THE EXPIRATION DATE AND THE WITHDRAWAL DEADLINE ARE 4:00 P.M.,
EASTERN TIME, ON MONDAY, JANUARY 27, 2014, UNLESS EXTENDED.
To the Holders of Units of
BLACKROCK PREFERRED PARTNERS LLC:
BlackRock Preferred Partners LLC (the “Fund”) is offering (the “Offer”) to purchase up to 989,446 of its limited liability company units (the “Units”). The Units subject to the Offer represent approximately 15% of the Fund’s net asset value (“NAV”) as of November 29, 2013 (approximately $10,982,850). For Units (or portions thereof) tendered and accepted for repurchase, members of the Fund (“Members”) will receive and be bound by the terms of a repurchase instrument (the “Repurchase Instrument”), as set forth in the Fund’s Amended and Restated Limited Liability Company Agreement, dated as of June 6, 2012 (the “LLC Agreement”), entitling the Member to be paid an amount equal to the NAV per Unit accepted for repurchase determined as of March 31, 2014 (or a later date determined by the Fund if the Offer is extended) (in each case, the “Valuation Date”), less any Repurchase Fee (defined below) due to the Fund in connection with the Offer, and subject to the terms thereof. The Fund’s NAV on November 29, 2013, was $11.10 per Unit.
Each Member whose Units (or portion thereof) have been accepted for repurchase will be bound by the terms of the Repurchase Instrument, as set forth in the Fund’s LLC Agreement, entitling the Member to be paid an amount equal to the NAV of the Units accepted for repurchase as of the Valuation Date, and subject to the terms thereof. The Repurchase Instrument will be un-certificated, non-interest bearing, non-transferable and non-negotiable. Although the amounts required to be paid by the Fund under the Repurchase Instrument will generally be paid in cash, the Fund may under certain limited circumstances pay all or a portion of the amounts due by an in-kind distribution of securities. Units are offered for purchase as of the first Business Day (defined below) of each calendar month (the “Membership Date”) and a purchaser of Units becomes a Member of the Fund in respect of such Units on the Membership Date in respect of such Units. A 2.00% early repurchase fee (the “Repurchase Fee”) payable to the Fund will be charged to any Member that tenders its Units (or portion thereof) to the Fund unless the Valuation Date for the tender offer is on (or later than) the last Business Day of the month immediately preceding the month in which the one-year anniversary of the Member’s Membership Date in respect of the Units (or portion thereof) falls. For example, if a Member’s Membership Date in respect of Units falls in January of year 1, such Member would be subject to the Repurchase Fee if such Units were tendered pursuant to a tender offer with a Valuation Date that occurs on any date prior to the last Business Day in December of year 1, but would not be subject to the Repurchase Fee if such Units were tendered pursuant to a tender offer with a Valuation Date on (or later than) the last Business Day in December of year 1. The purpose of the Repurchase Fee is to reimburse the Fund for the costs incurred in liquidating securities in the Fund’s portfolio in order to honor the Member’s repurchase request and to discourage short-term investments which are generally disruptive to the Fund’s investment program. This Repurchase Fee applies separately to each purchase of Units made by a Member. The Fund may, in its sole discretion, waive the Repurchase Fee (a) for tenders where the fee collected from an individual Member would be de minimis as a percentage of the Fund’s net assets on the Valuation Date (e.g., the fee collected would be less than the lesser of 0.005% of the Fund’s net assets on the Valuation Date or $5,000) or (b) in circumstances where a Member can demonstrate that it would suffer severe hardship as a result of paying the Repurchase Fee. The Valuation Date for the Offer is March 31, 2014 (or a later date determined by the Fund if the Offer is extended). A “Business Day” means any day other than a Saturday, Sunday or any other day on which banks in New York, New York are required by law to be closed. All references to Business Day herein shall be based on the time in New York City.
The Offer expires Monday, January 27, 2014, at 4:00 p.m., Eastern time, unless the Offer is extended upon the terms and conditions set forth in this Offer to Purchase and the related Letter of Transmittal. If more than 989,446 Units are duly tendered by Members in response to the Offer, the Fund expects either to extend the Offer period and increase the number of Units it is offering to purchase or to purchase the Units (or portions thereof) tendered on a pro rata basis. In respect of each Member, the Offer is conditioned upon the Member tendering a minimum of $10,000 worth of Units (or all of such Member’s Units if less), subject to the ability of the Fund’s management or the Board of Directors (the “Board”) to permit a Member to tender a lesser amount in the Board’s discretion.
