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OFFER TO PURCHASE FOR CASH
UP TO 1,536,630 DEPOSITARY RECEIPTS
REPRESENTING UNITS
in
XXXXX CASH PLUS-II LIMITED PARTNERSHIP
at
$7.45 NET PER UNIT
by
KRESCENT PARTNERS L.L.C.
and
AMERICAN HOLDINGS I, L.P.
--------------------------------------------------------------------------------
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MARCH 20, 1997, UNLESS EXTENDED.
--------------------------------------------------------------------------------
Krescent Partners L.L.C., a Delaware limited liability company
("Krescent"), and American Holdings I, L.P., a Delaware limited partnership
("AHI" and together with Krescent, the "Purchasers"), hereby offer to purchase
up to 1,536,630 of the issued and outstanding Depositary Receipts representing
Units (as defined in the Glossary) in Xxxxx Cash Plus-II Limited Partnership, a
Massachusetts limited partnership (the "Partnership"), at a purchase price of
$7.45 per Unit, net to the seller in cash (the "Purchase Price"), without
interest thereon, upon the terms and subject to the conditions set forth in
this Offer to Purchase (the "Offer to Purchase") and in the related Letter of
Transmittal, as each may be supplemented, modified or amended from time to time
(which together constitute the "Offer"). The Purchase Price will be
automatically reduced by the aggregate amount of distributions per Unit, if
any, made or declared by the Partnership after February 20, 1997 and on or
prior to the Expiration Date (as defined in Section 1 ("Terms of the Offer")).
In addition, if a distribution is made or declared after the Expiration Date
but prior to the date on which the Purchasers pay the Purchase Price for the
tendered Units, the Purchasers will offset the amount otherwise due to a holder
of Units (a "Unitholder") pursuant to the Offer in respect of the tendered
Units which have been accepted for payment but not yet paid for by the amount
of any such distribution. UNITHOLDERS WHO TENDER THEIR UNITS WILL NOT BE
OBLIGATED TO PAY ANY COMMISSIONS OR PARTNERSHIP TRANSFER FEES, WHICH
COMMISSIONS AND FEES WILL BE BORNE BY THE PURCHASERS. The 1,536,630 Units
sought pursuant to the Offer represent, to the best knowledge of the
Purchasers, approximately 20.5% of the Units outstanding as of the date of this
Offer.
--------------------
THE PURCHASERS ARE NOT AFFILIATED WITH THE GENERAL PARTNERS OF THE
PARTNERSHIP.
--------------------
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. SEE SECTION 14 ("CONDITIONS OF THE OFFER").
--------------------
IN ORDER TO COMPLY WITH CERTAIN RESTRICTIONS SET FORTH IN THE
PARTNERSHIP'S AMENDED AGREEMENT OF LIMITED PARTNERSHIP, TENDERS OF LESS
THAN 100 UNITS OR TENDERS OF LESS THAN ALL UNITS OWNED BY A UNITHOLDER
THAT WOULD RESULT IN A UNITHOLDER HOLDING LESS THAN 250 UNITS (100 UNITS
IN THE CASE OF TAX-EXEMPT ENTITIES) WILL NOT BE ACCEPTED.
--------------------
Before tendering, Unitholders are urged to consider the following factors:
o Although the Purchasers cannot predict the future value of the
Partnership's assets on a per Unit basis, the Purchase Price could
differ significantly from the net proceeds that would be realized from a
current sale of the properties owned by the Partnership (the
"Properties") or that may be realized upon a future liquidation of the
Partnership. See Section 13 ("Purchase Price Considerations").
o The Purchasers are making the Offer with a view to making a profit. The
Purchase Price of $7.45 is approximately 77% and 79%, respectively, of
Xxxxxxxx's and AHI's respective estimates of the liquidation value of
the Partnership's assets on a per Unit basis of approximately $9.67 and
$9.48 assuming such assets were sold today. Accordingly, there may be a
conflict between the desire of the Purchasers to acquire the Units at a
low price and the desire of Unitholders to sell their Units at a high
price.
o If Krescent and AHI are successful in acquiring a significant number of
Units pursuant to the Offer, each of Krescent and AHI could in the
future be in a position to significantly influence all Partnership
decisions on which Unitholders may vote, including decisions regarding
removal of any General Partner, merger, sales of assets and liquidation
of the Partnership.
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IMPORTANT
Any (i) Unitholder, (ii) beneficial owner, in the case of Depositary
Receipts of Units owned by Individual Retirement Accounts or Xxxxx Plans (a
"Beneficial Owner"), or (iii) person who has purchased Depositary Receipts but
has not yet been reflected on the Partnership's books as a transferee of such
Depositary Receipts (an "Assignee"), desiring to tender any or all of such
person's Depositary Receipts should either (1) complete and sign the Letter of
Transmittal, or a facsimile copy thereof, in accordance with the instructions
in the Letter of Transmittal and mail or deliver the Letter of Transmittal, or
a facsimile copy thereof, and any other required documents to The Xxxxxx Group,
Inc. (the "Information Agent/Depositary"), at the address or facsimile number
set forth below, or (2) request his or her broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for him or her.
Unless the context requires otherwise, references to Unitholders in this Offer
to Purchase shall be deemed to also refer to Beneficial Owners and Assignees.
Questions or requests for assistance may be directed to the Information
Agent/Depositary at the address and telephone number set forth below. Requests
for additional copies of this Offer to Purchase, the Letter of Transmittal and
other related documents may be directed to the Information Agent/Depositary.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY
REPRESENTATION ON BEHALF OF THE PURCHASERS OR TO PROVIDE ANY INFORMATION OTHER
THAN AS CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH
RECOMMENDATION, INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
EACH UNITHOLDER IS URGED TO READ CAREFULLY THE ENTIRE OFFER TO PURCHASE,
THE LETTER OF TRANSMITTAL AND RELATED DOCUMENTS.
FOR ADDITIONAL INFORMATION CALL:
THE XXXXXX GROUP, INC.
0000 XXX XXXXXXX XXXXXX
00XX XXXXX
XXXXXX, XX 00000
TELEPHONE: (000) 000-0000
FACSIMILE: (000) 000-0000 OR (000) 000-0000
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TABLE OF CONTENTS
Page
----
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE TENDER OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1. Terms of the Offer . . . . . . . . . . . . . . . . . . . . . 4
2. Proration; Acceptance for Payment and Payment for Units . . 4
3. Procedures for Tendering Units . . . . . . . . . . . . . . . 5
4. Withdrawal Rights . . . . . . . . . . . . . . . . . . . . . 7
5. Extension of Tender Period; Termination; Amendment . . . . . 8
6. Certain Federal Income Tax Consequences . . . . . . . . . . 9
7. Effects of the Offer. . . . . . . . . . . . . . . . . . . . 11
8. Purpose of the Offer; Future Plans . . . . . . . . . . . . . 12
9. Certain Information Concerning the Partnership . . . . . . . 13
10. Certain Information Concerning the Purchasers . . . . . . . 16
11. Background Of The Offer. . . . . . . . . . . . . . . . . . . 18
12. Source Of Funds . . . . . . . . . . . . . . . . . . . . . . 20
13. Purchase Price Considerations . . . . . . . . . . . . . . . 21
14. Conditions of the Offer. . . . . . . . . . . . . . . . . . . 22
15. Certain Legal Matters. . . . . . . . . . . . . . . . . . . . 24
16. Certain Fees and Expenses. . . . . . . . . . . . . . . . . . 25
17. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . 25
Appendix A. Glossary . . . . . . . . . . . . . . . . . . . . . . A-1
Schedule I. Information with respect to the executive officers and
directors of AP-GP Prom Partners Inc. . . . . . . . . S-1
Schedule II. Information with respect to the executive officers and
directors of American Holdings I-GP, Inc. and American
Property Investors, Inc. . . . . . . . . . . . . . . S-2
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TO THE HOLDERS OF DEPOSITARY RECEIPTS IN XXXXX CASH PLUS-II LIMITED
PARTNERSHIP:
INTRODUCTION
Krescent Partners L.L.C., a Delaware limited liability company
("Krescent"), and American Holdings I, L.P., a Delaware limited partnership
("AHI" and together with Krescent, the "Purchasers"), hereby offer to purchase
up to 1,536,630 of the issued and outstanding Depositary Receipts representing
Units (as defined in the Glossary) in Xxxxx Cash Plus-II Limited Partnership, a
Massachusetts limited partnership (the "Partnership"), at a purchase price of
$7.45 per Unit, net to the seller in cash (the "Purchase Price"), without
interest, upon the terms and subject to the conditions set forth in this Offer
to Purchase (the "Offer to Purchase") and in the related Letter of Transmittal,
as each may be supplemented, modified or amended from time to time (which
together constitute the "Offer"). The Purchase Price will be automatically
reduced by the aggregate amount of distributions per Unit, if any, made or
declared by the Partnership after February 20, 1997 and on or prior to the
Expiration Date (as defined in Section 1 ("Terms of the Offer")). In addition,
if a distribution is made or declared after the Expiration Date but prior to
the date on which the Purchasers pay the Purchase Price for the tendered Units,
the Purchasers will offset the amount otherwise due a holder of Units (a
"Unitholder") pursuant to the Offer in respect of the tendered Units which have
been accepted for payment but not yet paid for by the amount of any such
distribution. Unitholders who tender their Units will not be obligated to pay
any commissions or Partnership transfer fees, which commissions and fees will
be borne by the Purchasers. The 1,536,630 Units sought pursuant to the Offer
represent, to the best knowledge of the Purchasers, approximately 20.5% of the
Units issued and outstanding as of the date of this Offer.
THE PURCHASERS ARE NOT AFFILIATED WITH THE GENERAL PARTNERS OF THE
PARTNERSHIP (THE "GENERAL PARTNERS"). IN ORDER TO COMPLY WITH CERTAIN
RESTRICTIONS SET FORTH IN THE PARTNERSHIP'S AMENDED AGREEMENT OF LIMITED
PARTNERSHIP (THE "PARTNERSHIP AGREEMENT"), TENDERS OF LESS THAN 100 UNITS OR
TENDERS OF LESS THAN ALL UNITS OWNED BY A UNITHOLDER THAT WOULD RESULT IN A
UNITHOLDER HOLDING LESS THAN 250 UNITS (100 UNITS IN THE CASE OF TAX-EXEMPT
ENTITIES, INCLUDING INDIVIDUAL RETIREMENT ACCOUNTS AND XXXXX PLANS) WILL NOT BE
ACCEPTED.
The Purchasers are making this Offer because they believe that the Units
represent an attractive investment at the price offered. There can be no
assurance, however, that the Purchasers' judgment is correct, and, as a result,
ownership of Units (either by the Purchasers or Unitholders who retain their
Units) will remain a speculative investment. The Purchasers are acquiring the
Units for investment purposes and do not intend to make any effort to change
current management or the operations of the Partnership and have no current
plans for any extraordinary transaction involving the Partnership.
FACTORS TO BE CONSIDERED BY UNITHOLDERS. In considering the Offer,
Unitholders are urged to consider the following factors:
o Although the Purchasers cannot predict the future value of the
Partnership's assets on a per Unit basis, the Purchase Price could
differ significantly from the net proceeds that would be realized from a
current sale of the properties owned by the Partnership (the
"Properties") or that may be realized upon a future liquidation of the
Partnership. See Section 13 ("Purchase Price Considerations").
o The Purchasers are making the Offer with a view to making a profit.
Accordingly, there may be a conflict between the desire of the
Purchasers to acquire the Units at a low price and the desire of the
Unitholders to sell their Units at a high price. The Purchase Price of
$7.45 is approximately 77% and 79%, respectively, of Xxxxxxxx's and
AHI's respective estimates of the liquidation value of the Partnership's
assets on a per Unit basis of approximately $9.67 and $9.48 assuming
such assets were sold today. Upon the liquidation of the Partnership,
the Purchasers will benefit to the extent the amount per Unit they
receive in the liquidation exceeds the Purchase Price, if any.
Therefore, Unitholders might receive more value if they hold their
Units, rather than tender, and receive proceeds from the liquidation of
the Partnership. Alternatively, Unitholders may prefer to receive the
Purchase Price now rather than wait for uncertain future net liquidation
proceeds. No independent person has been retained to evaluate or render
any opinion with respect to the fairness of the Purchase Price and no
representation is made by the Purchasers or any affiliate of the
Purchasers as to such fairness. When the assets of the Partnership are
ultimately sold, the return to Unitholders could be higher or lower than
the Purchase Price.
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o If Krescent and AHI are successful in acquiring a significant number of
Units pursuant to the Offer, following the Standstill Expiration Date
(as such term is defined in the Glossary), each of Krescent and AHI
could be in a position to significantly influence all Partnership
decisions on which Unitholders may vote. If the maximum number of Units
sought by the Purchasers is tendered and accepted for payment pursuant
to the Offer, Krescent and AHI will own approximately 14.55% and 10.45%
of the outstanding Units, respectively. The Units acquired by Xxxxxxxx
and AHI will also be subject to a buy/sell arrangement commencing one
year following the Offer that could result in a consolidation of the
Units acquired pursuant to the Offer with either Krescent or AHI. After
the Standstill Expiration Date, the ownership of tendered Units by
Xxxxxxxx and/or AHI could effectively (i) prevent non-tendering
Unitholders from taking actions they desire but that Krescent or AHI
opposes and (ii) enable either Krescent or AHI to take action desired by
it but opposed by non-tendering Unitholders. Under the Partnership
Agreement, Unitholders holding more than 50% of the total Units are
entitled, through the Corporate Limited Partner, to take action with
respect to a variety of matters, including: dissolution of the
Partnership; removal of any General Partner and election of a
replacement therefor; approve or disapprove the sale of all or
substantially all of the Partnership's assets; and most types of
amendments to the Partnership Agreement. Although neither Xxxxxxxx nor
AHI have any current intentions with regard to any of these matters,
each of them will, following the Standstill Expiration Date, vote the
Units acquired pursuant to the Offer in its interest, which may, or may
not, be in the best interest of non-tendering Unitholders. Until the
Standstill Expiration Date, the Purchasers have agreed to vote their
Units in the same proportion as the votes of all of the Unitholders who
vote on any proposal.
