Reports on Form 8-K
(a) Not applicable
(b) The Company was not required to file any reports on Form 8-K
during the quarter ended September 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PRESIDIO CAPITAL CORP. (Registrant)
Date: November 14, 1996 By:/s/ Joseph M. Jacobs
----------------
Joseph M. Jacobs
Chief Executive Officer and President
Date: November 14, 1996 By:/s/ Jay L. Maymudes
-----------------
Jay L. Maymudes
Vice President, Treasurer and Chief
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF THE SEPTEMBER 30, 1996 FORM 10-Q OF PRESIDIO CAPITAL CORP. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 82,473
<SECURITIES> 30,518
<RECEIVABLES> 116,543
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,372
<DEPRECIATION> 0
<TOTAL-ASSETS> 232,906
<CURRENT-LIABILITIES> 77,599
<BONDS> 900
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 232,906
<SALES> 0
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<CGS> 0
<TOTAL-COSTS> 0
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<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
