SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): August 4, 2006
Biggest Little Investments L.P.
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(Exact name of registrant as specified in its charter)
Delaware 0-16856 13-3368726
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(State or other jurisdic- (Commission File Number) (IRS Employer Identi-
tion of incorporation or fication No.)
organization)
1175 West Moana Lane
Reno, Nevada 89509
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(Address of principal executive (Zip Code)
offices)
(775) 825-3355
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Ruled 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13E-4(c))
ITEM 1.01. Entry into a Material Definitive Agreement.
On August 4, 2006, Biggest Little Investments, L.P. (the "Partnership")
entered into a letter agreement (the "Agreement") with Marshall & Stevens
Incorporated ("Marshall & Stevens")pursuant to which the Partnership retained
Marshall & Stevens to assist the Partnership in analyzing an offer to purchase
(the "Offer") the Sierra Marketplace Shopping Center ("Sierra Marketplace")
and the Partnership's strategic alternatives compared to the Offer. The
Offer, received by the Partnership on July 27, 2006 from counsel to Monarch
Casino & Resort, Inc., a Nevada corporation ("Monarch"), set forth the terms
of a proposal by Monarch to purchase the Sierra Marketplace ("Sierra
Marketplace") at a cash price of $27 million.
The Agreement states that Marshall & Stevens will provide the Partnership
with financial advisory services for a fee of $20,000, and an objective,
supportable fairness opinion from a financial point of view for a fee of
$50,000, to the partners of the Partnership as to the Offer. The Agreement
requires payment of a $20,000 retainer and, if the opinion is not delivered,
the Partnership will be required to pay Marshall & Stevens on an hourly basis
for its time spent on the engagement. The Partnership may terminate the
engagement at any time. The Agreement also provides for the Partnership to
indemnify Marshall& Stevens against claims involving its services furnished to
the Partnership and includes a mandatory arbitration provision.
Sierra Marketplace, a shopping center located in Reno, Nevada, is the
Partnership's sole property. Monarch owns the Atlantis Hotel Casino, located
adjacent to Sierra Marketplace, and leases a 37,368 square foot section of
Sierra Marketplace which provides vehicular and pedestrian access between the
properties, as well as sharing a portion of Sierra Marketplace's common area.
In addition, Monarch also leases approximately 12,000 square feet of office
and storage space at Sierra Marketplace. John and Bob Farahi, brothers of Ben
Farahi, the sole member of the Partnership's general partner, are officers and
directors of Monarch. Ben Farahi owns approximately 10.5% of the outstanding
shares of Monarch's common stock and was also an officer and director of
Monarch, but resigned from such positions in May 2006.
Ben Farahi is currently engaged in a tender offer for units of limited
partnership of the Partnership ("Units"). Western Real Estate Investments,
LLC, a limited liability company in which each of Ben, John and Bob Farahi
owns a one-third interest ("Western"), beneficially owns approximately 50.8%
of the outstanding Units. On June 22, 2006, Ben Farahi filed Articles of
Dissolution with the Secretary of State of the State of Nevada with respect
to Western. However, John and Bob Farahi have challenged the filing and,
accordingly, the status of Western is currently in dispute. Ben Farahi
believes that each of the brothers owns one-third of the assets of Western
Real Estate Investments and, accordingly, one-third of the Units owned by
Western. Together with the Units Ben Farahi owns individually, then, he owns
approximately 22.6% of the outstanding Units. However, in the event that it
is eventually determined under Nevada law that Ben and Bob Farahi control the
actions of Western, it is possible that they would control all of the Units
owned by Western, constituting a 50.8% majority interest in the Partnership.
In such event, they could remove and replace Maxum LLC, the Partnership's
general partner, and control whether, and on what terms, the Sierra
Marketplace is sold.
The Partnership intends to commence furnishing due diligence materials
to Monarch and negotiating with Monarch with respect to the letter of intent
upon the execution of a Confidentiality Agreement between the parties.
ITEM 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired: N/A
(b) Pro Forma Financial Information: N/A
(c) Shell Company Transactions: N/A
(d) Exhibits:
10.1 Letter Agreement between the Partnership and Marshall & Stevens,
dated August 4, 2006.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized this 7th day of August, 2006.