The Units are not currently traded on an established secondary market. The value of your Units will likely change between the time the Fund’s NAV was most recently calculated (November 29, 2013) and the Valuation Date (March 31, 2014). The Fund calculates its NAV as of the close of business on the last Business Day of each calendar month, within approximately 25 calendar days after the last Business Day of such month, and at such other times as the Board may determine. Members desiring to obtain the Fund’s most recently calculated NAV may contact the Fund’s administrator, The Bank of New York Mellon (the “Administrator”), at 1-866-211-4521. See Section 1 “Price; Number of Units.”
BlackRock Advisors, LLC, the Fund’s investment adviser (the “Advisor”), and BlackRock Financial Management, Inc., the Fund’s investment sub-adviser (the “Sub-Advisor” and, together with the Advisor, the “Advisors”) currently expect that they will generally recommend to the Fund’s Board that the Fund offer to repurchase Units from Members quarterly with tender offer valuation dates occurring on the last Business Day of March, June, September and December; however, the Fund is not required to conduct tender offers and may be less likely to conduct tenders during periods of exceptional market conditions, when the private funds or other pooled investment vehicles or accounts organized outside the United States (collectively, the “Portfolio Funds”). suspend redemptions or when such Portfolio Funds otherwise limit the liquidity provided to their investors (such as the Fund). The Fund will not at any time be required to make tender offers. The Fund cannot assure you that you will be provided with sufficient liquidity, or that the Fund will make any similar tender offers in the future.
If more than 989,446 Units are duly tendered prior to the expiration of the Offer, assuming no changes in the factors originally considered by the Fund’s Board when it determined to make the Offer, the Fund will either (1) extend the Offer period, if necessary, and increase the number of Units that the Fund is offering to repurchase to an amount which it believes will be sufficient to accommodate the Units already tendered during the original Offer period, the excess Units tendered, as well as any Units expected to be tendered during the extended Offer period, or (2) repurchase Units (or portions thereof) on a pro rata basis based on the number of Units tendered.
THE OFFER IS BEING MADE TO ALL MEMBERS OF THE FUND AND IS CONDITIONED ON THE TENDER OF A MINIMUM OF $10,000 WORTH OF UNITS FROM EACH TENDERING MEMBER (OR ALL OF SUCH MEMBER’S UNITS IF LESS), SUBJECT TO THE ABILITY OF THE FUND’S MANAGEMENT OR THE BOARD TO PERMIT A MEMBER TO TENDER A LESSER AMOUNT IN THE BOARD’S DISCRETION.
IMPORTANT
If you desire to tender all or any portion of your Units, you should complete and sign the Letter of Transmittal and mail or deliver it and any other required documents to the Administrator.
NEITHER THE FUND NOR ITS BOARD MAKES ANY RECOMMENDATION TO ANY MEMBER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING UNITS. EACH MEMBER MUST MAKE HIS OR HER OWN DECISION WHETHER TO TENDER UNITS, AND IF SO, HOW MANY UNITS TO TENDER.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE FUND AS TO WHETHER MEMBERS SHOULD TENDER UNITS PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THESE TRANSACTIONS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTIONS NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Questions and requests for assistance regarding the Offer may be directed to your financial advisor or other nominee, or to the Administrator at the address and telephone number set forth below. Requests for additional copies of this Offer to Purchase and the related Letter of Transmittal should be directed to the Administrator:
The Bank of New York Mellon
Attn: BlackRock Preferred Partners
c/o Investor Services
400 Bellevue Parkway
Wilmington, DE 19809
1-866-211-4521
| |
| December 26, 2013 | BLACKROCK PREFERRED PARTNERS LLC |
TABLE OF CONTENTS
| | |
| Section | | Page |
| 1. | Price; Number of Units | 5 |
| 2. | Procedure for Tendering Units | 6 |
| 3. | Withdrawal Rights | 7 |
| 4. | Payment for Units | 7 |
| 5. | Certain Conditions of the Offer | 8 |
| 6. | Purpose of the Offer | 9 |
| 7. | Certain Effects of the Offer | 9 |
| 8. | Source and Amount of Funds | 10 |
| 9. | Summary of Selected Financial Information | 10 |
| 10. | Certain Information About the Fund | 11 |
| 11. | Additional Information | 12 |
| 12. | Certain Federal Income Tax Consequences | 12 |
| 13. | Extension of Tender Period; Termination; Amendments | 13 |
| 14. | Miscellaneous | 13 |