Unitholders may no longer wish to continue with their investment in the
Partnership for a number of reasons, including:
o Although not necessarily an indication of value, the $7.45 Purchase
Price is a premium over the $7.15 weighted average selling price for
Units reported for the limited and sporadic secondary market during the
six-month period ended November 30, 1996. See Section 13 ("Purchase
Price Considerations"). Such secondary market selling prices do not
take into account commissions charged by secondary market makers
effectuating such sales which the Purchasers believe, based on a typical
250 Unit sales transaction, range from 5% to 8.75% of the sales price
(which would result in a reduction of the net proceeds to the seller of
at least approximately $0.36 per Unit).
o The Offer will provide Unitholders with an immediate opportunity to
liquidate their investment in the Partnership without the usual
transaction costs associated with market sales or partnership transfer
fees.
o The Purchasers believe that, based on the experience of Xxxxxxxx's
financial advisor, Liquidity Financial Advisors, Inc. ("Liquidity
Financial"), and the experience of an affiliate of AHI in their
respective efforts to obtain a list of Unitholders from the General
Partners, it may be difficult for third parties to obtain a Unitholder
list from the General Partners. If the General Partners resist the
efforts of other third parties to obtain a list of Unitholders, such
action could impede or delay the commencement of other tender offers for
the Units. There can be no assurance, however, that the General
Partners will resist the effort of third parties to obtain a list of
Unitholders or that other tender offers for the Units will not be
commenced.
o Because the Purchasers are subject to the restrictions set forth in the
Standstill Agreement until the Standstill Expiration Date, the
Purchasers will not, until the expiration of such date, be able to
remove and replace the General Partners or cause any extraordinary
transaction with respect to the Partnership. Therefore, future returns
from an investment in the Units will continue to depend, in part, on the
actions or inactions of the General Partners. In addition, Unitholders
are advised that the Purchasers do not have any current plans or
intentions to remove or replace the General Partners or to effectuate
any extraordinary transactions involving the Partnership.
o Although there are some limited resale mechanisms available to the
Unitholders wishing to sell their Units, there is no formal or organized
trading market for the Units. The Partnership's Form 10-K for the year
ended December 31, 1995 (the "Form 10-K") states: "There is no public
market for the Units and it is not anticipated that any such public
market will develop." Accordingly, Unitholders who desire
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resale liquidity may wish to consider the Offer. The Offer affords a
significant number of Unitholders an opportunity to dispose of their
Units for cash, which alternative otherwise might not be available to
them. However, the Purchase Price is not intended to represent either
the fair market value of a Unit or the fair market value of the
Partnership's assets on a per Unit basis.
o Unitholders who acquired their Units in the Partnership's original
offering should receive a tax benefit from the sale of their Units.
o General disenchantment with real estate investments.
o General disenchantment with long-term investments in limited
partnerships because of, among other things, their illiquidity and the
inability of Unitholders to effectuate management control over the
Partnership's affairs through the annual election of General Partners.
Unitholders should note, however, that they do have the right to remove
the General Partners by a majority vote.
o The Offer may be attractive to certain Unitholders who wish in the
future to avoid the expenses, delays and complications in filing complex
income tax returns which result from an ownership of Units.
o The Offer provides Unitholders with the opportunity to liquidate their
Units and to reinvest the proceeds in other investments should they
desire to do so.
o The Purchasers believe that the Units represent an attractive investment
at the Purchase Price. There can be no assurance, however, that this
judgment is correct. Ownership of Units will remain a speculative
investment.
Following the completion of the Offer and subject to the terms of the
Standstill Agreement, the Purchasers and their affiliates may acquire
additional Units. Any such acquisitions may be made through private purchases,
through one or more future tender offers or by any other means deemed
advisable, and may be at prices higher or lower than the price to be paid for
the Units purchased pursuant to the Offer. See Section 8 ("Purpose of the
Offer; Future Plans").
The Offer is not conditioned upon any minimum number of Units being
tendered. If, as of the Expiration Date, more than 1,536,630 Units are validly
tendered and not properly withdrawn, the Purchasers will only accept for
purchase on a pro rata basis 1,536,630 Units, subject to the terms and
conditions herein. See Section 14 ("Conditions of the Offer").
Unitholders are urged to consider carefully all of the information
contained herein before accepting the Offer.
The Purchasers expressly reserve the right, in their sole discretion and
for any reason, to terminate the Offer at any time and to waive any or all of
the conditions of the Offer, although the Purchasers do not presently intend to
waive any such conditions. See Section 7 ("Effects of the Offer"). In order
to comply with certain restrictions set forth in the Partnership Agreement,
tenders of less than 100 Units or tenders of less than all Units owned by a
Unitholder that would result in a Unitholder holding less than 250 Units (100
Units in the case of tax-exempt entities, including Individual Retirement
Accounts and Xxxxx Plans) will not be accepted.
According to the Form 10-K, there were 7,499,718 Units issued and
outstanding, held of record by approximately 9,900 Unitholders. Krescent owns
approximately 338,298 Units. AHI does not own any Units.
Except as otherwise indicated, information contained in this Offer to
Purchase is based upon documents and reports publicly filed by the Partnership
with the Commission. Although the Purchasers have no information that any
statements contained in this Offer to Purchase are untrue, the Purchasers do
not take responsibility for the accuracy or completeness of any information
contained in this Offer to Purchase which is derived from such public
documents, or for any failure by the Partnership to disclose events which may
have occurred and may affect the significance or accuracy of any such
information but which are unknown to the Purchasers.
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Each Unitholder must make his or her own decision based on his or her
particular circumstances. Unitholders should consult with their respective
advisors about the financial, tax, legal and other implications to them of
accepting the Offer. UNITHOLDERS ARE URGED TO READ THIS OFFER TO PURCHASE, THE
RELATED LETTER OF TRANSMITTAL AND THE OTHER ACCOMPANYING MATERIALS CAREFULLY
BEFORE DECIDING WHETHER TO TENDER THEIR UNITS.
THE TENDER OFFER
1. TERMS OF THE OFFER.
Upon the terms of the Offer (including the terms and conditions of any
extension or amendment of the Offer), the Purchasers will accept for payment
and pay for up to 1,536,630 Units that are validly tendered on or prior to the
Expiration Date (as hereinafter defined) and not withdrawn in accordance with
Section 4 ("Withdrawal Rights"). The term "Expiration Date" shall mean 12:00
midnight, New York City time, on March 20, 1997, unless the Purchasers, in
their sole discretion, shall have 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 Purchasers, will
expire.
IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASERS SHALL INCREASE THE
PURCHASE PRICE OFFERED TO UNITHOLDERS, SUCH INCREASED PURCHASE PRICE SHALL BE
PAID FOR ALL UNITS ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER, WHETHER OR NOT
SUCH UNITS WERE TENDERED PRIOR TO THE INCREASE IN CONSIDERATION.
The Offer is conditioned on satisfaction of certain conditions. See
Section 14 (which sets forth in full the conditions of the Offer). The
Purchasers reserve the right (but shall not be obligated), in their sole
discretion, to waive any or all of such conditions. If, on or prior to the
Expiration Date, any or all of such conditions have not been satisfied or
waived, the Purchasers may (i) decline to purchase any of the Units tendered,
terminate the Offer and return all tendered Units to tendering Unitholders,
(ii) waive all the then unsatisfied conditions and, subject to complying with
applicable rules and regulations of the Commission, purchase all Units validly
tendered, (iii) extend the Offer and, subject to the right of Unitholders to
withdraw Units until the Expiration Date, retain the Units that have been
tendered during the period or periods for which the Offer is extended, or (iv)
amend the Offer.
Xxxxxxxx's financial advisor, Liquidity Financial, provided Krescent
with a list of the Unitholders for the purpose of making the Offer, and this
Offer to Purchase, the related Letter of Transmittal and, if required, any
other relevant materials are being mailed to Unitholders, Beneficial Owners and
Assignees who hold Depositary Receipts representing the Units, to the extent
their names and addresses are on this list.
2. PRORATION; ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS.
If more than 1,536,630 Units are validly tendered on or prior to the
Expiration Date and not properly withdrawn on or prior to the Expiration Date,
the Purchasers will only accept for payment, upon the terms and subject to the
conditions of the Offer, and pay for an aggregate of 1,536,630 Units so
tendered, pro rata according to the number of Units validly tendered and not
properly withdrawn on or prior to the Expiration Date, with appropriate
adjustments to avoid purchases that would violate the transfer restrictions in
Section 7.2 of the Partnership Agreement (the "Transfer Restrictions"). If the
number of Units validly tendered and not properly withdrawn on or prior to the
Expiration Date is less than or equal to 1,536,630 Units, the Purchasers will
purchase all Units so tendered and not properly withdrawn, upon the terms and
subject to the conditions of the Offer.
In the event that proration of tendered Units is required, and because
of the difficulty of determining the proration results, the Purchasers may not
be able to announce the final results of such proration until at least
approximately seven business days after the Expiration Date. Subject to the
Purchasers' obligation under Rule 14e-1(c) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), to pay Unitholders the Purchase Price in
respect of Units tendered or return those Units promptly after the termination
or withdrawal
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of the Offer, the Purchasers do not intend to pay for any Units accepted for
payment pursuant to the Offer until the final proration results are known.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the Purchasers will purchase, by accepting for
payment, and will pay for, all Units validly tendered and not withdrawn in
accordance with Section 4 on or prior to the Expiration Date as promptly as
practicable following the Expiration Date. In addition, subject to applicable
rules of the Commission, the Purchasers expressly reserve the right to delay
acceptance for payment of, or payment for, Units pending receipt of any
regulatory or governmental approvals specified in Section 15 ("Certain Legal
Matters") or pending receipt of any additional documentation required by the
Letter of Transmittal. In all cases, payment for Units accepted for payment
pursuant to the Offer will be made only after timely receipt by the Information
Agent/Depositary of (a) the Letter of Transmittal (or a facsimile copy thereof)
properly completed and duly executed, with required medallion signature
guarantees (unless waived by the Purchasers in their sole and absolute
discretion), and (b) any other documents required by the Letter of Transmittal.
For purposes of the Offer, the Purchasers shall be deemed to have
accepted for payment tendered Units when, as and if the Purchasers give oral or
written notice to the Information Agent/Depositary of the Purchasers'
acceptance for payment of such Units pursuant to the Offer. No tender of Units
will be deemed to have been validly made until all defects and irregularities
with respect to such tender have been cured or waived. Upon the terms and
subject to the conditions of the Offer, payment for Units tendered and accepted
for payment pursuant to the Offer will in all cases be made by deposit of the
Purchase Price with the Information Agent/Depositary, which will act as agent
for the tendering Unitholders for the purpose of receiving payment from the
Purchasers and transmitting payment to tendering Unitholders.
The Purchase Price will automatically be reduced by the aggregate amount
of distributions per Unit, if any, made or declared by the Partnership after
February 20, 1997 and on or prior to the Expiration Date. In addition, if a
distribution is made or declared after the Expiration Date but prior to the
date on which the Purchasers or their assignees pay for tendered Units, the
Purchasers will offset the amount otherwise due to a Unitholder pursuant to the
Offer in respect of tendered Units which have been accepted for payment but not
yet paid for by the amount of any such distribution. UNDER NO CIRCUMSTANCES
WILL THE PURCHASERS PAY INTEREST ON THE PURCHASE PRICE FOR UNITS.
If any tendered Units are not purchased pursuant to the Offer for any
reason, the Letter of Transmittal with respect to such Units will be destroyed
by the Information Agent/Depositary. If, for any reason whatsoever, acceptance
for payment of or payment for any Units tendered pursuant to the Offer is
delayed or the Purchasers are unable to accept for payment, purchase or pay for
Units tendered pursuant to the Offer, then, without prejudice to the
Purchasers' rights under Section 14 ("Conditions of the Offer"), the
Information Agent/Depositary may, nevertheless, on behalf of the Purchasers and
subject to Rule 14e-1(c) under the Exchange Act, retain tendered Units, and
such Units may not be withdrawn except to the extent that the tendering
Unitholder is entitled to withdrawal rights as described in Section 4
("Withdrawal Rights").
3. PROCEDURES FOR TENDERING UNITS.
VALID TENDER. For Units to be validly tendered pursuant to the Offer, a
Letter of Transmittal, properly completed and duly executed, together with any
other documents required by the Letter of Transmittal, must be received by the
Information Agent/Depositary at its address on the back cover page of the Offer
to Purchase on or prior to the Expiration Date. In order to comply with
certain restrictions set forth in the Partnership Agreement, tenders of less
than 100 Units or tenders of less than all Units owned by a Unitholder that
would result in a Unitholder holding less than 250 Units (100 Units in the case
of tax-exempt entities, including Individual Retirement Accounts and Xxxxx
Plans) will not be accepted. See Instruction 1 to the Letter of Transmittal.
IN ORDER FOR A TENDERING UNITHOLDER TO PARTICIPATE IN THE OFFER, UNITS
MUST BE VALIDLY TENDERED AND NOT WITHDRAWN ON OR PRIOR TO THE EXPIRATION DATE,
WHICH IS 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MARCH 20, 1997, UNLESS
EXTENDED.
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THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING UNITHOLDER AND
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE INFORMATION
AGENT/DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY. SEE INSTRUCTION 2 TO THE LETTER OF TRANSMITTAL.
SIGNATURE GUARANTEES. The signature(s) on the Letter of Transmittal
must be medallion guaranteed by a commercial bank, savings bank, credit union,
savings and loan association or trust company having an office, branch or
agency in the United States, a brokerage firm that is a member firm of a
registered national securities exchange or a member of the National Association
of Securities Dealers, Inc. (the "NASD") as provided in the Letter of
Transmittal. See Instruction 2 of the Letter of Transmittal.
BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent the possible
application of backup federal income tax withholding with respect to payment of
the Purchase Price pursuant to the offer, a tendering Unitholder must provide
the Purchasers with such Unitholder's correct taxpayer identification number or
social security number by completing the Substitute Form W-9 included in the
Letter of Transmittal. See Instruction 3 to the Letter of Transmittal.
FIRPTA WITHHOLDING. To prevent the withholding of federal income tax in
an amount equal to 10% of the sum of the Purchase Price plus the amount of
Partnership liabilities allocable to each Unit purchased, each Unitholder must
complete the FIRPTA Affidavit included in the Letter of Transmittal certifying
such Unitholder's taxpayer identification number and address and that the
Unitholder is not a foreign person. See Instruction 3 to the Letter of
Transmittal.
