MADISON LIQUIDITY INVESTORS 104, LLC
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c/o Gemisys Tender Services__o__7103 South Revere Parkway__o__Englewood, CO
80112__o__Tel: 000.000.0000__o__Fax: 000.000.0000
February 5, 1999
TO UNITHOLDERS IN ENSTAR INCOME/GROWTH PROGRAM 6-A, L.P.
RE: Offer to Purchase Limited Partnership Interests
Dear Fellow Investor:
Madison Liquidity Investors 104, LLC ("Madison") is seeking to buy your Limited
Partnership Interests (the "Units") in Enstar Income/Growth Program 6-A, L.P.
(the "Partnership") for $50.00 per Unit in CASH. This amount will be reduced by
the $25.00 transfer fee (per transfer, not per Unit) charged by the Partnership
and any cash distributions made by the Partnership on or after February 5, 1999.
WE ARE AN INVESTMENT FIRM WHICH BUYS UNITS IN DOZENS OF UNDERPERFORMING LIMITED
PARTNERSHIPS AND ARE NOT AFFILIATED WITH THE PARTNERSHIP NOR THE GENERAL
PARTNER. We are principals seeking to acquire Units for our investment portfolio
only (we are not a matching service or professional broker who resells units).
Madison and its affiliates have over $270 million in capital that is committed
to paying limited partners for their units. To date, over 45,000 limited
partners nationwide in over 250 limited partnerships have chosen to sell their
units to us. This has made Madison a leading and reliable choice for limited
partnership investors seeking a time and cost efficient liquidity option.
Please consider the following points in evaluating our offer:
o FAST, COMMISSION-FREE SALE. Our offer provides you with the
opportunity to immediately sell your Units without the commission
costs (generally, up to 10% of the sales price, subject to a $150-$200
minimum commission per trade) paid by the seller in typical secondary
market sales. Remember, with secondary market matching services, the
process to sell your Units will not even begin until an interested
buyer can be found, which cannot be assured and can take days, weeks
or even months.
o HISTORICAL PARTNERSHIP PERFORMANCE. The Partnership was closed 11
years ago. You invested $250.00 per Unit and to date an original
investor has received total cash distributions of approximately $41.98
per Unit from the Partnership. When combined with the remaining net
asset value range (as estimated by the General Partner) this would
represent a negative return on your investment.
o ILLIQUID UNITS. The relative illiquidity of the Units resulting from
the absence of a formal trading market means the Units are difficult
to sell. In fact, there was only one sale per month representing 50
Units, on average, during the months of October and November 1998 (the
most recent period for which information is available) according to
the November/December issue of The Partnership Spectrum.
o PARTNERSHIP FACING SIGNIFICANT CAPITAL RESTRAINT. The Partnership is
party to a loan agreement (the "Facility") with an affiliate of the
General Partner. "However, the Partnership's borrowing capacity and
its present cash reserves will be insufficient to fund its entire
upgrade program. Consequently, the Partnership will need to rely on
increased cash flow from operations or new sources of borrowing in
order to meet its future liquidity requirements" quoted from the
Partnership's quarterly report for the period ending September 30,
1998 on Form 10-Q.
o DISTRIBUTIONS CONTINUE TO BE SUSPENDED. The Partnership has not paid a
distribution to investors since May 1993. As disclosed in the
Partnership's quarterly report for the period ending September 30,
1998 on Form 10-Q, "As a result of the pending upgrade program
discussed above, the Corporate General Partner has concluded that it
is not prudent for the Partnership to resume paying distributions at
this time."
o SIMPLIFIED TAX FILING. If you sell your Units now, 1999 will be the
final year for which you receive a K-1 tax form from the Partnership,
assuming the transfer of your Units is completed by year end. Many
investors who have tax professionals prepare their taxes find the cost
of filing K-1s to be burdensome, particularly if more than one limited
partnership is owned.
o ABILITY TO REDEPLOY SALE PROCEEDS INTO OTHER INVESTMENTS. The decision
to sell your Units for cash now would provide you with the ability to
redeploy your investment assets into potentially stronger and liquid
investments. This could, depending on your individual investment
decisions, provide current income and capital appreciation potential,
as well as liquidity if needed.