1.Price; Number of Units.BlackRock Preferred Partners LLC (the “Fund”) will, upon the terms and subject to the conditions of this Offer to Purchase (the “Offer”), repurchase up to 989,446 of its limited liability company units (“Units”) which are tendered and not withdrawn prior to 4:00 p.m., Eastern time, on January 27, 2014 (such time and date being hereinafter called the “Initial Expiration Date”), unless it determines to accept none of the Units. The Units subject to the Offer represent approximately 15% of the Fund’s net asset value (“NAV”) as of November 29, 2013 (approximately $10,982,850). The Fund reserves the right to extend the Offer. See Section 13 “Extension of Tender Period; Termination; Amendments.” The later of the Initial Expiration Date or the latest time and date to which the Offer is extended is hereinafter called the “Expiration Date.” For Units (or portions thereof) tendered and accepted for repurchase, members of the Fund (“Members”) will receive and be bound by the terms of a repurchase instrument (the “Repurchase Instrument”), as set forth in the Fund’s Amended and Restated Limited Liability Company Agreement, dated as of June 6, 2012 (the “LLC Agreement”), entitling the Member to be paid an amount equal to the NAV per Unit accepted for repurchase determined as of March 31, 2014 (or a later date determined by the Fund if the Offer is extended) (in each case, the “Valuation Date”), less any Repurchase Fee (defined below) due to the Fund in connection with the Offer, and subject to the terms thereof. The Fund’s NAV on November 29, 2013, was $11.10 per Unit. The purchase price of any Units accepted for repurchase will be their NAV per Unit as of the Valuation Date. The Repurchase Instrument will be un-certificated, non-interest bearing, non-transferable and non-negotiable. Although the amounts required to be paid by the Fund under the Repurchase Instrument will generally be paid in cash, the Fund may under certain limited circumstances pay all or a portion of the amounts due by an in-kind distribution of securities. The Fund intends to make an in-kind payment only under the limited circumstance where the Fund receives an in-kind distribution from its investments in private funds or other pooled investment vehicles or accounts organized outside the United States (collectively, the “Portfolio Funds”) of transferable securities that the Fund cannot liquidate itself prior to making the distribution.
Units are offered for purchase as of the first Business Day (defined below) of each calendar month (the “Membership Date”) and a purchaser of Units becomes a Member of the Fund in respect of such Units on the Membership Date in respect of such Units. A 2.00% early repurchase fee (the “Repurchase Fee”) payable to the Fund will be charged to any Member that tenders its Units (or portion thereof) to the Fund unless the Valuation Date for the tender offer is on (or later than) the last Business Day of the month immediately preceding the month in which the one-year anniversary of the Member’s Membership Date in respect of the Units (or portion thereof) falls. For example, if a Member’s Membership Date in respect of Units falls in January of year 1, such Member would be subject to the Repurchase Fee if such Units were tendered pursuant to a tender offer with a Valuation Date that occurs on any date prior to the last Business Day in December of year 1, but would not be subject to the Repurchase Fee if such Units were tendered pursuant to a tender offer with a Valuation Date on (or later than) the last Business Day in December of year 1. The Repurchase Fee applies separately to each purchase of Units made by a Member. The purpose of the Repurchase Fee is to reimburse the Fund for the costs incurred in liquidating securities in the Fund’s portfolio in order to honor the Member’s repurchase request and to discourage short-term investments which are generally disruptive to the Fund’s investment program. The Fund may, in its sole discretion, waive the Repurchase Fee (a) for tenders where the fee collected from an individual Member would be de minimis as a percentage of the Fund’s net assets on the Valuation Date (e.g., the fee collected would be less than the lesser of 0.005% of the Fund’s net assets on the Valuation Date or $5,000) or (b) in circumstances where a Member can demonstrate that it would suffer severe hardship as a result of paying the Repurchase Fee. The Valuation Date for the Offer is March 31, 2014 (or a later date determined by the Fund if the Offer is extended). A “Business Day” means any day other than a Saturday, Sunday or any other day on which banks in New York, New York are required by law to be closed. All references to Business Day herein shall be based on the time in New York City.
If more than 989,446 Units are duly tendered prior to the expiration of the Offer, assuming no changes in the factors originally considered by the Fund’s Board of Directors (the “Board”) when it determined to make the Offer, the Fund will either (1) extend the Offer period, if necessary, and increase the number of Units that the Fund is offering to repurchase to an amount that it believes will be sufficient to accommodate the Units already tendered during the original Offer period, the excess Units tendered, as well as any Units expected to be tendered during the extended Offer period, or (2) repurchase Units (or portions thereof) on a pro rata basis based on the number of Units tendered.