REINVESTMENT PLAN. The Partnership established a reinvestment plan
which enables Unitholders to have their distributions from the Partnership
invested in additional Units. The Purchasers do not know which Unitholders
participate in this reinvestment plan and, if so, the number of Units
beneficially owned in such plan by the participating Unitholder. Therefore,
the Purchasers have provided a box at the beginning of the Letter of
Transmittal to be checked by Unitholders who desire to sell all their Units,
including Units beneficially owned by them in the reinvestment plan.
APPOINTMENT AS PROXY; POWER OF ATTORNEY. By executing and delivering
the Letter of Transmittal, a tendering Unitholder irrevocably appoints the
Purchasers and the designees of the Purchasers and each of them as such
Unitholder's proxies, with full power of substitution, in the manner set forth
in the Letter of Transmittal, each with full power of substitution, to the full
extent of such Unitholder's rights with respect to the Units tendered by such
Unitholder and accepted for payment by the Purchasers (and with respect to any
and all other Units or other securities issued or issuable in respect of such
Units on or after the date hereof). All such proxies shall be considered
irrevocable and coupled with an interest in the tendered Units. Such
appointment will be effective when, and only to the extent that, the Purchasers
accept such Units for payment. Upon such acceptance for payment, all prior
proxies given by such Unitholder with respect to such Units (and such other
Units and securities) will be revoked without further action, and no subsequent
proxies may be given nor any subsequent written consents executed (and, if
given or executed, will not be deemed effective). The Purchasers and their
designees will, with respect to the Units (and such other Units and securities)
for which such appointment is effective, be empowered to exercise all voting
and other rights of such Unitholder as they in their sole discretion may deem
proper pursuant to the Partnership Agreement or otherwise. The Purchasers may
assign such proxy and/or power of attorney to any person with or without
assigning the related Units with respect to which such proxy and/or power of
attorney was granted. The Purchasers reserve the right to require that, in
order for Units to be deemed validly tendered, immediately upon the Purchasers'
payment for such Units, the Purchasers must be able to exercise full voting
rights with respect to such Units and other securities, including voting at any
meeting of Unitholders.
In addition, pursuant to such appointment as attorneys-in-fact, the
Purchasers and their designees each will have the power, among other things,
(i) to seek to transfer ownership of such Units on the Partnership's books (and
execute and deliver any accompanying evidences of transfer and authenticity any
of them may deem necessary or appropriate in connection therewith, including,
without limitation, any documents or instruments required to be executed under
the Partnership Agreement or a "Transferor's (Seller's) Application for
Transfer"
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created by the NASD, if required), (ii) upon receipt by the Information
Agent/Depositary (as the tendering Unitholder's agent) of the Purchase Price,
to receive any and all distributions made by the Partnership after the
Expiration Date, and to receive all benefits and otherwise exercise all rights
of beneficial ownership of such Units in accordance with the terms of the
Offer, (iii) to execute and deliver to the Partnership, the General Partners
and/or the Corporate Limited Partner (as the case may be) a change of address
form instructing the Partnership to send any and all future distributions to
which the Purchasers are entitled pursuant to the terms of the Offer in respect
of tendered Units to the address specified in such form, and (iv) to endorse
any check payable to or upon the order of such Unitholder representing a
distribution to which the Purchasers are entitled pursuant to the terms of the
Offer, in each case on behalf of the tendering Unitholder.
ASSIGNMENT OF ENTIRE INTEREST IN THE PARTNERSHIP. By executing and
delivering the Letter of Transmittal, a tendering Unitholder irrevocably
assigns to the Purchasers and their assigns all of the, direct and indirect,
right, title and interest of such Unitholder in the Partnership with respect to
the Units tendered and purchased pursuant to the Offer, including, without
limitation, such Unitholder's right, title and interest in and to any and all
distributions made by the Partnership after the Expiration Date in respect of
the Units tendered by such Unitholder and accepted for payment by the
Purchasers, regardless of the fact that the record date for any such
distribution may be a date prior to the Expiration Date. Krescent and AHI each
reserve the right to transfer or assign, in whole or from time to time in part,
to any third party, the right to purchase Units tendered pursuant to the Offer,
together with its rights under the Letter of Transmittal, but any such transfer
or assignment will not relieve the assigning party of its obligations under the
Offer or prejudice the rights of tendering Unitholders to receive payment for
Units validly tendered and accepted for payment pursuant to the Offer.
DETERMINATION OF VALIDITY. All questions as to the form of documents
and validity, eligibility (including time of receipt) and acceptance for
payment of any tender of Units will be determined by the Purchasers, in their
sole discretion, whose determination shall be final and binding on all parties.
The Purchasers reserve the absolute right to reject any or all tenders
determined by them not to be in proper form, or the acceptance of or payment
for which may, in the opinion of the Purchasers' counsel, be unlawful. The
Purchasers also reserve the absolute right to waive any of the conditions of
the Offer or any defect or irregularity in any tender of Units of any
particular Unitholder whether or not similar defects or irregularities are
waived in the case of other Unitholders.
ASSIGNEE STATUS. Assignees must provide documentation to the
Information Agent/Depositary which demonstrates, to the satisfaction of the
Purchasers, such person's status as an assignee of a Unit.
The Purchasers' interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding. No tender of Units will be deemed to have been validly made
until all defects and irregularities with respect to such tender have been
cured or waived. None of the Purchasers, any of their affiliates or assigns,
if any, the Information Agent/Depositary or any other person will be under any
duty to give any notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification.
The Purchasers' acceptance for payment of Units tendered pursuant to the
procedures described above will constitute a binding agreement between the
tendering Unitholder and the Purchasers upon the terms and subject to the
conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Tenders of Units made pursuant to the Offer are irrevocable, except that
Units tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment as provided in
this Offer to Purchase, may also be withdrawn at any time after April 21, 1997.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Information
Agent/Depositary at the address set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name(s) of the
person(s) who tendered the Units to be withdrawn, the number of Units to be
withdrawn and the name(s) of the registered holder(s) of the Units, if
different from that of the person(s) who tendered such Units. Such notice of
withdrawal must also be signed by the same person(s) who signed the Letter of
Transmittal in the same manner as the Letter of Transmittal was signed
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(including medallion signature guarantees). If the Units are held in the name
of two or more persons, all such persons must sign the notice of withdrawal.
Any Units properly withdrawn will be deemed not validly tendered for purposes
of the Offer, but may be re-tendered at any subsequent time prior to the
Expiration Date by following the procedures described in Section 3 ("Procedures
for Tendering Units").
If, for any reason whatsoever, acceptance for payment of any Units
tendered pursuant to the Offer is delayed, or the Purchasers are unable to
accept for payment or pay for Units tendered pursuant to the Offer, then,
without prejudice to the Purchasers' rights set forth herein, the Information
Agent/Depositary may, nevertheless, on behalf of the Purchasers, retain
tendered Units and such Units may not be withdrawn except to the extent that
the tendering Unitholder is entitled to and duly exercises withdrawal rights as
described herein. The reservation by the Purchasers of the right to delay the
acceptance or purchase of or payment for Units is subject to the provisions of
Rule 14e-1(c) under the Exchange Act, which requires the Purchasers to pay the
consideration offered or return Units tendered by or on behalf of Unitholders
promptly after the termination or withdrawal of the Offer.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchasers, in their sole
discretion, whose determination shall be final and binding. None of the
Purchasers, any of their affiliates or assigns, if any, the Information
Agent/Depositary or any other person will be under any duty to give any
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT.
The Purchasers reserve the right, in their sole discretion and
regardless of whether any of the conditions set forth in Section 14
("Conditions of the Offer") shall have been satisfied, at any time and from
time to time, (i) to extend the period of time during which the Offer is open
and thereby delay acceptance for payment of, and the payment for, any Units,
(ii) to terminate the Offer and not accept for payment any Units not already
accepted for payment or paid for, and (iii) to amend the Offer in any respect
by giving oral or written notice of such amendment to the Information
Agent/Depositary.
If the Purchasers increase or decrease either the number of the Units
being sought or the consideration to be paid for any Units pursuant to the
Offer and the Offer is scheduled to expire at any time before the expiration of
a period of 10 business days from, and including, the date that notice of such
increase or decrease is first published, sent or given in the manner specified
below, the Offer will be extended until, at a minimum, the expiration of such
period of 10 business days. If the Purchasers make a material change in the
terms of the Offer (other than a change in price or percentage of securities
sought) or in the information concerning the Offer, or waive a material
condition of the Offer, the Purchasers will extend the Offer, if required by
applicable law, for a period sufficient to allow Unitholders to consider the
amended terms of the Offer.
The Purchasers also reserve the right, in their sole discretion, in the
event any of the conditions specified under Section 14 ("Conditions of the
Offer") shall not have been satisfied and so long as Units have not theretofore
been accepted for payment, to delay (except as otherwise required by applicable
law) acceptance for payment of or payment for Units or to terminate the Offer
and not accept for payment or pay for Units.
If the Purchasers extend the period of time during which the Offer is
open, delay acceptance for payment of or payment for Units or are unable to
accept for payment or pay for Units pursuant to the Offer for any reason, then,
without prejudice to the Purchasers' rights under the Offer, the Information
Agent/Depositary may, on behalf of the Purchasers, retain all Units tendered,
and such Units may not be withdrawn except as otherwise provided under Section
4 ("Withdrawal Rights"). The reservation by the Purchasers of the right to
delay acceptance for payment of or payment for Units is subject to applicable
law, which requires that the Purchasers pay the consideration offered or return
the Units deposited by or on behalf of Unitholders promptly after the
termination or withdrawal of the Offer.
Any extension, termination or amendment of the Offer will be followed as
promptly as practicable by a public announcement thereof. Without limiting the
manner in which the Purchasers may choose to make any public announcement, the
Purchasers will have no obligation (except as otherwise required by applicable
law) to
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publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Xxxxx News Service. In the case of an
extension of the Offer, the Purchasers will make a public announcement of such
extension no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date.
6. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following summary is a general discussion of certain federal income
tax consequences of a sale of Units pursuant to the Offer assuming that the
Partnership is a partnership for federal income tax purposes and that it is not
a "publicly traded partnership" as defined in Section 7704 of the Internal
Revenue Code of 1986, as amended (the "Code"). This summary is based on the
Code, applicable Treasury Regulations thereunder, administrative rulings,
practice and procedures and judicial authority as of the date of the Offer.
All of the foregoing are subject to change, and any such change could affect
the continuing accuracy of this summary. This summary does not discuss all
aspects of federal income taxation that may be relevant to a particular
Unitholder in light of such Unitholder's specific circumstances or to certain
types of Unitholders subject to special treatment under the federal income tax
laws (for example, foreign persons (if any), dealers in securities, banks,
insurance companies and tax-exempt entities), nor does it discuss any aspect of
state, local, foreign or other tax laws. Sales of Units pursuant to the Offer
will be taxable transactions for federal income tax purposes, and may also be
taxable transactions under applicable state, local, foreign and other tax laws.
EACH UNITHOLDER SHOULD CONSULT HIS OR ITS TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO SUCH UNITHOLDER OF SELLING UNITS PURSUANT TO THE OFFER.
CONSEQUENCES TO TENDERING UNITHOLDER. A Unitholder will recognize gain
or loss on a sale of Units pursuant to the Offer equal to the difference
between (i) the Unitholder's "amount realized" on the sale and (ii) the
Unitholder's adjusted tax basis in the Units sold. The "amount realized" with
respect to a Unit sold pursuant to the Offer will be a sum equal to the amount
of cash received by the Unitholder for the Unit plus the amount of Partnership
liabilities allocable to the Unit (as determined under Code Section 752). The
amount of a Unitholder's adjusted tax basis in Units sold pursuant to the Offer
will vary depending upon the Unitholder's particular circumstances, and will be
affected by both allocations of Partnership income, gain or loss, and any cash
distributions made by the Partnership to a Unitholder with respect to such
Units. In this regard, tendering Unitholders will be allocated a pro rata
share of the Partnership's taxable income or loss with respect to Units sold
pursuant to the Offer through the effective date of the sale.
A Unitholder who acquired Units pursuant to the original offering of
Units by the Partnership is expected to recognize a tax loss on a sale of Units
pursuant to the Offer. Even if the Unitholder is subject to the passive
activity loss limitation (discussed below), such loss generally could be
deducted in full in the year of sale (subject to other applicable limitations,
including the limitation on the deductibility of capital losses, discussed
below) provided the Unitholder sells all of his or its Units.
In general, the character (as capital or ordinary) of Unitholder's gain
or loss on a sale of a Unit pursuant to the Offer will be determined by
allocating the Unitholder's amount realized on the sale and his adjusted tax
basis in the Units sold between "Section 751 items," which are "substantially
appreciated inventory" and "unrealized receivables" (including depreciation
recapture) as defined in Code Section 751, and non-Section 751 items. The
difference between the portion of the Unitholder's amount realized that is
allocable to Section 751 items and the portion of the Unitholder's adjusted tax
basis in the Units sold that is so allocable will be treated as ordinary income
or loss, and the difference between the Unitholder's remaining amount realized
and adjusted tax basis will be treated as capital gain or loss assuming the
Units were held by the Unitholder as a capital asset. The Purchasers believe
that substantially all of any tax loss realized on a sale of Units pursuant to
the Offer will be treated as a capital loss under these rules, although it is
possible, because a Unitholder's adjusted tax basis in the Units sold will be
allocated to Section 751 items based on the Partnership's tax basis in these
items, that a Unitholder may recognize ordinary income with respect to the
portion of the Unitholder's amount realized on the sale of a Unit that is
attributable to Section 751 items while recognizing a capital loss with respect
to the balance of the selling price.
A Unitholder's capital gain (if any) or loss on a sale of Units pursuant
to the Offer will be treated as long-term capital gain or loss if the
Unitholder's holding period for the Units exceeds one year. Under current
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law (which is subject to change), long-term capital gains of individuals and
other non-corporate taxpayers are taxed at a maximum marginal federal income
tax rate of 28%, whereas the maximum marginal federal income tax rate for other
income of such persons is 39.6%. Capital losses are deductible only to the
extent of capital gains, except that non-corporate taxpayers may deduct up to
$3,000 of capital losses in excess of the amount of their capital gains against
ordinary income. Excess capital losses generally can be carried forward to
succeeding years (a corporation's carryforward period is five years and a non-
corporate taxpayer can carry forward such losses indefinitely); in addition,
corporations, but not non-corporate taxpayers, are allowed to carry back excess
capital losses to the three preceding taxable years.