o ELIMINATION OF RETIREMENT ACCOUNT FEES. If you sell your Units now,
1999 could be the final year in which you incur fees for your IRA or
retirement account. Due to the lackluster performance and declining
value of limited partnership units generally, many custodians will not
allow the transfer of limited partnership units into new retirement
accounts. While many investors have consolidated their retirement
accounts and taken advantage of custodial services offered through
discount brokerage firms, they may have had to maintain separate
retirement accounts for limited partnership units, because of
custodian restrictions on the transfer of such units. Once our cash
payment is sent directly to your retirement account, you are free to
consolidate your retirement accounts or transfer the funds to a
custodian that offers lower fees.
o UNCERTAIN TIMING OF FINAL PARTNERSHIP LIQUIDATION. A sale of all of
the assets of a partnership is no guarantee that full liquidation will
occur immediately after such sale or shortly thereafter. As stated in
the July/August 1998 issue of The Partnership Spectrum, "Long
suffering partnership investors rejoicing over the sale of their
partnership's assets typically don't realize that it could be months
or even years before their partnership is formally dissolved and the
final K-1 is mailed out. While warranties and representations made to
buyers in connection with asset sales often keep a partnership from
dissolving for six to twelve months after the last property has been
sold, a lawsuit can require a partnership to stay open for years."
Accordingly, to the extent that the Partnership continues to exist
after its final asset sale, you will continue to receive a K-1 in each
year in which the Partnership continues to exist and there can be no
assurance that the Partnership will make cash distributions in each of
such years.
o Unitholders who tender their Units will give up the opportunity to
participate in any future benefits from the ownership of Units,
including potential future distributions by the Partnership, and the
purchase price per Unit payable to a tendering Unitholder by the
Purchaser may be less than the total amount which might otherwise be
received by the Unitholder with respect to the Units over the
remaining term of the Partnership.
o The Purchaser is making the Offer for investment purposes and with the
intention of making a profit from the ownership of the Units. In
establishing the purchase price of $50.00 per Unit, the Purchaser is
motivated to establish the lowest price which might be acceptable to
Unitholders consistent with the Purchaser's objectives.
o Because the 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
Purchaser cannot, and does not, know whether the information compiled
by The Partnership Spectrum is accurate or complete.
0 The eventual transfer of all tendered Units is subject to the final
approval of the Partnership or General Partners and is subject to
their discretion.
Xxxxxxx will only purchase a maximum of 9.9% of the outstanding Units pursuant
to this offer. If more Units are offered to us, we will prorate our purchase
ratably to all sellers. You will be paid promptly following (i) receipt of a
valid, properly executed Agreement of Assignment and Transfer (see the yellow
document enclosed) and (ii) receipt by Xxxxxxx of the Partnership's confirmation
that the transfer of Units has been effectuated, subject to Section 4
(Proration) of the Offer to Purchase. ALL SALES OF UNITS WILL BE IRREVOCABLE BY
YOU, SUBJECT TO SECTION 5 (WITHDRAWAL RIGHTS) OF THE OFFER TO PURCHASE.
A COMPREHENSIVE DISCUSSION OF THE TERMS OF THE OFFER CAN BE FOUND IN THE OFFER
TO PURCHASE, EXHIBIT (A)(1) TO THE SCHEDULE 14D-1.
If you wish to accept our offer, please complete and MEDALLION SIGNATURE
GUARANTEE (this must be done by your broker or a bank where you have an account)
the enclosed yellow Agreement of Assignment and Transfer and return it in the
enclosed envelope, along with your limited partnership certificate (if one was
issued to you and is available).
Our offer will expire at 5:00 p.m., Eastern Standard Time, on March 5, 1999,
unless the offer is extended. We encourage you to act promptly.
Please call us at (000)000-0000, or send a fax to (000)000-0000, if you have any
questions. Thank you for your consideration of our offer.
Very truly yours,
Madison Liquidity Investors 104, LLC
The price offered hereby may be more or less than prices recently quoted by
secondary market matching market services. We believe that transactions through
these secondary market services are costly and time consuming, and that the
quoted prices often differ from the price a seller actually receives. Therefore,
you may prefer to sell to us even at a lower price than otherwise so quoted. We
believe that the value of the Units will ultimately be more than the price
offered hereby. However, there are numerous risks and uncertainties that may
cause our belief to be wrong. If you wish to have us bear those risks and
uncertainties, you should consider selling your Units to us. We reserve the
right to apply procedural considerations in determining which Units to accept.