As of December 2, 2013, there were approximately 6,693,145 Units issued and outstanding and there were 206 holders of record of the Units. BlackRock Holdco 2, Inc. (“BlackRock”), an affiliate of the Fund’s investment adviser and investment sub-adviser and a wholly owned subsidiary of BlackRock, Inc., holds 2,593,315.64 Units as of December 2, 2013, representing approximately 38.75% of the Fund’s outstanding Units. BlackRock
purchased these Units as a seed capital investment in the Fund. BlackRock intends to tender up to 330,000 Units of this seed capital investment pursuant to the Offer, representing up to approximately 12.73% of the Units currently owned by BlackRock, up to approximately 4.93% of the Fund’s total outstanding Units as of December 2, 2013 and up to approximately $3,663,000 (5.00%) of the Fund’s NAV as of November 29, 2013. In connection with the Fund’s tender offer that expired on October 28, 2013, BlackRock tendered 389,000 Units which were accepted for repurchase in accordance with the terms of that offer. The valuation date for that offer does not occur until December 31, 2013, and thus these Units continue to be reflected in the November 29, 2013 NAV and December 2, 2013 ownership figures above. The 330,000 Units BlackRock intends to tender pursuant to the Offer represent approximately 15% of the balance of BlackRock’s untendered seed capital Units. Any Units purchased from BlackRock will be on the same terms and conditions as any other purchase of Units pursuant to the Offer. BlackRock does not intend to tender any amount of Units that would cause the Offer to be oversubscribed.
The Units currently are not traded on any established secondary market. The value of your Units will likely change between the time the Fund’s NAV was most recently calculated (November 29, 2013) and the Valuation Date (March 31, 2014). The Fund calculates its NAV as of the close of business on the last Business Day of each calendar month, within approximately 25 calendar days after the last Business Day of such month, and at such other times as the Board may determine. Members desiring to obtain the Fund’s most recently calculated NAV may contact the Fund’s administrator, The Bank of New York Mellon (the “Administrator”), at 1-866-211-4521.
2.Procedure for Tendering Units.In order for you to tender any of your Units pursuant to the Offer, you must send to the Administrator (The Bank of New York Mellon, Attn: BlackRock Preferred Partners, c/o Investor Services, 400 Bellevue Parkway, Wilmington, DE 19809), a properly completed and executed Letter of Transmittal for the Fund.
A. General Procedures.
If you will be mailing or delivering a Letter of Transmittal and any other required documents to the Administrator in order to tender your Units, they must be received on or prior to the Expiration Date by the Administrator (The Bank of New York Mellon, Attn: BlackRock Preferred Partners, c/o Investor Services, 400 Bellevue Parkway, Wilmington, DE 19809).
Except for a Letter of Transmittal delivered by a Member who holds Units in a Morgan Stanley Smith Barney account or through a broker, dealer, commercial bank, trust company or other nominee, the signatures on a Letter of Transmittalmustbe guaranteed by a member firm of a registered national securities exchange, or a commercial bank or trust company having an office, branch or agency in the United States, the existence and validity of which may be verified by the Administrator through the use of industry publications. Notarized signatures are not sufficient. You can obtain a medallion signature guarantee stamp from a bank, securities dealer, securities broker, credit union, savings and loan association, national securities exchange or registered securities association. For a Letter of Transmittal delivered by a Member who holds Units in a Morgan Stanley Smith Barney account or through a broker, dealer, commercial bank, trust company or other nominee, the signatures do not require a medallion stamp guarantee.
The Letter of Transmittal must include account number(s) that correspond with the account number(s) of the account(s) in which the Units are registered, and the Fund may, in its sole discretion, reject any Letter of Transmittal in which such account numbers do not match.
Delivery of the Repurchase Instrument in payment for Units tendered and accepted for repurchase will be made only after receipt by the Administrator on or before the Expiration Date of a properly completed and duly executed Letter of Transmittal and any other required documents.
The method of delivery of any documents is at the election and risk of the party tendering the Units. If documents are sent by mail, it is recommended that they be sent by registered mail, properly insured, with return receipt requested.
B. Determinations of Validity.
All questions as to the validity, form, eligibility (including time of receipt) and acceptance of tenders will be determined by the Fund, in its sole discretion, whose determination shall be final and binding. The Fund reserves the absolute right to reject any or all tenders determined by it not to be in appropriate form or the acceptance of or payment for which would, in the opinion of the Fund or counsel for the Fund, be unlawful. The Fund also reserves the absolute right to waive any of the conditions of the Offer or any defect in any tender with respect to any particular
Units or any particular Member, and the Fund’s interpretations of the terms and conditions of the Offer will be final and binding. Unless waived, any defects or irregularities in connection with tenders must be cured within such times as the Fund shall determine. Tenders will not be deemed to have been made until the defects or irregularities have been cured or waived. Neither the Fund, BlackRock Advisors, LLC, the Fund’s investment adviser (the “Advisor”),
BlackRock Financial Management, Inc., the Fund’s investment sub-adviser (the “Sub-Advisor,” and together with the Advisor, the “Advisors”), nor the Administrator, nor any other person, shall be obligated to give notice of any defects or irregularities in tenders, nor shall any of them incur any liability for failure to give such notice.