Under Code Section 469, a non-corporate taxpayer or personal service
corporation can deduct passive activity losses in any year only to the extent
of such person's passive activity income for such year, and closely held
corporations may not offset such losses against so-called "portfolio" income.
If the Unitholder recognizes a loss on the sale of Units, such loss generally
would not be subject to the passive activity loss limitation, and therefore,
could be deducted in full in the year of sale (subject to any other applicable
limitations), provided the Unitholder sells all his Units. If a Unitholder is
unable to sell all his Units, the deductibility of such losses would continue
to be subject to the passive activity loss limitation until the Unitholder
sells his remaining Units. See Section 7 ("Effects of the Offer").
A Unitholder (other than corporations and certain foreign individuals)
who tenders Units may be subject to 31% backup withholding unless the
Unitholder provides a taxpayer identification number ("TIN") and certifies that
the TIN is correct or properly certifies that he is awaiting a TIN. A
Unitholder may avoid backup withholding by properly completing and signing the
Substitute Form W-9 included as part of the Letter of Transmittal. IF A
UNITHOLDER WHO IS SUBJECT TO BACKUP WITHHOLDING DOES NOT PROPERLY COMPLETE AND
SIGN THE SUBSTITUTE FORM W-9, THE PURCHASERS WILL WITHHOLD 31% FROM PAYMENTS TO
SUCH UNITHOLDER. SEE INSTRUCTION 3 TO THE LETTER OF TRANSMITTAL.
Xxxx realized by a foreign Unitholder on a sale of a Unit pursuant to
the Offer will be subject to federal income tax. Under Section 1445 of the
Code, the transferee of a partnership interest held by a foreign person is
generally required to deduct and withhold a tax equal to 10% of the amount
realized on the disposition. The Purchasers will withhold 10% of the amount
realized by a tendering Unitholder from the Purchase Price payable to such
Unitholder unless the Unitholder properly completes and signs the FIRPTA
Affidavit included as part of the Letter of Transmittal certifying the
Unitholder's TIN, that such Unitholder is not a foreign person and the
Unitholder's address. Amounts withheld would be creditable against a foreign
Unitholder's federal income tax liability and, if in excess thereof, a refund
could be obtained from the Internal Revenue Service by filing a U.S. income tax
return.
CONSEQUENCES TO A NON-TENDERING UNITHOLDER. The Purchasers do not
anticipate that a Unitholder who does not tender his or her Units will realize
any material tax consequences as a result of the election not to tender.
However, if as a result of the Offer there is a sale or exchange of 50% or more
in Partnership capital and profits within a 12-month period, a termination of
the Partnership for federal income tax purposes would occur, and the taxable
year of the Partnership would close. In the case of such a sale or exchange,
the Properties (subject to related debt) of the Partnership would be treated as
distributed to the partners, and following the deemed distribution,
contribution of the same properties would be deemed to be made to a new
partnership or to an association taxable as a corporation. The Purchasers have
not, however, had access to complete information concerning assignments of
Units and cannot, therefore, be certain that the Partnership will not terminate
for tax purposes as a result of sales pursuant to the Offer. The consequences
of a termination of the Partnership could include changes in the methods of
depreciation available to the Partnership for tax purposes, changes in the tax
basis of the Partnership's assets, possible recognition of taxable gain
resulting from any deemed cash distribution in excess of the non-tendering
Limited Partner's tax basis in his or her Units, and possibly other
consequences the extent of which cannot be determined by the Purchasers without
access to the books and records of the Partnership. In addition, a termination
of the Partnership could cause the Partnership or their assets to become
subject to unfavorable statutory or regulatory changes enacted or issued prior
to the termination but previously not applicable to the Partnership or their
assets because of protective "transitional" rules. The Purchasers have
reserved the right not to purchase Units to the extent such purchase would
cause a termination of the Partnership for federal income tax purposes.
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CONSEQUENCES TO A TAX-EXEMPT UNITHOLDER. Although certain entities are
generally exempt from federal income taxation, such tax-exempt entities
(including individual retirement accounts (each an "IRA")) are subject to
federal income tax on any "unrelated business taxable income" ("UBTI"). UBTI
generally includes, among other things, income (other than, in the case of
property which is not "debt-financed property", interest, dividends, real
property rents not dependent upon income or profits, and gain from disposition
of non-inventory property) derived by certain trusts (including IRAs) from a
trade or business or by certain other tax-exempt organizations from a trade or
business, the conduct of which is not substantially related to the exercise of
such organization's charitable, educational or other exempt purpose and income
to the extent derived from debt-financed property. UBTI would also arise if
the Partnership were treated for income tax purposes as a publicly traded
partnership.
To the extent the Partnership holds debt financed property or inventory
or other assets as a dealer, a tax-exempt Unitholder (including an IRA) could
realize UBTI on the sale of a Partnership interest. In addition, a tax-exempt
Unitholder will realize UBTI upon the sale of a Unit, if such Unitholder held
its Units as inventory or otherwise as dealer property, or acquired its Units
with acquisition indebtedness. However, any UBTI recognized by a tax-exempt
Unitholder as a result of a sale of a Unit, in general, may be offset by such
Unitholder's net operating loss carryover (determined without taking into
account any amount of income or deduction which is excluded in computing UBTI),
subject to applicable limitations.
EACH TAX-EXEMPT UNITHOLDER SHOULD CONSULT ITS TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH UNITHOLDER OF SELLING OR NOT SELLING UNITS
PURSUANT TO THE OFFER.
7. EFFECTS OF THE OFFER.
CERTAIN RESTRICTIONS ON TRANSFER OF INTERESTS. The Partnership
Agreement restricts transfers of the Depositary Receipts that represent the
Units if, among other things, such transfer would cause a termination of the
Partnership for federal income tax purposes (which termination would occur when
Depositary Receipts representing Units that, in turn, represent 50% or more of
the total Partnership capital and profits are transferred within a twelve-month
period). Consequently, sales of Depositary Receipts representing Units in the
secondary market and in private transactions during the twelve-month period
following completion of the Offer may be restricted, and requests for transfers
of Depositary Receipts during such twelve-month period may not be recognized.
The Purchasers do not intend to purchase Depositary Receipts to the extent such
purchase would violate the transfer restrictions set forth in the Partnership
Agreement. See Section 6 ("Federal Income Tax Considerations--Consequences to a
Non-Tendering Unitholder").
EFFECT ON TRADING MARKET; REGISTRATION UNDER SECTION 12(G) OF THE
EXCHANGE ACT. If a substantial number of Units are purchased pursuant to the
Offer, the result will be a reduction in the number of Unitholders. In the
case of certain kinds of equity securities like the Units, a reduction in the
number of securityholders might be expected to result in a reduction in the
liquidity and volume of activity in the trading market for the security. The
Form 10-K states: "There is no public market for the Units and it is not
anticipated that any such public market will develop." Therefore, the
Purchasers do not believe a reduction in the number of Unitholders will
materially further restrict the Unitholders' ability to find purchasers for
their Units through secondary market transactions.
Partnership Profiles, Inc., which publishes the Partnership Spectrum,
tracks recent trades in certain limited partnership interests. For the six
months ended November 30, 1996, the Partnership Spectrum reports that a total
of 59,006.6 Units traded at per Unit prices between $6.70 and $7.50 with a
weighted average of $7.15 per Unit. The most recent issue of the Partnership
Spectrum (November/December, 1996) indicates that 13,191 Units traded in the
period from October 1, 1996 through November 30, 1996 at per Unit prices
between $6.70 and $7.50 with a weighted average price of $7.13 per Unit.
The Units currently are registered under Section 12(g) of the Exchange
Act, which means, among other things, that the Partnership is required to file
periodic reports with the Commission and to comply with the Commission's proxy
rules. The Purchasers do not expect or intend that consummation of the Offer
will cause the Units to cease to be registered under Section 12(g) of the
Exchange Act. If the Units were to be held by fewer than 300 persons, the
Partnership could apply to de-register the Units under the Exchange Act.
Because
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the Units are widely held, however, the Purchasers expect that even if they
purchase the maximum number of Units in the Offer, the Units will continue to
be held of record by substantially more than 300 persons.
CONTROL OF ALL UNITHOLDER VOTING DECISIONS BY PURCHASERS. Pursuant to
the Partnership Agreement, each of Krescent and AHI, through the Corporate
Limited Partner, will have the right to vote each Unit purchased by it pursuant
to the Offer. If Xxxxxxxx and AHI are successful in acquiring a significant
number of Units pursuant to the Offer, and following the Standstill Expiration
Date, each of Krescent and AHI could be in a position to significantly
influence all Partnership decisions on which Limited Partners may vote. If the
maximum number of Units sought by the Purchasers is tendered and accepted for
payment pursuant to the Offer, Krescent and AHI will own approximately 14.55%
and 10.45% of the outstanding Units, respectively. See discussion of Krescent-
AHI Agreement in Section 11 ("Background of the Offer"). The Units acquired by
Xxxxxxxx and AHI will also be subject to a buy/sell arrangement commencing one
year following the Offer that could result in a consolidation of the Units
acquired pursuant to the Offer with either Krescent or AHI. After the
Standstill Expiration Date, the ownership of tendered Units by Xxxxxxxx and/or
AHI could effectively (i) prevent non-tendering Unitholders from taking action
they desire but that Krescent or AHI opposes and (ii) enable Krescent or AHI to
take action desired by it but opposed by non-tendering Unitholders. Generally,
under the Partnership Agreement, holders of more than 50% of the total Units
are entitled, through the Corporate Limited Partner, to take action with
respect to a variety of matters, including: removal of any General Partner and
the election of a replacement therefor; dissolution of the Partnership; approve
or disapprove the sale of all or substantially all of the Partnership's
properties; and most types of amendments to the Partnership Agreement.
Although neither Xxxxxxxx nor AHI has any current plans or intentions with
regard to any of these matters, each of them will, following the Standstill
Expiration Date, vote the Units acquired pursuant to the Offer in its interest,
which may, or may not, be in the best interest of non-tendering Unitholders.
Until the Standstill Expiration Date, Xxxxxxxx and AHI have agreed to vote
their Units in the same proportion as the votes of all the Unitholders who vote
on any proposals. See Section 8 ("Purpose of the Offer; Future Plans") for
certain contractual limitations on Xxxxxxxx and AHI regarding their
participation in certain extraordinary transactions involving the Partnership,
including the solicitation of proxies to replace the General Partners.
8. PURPOSE OF THE OFFER; FUTURE PLANS.
PURPOSE OF THE OFFER. The purpose of the Offer is to enable each of the
Purchasers to acquire a significant interest in the Partnership for investment
purposes based on its expectation that there may be underlying value in the
Properties. Neither of the Purchasers currently intends to make any effort to
change current management or the operation of the Partnership or has current
plans or intentions for any extraordinary transaction involving the
Partnership. However, the plans of either Krescent or AHI with respect to its
investment in the Units could change at any time in the future. If such plans
with respect to the Partnership change in the future, the ability of Krescent
or AHI to influence actions on which Unitholders (through the Corporate Limited
Partner) have a right to vote will depend on the Unitholders' response to the
Offer (i.e., the number of Units tendered). If the Purchasers acquire only a
few Units pursuant to the Offer, neither of them would be in a position to
influence matters over which Unitholders have a right to vote. Conversely, if
the maximum number of Units sought are tendered and accepted for payment
pursuant to the Offer, Krescent and AHI will own approximately 14.55% and
10.45% of the issued and outstanding Units, respectively, and, as a result,
will, following the Standstill Expiration Date, each be in a position to exert
significant control over matters on which Unitholders (through the Corporate
Limited Partner) have a right to vote. The purchase of the Units will allow
the Purchasers to benefit from any of the following: (a) any cash
distributions from Partnership operations in the ordinary course of business;
(b) any distributions of net proceeds from the sale of any Properties; and (c)
any distributions of net proceeds from the liquidation of the Partnership.
FUTURE PLANS. Following the completion of the Offer and subject to the
terms of the Standstill Agreement, the Purchasers and their affiliates may
acquire additional Units. Any such acquisition may be made through private
purchases, through one or more future tender offers or by any other means
deemed advisable, and may be at prices higher or lower than the price to be
paid for the Units purchased to the Offer.
Pursuant to an Agreement dated November 21, 1996 between Krescent and
Liquidity Financial Group, L.P., an affiliate of Liquidity Financial (a copy of
which has been filed as Exhibit (c)(4) to the Purchasers' Tender Offer
Statement on Schedule 14D-1 filed with the Commission on February 20, 1997),
Xxxxxxxx assumed the
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restrictions set forth in the Standstill Agreement, as described below.
Pursuant to an Assumption Agreement and Consent dated February 7, 1997 between
AHI, Liquidity Financial Group, L.P. and The Xxxxx Corporation (a copy of which
has been filed as Exhibit (c)(8) to the Purchasers' Tender Offer Statement on
Schedule 14D-1 filed with the Commission on February 20, 1997), AHI agreed to
become bound by the restrictions set forth in the Standstill Agreement with
respect to the Partnership. As a result, each of Krescent and AHI agreed that,
prior to the Standstill Expiration Date, it will not and it will cause certain
affiliates not to (i) acquire, attempt to acquire or make a proposal to
acquire, directly or indirectly, more than 25% (including Units acquired
through all other means) of the outstanding Units, (ii) propose or propose to
enter into, directly or indirectly, any merger, consolidation, business
combination, sale or acquisition of assets, liquidation, dissolution or other
similar transaction involving the Partnership, (iii) make, or in any way
participate, directly or indirectly, in any "solicitation" of "proxies" or
"consents" (as such terms are used in the proxy rules of the Securities and
Exchange Commission) to vote, or seek to advise or influence any person with
respect to the voting of any voting securities of the Partnership, (iv) form,
join or otherwise participate in a "group" (within the meaning of Section
13(d)(3) of the Exchange Act)) with respect to any voting securities of the
Partnership unless each member of such group agrees in writing to be bound by
the terms of the Standstill Agreement, provided, however, that those affiliates
bound by the Standstill Agreement will not be deemed to be acting in a "group"
in violation of it solely by virtue of voting in compliance with the Standstill
Agreement, (v) sell, transfer or assign any Units to any person or entity not
bound by the terms and conditions of the Standstill Agreement, (vi) disclose
any intention, plan or arrangement inconsistent with the terms of the
Standstill Agreement, or (vii) loan money to, advise, assist or encourage any
person in connection with any actions restricted or prohibited by the terms of
the Standstill Agreement.