Biggest Little Investments L.P.
By: Maxum LLC
Its General Partner
By: /s/ Ben Farahi
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Ben Farahi
Manager
EXHIBIT LIST
Exhibit Description
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10.1 Letter Agreement between Biggest Little Investments,
L.P. and Marshall & Stevens, dated August 4, 2006.
Exhibit 10.1
Marshall & Stevens
Valuation Consulting
355 South Grand Avenue
Suite 1750
Los Angeles, CA 90071-1568
213.612.8000
213.612.8014 Fax
www.marshall-stevens.com
August 4, 2006
Maxum, LLC
Manager
Biggest Little Investments, L.P.
1175 West Moana Lane, Ste. 200
Reno, Nevada 89509
Dear Ladies & Gentleman:
The Marshall & Stevens advisory service will assist you in analyzing the
current offer with respect to the Sierra Marketplace, and regarding the
strategic alternatives compared to the current transaction of $27 million for
an outright sale of the Company. Please find herein our professional
qualifications, the purpose and scope of the services to be performed, and
our fee structure for this engagement.
PURPOSE
Marshall & Stevens advisors will provide financial advisory services and an
objective, supportable fairness opinion from a financial point of view to the
Board of Directors and shareholders of Biggest Little Investments, L.P.
(herein ?BLI? or the ?Company?) as to the proposed transaction currently
being offered to the Company.
MARSHALL & STEVENS QUALIFICATIONS
Founded in 1932, Marshall & Stevens is a premier, independent national
financial advisory and valuation firm. Marshall & Stevens provides fairness
and solvency opinions, transaction advisory and due diligence to boards and
management, and valuations of businesses and their assets (both tangible and
intangible) for every purpose. The quality and supportability of the
valuation work performed by Marshall & Stevens are recognized by national and
international corporations and their audit firms, as well as government and
regulatory agencies such as the IRS and SEC. Marshall & Stevens is uniquely
qualified to provide these analyses based on our prior experience in taking
public companies private. Your engagement will be completed under the
direction of:
- Mr. Kevin Hanson, Senior Vice President and West Coast leader of the
Financial Valuation and Consulting practice. Mr. Hanson?s experience
includes recent fairness opinions for MGM Mirage, Direct TV, MAI Systems
Inc., Elgar Holdings, Inc., Telebyte, Inc., and Celerity Group Inc.
- Ms. Cherin Mooradian, Senior Vice President and West Coast leader of
the Real Estate practice. She serves as project manager on major
consulting and valuation assignments for our clients, participates as
project manager and/or appraiser in nationwide valuations, and is a
certified general appraiser in several states, including Nevada.
Thank you for your consideration. We look forward to the opportunity to
be of service to you.
Sincerely,
MARSHALL & STEVENS INCORPORATED
/s/Joseph A. Gagliano
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Joseph A. Gagliano
Principal
TABLE OF CONTENTS
I. SCOPE (FAIRNESS OPINION AND ADVISORY)
II. REPORTS & TIMING
III. CONFIDENTIALITY
IV. PROFESSIONAL FEES
V. CONTRACTUAL CONDITIONS & ACCEPTANCE
I. SCOPE (FAIRNESS OPINION)
We will provide an objective, supportable opinion concerning the
fairness of the proposed transaction from a financial point of view to the
Board of Directors and shareholders of BLI. The components of our opinion
follow.
DETAILS OF THE ENGAGEMENT
- Description of the transaction
- Purpose for which the opinion is to be used
- Previous work/involvement with major parties (if any)
SCOPE OF ANALYSIS
- Detail of due diligence undertaken
- Financial information relied upon
- Other information relied upon
- Assumptions made
- Exchange calculation
DESCRIPTION OF ANALYSIS
- Techniques and findings during our analysis
CONCLUSION
- Determination of fairness
The opinion will outline the techniques and procedures employed, and the
various conclusions reached.
SCOPE (ADVISORY)
Our advisory service will assist you in analyzing the current offer with
respect to the Sierra Marketplace, and regarding the strategic alternatives
compared to the current transaction of $27 million for an outright sale of
the Company. As part of our analysis, our real estate professionals will
value BLI?s mall in Reno, Nevada, which occupies 18 acres and has
approximately 213,000 sq.ft. of leaseable space.