C. Tender Constitutes an Agreement.
A tender of Units made pursuant to the procedures set forth above will constitute an agreement between the tendering Member and the Fund in accordance with the terms and subject to the conditions of the Offer. Immediately after the Expiration Date, each Member whose Units (or portion of them) have been accepted for repurchase will be bound by the terms of the Repurchase Instrument, as set forth in the Fund’s LLC Agreement, entitling the Member to be paid an amount equal to the NAV per Unit accepted for repurchase determined as of the Valuation Date, and subject to the terms thereof.
3.Withdrawal Rights.You may withdraw Units tendered at any time prior to the Expiration Date and, if the Units have not yet been accepted for payment by the Fund, at any time after February 24, 2014.
To be effective, any notice of withdrawal must be timely received by the Administrator (The Bank of New York Mellon, Attn: BlackRock Preferred Partners, c/o Investor Services, 400 Bellevue Parkway, Wilmington, DE 19809). Any notice of withdrawal must specify the name of the person having deposited the Units to be withdrawn and the number of Units to be withdrawn. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Fund in its sole discretion, whose determination shall be final and binding. Units properly withdrawn shall not thereafter be deemed to be tendered for purposes of the Offer. However, withdrawn Units may be re-tendered, provided that such tenders are made before the Expiration Date by following the tender procedures described in Section 2 “Procedure for Tendering Units.”
4.Payment for Units.For purposes of the Offer, immediately after the Expiration Date, each Member whose Units (or portion thereof) have been accepted for repurchase will be bound by the terms of the Repurchase Instrument, as set forth in the Fund’s LLC Agreement, entitling the Member to be paid an amount equal to the NAV per Unit accepted for repurchase, determined as of the Valuation Date, less any Repurchase Fee, and subject to the terms thereof. The Repurchase Instrument will be un-certificated, non-interest bearing, non-transferable and non-negotiable. A Member who becomes bound by the terms of a Repurchase Instrument (the “Payee”) shall retain all rights, with respect to Units accepted for repurchase, to inspect the books and records of the Fund and to receive financial and other reports relating to the Fund until the date upon which the Repurchase Instrument is paid in full. Except as otherwise provided in the Repurchase Instrument or the Fund’s LLC Agreement, such Payee shall have no other rights (including, without limitation, any voting rights) under the Fund’s LLC Agreement. For purposes of calculating the value of the Units to be repurchased as of the Valuation Date, the amount payable to the Payee will take into account and include all Fund gains, losses and expenses until the Valuation Date. If the Fund is liquidated or dissolved prior to the Valuation Date, the Valuation Date shall become the date on which the Fund is liquidated or dissolved and the value of the Units accepted for repurchase will be calculated in accordance with the foregoing sentence.
Payment in respect of the Repurchase Instrument will be made in two or more installments. An initial payment equal to approximately 90% of the amount required to be paid under the Repurchase Instrument will be made as of the later of (i) any Business Day that is within 45 days after the Valuation Date, or (ii) if the Fund has requested withdrawals of its capital from any Portfolio Funds in order to fund the repurchase of Units, within ten Business Days after the Fund has received at least 90% of the aggregate amount withdrawn from the Portfolio Funds. The balance due under the Repurchase Instrument is generally expected to be paid within 90 days after the Valuation Date and will be subject to adjustment as a result of any corrections to the Fund’s NAV as of the Valuation Date. The Board has discretion to hold
back any amount of the balance due under the Repurchase Instrument for longer than the periods described above, but not longer than until promptly after the completion of the annual audit of the Fund’s financial statements for the fiscal year in which the repurchase is effected, with such balance being subject to adjustment as a result of the Fund’s annual audit or as a result of any other adjustments to the Fund’s NAV as of the Valuation Date. The Fund’s fiscal year in which any repurchases pursuant to tenders in connection with this Offer will be effected ends on March 31, 2014. In the event the Board determines to hold back any such amount of the balance due under the Repurchase Instrument in accordance with the foregoing, such balance, as adjusted in accordance with the foregoing (if applicable), will be paid not later than promptly after the completion of the Fund’s annual audit. No interest will be paid on any amounts. The Repurchase Instrument may be prepaid, without premium, penalty or notice, at any time on or after the Valuation Date.
Although the amounts required to be paid by the Fund under the Repurchase Instrument will generally be paid in cash, the Fund may under certain limited circumstances pay all or a portion of the amounts due by an in-kind distribution of securities. The Fund intends to make an in-kind payment only under the limited circumstance where the Fund receives an in-kind distribution from Portfolio Funds of transferable securities that the Fund cannot liquidate itself prior to making the distribution.