9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP.
Information included herein concerning the Partnership is derived from
the Partnership's publicly-filed reports. Additional financial and other
information concerning the Partnership is contained in the Partnership's Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and other filings with the
Commission. Such reports and other documents may be examined and copies may be
obtained from the public reference facilities maintained at the principal
offices of the Commission at 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, at
the regional offices of the Commission located at Seven World Trade Center,
13th Floor, New York 00000 xxx 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000, and at the Commission's World Wide Web site at
xxxx://xxx.xxx.xxx. Copies should be available by mail upon payment of the
Commission's customary charges by writing to the Commission's principal offices
at 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000. The Purchasers disclaim any
responsibility for the information included in such reports and extracted in
this Offer to Purchase.
THE PARTNERSHIP'S ASSETS AND BUSINESS
The Partnership is a limited partnership formed in 1985, under the laws
of the Commonwealth of Massachusetts. Its principal executive offices are
located at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000. Its telephone
number is (000) 000-0000.
The Partnership is engaged in the business of investing in and operating
real estate and related assets. The Partnership has an objective to make
partially tax sheltered distributions of the cash flow generated by the
Partnership's properties and mortgage backed securities.
As of December 31, 1995, the Partnership held unleveraged interests in
four retail centers containing an aggregate of 364,894 square feet of leasable
area and one apartment complex having 222 units, all of which were wholly-owned
by the Partnership. In addition, the Partnership had an unleveraged joint
venture interest in a shopping center with 474,138 square feet of leasable
space.
The following table sets forth certain information regarding the retail
centers, apartment complex and shopping center as of December 31, 1995. More
comprehensive information concerning such properties is included in the Form
10-K.
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Current Average Occupancy
Leasable Square For Year Ended
Property Name Location Footage/Units December 31,
------------- -------- ------------- ------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Encino Oaks Shopping Center Encino, CA 52,380 99% 100% 97% 97% 96%
Alderwood Towne Center Lynnwood, WA 105,346 100% 99% 100% 97% 93%
Canyon Place Shopping Center Portland, OR 157,283 90% 82% 83% 87% 91%
Coral Plaza Shopping Center Oak Lawn, IL 49,885 85% 87% 88% 90% 85%
Brookwood Village Mall and Birmingham, AL 474,138 94% 95% 91% 84% 87%
Convenience Center(1)
Xxxxxxxxxx Xxxx Apartments Smyrna, GA 222 96% 97% 96% 92% 91%
----------
(1) The partnership has a 50% joint venture interest in this property.
As of December 31, 1995, the Partnership held mortgage backed securities
with a market value of approximately $9,044,000. The Partnership's portfolio
of mortgage backed securities consists of Federal Home Loan Mortgage
Corporation issues with coupon rates ranging from 8.0% to 10.0% per annum
maturing in the years 2009 through 2017, Federal National Mortgage Association
issues with coupon rates ranging from 9.5% to 10.0% per annum maturing in the
year 2016, and Government National Mortgage Association issues with coupon
rates of 9.0% per annum maturing in the years 2008 through 2009.
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SELECTED FINANCIAL DATA. Set forth below is a summary of certain
financial data for the Partnership which has been excerpted from the Form 10-K
and the Form 10-Q. More comprehensive financial and other information is
included in such reports and other documents filed by the Partnership with the
Commission, and the following summary is qualified in its entirety by reference
to such reports and other documents and all the financial information and
related notes contained therein.
Statements of Operations
For the Nine Months Ended September 30, 1996 and 1995
(unaudited)
Nine Months Ended
September 30,
-------------------
1996 1995
---- ----
Revenue:
Rental . . . . . . . . . . . . . . . . . . . . . . $4,957,993 $4,918,479
Partnership's share of Joint Venture net income 420,606 443,024
Interest income - Mortgage backed securities . . . 527,149 623,503
Interest income - other . . . . . . . . . . . . . . 352,546 345,962
---------- ----------
Total Revenue . . . . . . . . . . . . . . . 6,258,294 6,330,968
Expenses:
Operating . . . . . . . . . . . . . . . . . . . . . 705,863 640,189
Maintenance . . . . . . . . . . . . . . . . . . . . 343,720 336,980
General and administrative . . . . . . . . . . . . 195,166 248,492
Real Estate Taxes . . . . . . . . . . . . . . . . . 593,934 646,943
Management fees . . . . . . . . . . . . . . . . . . 286,934 278,953
Depreciation . . . . . . . . . . . . . . . . . . . 1,583,692 1,498,322
---------- ----------
Total Expenses . . . . . . . . . . . . . . . 3,709,309 3,649,879
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $2,548,985 $2,681,089
========== ==========
Allocating net income:
Unitholders (7,499,718 Units Outstanding) . . . . . $2,497,972 $2,627,432
Net income per Unit of Depositary Receipt . . . . . $ .33 $ .35
Corporate Limited Partner (100 Units Outstanding) . $ 33 $ 35
General Partners . . . . . . . . . . . . . . . . . $ 50,980 $ 53,622
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Summary Selected Financial Data
For the Years ended December 31,
--------------------------------
1995 1994 1993 1992 1991
Total revenue . . . . . . . . $ 8,367,001 $ 8,022,513 $ 8,432,254 $ 8,719,084 $ 8,927,929
Net Income . . . . . . . . . 3,388,472 3,064,617 3,232,087 3,451,547 3,941,950
Net income allocated to
Partners:
Unitholders . . . . . 3,320,658 3,003,285 3,167,403 3,382,471 3,863,059
Per Unit . . . . . . .44 .40 .42 .45 .52
Corporate Limited
Partner . . . . . . . 44 40 42 45 52
General Partners . . 67,770 61,292 64,642 69,031 78,839
Total Assets at December 31 . 81,299,409 84,277,257 87,248,625 97,595,990 100,178,556
Distributions to Partners:
Unitholders . . . . . 5,999,775 6,012,096 13,495,370 6,003,028 10,768,687
Per Unit (1) . . . . .80 .80 1.80 .80 1.44
Corporate Limited
Partner . . . . . . . 80 80 180 80 144
General Partner . . . 109,044 89,729 89,558 116,273 132,024
--------------
(1) During 1995, 1994, 1993, 1992, and 1991, the average Per Unit
return of capital to the Unitholders was $.04, $.20, $1.21, $.13
and $.38, respectively.
10. CERTAIN INFORMATION CONCERNING THE PURCHASERS.
KRESCENT. Xxxxxxxx was organized for the purpose of acquiring the Units
pursuant to the Offer. The principal executive office of Krescent is at 0000
Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. The managing
member of Krescent (the "Managing Member") is AP-GP Prom Partners Inc., a newly
formed Delaware corporation which is ultimately controlled by Apollo Real
Estate Capital Advisors II, Inc. ("Advisors"), as general partner of Apollo
Real Estate Advisors II, L.P. ("AREA II"), the general partner of Apollo Real
Estate Investment Fund II, L.P., a recently formed private real estate
investment fund and the sole shareholder of the Managing Member. Since its
inception, the directors of Advisors have been Xxxx X. Xxxxx and Xxxx X.
Xxxxxx, who were founding principals of Apollo Advisors, L.P., the respective
managing general partner of Apollo Investment Fund, L.P., AIF II, L.P. and
Apollo Investment Fund III, L.P., private securities investment funds, and,
together with Xxxxxxx X. Xxxx, of Apollo Real Estate Advisors, L.P. ("AREA")
and AREA II, the respective managing general partners of Apollo Real Estate
Investment Fund, L.P. and Apollo Real Estate Investment Fund II, L.P. Xx. Xxxx
has been the President and Managing Partner of the Xxxx Organization, a
national owner and developer of and investor in office and industrial buildings
as well as other commercial properties principally in the New York/New Jersey
metropolitan area as well as throughout the United States since 1963. The
business address for Messrs. Black, Xxxxxx and Xxxx is 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
For certain information concerning the executive officers and directors
of the Managing Member, see Schedule I to this Offer to Purchase.
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Except as otherwise set forth in this Offer to Purchase or Schedule I
hereto, (1) neither Xxxxxxxx, the Managing Member, Advisors, and to the best of
Xxxxxxxx's knowledge, the persons listed on Schedule I, nor any affiliate of
the foregoing beneficially owns or has a right to acquire any Units, (2)
neither Xxxxxxxx, the Managing Member, Advisors, and to the best of Krescent's
knowledge, the persons listed on Schedule I, nor any affiliate thereof or
director, executive officer or subsidiary of the Managing Member or Advisors
has effected any transaction in the Units within the past 60 days, (3) neither
Xxxxxxxx, the Managing Member, Advisors, and to the best of Xxxxxxxx's
knowledge, any of the persons listed on Schedule I, nor any director or
executive officer of the Managing Member or Advisors 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, (4)
there have been no transactions or business relationships which would be
required to be disclosed under the rules and regulations of the Commission
between any of Krescent, the Managing Member, Advisors, or, to the best of
Xxxxxxxx's knowledge, the persons listed on Schedule I, on the one hand, and
the Partnership or its affiliates, on the other hand, and (5) there have been
no contracts, negotiations or transactions between Krescent, the Managing
Member, Advisors, or, to the best of Xxxxxxxx's knowledge, the persons listed
on Schedule I, 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.
Krescent owns an aggregate of 338,298.3247 Units, which represents
approximately 4.5% of the number of Units outstanding as reported in the Form
10-K (the most recently available filing containing such information). On
November 1, 1996, Krescent effected a secondary market transaction to acquire
250 Units at a price per Unit of $6.00. Xxxxxxxx acquired the additional Units
it owns on December 30, 1996 pursuant to a tender offer commenced November 29,
1996 for up to 4.9% of the outstanding Units at a price per Unit of $7.45.
Liquidity Financial, a registered investment advisor, is acting as
financial advisor to Krescent in connection with the Offer and has provided
certain financial advisory services to Krescent in connection with the Offer.
See Section 11 ("Background of the Offer").
AHI. AHI is a Delaware limited partnership. Its general partner is
American Holdings I-GP, Inc. (the "AHI General Partner"), a Delaware
corporation which is wholly owned by American Real Estate Holdings, L.P., a
Delaware limited partnership ("AREH"). The general partner of AREH is American
Property Investors, Inc. ("API"), a Delaware corporation which is wholly-owned
by Xxxx X. Xxxxx. The address of the principal offices of each of AHI, the AHI
General Partner, AREH and API is 000 Xxxxx Xxxxxxx Xxxx, Xxxxx Xxxxx, Xxx Xxxx
00000. Mr. Xxxxx's business address is c/o Icahn Associates Corp., 000 X. 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
AHI and the AHI General Partner were recently formed for the purpose of
acquiring the securities of certain limited partnerships. XXXX is engaged in
the business of acquiring and managing real estate and activities related
thereto. API is engaged in the business of acting as general partner of AREH
and of American Real Estate Partners, L.P., a Delaware limited partnership
which is the limited partner of AREH. Mr. Xxxxx's present principal occupation
or employment is set forth on Schedule II to this Offer to Purchase and
incorporated herein by reference.
For certain information concerning the executive officers and directors
of the AHI General Partner and API, see Schedule II to this Offer to Purchase.
Neither AHI, the AHI General Partner, AREH, API, Mr. Xxxxx, nor any
executive officer or director of the AHI General Partner or API 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
of 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
set forth below, (i) neither AHI, the AHI General
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Partner, AREH, API, Mr. Xxxxx nor, to the best of AHI's knowledge, any of the
persons listed on Schedule II, nor any affiliate of the foregoing beneficially
owns or has a right to acquire any Units, (ii) neither AHI, the AHI General
Partner, AREH, API, Mr. Xxxxx nor, to the best of AHI's knowledge, any of the
persons listed on Schedule II, nor any affiliate of the foregoing has effected
any transaction in the Units within the past 60 days, (iii) neither AHI, the
AHI General Partner, AREH, API, Mr. Xxxxx nor, to the best of AHI's knowledge,
any of the persons listed on Schedule II, nor any affiliate of the foregoing
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 any of AHI, the AHI General Partner,
AREH, API, Mr. Xxxxx nor, to the best of AHI's knowledge, any of the persons
listed on Schedule II, 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 AHI, the AHI General Partner, AREH, API, Mr. Xxxxx nor, to
the best of AHI's knowledge, any of the persons listed on Schedule II, 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.
Xxxxxxxx Corp., an affiliate of AHI ("Xxxxxxxx"), owns 375 Units, which
represents less than 1% of the number of Units outstanding as reported in the
Form 10-K (the most recently available filing containing such information); such
Units are indirectly beneficially owned by Mr. Xxxxx. These Units were
acquired in auction transactions through the Chicago Partnership Board in June
and July 1996.
11. BACKGROUND OF THE OFFER.
In late 1994, representatives of Liquidity Financial met with
representatives of AREA to discuss a possible financial advisory relationship
between the parties. Specifically, Liquidity Financial proposed to act as
financial advisor to AREA with respect to strategic investments in limited
partnerships which are not controlled by AREA. Negotiations regarding this
proposed financial advisory relationship continued through the winter of 1995
and ultimately culminated in the execution in March 1995 of an agreement in
principle (the "1995 Agreement in Principle"). During the spring and summer of
1995, Liquidity Financial and AREA discussed the terms of a number of potential
tender offers for limited partnership interests, however no specific terms were
agreed on and no tender offers involving Liquidity Financial and AREA and their
respective affiliates were commenced. Ultimately, the 1995 Agreement in
Principle terminated pursuant to its terms.
Liquidity Financial has advised Xxxxxxxx that following the termination
of the 1995 Agreement in Principle it continued its business of evaluating
limited partnerships and utilized its position as a limited partner to obtain
lists of limited partners from a number of partnerships in which it held
interests. As part of this business, Liquidity Financial Group, L.P. ("LFG"),
an affiliate of Liquidity Financial, requested in writing a list of Unitholders
from the Partnership in February 1996. Subsequent oral and written requests
for this list were made by representatives of LFG to representatives of the
Partnership in February 1996 through May 1996. During May 1996, an LFG
representative met with a representative of the Partnership for the purpose of
negotiating an agreement pursuant to which the Partnership would release the
list of Unitholders to LFG. Such negotiations culminated in the execution of
the Standstill Agreement in June 1996, at which time a list of Unitholders was
delivered to LFG. LFG and the Partnership subsequently agreed in October 1996
to amend the Standstill Agreement for the purpose of clarifying the definition
of the term "group" as used therein.