We may extend the term of our offer at our discretion. At times when a Madison
tender offer for Units of the Partnership is not outstanding, affiliates of
Madison may purchase Units at negotiated prices which may be more or less than
the price offered hereby.
COMMONLY ASKED QUESTIONS AND ANSWERS
WHY WOULD I WANT TO SELL MY UNITS TO XXXXXXX?
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Have your original objectives for this investment been met? Are your pleased
with the way this investment has performed to date? We have found that most
investors are disappointed with the performance of their limited partnership
investments. Many investors have been in these investments far longer than
originally anticipated and their returns have been disappointing. In addition,
the tax reporting requirements for limited partnerships are burdensome and
costly, often requiring an accountant to prepare your taxes. Recent requirements
by certain states have also increased this burden by requiring limited partners
to file state income tax returns, and potentially to pay taxes, in states where
a partnership owns properties, regardless of the overall profitability of the
partnership.
Many investors feel that selling their limited partnership units will free up
funds to pursue more attractive investment options. And unlike limited
partnerships, most other investments provide immediate liquidity in the event an
investor needs access to his/her funds.
While emotionally difficult to accept, many investors are realizing that not
only will original projections never be met on many of these limited
partnerships, but, in some cases, original investment capital will never be
fully recovered. Thus, a readily available purchase offer for an underperforming
investment with an uncertain termination date may be an opportunity worthy of
your consideration.
WHY DOES MADISON WANT TO BUY MY UNITS?
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Madison purchases units in dozens of underperforming limited partnerships for
its own investment portfolio... not for the purposes of reselling the units or
matching buyers and sellers, as is the case with secondary market matching
services. By agreeing to sell to Madison, you are assuring a sale of your Units,
subject to proration rights and other conditions having been met. A secondary
market firm cannot assure a sale unless it can locate a buyer who is interested
in purchasing your particular Units. Most individual investors are not
interested in purchasing limited partnership units for their investment
portfolios, so Xxxxxxx is providing you with a liquidity option that is
generally not otherwise readily available.
Unlike other firms that purchase limited partnership units, Xxxxxxx is typically
not interested in acquiring controlling interests in limited partnerships.
Furthermore, buying units in a broad portfolio of limited partnerships allows us
to diversify our investment portfolio, thus mitigating our risk of purchasing
such underperforming investments.
WHAT OTHER OPTIONS ARE AVAILABLE TO ME TO SELL MY UNITS?
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NOT MANY! Unlike Madison, secondary market firms will only match buyers and
sellers, they do not provide a firm bid, so the only way you can sell your Units
through this market is if they can locate an interested buyer. FURTHERMORE,
MADISON CHARGES NO COMMISSIONS (SECONDARY MARKET FIRMS GENERALLY CHARGE UP TO
10%, SUBJECT TO A $150 - $200 MINIMUM COMMISSION PER TRADE) AND OUR OFFER PRICE
IS OFTEN HIGHER THAN RECENT SECONDARY MARKET PRICES!
HOW DO I SUBSCRIBE TO XXXXXXX'S OFFER AND WHEN WILL I BE PAID?
The purchase process involves several steps. By carefully following the
instructions on the enclosed checklist, you are ensuring the fastest possible
turnaround time for the sale of your Units. Properly completed Agreements of
Assignment and Transfer are forwarded by Xxxxxxx to the General Partner on a
weekly basis following the completion of the offer. Most General Partners will
take approximately four weeks thereafter to confirm the number of Units you own
and provide Xxxxxxx with the effective transfer date. IRA investors should add
approximately two weeks because of the additional signatures required from your
custodian. Thereafter, you will be promptly paid by Xxxxxxx.
HOW DID XXXXXXX GET MY NAME?
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In every limited partnership in which Xxxxxxx conducts a tender offer, one of
its affiliates is a limited partner, and as such, we are entitled to receive a
list of the names and addresses of all of our fellow limited partners or have
the General Partner forward this correspondence to you.
WHAT HAPPENS IF I DON'T SELL MY UNITS?
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Nothing. If you choose to retain your investment in the Partnership, you will be
a limited partner until all its assets and the Partnership have been liquidated.