Marketable securities may be used to satisfy an in-kind distribution, which will be valued in accordance with the Fund’s valuation policies and procedures and will be distributed to all Members whose Units have been accepted for repurchase on a proportionate basis. If, however, payments are made in-kind to a Member, such Member may incur tax liability and brokerage costs in converting such securities to cash. The Fund does not impose any charges in connection with repurchases of Units (except for the Repurchase Fee described above).
If modification of the Fund’s repurchase procedures as described above is deemed necessary to comply with regulatory requirements or otherwise advisable, the Board will, to the extent practicable, adopt revised procedures reasonably designed to provide Members substantially the same liquidity for Units as would be available under the procedures described above.
The Fund will pay all transfer taxes, if any, payable on the transfer to it of its Units repurchased pursuant to the Offer. If tendered Units are registered in the name of any person other than the person signing the Letter of Transmittal, the amount of any such transfer taxes (whether imposed on the registered holder or such other person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. The Fund will not pay any interest on the repurchase price under any circumstances.
5.Certain Conditions of the Offer.The Fund shall not be required to accept for payment or pay for any of its Units tendered, and may terminate or amend the Offer or may postpone the acceptance for payment of, or payment for, its respective Units tendered, if: (1) such purchases would impair the Fund’s status as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”) (which would cause the Fund’s income to be taxed at the corporate level in addition to the taxation of Members who receive dividends from the Fund); (2) the Fund would not be able to liquidate its interests in Portfolio Funds in a manner which is orderly and consistent with the Fund’s investment objective and policies in order to enable the Fund to repurchase Units tendered pursuant to the Offer; or (3) there is, in the Fund’s Board’s judgment, any (a) legal action or proceeding instituted or threatened challenging the Offer or otherwise materially adversely affecting the Fund, (b) declaration of a banking moratorium by Federal or state authorities or any suspension of payment by banks in the United States or New York State, which is material to the Fund, (c) limitation imposed by Federal or state authorities on the extension of credit by lending institutions, (d) commencement of war, armed hostilities, acts of terrorism or other international or national calamity directly or indirectly involving the United States, which is material to the Fund, or (e) other event or condition which would have a material adverse effect on the Fund or its Members if Units tendered pursuant to the Offer were repurchased. If the Fund determines to amend the Offer or to postpone the acceptance for payment of or payment for Units tendered, it will, to the extent necessary, extend the period of time during which the Offer is open.
The Fund requires that each tendering Member tender a minimum of $10,000 worth of Units (or all of such Member’s Units if less), subject to the ability of the Fund’s management or the Board to permit a Member to tender a lesser amount in its discretion. A Member tendering only a portion of its Units for repurchase will be required to continue to hold Units with a value of at least $25,000 after giving effect to the repurchase, subject to the Board’s ability to permit a Member to continue to hold Units in a lesser amount in the Board’s discretion. If a Member tenders an amount that would cause the value of its Units in the Fund to fall below the required minimum, the Fund reserves the right to reduce the amount to be repurchased from the Member so the value of the Member’s Units is above the minimum or to repurchase all of the Member’s Units.
Moreover, in the event any of the foregoing conditions are modified or waived in whole or in part at any time, the Fund will promptly make a public announcement of such waiver and may, depending on the materiality of the modification or waiver, extend the Offer period. See Section 13 “Extension of Tender Period; Termination; Amendments.”
6.Purpose of the Offer.The Fund does not currently believe there is or will be an active secondary market for its Units. The Fund’s Board has determined that it would be in the best interest of Members for the Fund to take action to attempt to provide a limited amount of liquidity to Members. In determining whether the Fund should offer to repurchase Units from Members, the Board considered the recommendations of the Advisors as to the timing of such an offer, as well as a variety of operational, business and economic factors. In determining whether to accept the Advisors’ recommendation to repurchase Units, the Board considered the following factors, among others: (a) whether any Members have requested to tender Units to the Fund; (b) the liquidity of the Fund’s assets (including fees and costs associated with withdrawing from Portfolio Funds); (c) the investment plans and working capital and reserve requirements of the Fund; (d) the history of the Fund in repurchasing Units; (e) the availability of information as to the value of the Fund’s interests in underlying Portfolio Funds; (f) the conditions of the securities markets and the economy generally, as well as political, national or international developments or current affairs; (g) any anticipated tax or regulatory consequences to the Fund of any proposed repurchases of Units; and (h) the recommendations of the Advisors.