In July 1996, representatives of Liquidity Financial contacted
representatives of AREA II for the purpose of exploring a possible new
financial advisory relationship between Liquidity Financial and AREA II. These
discussions continued throughout the summer of 1996 and culminated in the
execution of a new Agreement in Principle in September 1996 (the "1996
Agreement in Principle"). The 1996 Agreement in Principle outlines the terms
of a financial advisory relationship between Liquidity Financial and its
affiliates and AREA II and its affiliates with respect to certain tender offers
for limited partnership interests. The 1996 Agreement in Principle identified
the Partnership as a potential target for such tender offers.
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On October 24, 1996, a representative of LFG contacted a representative
of the Partnership to request, on behalf of Xxxxxxxx, that the General Partners
agree to recognize Xxxxxxxx as a transferee of Units upon Xxxxxxxx's acceptance
of Units for payment pursuant to the terms of the Offer. During that
conversation, the Partnership's representative indicated that in order to agree
to recognize Xxxxxxxx as a transferee of any Units acquired pursuant to the
Offer, the Partnership needed to be satisfied that consummation of the Offer
would not cause the Partnership to be classified as a "publicly-traded
partnership" (a "PTP") for tax purposes. Later that day, a memorandum from
Xxxxxxxx's counsel was sent to the Partnership concluding that the Offer would
not cause it to be a PTP and a letter agreement was sent to one of the General
Partners requesting such recognition as a transferee of Units. On October 29,
1996, counsel for the Partnership, in a letter to LFG, responded to the
memorandum prepared by Xxxxxxxx's counsel. During the week of November 4,
1996, counsel for Xxxxxxxx and counsel for the Partnership continued to discuss
the PTP status issue. On November 11, 1996, counsel for Xxxxxxxx and counsel
for the Partnership agreed on a form of opinion letter regarding the PTP issue
that would be delivered upon the recognition of Xxxxxxxx as a transferee of the
Units. On November 14, 1996, LFG requested a current list of Unitholders and
the lists of securityholders of various entities affiliated with the
Partnership, which list was received by LFG on November 19, 1996. Also, on
November 19, 1996, a General Partner of the Partnership executed a letter to
Krescent indicating its agreement to cause Krescent to be recognized as a
transferee of Units (i) upon Xxxxxxxx's payment for Units pursuant to the
Offer, (ii) upon delivery of an opinion of Xxxxxxxx's counsel that the Offer
would not cause the Partnership to be a PTP and (iii) upon delivery, in
satisfactory form, of the Partnership's standard transfer paperwork, payment of
standard transfer fee and satisfaction of any other standard ministerial
matter.
On November 21, 1996, (i) Liquidity Financial and Xxxxxxxx entered into
a definitive advisory agreement (the "Advisory Agreement") relating to the
Offer, and (ii) Liquidity Financial provided Krescent with its list of
Unitholders. Pursuant to the terms of an option agreement, dated November 21,
1996 and amended on January 8, 1997, Liquidity Financial Group, L.P., an
affiliate of Liquidity Financial, has the option, for the 6 month period
following the latest date Krescent accepts securities in any tender offer, to
acquire, indirectly through a member of Krescent, up to a 5% interest in
Krescent.
By letter dated November 4, 1996, Xxxxxxxx Corp., an affiliate of AHI,
contacted the Partnership and the General Partners to request lists of the
names, addresses and telephone numbers of the Unitholders of the Partnership
and certain other limited partnerships sponsored by the General Partners.
Counsel to the Partnership responded to Xxxxxxxx'x request on November 12, 1996
by refusing to furnish such lists. On or about November 22, 1996, counsel to
Xxxxxxxx contacted representatives of the General Partners and suggested that,
in consideration of the General Partners agreeing to furnish the lists,
Xxxxxxxx would be prepared to enter into a standstill agreement relating to the
Partnership and such other partnerships containing terms substantially similar
to those contained in the Standstill Agreement executed by LFG. Xxxxxxxx and a
General Partner signed such a standstill agreement (the "Xxxxxxxx Standstill
Agreement") on November 26, 1996. On November 27, 1996, a General Partner
provided Xxxxxxxx with lists of the Unitholders of the Partnership and certain
of the other partnerships covered by the Xxxxxxxx Standstill Agreement.
During the week of December 2, 1996, representatives of AHI and Xxxxxxxx
began discussing terms upon which XXX and Xxxxxxxx would make the Offer. These
discussions resulted in the execution of a letter agreement, dated February 12,
1997 (the "Krescent-AHI Agreement"), a copy of which has been filed as Exhibit
(c)(9) to the Purchasers' Tender Offer Statement on Schedule 14D-1 filed with
the Commission on February 20, 1997. The Krescent-AHI Agreement provides that,
among other things: (i) all decisions relating to the conduct of the Offer
will be made jointly by Xxxxxxxx and AHI; (ii) AHI will purchase the first
242,970 Units and then Krescent and AHI will purchase 58.2% and 41.8%,
respectively, of the Units tendered thereafter pursuant to the Offer; (iii) if
242,970 Units are not tendered pursuant to the Offer, AHI will be entitled to
purchase Units from Krescent such that Krescent will then own 58.2% of the
aggregate number of Units owned by it and AHI and AHI will own 41.8% of the
aggregate owned by it and Krescent; (iv) if, after the exercise and/or
expiration of all outstanding options or other rights to acquire an interest in
Krescent, the direct and indirect percentage ownership interest of Apollo Real
Estate Investment Fund II, L.P. and its affiliates (the "Apollo Group") in
Krescent exceeds 83.6%, then AHI will be entitled to purchase additional Units
from Krescent so that, after giving effect to such purchase, the total
percentage of Units purchased by AHI in the Offer equals 50% of such percentage
interest of
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the Apollo Group in Krescent; (v) at any time after the first anniversary of
the purchase of Units pursuant to the Offer and so long as AHI and Krescent
(and/or their respective affiliates) own at least 2% of the outstanding Units,
each of AHI and Xxxxxxxx has the right to initiate a buy/sell right pursuant to
which either AHI or Krescent may offer to buy Units from the other and the
other must either sell such Units to the offering party or buy the offering
party's Units at a purchase price per Unit and on such other terms and
conditions as set forth in the initiating party's offer; and (vi) AHI and
Krescent will share the costs and expenses of the Offer in the same percentages
as their right to purchase Units pursuant to the Offer. After the purchase of
Units pursuant to the Offer and except as set forth above, there is no
contract, agreement or understanding between Xxxxxxxx and AHI with respect to
voting or disposing of Units or with respect to any action relating to the
Partnership.
On December 10, 1996, counsel for Xxxxxxxx contacted counsel for the
Partnership with regard to amending the Standstill Agreement in order to
clarify an issue relating to participation in a "group" (within the meaning of
Section 13(d)(3) of the Exchange Act). During the week of December 16, 1996,
counsel for Xxxxxxxx and counsel for the Partnership discussed group
participation issues and the proposed Krescent-AHI Agreement. On January 6,
1997, an amendment to the Standstill Agreement was executed to allow "group"
participation, formation or otherwise if each member of such group agrees to be
bound by the terms of the Standstill Agreement.
On February 3, 1997, Xxxxxxxx and the General Partner amended the
Xxxxxxxx Standstill Agreement to delete the Partnership and another partnership
sponsored by the General Partners from the schedule of partnerships covered
thereby. Following the execution of such amendment, AHI assumed the
obligations of LFG under the Standstill Agreement with respect to the
Partnership and another partnership pursuant to the AHI Assumption Agreement.
On February 4, 1997, the Purchasers provided the Partnership with
substantially completed communications to Unitholders and with notice that they
planned to commence the Offer five business days after the Partnership's
receipt of this notice. Also on February 4, 1997, counsel for the Purchasers
contacted counsel for the Partnership requesting a waiver of the five business
day notice provision in the Standstill Agreement. On February 5, 1997, the
Partnership rejected the Purchasers' waiver request at that time. By letter
dated February 10, 1997, counsel for the Partnership advised counsel for the
Purchasers that the Partnership believes compliance with the Standstill
Agreement and commencement of the five business day notice period requires
delivery of definitive copies of the Purchasers' communications to Unitholders.
Counsel for the Purchasers contacted counsel for the Partnership on February
11, 1997 and reiterated their request for a waiver of the five business day
notice provision in the Standstill Agreement, which request was denied. On
February 12, 1997, the Purchasers provided the Partnership with definitive
copies of communications to Unitholders and with notice that they planned to
commence the Offer five business days after the Partnerhsip's receipt of this
notice.
12. SOURCE OF FUNDS.
The Purchasers expect that an aggregate of approximately $11,447,900
(exclusive of fees and expenses) would be required to purchase the Units sought
pursuant to the Offer, if tendered. Therefore, Xxxxxxxx expects that
approximately $5,609,200 (exclusive of fees and expenses) would be required to
purchase 58.2% of the Units sought pursuant to the Offer, if tendered, after
giving effect to the initial purchase of 242,970 Units by AHI. Krescent
presently contemplates that it will obtain all of such funds from capital
contributions from its members who have an aggregate net worth substantially in
excess of the amount required to purchase the Units. One of Xxxxxxxx's
members, Apollo Real Estate Investment Fund II, L.P., has capital commitments
from institutional and other investors for aggregate amounts that exceed $500
million. However, Krescent may seek to obtain debt financing to facilitate the
purchase of Units, but no commitment has been obtained for any such debt
financing.
AHI expects that approximately $5,838,700 (exclusive of fees and
expenses) would be required to initially purchase 242,970 Units and to purchase
41.8% of the Units sought thereafter pursuant to the Offer, if tendered. AHI
presently contemplates that it will obtain all of such funds from capital
contributions from its partners, who have an aggregate net worth substantially
in excess of the amount required to purchase such Units.
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13. PURCHASE PRICE CONSIDERATIONS.
The Purchasers have set the Purchase Price at $7.45 net per Unit
(subject to adjustment as set forth in this Offer to Purchase). The Purchasers
established the Purchase Price by analyzing a number of quantitative and
qualitative factors including: (i) the absence of a significant number of
recent secondary market resales of the Units; (ii) the lack of liquidity of an
investment in the Partnership; (iii) the costs to the Purchasers associated
with acquiring the Units; (iv) the administrative costs of continuing to own
the Partnership's assets through a publicly registered limited partnership; (v)
the possibility that Unitholders may realize taxable income in excess of tax
distributions from the Partnership in future years; (vi) the inability of
Unitholders to exercise effective control over the management of the
Partnership through the annual election of the General Partners; and (vii)
estimated transaction costs of completing the Offer.
The Form 10-K states that "(t)here is no public market for the Units and
it is not anticipated that any such public market will develop." At present,
privately negotiated sales and sales through intermediaries (e.g., through the
trading system operated by Chicago Partnership Board, Inc., which publishes
sales by holders of Units) are the only means available to a Unitholder to
liquidate an investment in Units (other than the Offer) because the Units are
not listed or traded on any exchange or quoted on any NASDAQ list or system.
According to Partnership Spectrum, an independent third-party industry
publication, for the six months ended November 30, 1996, a total of 59,006.6
Units traded at per Unit prices between $6.70 and $7.50 with a weighted average
of $7.15 per Unit. Set forth below is a schedule of the trading activity of
Units during the six-months ended November 30, 1996, in two-month intervals, as
reported by The Partnership Spectrum:
Trading Activity for Six-Month Period Ended November 30, 1996
-------------------------------------------------------------
Period Low/High No. of Units Traded Total Volume
------ -------- ------------------- ------------
June 1, 1996 - July 31, 1996 $6.79/$7.44 25,395.4 $181,563.46
August 1, 1996 - September 30, 1996 $6.70/$7.44 20,420.2 146,099.53
October 1, 1996 - November 30, 1996 $6.70/$7.50 13,191.0 94,038.40
----------- -------- -----------
TOTALS: $6.70/$7.50 59,006.6 $421,701.39
------- ======== ===========
Unitholders are advised, however, that such gross sales prices reported by The
Partnership Spectrum do not necessarily reflect the net sales proceeds received
by sellers of Units, which typically are reduced by commissions and other
secondary market transaction costs to amounts less than the reported prices.
The November/December, 1996 issue of the Partnership Spectrum has also
reported that the General Partners estimate that the net asset value of each
Unit is $11.19. The General Partners have not, however, disclosed the formula
used, the assumptions made, or the underlying valuations relied upon in
deriving this estimated net asset value of each Unit. Different formulas,
assumptions, or underlying valuations may result in higher or lower estimates
of the net asset value of each Unit. Additionally, the Purchasers believe that
the General Partners' estimate of net asset value is not necessarily
representative of the value of the Units when the Partnership ultimately
liquidates its Properties. The Purchasers believe that property selling costs
and expenses (e.g., brokers' commissions, attorneys' fees, escrow fees, title
company costs, rent guarantees, correction of deferred maintenance, etc.),
which could be incurred by the Partnership in disposing of the Properties, may
significantly reduce the gross sale proceeds paid to the Partnership and, in
turn, the amount of cash available for distribution to the Unitholders.
The Purchasers understand that the Partnership maintains a reinvestment
plan under which participating Unitholders have their distributions from the
Partnership invested in additional Units which are purchased to the extent
available by the plan's agent in the secondary market or otherwise. While the
Purchasers understand that certain Unitholders have sold Units directly to the
plan, the Purchasers are not aware of any publicly disclosed information as to
the number of Units purchased or the per Unit prices paid by the plan.
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The Purchase Price represents the price at which the Purchasers are
willing to purchase Units. No independent person has been retained to evaluate
or render any opinion with respect to the fairness of the Purchase Price and no
representation is made by the Purchasers or any affiliate of the Purchasers as
to such fairness. The Purchasers did not attempt to obtain current independent
valuations or appraisals of the underlying assets owned by the Partnership.
Other measures of the value of the Units may be relevant to Unitholders.
UNITHOLDERS ARE URGED TO CONSIDER CAREFULLY ALL OF THE INFORMATION CONTAINED
HEREIN AND CONSULT WITH THEIR OWN ADVISORS, TAX, FINANCIAL OR OTHERWISE, IN
EVALUATING THE TERMS OF THE OFFER BEFORE DECIDING WHETHER TO TENDER UNITS.