BASIS OF VALUE
The basis of value will be Fair Market Value, defined as:
Fair Market Value (Appraisal Foundation) -- The most probable price that
a property should bring in a competitive and open market under all
conditions requisite to a fair sale, the buyer and seller each acting
prudently and knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition are the consummation of a
sale as of a specified date and the passing of title from seller to
buyer under conditions whereby:
a. Buyer and seller are typically motivated;
b. Both parties are well-informed or well-advised, and acting in what
they consider their best interests;
c. A reasonable time is allowed for exposure in the open market;
d. Payment is made in terms of cash in United States dollars or in terms
of financial arrangements comparable thereto; and
e. The price represents the normal consideration for the property, sold
unaffected by special or creative financing or sales concessions
granted by anyone associated with the sale.
METHODOLOGY
Our investigation will include a personal inspection of the real estate at
the subject location.
Our valuation methodology will consider the three approaches to value as may
apply: Cost, Sales Comparison or Market, and Income. These approaches are
generally defined as follows:
Cost Approach - Considers the current cost of reproducing a property,
less accrued depreciation in the property. A summation of the market
value of the land assumed vacant and the depreciated reproduction or
replacement cost new of the improvements provides an indication of the
total value of the property.
Sales Comparison Approach ? Produces an estimate of value by comparing
the sales and/or listings of similar properties in the same area as the
subject property or in competing areas. This technique is used to
indicate the value established by informed buyers and sellers in the
market.
Income Capitalization Approach ? Based on an estimate of the subject
property's possible net operating income. The net operating income is
capitalized to arrive at an indication of value from the standpoint of
an investment. This method measures the present worth of anticipated
future benefits (net income) derived from the property.
II. REPORTS & TIMING
We will commence the assignment upon receipt of your written authorization to
proceed, the signed Contractual Conditions, retainer and all requested data.
Our delivery date will be in accordance with BLI?s schedule for the project.
We will confirm or update our opinion prior to the closing of the proposed
transaction at no additional cost or expense.
III. CONFIDENTIALITY
We agree that the information and data provided to us in connection with this
engagement, whether written or oral, will be kept confidential by us, our
officers, employees and agents; will be disclosed by us only to such
officers, employees and agents as need to know in connection with this
engagement; and will be used only for the purpose of this engagement.
Marshall & Stevens will maintain the confidential nature of any information
received from the client or developed during the engagement in accordance
with established professional standards.
We acknowledge and agree that our opinion may be included in the proxy
statements for the transaction.
IV. PROFESSIONAL FEES
Our fees to perform this engagement, inclusive of all out-of-pocket expenses,
are as follows:
Fairness Opinion $50,000
Advisory Services & Appraisal $20,000
Our fees are predicated on information provided to us by BLI. If any material
unexpected or significant problems are encountered during the course of the
engagement, or you request additional services not contemplated above, we
reserve the right to review our fee upon prior written notice to you.
On an engagement of this nature, we require a $20,000 retainer, with the
remainder to be paid at the time the fairness opinion is delivered. If the
opinion is not delivered, BLI will be responsible for our documented time and
expenses incurred up to the point at which the engagement was cancelled.
Should this event occur, our professional rates for such reimbursement
follow:
Senior Vice President $400 per hour
Director of Finance $300 per hour
Financial Analyst $175 per hour
BLI may terminate this engagement at any time upon written notice to Marshall
& Stevens, which termination will be effective upon delivery to Marshall &
Stevens or as otherwise set forth in the notice.
V. CONTRACTUAL CONDITIONS & ACCEPTANCE
The attached Contractual Conditions are an essential part of our agreement
and contract to perform services; please initial and date as indicated.
Please indicate your acceptance of all terms herein by signing and returning
to my attention the original of this proposal, including the signed
Contractual Conditions, and the retainer. In order to expedite the start of
this assignment, please fax an advance copy of the executed signature
pages to me at (213) 612-8014. If you have questions or comments regarding
our proposed services, please do not hesitate to call me at (213) 233-1514.
We appreciate this opportunity to be of service, and look forward to working
with you on this important engagement.