The Advisors currently expect that they will generally recommend to the Board that the Fund offer to repurchase Units from Members quarterly with tender offer valuation dates occurring on the last Business Day of March, June, September and December. However, the Fund is not required to conduct tender offers and may be less likely to conduct tenders during periods of exceptional market conditions, when Portfolio Funds suspend redemptions or when such Portfolio Funds otherwise limit the liquidity provided to their investors (such as the Fund). The Fund will not at any time be required to make tender offers. The Fund cannot assure you that you will be provided with sufficient liquidity, or that the Fund will make any similar tender offers in the future. Neither the Fund nor the Board makes any recommendation as to whether or not you should tender your Units.
7.Certain Effects of the Offer.The repurchase of Units pursuant to the Offer will have the effect of increasing the proportionate interest in the Fund of Members who do not tender their Units. If you retain your Units, you will be subject to any increased risks that may result from the reduction in the Fund’s aggregate assets resulting from payment for the Units, including, for example, the potential for greater volatility in the Fund’s NAV due to decreased diversification, higher expenses, increased illiquidity in the Fund’s portfolio and the potential inability of the Fund to offer to repurchase Units in the future. A reduction in the aggregate assets of the Fund may result in Members that do not tender Units bearing higher costs to the extent that certain expenses borne by the Fund are relatively fixed and may not decrease if assets decline. These risks may be more pronounced in light of the fact that BlackRock intends to tender Units representing up to approximately 5.00% of the Fund’s NAV as of November 29, 2013, which will have the effect of establishing a minimum threshold of participation in the Offer, and thus a minimum amount by which the Fund’s aggregate assets will decrease as a result of payments for tendered Units. Units that are tendered to the Fund in connection with the Offer and accepted for repurchase will be retired, although the Fund may issue Units from time to time in accordance with the Fund’s LLC Agreement. The Fund currently expects that it will accept subscriptions for Units for purchase as of the first Business Day of each calendar month, except that Units may be made available for purchase more or less frequently as determined by the Fund’s Board in the Board’s sole discretion.
There will be a substantial period of time between the date as of which Members must accept the Fund’s offer to repurchase their Units (the Expiration Date) and the date such Members can expect to receive cash payment for their Units from the Fund. During this period investors will be subject to the risk that the Fund becomes unable to meet its obligations. Members whose Units are accepted for repurchase bear the risk that the Fund’s NAV may fluctuate significantly between the time that the Fund accepts their Units for repurchase (the Expiration Date) and the date as of which such Units are valued for purposes of such repurchase (the Valuation Date). Members will have to decide whether to tender Units without the benefit of having current information regarding the value of the Units on a date proximate to the Valuation Date – i.e., the date on which the Units are valued by the Fund for purposes of payment in respect of the Repurchase Instrument. The Fund calculates its NAV as of the close of business on the last Business Day of each calendar month, within approximately 25 calendar days after the last Business Day of such month, and at such other times as the Board may determine. Members desiring to obtain the Fund’s most recently calculated NAV may contact the Fund’s Administrator at 1-866-211-4521. Payment for Units accepted for repurchase may require the Fund to liquidate portfolio holdings earlier than the Advisors would otherwise have caused these holdings to be liquidated, potentially resulting in losses, and may increase the Fund’s investment-related expenses as a result of higher portfolio turnover rates. Liquidation of portfolio holdings to
fund repurchases of Units also may result in the Fund incurring redemption, withdrawal or similar fees charged by one or more Portfolio Funds. Such liquidations may also cause the Fund to sell its more liquid investments, which may reduce the ability of the Fund to conduct future tender offers and increase the illiquidity of the Fund’s portfolio. These risks too may be more pronounced in light of BlackRock’s intended participation in the Offer, as described above.
Additionally, Members who receive in-kind payment in respect of their accepted tenders will, after the Valuation Date, remain subject to the risk of fluctuation of the value of such assets received in-kind and, to the extent such assets are Portfolio Funds, to the fees and expenses of each such Portfolio Fund.
8.Source and Amount of Funds.The price to be paid by the Fund for Units tendered in the Offer and accepted for repurchase will equal their NAV as of the Valuation Date less any Repurchase Fee. Based on the Fund’s NAV on November 29, 2013, the aggregate purchase price, if all 989,446 Units subject to the Offer are tendered and accepted for payment pursuant to the Offer, will be approximately $10,982,850. The actual purchase price may be higher or lower depending on the Fund’s NAV on the Valuation Date. The Fund anticipates that the repurchase price for any of its Units repurchased pursuant to the Offer may be derived by the Fund from (i) cash on hand, (ii) the proceeds from the sale of cash equivalents held by the Fund, and/or (iii) the proceeds of sales of portfolio investments held by the Fund. There are no material conditions to the financing of the Offer. There are currently no alternative financing plans or arrangements for the Offer. None of the Fund, the Advisors or the Board or any person controlling the Fund has determined at this time to borrow funds to purchase Units tendered and accepted for repurchase in connection with the Offer.