The Purchasers, together with Xxxxxxxx's financial advisor, established
the Purchase Price based on their own and Xxxxxxxx's financial advisor's own
independent analysis of the Partnership, the Properties, the other assets of
the Partnership and the financial condition of the Partnership. No appraisal
was obtained for any of the Properties, and no independent person was retained
by the Purchasers to render any valuation or fairness opinion. The Purchasers
derived the estimated liquidation value per Unit from their analysis of
financial information from publicly-available information in the Form 10-K and
Form 10-Q, their review of the property information therein and their
independent analysis of the markets in which the Properties are located.
Xxxxxxxx made numerous assumptions and certain adjustments to the Partnership's
operating statements (to reflect capital expenses) and certain other items,
including, without limitation, assuming average annual capital expenditures of
$1.23 per square foot at each of the Properties and assuming the current
management fees of up to 6% of gross receipts continued. The liquidation value
was derived by taking into account the other assets and liabilities of the
Partnership as set forth in the Form 10-K, and certain other factors, resulting
in an estimated liquidation value of $72,489,736. Dividing that amount by the
number of Units outstanding, Xxxxxxxx arrived at an estimated liquidation value
per Unit of approximately $9.67. AHI has separately derived an estimated
liquidation value per Unit from its analysis of the publicly-available
financial and property information described above and its independent analysis
of the markets in which the Properties are located. AHI also made numerous
assumptions and certain adjustments to the Partnership's operating statements
including, without limitation, annualizing revenues and expenses relating
specifically to the Properties from the Form 10-Q, using annual capital
expenditures of $200 per apartment unit and $0.20 per leasable square foot of
commercial space and an assumed management fee of 4% and estimating the
Partnership's 50% joint venture interest in one property. AHI's estimate of
liquidation value was derived by taking into account the other assets and
liabilities of the Partnership as set forth in the Form 10-Q and certain other
factors, resulting in an estimated liquidation value of $71,095,164 or $9.48
per Unit. UNITHOLDERS ARE ADVISED THAT THE FOREGOING AMOUNTS ARE ONLY
ESTIMATES. The amount of adjusted net operating income and other assets used
to establish estimated liquidation value will vary from period to period. If
the Purchasers used results from another period and used the same analysis, the
estimated liquidation value would vary. In addition, a different valuation
formula would result in higher or lower estimated valuations for the
Properties.
14. CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer and in addition to
(and not in limitation of) Xxxxxxxx's and AHI's rights to extend and amend the
Offer at any time in their sole discretion, neither Xxxxxxxx nor AHI shall be
required to accept for payment, subject to Rule 14e-1(c) under the Exchange
Act, any tendered Units and may terminate the Offer as to any Units not then
paid for if, prior to the Expiration Date, (i) each of Krescent and AHI shall
not have confirmed to their reasonable satisfaction that, upon purchase of the
Units pursuant to the Offer, each of Krescent and AHI will have full rights to
ownership as to all such Units and each of Krescent and AHI will become
transferees of the purchased Units for all purposes under the Partnership
Agreement, (ii) each of Krescent and AHI shall not have confirmed to their
reasonable satisfaction that, upon the purchase of the Units pursuant to the
Offer, the Transfer Restrictions will have been satisfied, or (iii) all
authorizations, consents, orders or approvals of, or declarations or filings
with, or expirations of waiting periods imposed by, any court, administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, necessary for the consummation of the transactions
contemplated by the Offer shall not have been filed, occurred or been obtained.
Furthermore, notwithstanding any other term of the Offer, Krescent and AHI will
not be required to accept for payment and may terminate or amend the Offer as
to such Units if, at any time on or after the date of the Offer and before the
Expiration Date, any of the following conditions exist:
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(a) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities exchange
or the over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory), (iii) the commencement or escalation
of a war, armed hostilities or other national or international crisis involving
the United States, (iv) any limitation (whether or not mandatory) imposed by
any governmental authority on, or any other event that might have material
adverse significance with respect to, the nature or extension of credit by
banks or other lending institutions in the United States, or (v) in the case of
any of the foregoing, a material acceleration or worsening thereof; or
(b) any material adverse change (or any condition, event or
development involving a prospective material adverse change) shall have
occurred or be likely to occur in the business, prospects, financial condition,
results of operations, properties, assets, liabilities, capitalization,
partners' equity, licenses, franchises or businesses of the Partnership and its
subsidiaries taken as a whole; or
(c) there shall have been threatened, instituted or pending any
action, proceeding, application, audit, claim or counterclaim by any government
or governmental authority or agency, domestic or foreign, or by or before any
court or governmental, regulatory or administrative agency, authority or
tribunal, domestic, foreign or supranational, which (i) challenges the
acquisition by the Purchasers of the Units or seeks to obtain any material
damages as a result thereof, (ii) makes or seeks to make illegal, the
acceptance for payment, purchase or payment for any Units or the consummation
of the Offer, (iii) imposes or seeks to impose limitations on the ability of
the Purchasers or any affiliate of the Purchasers to acquire or hold or to
exercise full rights of ownership of the Units, including, but not limited to,
the right to vote (through the Corporate Limited Partner) any Units purchased
by them on all matters with respect to which Unitholders have the right to
direct the Corporate Limited Partner on the manner in which it will vote on
matters presented to the Limited Partners and Unitholders, (iv) may result in a
material diminution in the benefits expected to be derived by the Purchasers or
any of their affiliates as a result of the Offer, (v) requires divestiture by
the Purchasers of any Units, (vi) might materially adversely affect the
business, properties, assets, liabilities, financial condition, operations,
results of operations or prospects of the Partnership or the Purchasers, or
(vii) challenges or adversely affects the Offer; or
(d) there shall be any action taken, or any statute, rule,
regulation, order or injunction shall have been enacted, promulgated, entered,
enforced or deemed applicable to the Offer, or any other action shall have been
taken, by any government, governmental authority or court, domestic or foreign,
other than the routine application to the Offer of waiting periods that has
resulted, or in the reasonable good faith judgment of the Purchasers could be
expected to result, in any of the consequences referred to in clauses (i)
through (vii) of paragraph (c) above; or
(e) the Partnership or any of its subsidiaries shall have authorized,
recommended, proposed or announced an agreement or intention to enter into an
agreement, with respect to any merger, consolidation, liquidation or business
combination, any acquisition or disposition of a material amount of assets or
securities, or any comparable event, not in the ordinary course of business
consistent with past practices; or
(f) the failure to occur of any necessary approval or authorization
by any federal or state authorities necessary to the consummation of the
purchase of all or any part of the Units to be acquired hereby, which in the
reasonable judgment of the Purchasers in any such case, and regardless of the
circumstances (including any action of the Purchasers) giving rise thereto,
makes it inadvisable to proceed with such purchase or payment; or
(g) either Purchaser shall become aware that any material right of
the Partnership or any of its subsidiaries under any governmental license,
permit or authorization relating to any environmental law or regulation is
reasonably likely to be impaired or otherwise adversely affected as a result
of, or in connection with, the Offer; or
(h) the Partnership or either of its General Partners shall have
amended, or proposed or authorized any amendment to, the Partnership Agreement
or the Purchasers shall have become aware that the Partnership or either of its
General Partners have proposed any such amendment.
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The foregoing conditions are for the sole benefit of the Purchasers and
their affiliates and may be asserted by the Purchasers regardless of the
circumstances (including, without limitation, any action or inaction by the
Purchasers or any of their affiliates) giving rise to such condition, or may be
waived by the Purchasers, in whole or in part, from time to time in their sole
discretion. The failure by the Purchasers at any time to exercise the
foregoing rights will not be deemed a waiver of such rights, which will be
deemed to be ongoing and may be asserted at any time and from time to time.
Any determination by the Purchasers concerning the events described in this
Section 14 will be final and binding upon all parties.
15. CERTAIN LEGAL MATTERS.
Except as set forth in this Offer to Purchase, based on their review of
publicly available filings by the Partnership with the Commission and other
publicly available information regarding the Partnership, the Purchasers are
not aware of any licenses or regulatory permits that would be material to the
business of the Partnership, taken as a whole, and that might be adversely
affected by the Purchasers' acquisition of Units as contemplated herein, or any
filings, approvals or other actions by or with any domestic or foreign
governmental authority or administrative or regulatory agency that would be
required prior to the acquisition of Units by the Purchasers pursuant to the
Offer as contemplated herein, other than the filing of a Tender Offer Statement
on Schedule 14D-1 (which has been filed) and any required amendments thereto.
Should any such approval or other action be required, there can be no assurance
that any such additional approval or action, if needed, would be obtained
without substantial conditions or that adverse consequences might not result to
the Partnership's business, or that certain parts of the Partnership's or the
Purchasers' businesses might not have to be disposed of or held separate or
other substantial conditions complied with in order to obtain such approval or
action in the event that such approvals were not obtained or such actions were
not taken.
APPRAISAL RIGHTS. Unitholders will not have appraisal rights as a
result of the Offer.
STATE ANTI-TAKEOVER LAWS. A number of states have adopted anti-takeover
laws which purport, to varying degrees, to be applicable to attempts to acquire
securities of corporations or other entities which are incorporated or
organized in such states or which have substantial assets, securityholders,
principal executive officers or principal places of business therein. Although
the Purchasers have not attempted to comply with any state anti-takeover
statutes in connection with the Offer, the Purchasers reserve the right to
challenge the validity or applicability or any state law allegedly applicable
to the Offer and nothing in this Offer to Purchase nor any action taken in
connection therewith is intended as a waiver of such right. If any state anti-
takeover statute is applicable to the Offer, the Purchasers might be unable to
accept for payment or purchase Units tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer. In such case, the Purchasers
may not be obliged to accept for purchase or pay for any Units tendered.
ERISA. By executing and returning the Letter of Transmittal, a
Unitholder will be representing that either (a) the Unitholder is not a plan
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Code, or an entity deemed to hold
"plan assets" within the meaning of 29.C.F.R. Section 2510.3-101 of any such
plan; or (b) the tender and acceptance of Units pursuant to the Offer will not
result in a nonexempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code.
MARGIN REQUIREMENTS. The Units are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, those regulations generally are not applicable to the Offer.
ANTITRUST. Under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the rules and regulations that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated until certain information and
documentary material has been furnished for review by the Antitrust Division of
the Department of Justice and the FTC and certain waiting period requirements
have been satisfied. The Purchasers do not believe any filing is required
under the HSR Act with respect to their acquisition of Units contemplated by
the Offer.
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16. CERTAIN FEES AND EXPENSES.
Except as set forth in this Section 16, the Purchasers will not pay any
fees or commissions to any broker, dealer or other person for soliciting
tenders of Units pursuant to the Offer. The Purchasers have retained The
Xxxxxx Group, Inc. to act as Information Agent/Depositary in connection with
the Offer. The Purchasers will pay the Information Agent/Depositary reasonable
and customary compensation for its services, plus reimbursement for certain
reasonable out-of-pocket expenses, and have agreed to indemnify the Information
Agent/Depositary against certain liabilities and expenses in connection
therewith, including certain liabilities under the federal securities laws.
The Purchasers will also pay all costs and expenses of printing and mailing the
Offer and its legal fees and expenses.
17. MISCELLANEOUS.
The Offer is being made to all Unitholders, Beneficial Owners and
Assignees, all to the extent known by the Purchasers. The Purchasers are not
aware of any state in which the making of the Offer is prohibited by
administrative or judicial action pursuant to a state statute. If the
Purchasers become aware of any state where the making of the Offer is so
prohibited, the Purchasers will make a good faith effort to comply with any
such statute or seek to have such statute declared inapplicable to the Offer.
If, after such good faith effort, the Purchasers cannot comply with any
applicable statute, the Offer will not be made to (nor will tenders be accepted
from or on behalf of) Unitholders in such state.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, the Purchasers have filed with the Commission a Tender Offer
Statement on Schedule 14D-1, together with exhibits, furnishing certain
additional information with respect to the Offer. Such statement and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained at the same places and in the same manner as set forth with respect to
information concerning the Partnership in Section 9 ("Certain Information
Concerning the Partnership") (except that they will not be available at the
regional offices of the Commission).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASERS NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Krescent Partners L.L.C.
American Holdings I, L.P.
February 20, 1997
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APPENDIX A
GLOSSARY OF DEFINED TERMS
"Advisors" means Apollo Real Estate Capital Advisors II, Inc.
"Advisory Agreement" means the definitive advisory agreement entered
into between Liquidity Financial and Krescent on November 21, 1996.
"AHI" means American Holdings I, L.P., a Delaware limited partnership.
"AHI Assumption Agreement" means that certain Assumption Agreement and
Consent dated as of February 7, 1997, between LFG, AHI and The Xxxxx
Corporation.
"AHI General Partner" means American Holdings I-GP, Inc., a Delaware
corporation.
"API" means American Property Investors, Inc., a Delaware corporation.
"AREA" means Apollo Real Estate Advisors, L.P.
"AREA II" means Apollo Real Estate Advisors II, L.P.
"AREH" means American Real Estate Holdings, L.P., a Delaware limited
partnership.
"Assignee" means a person or entity who has purchased Units but is not
recognized on the Partnership's books as a transferee of such Units.
"Assumption Agreement" means that certain Assumption Agreement dated
November 21, 1996 pursuant to which Xxxxxxxx agreed to become bound by the
restrictions set forth in the Standstill Agreement.
"Beneficial Owner" means a Unitholder in the case of Units owned by
Individual Retirement Accounts or Xxxxx plans.
"business day" means any day other than a Saturday, Sunday or federal
holiday and consists of the time period from 12:01 a.m. through 12:00 midnight,
New York City time, and any time period of business days will be computed in
accordance with Rule 14d-1(c)(6) under the Exchange Act.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Corporate Limited Partner" means Xxxxx Depositary Corporation, a
Massachusetts corporation, or any successor to it which holds Limited
Partnership Interests on behalf of Unitholders.
"Depositary Receipt" means an instrument evidencing a Unit or Units.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" has the meaning set forth in Section 1.
"Form 10-K" means the Partnership's Form 10-K for the year ended
December 31, 1995.
A-1
30
"Form 10-Q" means the Partnership's Form 10-Q for the quarter ended
September 30, 1996.