Remember, however, that even if the Partnership had an original anticipated
holding period of five, seven or ten years, there is usually nothing requiring
liquidation within this time frame. In fact, most limited partnerships can
legally continue for up to twenty or thirty years, or longer, from inception.
IF YOU HAVE ANY ADDITIONAL QUESTIONS, PLEASE CALL:
MADISON LIQUIDITY INVESTORS 104, LLC
C/O GEMISYS TENDER SERVICES
(000) 000-0000
INSTRUCTIONS TO COMPLETE AGREEMENT OF ASSIGNMENT AND TRANSFER
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
By checking-off below ALL of the items that pertain to your form of ownership,
you are guaranteeing the fastest turnaround time for payment for your Units.
Refer to the "Other Common Oversights" section below to make sure you are not
forgetting anything that may delay processing.
Upon our receipt of your Agreement of Assignment and Transfer, Xxxxxxx will
evaluate it to determine if it is complete by the General Partner's standards.
If your Agreement is incomplete, you will receive a deficiency letter from us
that will let you know the additional information that we need to process your
sale. Please respond promptly to such request for additional information. YOUR
FAILURE TO PROVIDE THIS ADDITIONAL INFORMATION CAN ADD WEEKS TO THE PROCESSING
TIME.
1. BOX A
- INDIVIDUAL OWNER/JOINT OWNERS OF RECORD
[ ] Sign Agreement (BOTH owners must sign if joint account).
[ ] Provide a MEDALLION SIGNATURE GUARANTEE.
[ ] Enclose your original limited partnership certificate,
if available.
[ ] Return Agreement to Madison c/o Gemisys Tender Services
in pre-paid/pre-addressed envelope provided.
- IRA INVESTORS
[ ] Beneficial owner should sign Agreement.
Xxxxxxx will work directly with your Custodian to
get the necessary custodial signature/medallion
guarantee and we will then forward your check
directly to your IRA account.
- TRUST, PROFIT SHARING AND PENSION PLANS
[ ] Authorized signatory should sign Agreement.
[ ] Enclose first, last and other applicable pages
of TRUST OR PLAN AGREEMENT showing that xxxxxx(s)
is authorized signatory.
- CORPORATIONS
[ ] Authorized signatory should sign Agreement.
[ ] INCLUDE CORPORATE RESOLUTION showing that xxxxxx(s) is
authorized signatory.
- OTHER COMMON OVERSIGHTS
[ ] Death Certificates: If the owner of the Units
has died, please enclose a copy of the Death
Certificate and evidence of your signature
authority.
[ ] Letters Testamentary: If you have inherited the
Units, include a copy of the original owner's
DEATH CERTIFICATE and a copy of the LETTERS
TESTAMENTARY OR WILL showing that you are the
legal owner of the Units.
2. BOX B - MEDALLION SIGNATURE GUARANTEE.
Required to be signed by your bank or brokerage house only.
3. BOX C - SUBSTITUTE FORM W-9.
Please check the shaded box in Box C(i) if you do not have a Taxpayer
Identification Number or Social Security Number ("TIN") but have
already applied for a TIN. Please check the shaded box in Box C(ii)
if you are subject to the 31% federal tax backup withholding.
4. BOX D - FIRPTA AFFIDAVIT.
Please check the shaded box in Box D(i) if you are not a U.S. citizen
or a resident alien for purposes of U.S. income taxation, or are a
foreign corporation, foreign partnership, foreign estate or foreign
trust. If the Unitholder is a corporation, please indicate the state
of incorporation in the shaded area in Box D(iii).
5. BOX E - FOREIGN PERSONS.
Please check the shaded box in Box E if you are an "exempt foreign
person" for purposes of the backup withholding rules under the U.S.
federal income tax laws.
Madison Liquidity Investors 104, LLC, c/o Gemisys Tender Services,
0000 Xxxxx Xxxxxx Xxxxxxx, Xxxxxxxxx, XX 00000 Tel: 000-000-0000
Fax: 000-000-0000
Please note: A Medallion Signature Guarantee is similar to a notary, but is
provided by your bank or brokerage house where you have an account.
IF YOU HAVE ANY ADDITIONAL QUESTIONS, PLEASE CALL:
MADISON LIQUIDITY INVESTORS 104, LLC
C/O GEMISYS TENDER SERVICES
(000) 000-0000