9.Summary of Selected Financial Information.Set forth below is a summary of selected audited financial information for the Fund for its fiscal period ended March 31, 2012, selected audited financial information for the Fund for the fiscal year ended March 31, 2013 and selected unaudited financial information for the Fund for the period ended September 30, 2013. The financial information for the fiscal period ended March 31, 2012 is excerpted from the Fund’s audited financial statements for the fiscal period ended March 31, 2012, which are included in the Fund’s 2012 Annual Report. The Fund’s 2012 Annual Report is incorporated by reference into this Offer to Purchase. The financial information for the fiscal year ended March 31, 2013 is excerpted from the Fund’s audited financial statements for the fiscal year ended March 31, 2013, which are included in the Fund’s 2013 Annual Report. The Fund’s 2013 Annual Report is incorporated by reference into this Offer to Purchase. The financial information for the period ended September 30, 2013 is excerpted from the Fund’s unaudited financial statements for the period ended September 30, 2013, which are included in the Fund’s 2013 Semi-Annual Report. The Fund’s 2013 Semi-Annual Report is incorporated by reference into this Offer to Purchase. More comprehensive financial information is included in the Fund’s audited financial statements contained in the Fund’s 2012 Annual Report, copies of which have been filed with the Securities and Exchange Commission (the “SEC”) on Form N-CSR on June 4, 2012, the Fund’s audited financial statements contained in the Fund’s 2013 Annual Report, copies of which have been filed with the SEC on Form N-CSR on June 3, 2013, and the Fund’s unaudited financial statements contained in the Fund’s 2013 Semi-Annual Report, copies of which have been filed with the SEC on Form N-CSRS on December 3, 2013. You may request a copy of the Fund’s current Prospectus and most recent Annual and/or Semi-Annual Reports (as applicable) at no charge at www.blackrock.com or by calling the Administrator at 1-866-211-4521. The summary of the Fund’s selected financial information set forth below is qualified in its entirety by reference to such Annual Reports, Semi-Annual Reports and the financial information therein, the notes thereto and related material contained therein.
SUMMARY OF SELECTED FINANCIAL INFORMATION
| | | September 30, 2013
(unaudited) | | March 31, 2013 | | March 31, 2012 |
| ASSETS, LIABILITIES AND MEMBERS’ CAPITAL | | | | | | | | | | | | |
| Total assets | | $ | 68,071,489 | | | $ | 58,765,906 | | | $ | 35,131,524 | |
| Total liabilities | | $ | 2,219,928 | | | $ | 5,004,625 | | | $ | 4,061,805 | |
| Members’ Capital | | $ | 65,851,561 | | | $ | 53,761,281 | | | $ | 31,069,719 | |
| Net Asset Value per Unit | | $ | 10.88 | | | $ | 10.59 | | | $ | 10.16 | |
| Number of units outstanding | | | 6,054,275 | | | | 5,076,699 | | | | 3,057,023 | |
| | | Period Ended | | | | Fiscal Period |
| | | September 30, 2013 | | Fiscal Year Ended | | September 1, 20111 |
| | | (Unaudited) | | March 31, 2013 | | to March 31, 2012 |
| STATEMENT OF OPERATIONS | | | | | | | | | | | | |
| Investment Income | | | | | | | | | | | | |
| Dividends | | $ | 5,385 | | | $ | 1,244 | | | $ | — | |
| Expenses | | | | | | | | | | | | |
| Total expenses | | $ | 748,703 | | | $ | 1,455,417 | | | $ | 1,017,850 | |
| Less expenses waived and reimbursed by Advisor . | | $ | (140,361 | ) | | $ | (600,838 | ) | | $ | (714,180 | ) |
| Total expenses after fees waived and reimbursed | | $ | 608,342 | | | $ | 854,579 | | | $ | 303,670 | |
| Net investment loss | | $ | (602,957 | ) | | $ | (853,335 | ) | | $ | (303,670 | ) |
| Realized and Unrealized Gain (Loss) | | | | | | | | | | | | |
| Net realized gain from investments | | $ | 287,892 | | | $ | 19,884 | | | $ | 38,371 | |
| Net change in unrealized appreciation/depreciation | | | | | | | | | | | | |
| on investments | | $ | 1,886,574 | | | $ | 4,699,281 | | | $ | 815,018 | |
| Total realized and unrealized gain | | $ | 2,174,466 | | | $ | 4,719,165 | | | $ | 853,389 | |
| Net Increase in Members’ Capital Resulting from | | | | | | | | | | | | |
| Operations | | $ | 1,571,509 | | | $ | 3,865,830 | | | $ | 549,719 | |