Sincerely,
MARSHALL & STEVENS INCORPORATED BIGGEST LITTLE INVESTMENTS, L.P.
/s/Joseph A. Gagliano Ben Farahi
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Joseph A. Gagliano PRINTED NAME
Principal
/s/Ben Farahi
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SIGNATURE
Managing Member of General Partner
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TITLE
08/04/2006
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DATE
Contractual Conditions
In consideration of Marshall & Stevens? performing the professional services
specified, at the fees charged, the client for whom our report is prepared
agrees to the following terms and conditions. These terms and conditions may
be amended or supplemented only by an agreement in writing signed by Marshall
& Stevens.
1. Client warrants that the person authorizing this engagement is empowered
to do so.
2. Any client use of the report is conditioned upon payment of all Marshall &
Stevens' fees and expenses in accordance with the agreed payment terms.
3. Fees are due and payable regardless of whether or not conclusions reached
coincide with client expectations. Fees are in no way related to values
determined by Marshall & Stevens.
4. Unless specifically brought to our attention, we will assume there are no
hidden or unexpected conditions that would adversely affect value.
5. Our reports, the Marshall & Stevens? name, and the name of any
subcontractor, are not to be used in whole or in part outside the client's
organization, without our prior written approval, except for review by
client's auditors, legal counsel, and by representatives of taxing
authorities. We will likewise preserve the confidential nature of information
received from you, or developed during this engagement, in accordance with
our established professional standards. We will respond to legal process for
client information after delivering a copy of such process to client.
6. Client agrees that Marshall & Stevens does not, either by entering into
this contract or by performing the services rendered, assume, abridge,
abrogate or undertake to discharge any duty of client to any other person.
7. Delivery schedules quoted assume (unless otherwise stated) that:
- Written authorization and the retainer requested will be received in a
timely manner as agreed;
- All supporting information to be provided by the client will be readily
available; and
- Our staff will be afforded ready access to all things and persons
necessary for the assignment.
8. No opinion is intended to be expressed about matters that require legal or
specialized expertise, investigation or knowledge beyond that customarily
employed by valuation professionals. Clients seeking engineering, legal, tax,
accounting, investment or other professional advice should retain such
advisors.
9. Marshall & Stevens warrants that it will perform its services in a
professional manner in accordance with professional standards. Marshall &
Stevens makes no further warranty of any kind, express or implied.
10. Marshall & Stevens expressly limits its liability under any legal theory
to the amount of the fee paid or $100,000, whichever is less.
11. Marshall & Stevens expressly disclaims liability as an insurer or
guarantor. Any person seeking greater protection from loss or damage than is
provided for herein should obtain appropriate insurance.
11. Hazardous substances, if present within a facility, can introduce an
actual or potential liability that may adversely affect marketability and
value. Such effect may be in the form of immediate expense or future
liability. In the development of our opinion of value, no consideration will
be given to such liability or its impact on value unless Marshall & Stevens
is specifically retained to prepare an environmental or toxic contamination
report. Unless such a report is prepared by Marshall & Stevens, client
releases Marshall & Stevens from any and all liability related in any way to
environmental matters.
12. The client shall defend, indemnify and hold harmless Marshall & Stevens
and its employees, agents or subcontractors against all third party claims
and any judgments, losses, damages or expenses relating to the performance,
or non-performance, of services by Marshall & Stevens.
14. If Marshall & Stevens is requested or compelled to produce documents or
testify with regard to the work performed, regardless of who makes such
request, client shall reimburse Marshall & Stevens for all costs, including
attorneys' fees, preparation and travel time, interview, deposition and court
time and expenses, all at Marshall & Stevens? then-existing rates.
13. In the event of a dispute involving interpretation or performance under
this agreement, the dispute shall be submitted to arbitration under the rules
of commercial arbitration of the American Arbitration Association, the
results of which shall be binding on all parties to this agreement. The
arbitration shall be conducted in the city in which the Marshall & Stevens'
office servicing this agreement is located. The party prevailing at the
arbitration shall recover from the other party its costs and expenses,
including attorneys', arbitrators' and stenographers' fees.
BF 08/04/2006(Initial and Date)
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