"FTC" means the Federal Trade Commission.
"General Partners" means The Xxxxx Corporation, a Massachusetts
corporation, and The Xxxxx Company Limited Partnership-IV, a Massachusetts
limited partnership.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Information Agent/Depositary" means The Xxxxxx Group, Inc.
"IRA" means an individual retirement account.
"Krescent" means Krescent Partners L.L.C., a Delaware limited liability
company.
"Krescent-AHI Agreement" means that certain Letter Agreement, dated
February 12, 1997, between Xxxxxxxx and AHI.
"LFG" means Liquidity Financial Group, L.P., an affiliate of Liquidity
Financial.
"Limited Partner" means any person or entity admitted to the Partnership
as a limited partner.
"Limited Partnership Interest" means the ownership interest of a Limited
Partner, including its interest in distributions, including liquidating
distributions, and profits and losses of the Partnership and all of its other
rights, duties and obligations under the Partnership Agreement.
"Liquidity Financial" means Liquidity Financial Advisors, Inc.,
Xxxxxxxx's financial advisor.
"Xxxxxxxx" means Xxxxxxxx Corp., a Massachusetts corporation and an
affiliate of AHI.
"Xxxxxxxx Standstill Agreement" means the agreement, dated November 26,
1996 and amended on January 8, 1997 and February 3, 1997, between The Xxxxx
Corporation and Xxxxxxxx.
"Managing Member" means AP-GP Prom Partners Inc., a newly-formed
Delaware corporation and the managing member of Krescent.
"NASD" means the National Association of Securities Dealers, Inc.
"1995 Agreement in Principle" means the agreement executed in March 1995
that outlined an agreement in principle regarding the establishment of a
financial advisory relationship between Liquidity Financial and AREA with
respect to strategic investments in certain limited partnerships.
"1996 Agreement in Principle" means the agreement executed in September
1996 that outlined an agreement in principle regarding the establishment of a
financial advisory relationship between Liquidity Financial and AREA II with
respect to strategic investments in certain limited partnerships.
"Offer" has the meaning set forth in the Introduction.
"Offer to Purchase" means this Offer to Purchase dated February 20,
1997.
"Partnership" means Xxxxx Cash Plus-II Limited Partnership, a
Massachusetts limited partnership.
"Partnership Agreement" means the Amended Agreement of Limited
Partnership of the Partnership, dated the 25th day of March, 1986, by and among
The Xxxxx Corporation, a Massachusetts corporation, and The Xxxxx Company
Limited Partnership-IV, a Massachusetts limited partnership, each as a General
Partner; Xxxxx
A-2
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Depositary Corporation, as the Corporate Limited Partner; and those Persons who
were or may be admitted to the Partnership as Investor Limited Partners.
"Purchase Price" has the meaning set forth in the Introduction.
"Purchasers" means, collectively, Xxxxxxxx and AHI.
"Standstill Agreement" means the Settlement Agreement and Release, dated
June 27, 1996 and amended as of October 8, 1996 and as of January 6, 1997,
between The Xxxxx Corporation and Liquidity Financial Group, L.P.
"Standstill Expiration Date" means that date which is two and one-half
years from the date Liquidity Financial receives the last list of Unitholders
of the Partnership or limited partners of any affiliate of the Partnership,
which date is currently May 19, 1999.
"TIN" means taxpayer identification number.
"Transfer Restrictions" has the meaning set forth in Section 2.
"UBTI" means unrelated business taxable income.
"Unitholder" means a holder of Units.
"Unit" means the interest of a Unitholder in a Limited Partnership
Interest evidenced by a Depositary Receipt and representing (i) the assignment
by the Corporate Limited Partner of its interest in the corresponding Limited
Partnership Interest to the extent permitted by Massachusetts law and (ii) the
right to require the Corporate Limited Partner to exercise any other rights
with respect to such Limited Partnership Interest at the direction of the
Unitholder.
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SCHEDULE I
EXECUTIVE OFFICERS AND DIRECTORS OF AP-GP PROM PARTNERS INC.
Set forth below is the name, current business address, present principal
occupation, and employment history for at least the past five years of each
executive officer and director of AP-GP Prom Partners Inc. Each person listed
below is a citizen of the United States.
XXX X. XXXXXXX. Xx. Xxxxxxx has been an officer and a director of AP-GP Prom
Partners Inc. since October 1996 and an officer of Advisors since its
inception. Since 1993, Xx. Xxxxxxx has been associated with AREA and since May
1996 with Apollo Real Estate Advisors II, L.P. ("AREA II") which respectively
act as managing general partner of Apollo Real Estate Investment Fund, L.P.
("Apollo I") and Apollo Real Estate Investment Fund II, L.P. ("Apollo" and
together with Xxxxxx X, the "Apollo Funds"). The Apollo Funds are private real
estate investment funds formed to invest in direct and indirect real property
interests, including direct property investments and public and private debt
and equity securities. Prior to 1993, Xx. Xxxxxxx was Executive Vice President
and Chief Operating Officer of the Xxxxxx Xxxxxx Company, a private real estate
development and management firm based in Westchester County, New York. Xx.
Xxxxxxx received his MBA degree from New York University. Xx. Xxxxxxx is also
a director of Capital Apartment Properties, Inc., Xxxxxx International, Inc.
and a past President of the NAIOP in New York. Xx. Xxxxxxx'x business address
is 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
X. XXXXXX XXXXXXX. Xx. Xxxxxxx has been an officer and a director of AP-GP
Prom Partners Inc. since October 1996 and an officer of Advisors since its
inception. Since 1993, Xx. Xxxxxxx has been a principal of AREA and since May
1996 of AREA II, which respectively act as managing general partner of Xxxxxx X
and Xxxxxx XX. Prior to 1993, Xx. Xxxxxxx was a principal of Xxxxxxxx Xxxx
Ventures, a national real estate investment firm. Xx. Xxxxxxx is also a
director of Capital Apartment Properties, Inc., Xxxxxx International, Inc.,
Xxxx Management Services, Inc. and Western Pacific Housing Corp. Xx. Xxxxxxx'x
business address is 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
XXXXXXX XXXX. Xx. Xxxx has been an officer and a director of AP-GP Prom
Partners Inc. since October 1996. Since May 1993, Xx. Xxxx has been associated
with AREA and since May 1996 has been associated with AREA II, which
respectively act as managing general partner of Xxxxxx X and Xxxxxx XX. Prior
to May 1993, Xx. Xxxx attended Columbia Law School. Prior to April 1990, Xx.
Xxxx was employed by the real estate investment banking group at Xxxxxxxx
Xxxxxx Xxxxxx, Inc., an investment banking and brokerage firm. Xx. Xxxx'x
business address is 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
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SCHEDULE II
EXECUTIVE OFFICERS AND DIRECTORS OF AMERICAN HOLDINGS I-GP, INC. AND
AMERICAN PROPERTY INVESTORS, INC.
The name and positions of the executive officers and directors of
American Holdings I-GP, Inc. (the "AHI General Partner"), the general partner
of AHI, and American Property Investors, Inc. ("API"), the general partner of
the sole stockholder of the AHI General Partner, are set forth below. The
business address of each such executive officer and director (other than Mr.
Xxxxx) is 000 Xxxxx Xxxxxxx Xxxx, Xxxxx Xxxxx, X.X. 10549. Mr. Xxxxx's
business address is c/o Icahn Associates Corp., 000 X. 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000. Each such executive officer and director is a citizen of the
United States of America.
NAME POSITION
---- --------
Xxxx X. Xxxxx . . . . . . Director and Chairman of the Board (API)
Xxxxxx X. Xxxxxxxx. . . . Director (API)
Xxxxxxx X. Xxxxxxxxxx . . Director (API)
Xxxx X. Xxxxxxxxx . . . . Director (API)
Xxxx X. Xxxxxxxxxx. . . . Vice President, Secretary and Treasurer
(API); Director, Secretary and Treasurer
(AHI General Partner)
Xxxxx X. Xxxxxx . . . . . Vice President (AHI General Partner)
The following sets forth with respect to each executive officer and
director of the AHI General Partner and API such person's (a) name, (b) present
principal occupation or employment and the name, principal business and address
of any corporation or other organization in which such employment or occupation
is conducted and (c) material occupations, positions, offices or employments
during the last five years, giving the starting and ending dates of each and
the name, principal business and address of any business corporation or other
organization in which such occupation, position, office or employment was
carried on.
XXXX X. XXXXX. Xxxx X. Xxxxx has been Chairman of the Board of
Directors of API since November 15, 1990. Mr. Xxxxx is also President and a
director of Starfire Holding Corporation (formerly Icahn Holding Corporation),
a Delaware corporation ("SHC"), and Chairman of the Board and a director of
various of SHC's subsidiaries, including ACF Industries, Inc., a New Jersey
corporation ("ACF"). SHC is primarily engaged in the business of holding,
either directly or through subsidiaries, a majority of the common stock of ACF
and its address is 000 Xxxxx Xxxxxxx Xxxx, Xxxxx Xxxxx, Xxx Xxxx 00000. Mr.
Xxxxx has also been Chairman of the Board of Directors of ACF since October 29,
1984 and a director of ACF since June 29, 1984. ACF is a railroad freight and
tank car leasing, sales and manufacturing company. He has also been Chairman
of the Board of Directors and President of Icahn & Company., Inc. since 1968.
Icahn & Co., Inc. is a registered broker-dealer and a member of the National
Association of Securities Dealers. In 1979, Mr. Xxxxx acquired control and
presently serves as Chairman of the Board of Directors of Bayswater Realty &
Capital Corp., which is a real estate investment and development company
("Bayswater"). ACF, Icahn & Co., Inc. and Bayswater are deemed to be directly
or indirectly owned and controlled by Mr. Xxxxx. Mr. Xxxxx was Chief Executive
Officer and member of the Office of the Chairman of Trans World Airlines, Inc.
("TWA") from November 8, 1988 to January 8, 1993; Chairman of the Board of
Directors of TWA from January 3, 1986 to January 8, 1993 and a director of TWA
from September 27, 1985 to January 8, 1993. Mr. Xxxxx also has substantial
equity interests in and controls various partnerships and corporations which
invest in publicly traded securities.
XXXXXX X. XXXXXXXX. Xxxxxx X. Xxxxxxxx has served as a director of API
since November 15, 1990. He was also Vice Chairman of the Board of Directors
of TWA from February 1, 1989 to January 8, 1993 and a member of the Office of
the Chairman from November 8, 1988 to January 8, 1993. Xx. Xxxxxxxx was a
director of TWA from September 27, 1985 to January 8, 1993. He also was a
director and executive officer and Director of Research at Icahn & Co., Inc.
and related entities from 1968 until December 1994. He also has been Vice
Chairman of the Board of Directors of ACF since October 29, 1984 and a Director
of ACF since June 29, 1984. Xx. Xxxxxxxx has also been a Senior Managing
Director of Greenway Partners, L.P. since May 1993, which invests in publicly
traded securities.
S-2
34
XXXXXXX X. XXXXXXXXXX. Xxxxxxx X. Xxxxxxxxxx has served as a director
of API since March 26, 1991. Since April 1995, Xx. Xxxxxxxxxx has acted as an
independent real estate investment banker. From January 1, 1994 through April
1995, Xx. Xxxxxxxxxx was Managing Director of RFG Financial, Inc., a commercial
mortgage company. From September 30, 1991 to December 31, 1993, Xx. Xxxxxxxxxx
was Senior Vice President of Xxxxxxxx Asset Management Group. From May 1, 1990
to September 30, 1991, Xx. Xxxxxxxxxx was Senior Vice President of Xxxx
Associates, Inc., a real estate development company, where he was involved in
the acquisition of real estate and the asset management workout and disposition
of business areas. He also acted as the Northeast Regional Director for Xxxx
Associates, Inc. From June 1985 to January 30, 1990, Xx. Xxxxxxxxxx was
Senior Vice President and stockholder of Eastdil Realty, Inc., a real estate
company, where he was involved in the asset management workout, disposition of
business and financing areas. During the interim period from January 30, 1990
through May 1, 1990, Xx. Xxxxxxxxxx was an independent contractor for Eastdil
Realty, Inc. on real estate matters.
XXXX X. XXXXXXXXX. Xxxx X. Xxxxxxxxx has served as a director of API
since December 3, 1993. Xx. Xxxxxxxxx is an attorney and a member of the New
York State Bar and has been with the New York based law firm of Xxxxxxxxx,
Xxxxxxxxx & Xxxx since 1966, where he is currently a senior partner.
XXXX X. XXXXXXXXXX. Xxxx X. Xxxxxxxxxx has served as sole director,
Secretary and Treasurer of the AHI General Partner since November 1996. He has
also served as Vice President, Secretary and Treasurer of API since March 18,
1991. Xx. Xxxxxxxxxx was also President of Bayswater Realty Brokerage Corp.
from June 1987 until November 19, 1993 and Vice President of Bayswater Realty &
Capital Corp. from September 1979 until April 15, 1993.
XXXXX X. XXXXXX. Xx. Xxxxxx has served as Vice President of the AHI
General Partner since November 1996. He has also served as a Vice President
and Assistant Secretary of API since March 18, 1991. From January 1988 to May
1991, he was a Vice President of Integrated Resources, Inc., a provider of
financial services. From 1981 through 1987 he was a controller at Interstate
Properties, a commercial real estate developer/operator.
S-3
35
Facsimile copies of the Letter of Transmittal, properly completed and
duly executed, will be accepted. Questions and requests for assistance may be
directed to the Information Agent/Depositary at the address and telephone
number listed below. Additional copies of this Offer to Purchase, the Letter
of Transmittal and other tender offer materials may be obtained from the
Information Agent/Depositary as set forth below, and will be furnished promptly
at the Purchasers' expense. The Letter of Transmittal and any other required
documents should be sent or delivered by each Limited Partner to the
Information Agent/Depositary at its address set forth below. To be effective,
a duly completed and signed Letter of Transmittal (or facsimile thereof) must
be received by the Information Agent/Depositary at the address (or facsimile
number) set forth below before 12:00 midnight, New York City Time, on Thursday,
March 20, 1997.
By Mail/Hand or Overnight Delivery:
0000 Xxx Xxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxx, XX 00000
By Facsimile:
(000) 000-0000
or
(000) 000-0000
For Additional Information Call:
THE XXXXXX GROUP INC.
(000) 000-0000
or
(000) 000-0000
