US BANK LETTERHEAD] January 28, 2008
Exhibit (a)(5)
[US BANK LETTERHEAD]
January 28, 2008
Dear Kiewit Royalty Trust Unit Holder:
As you may know, an unsolicited tender offer has been made by MPF Senior Note Program I, LP;
MPF Senior Note Program II, LP; Sutter Opportunity Fund 4, LLC; Xxxx X. Xxxxxxx Charitable Trust
No. 1; and Xxxx X. Xxxxxxx Charitable Trust No. 2 (collectively the “Purchasers”) to purchase up to
2,526,686 Units of the Kiewit Royalty Trust at a price of $0.55 per Unit. The Units sought by the
Purchasers represent 20% of the outstanding Units of the Trust. U.S. Bank, N.A., the Trustee of
the Trust, first became aware of this tender offer on January 11, 2008.
In accordance with the rules of the Securities and Exchange Commission, we are required to
make a recommendation regarding whether you should accept or reject the Purchasers’ tender offer or
to state that the Trust is neutral with respect to the Purchasers’ tender offer. We have
determined to not express any opinion and remain neutral with respect to the Purchasers’ tender
offer, primarily because we do not have a reliable indicator of the fair value of the Units.
However, we call your attention to the following considerations:
• On July 31, 2007, MPF Senior Note Program I, LP, Sutter Opportunity Fund 4, LLC and
certain affiliates of the Purchasers (the Prior Offerors”) previously announced a tender offer to
purchase up to 2,526,686 Units of beneficial interest in the Trust for $0.60 per Unit (the “Prior
Tender Offer”). The Prior Tender Offer expired on September 14, 2007. According to reports filed
by the Prior Offerors with the SEC, the Prior Tender Offer resulted in the tender by Unit holders,
and the acceptance for payment by the Prior Offerors, of a total of 251,096 Units. As a result of
the Prior Tender Offer, the Prior Offerors hold an aggregate of 251,096 Units, or approximately
2.0% of the total outstanding Units.
• The Purchasers’ offer price is $0.55 per Unit, less the amount of any distributions
declared or made by the Trust between the Offer Date and the Expiration Date. The Trustee is
unable to determine if the price offered by the Purchasers is fair to the holders of Units. It
should be noted that the Purchasers have estimated that the liquidation value of the Trust is
approximately $1.02 per Unit. However, neither the Trustee nor the
Purchasers have made an
independent appraisal of the coal royalties held by the Trust that are the sole source of its
revenues. In addition, there are numerous uncertainties as to the timing and amounts of future
royalty payments which the Trust may receive from the coal royalties. Therefore, the present value
of future distributions payable by the Trust to the holders of Units may be more or less than the
price being offered by the Purchasers. In addition, except for the purchases by the Prior Offerors
of an aggregate of 251,096 Units at a price of $0.60 per Unit pursuant to the Prior Tender Offer
described above, there are no recent purchases or sales of Units that could indicate a fair market
price for the Units. The Purchasers have noted in their Offer that they are motivated to establish
the lowest offer price that might be acceptable to Unit holders.
• There is no active trading market in Units and the Trust is not allowed to redeem or
otherwise purchase Units from Unit holders. Accordingly, holders of Units have few, if any,
opportunities to monetize their Units. The Offer, whether or not the offer price is fair,
represents an opportunity for Unit holders to exit from an otherwise highly illiquid investment.
• The Purchasers are seeking to acquire up to 20% of the outstanding Units of the Trust.
If the Purchasers are successful in acquiring this number of Units, they would collectively own
the largest block of Units and, as a result, may have a substantial effect on the outcome of Trust
decisions for which Unit holder consent is required.
We urge each Unit holder to carefully consider the foregoing along with all the information
provided by the Purchasers before tendering his or her Units. You should make your own decision as
to whether or not to tender or refrain from tendering your Units in light of your unique
circumstances, including your investment objectives, financial circumstances, tolerance for risk,
need for liquidity and views as to the Trust’s prospects and outlook. Under any circumstances, you
should be aware that a sale of your Units in the Trusts may have tax consequences that could be
adverse. Please consult with your tax advisor about the impact of a sale of Units.
If you would like to discuss the Trust and your interest in the Trust in greater detail,
please contact me at (000) 000-0000 or write to me at 0000 Xxxxxx Xxxxxx, Xxxxx, XX 00000. Please
be advised that the information contained in this letter reflects the extent of our advice with
respect to the offer.
| Sincerely, |
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| /s/ Xxxx X. Xxxxxxxx | ||||
| Xxxx X. Xxxxxxxx, Trust Officer | ||||
