Exhibit 99.1
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NOTICE OF SHAREHOLDERS OF KAANAPALI LAND, LLC
January 25, 2008
On January 11, 2008, SCM SPECIAL FUND, LLC, SUTTER OPPORTUNITY FUND 4,
LLC, MPF FLAGSHIP FUND 11, LLC, MPF DEWAAY PREMIER FUND 4, LLC, and MPF
SPECIAL FUND 8, LLC (collectively, the "Purchasers") filed a Tender Offer
Statement on Schedule TO with the Securities and Exchange Commission pursuant
to Section 14(d)(1) or 13(e)(1) of the Securities Exchange Act of 1934,
whereby the Purchasers presented an unsolicited offer (the "Offer") to
purchase up to 32,000 common shares (the "Shares") of Kaanapali Land, LLC (the
"Company") at $30 per Share. THE COMPANY EXPRESSES NO OPINION AND REMAINS
NEUTRAL WITH RESPECT TO THE OFFER. The Company considered the following
matters in concluding not to take a position, which matters should be reviewed
by any holder of Shares (individually, a "Holder" and collectively, the
"Holders") in considering the Offer:
. Neither the Company nor its manager, Pacific Trail Holdings,
LLC (the "Manager"), has recently expressed an opinion
concerning the fair market value of the Shares. In April 2007,
the Company entered into a Plan and Agreement of Merger (the
"Merger Agreement") for the merger of KLLLC Mergerco, LLC
("KLLLC") with and into the Company, which provided, subject to
the terms and conditions of the Merger Agreement, that upon the
effective time of the merger, each Class A Share(1) would have
been converted into the right to receive $43.25 in cash per
share (the "Proposed Merger Price"). Among the conditions to
the Merger Agreement was that there shall be no pending or
threatened litigation that could reasonably be expected (a) to
have a material adverse effect on the business, financial
condition or results of operations of the Company or KLLLC or
(b) to increase the costs of the merger in any material
respect. On May 10, 2007, John G. Brant, P.C. Pension Trust and
John G. Brant filed a suit in the Court of Chancery in the
State of Delaware against the Company, the Manager and others,
alleging that the price to be paid for each Class A Share
pursuant to the Merger Agreement was unfair and undervalued the
Company, as well as several other matters. Because the cost of
defending and/or settling the lawsuit could have been
reasonably expected to materially increase the costs of the
merger, the Company terminated the Merger Agreement on June 15,
2007. In connection with the Merger Agreement, however, the
Company filed a Schedule 13E-3 and Rule 13e-3 Transaction
Statement under Section 13(e) of the Securities Exchange Act of
1934 (collectively, the "Schedule 13E-3") whereby, among other
things, the Company, the Manager and certain other affiliates
participating in the transaction rendered the opinion that the
Proposed Merger Price was fair compensation to the Holders of
Class A Shares at the time of the proposed merger(2).
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(1) At the time of the Merger Agreement, the Company had two classes of
shares, Class A Shares and Class B Shares. These two classes were
subsequently redesignated as "common shares" effective November 14, 2007, upon
the expiration of certain rights that benefitted the Class A Shares under the
Amended and Restated Limited Liability Company Agreement of Kaanapali Land,
LLC, dated as of November 14, 2002.
(2) All of the Company's reports filed with the Securities and Exchange
Commission can be obtained by going to the SEC's EDGAR Website at
http://www.sec.gov/edgar.shtml.
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. Since the time of the proposed merger there has been a
significant deterioration in housing markets on a nationwide
basis, both in terms of volume and activity, a constriction of
credit markets (including, in particular, the residential
mortgage markets) and financial and equity markets generally.
These developments have been widely reported in the media. The
Company's primary business is the planning, entitlement,
development and sale of the acreage it holds on the Island of
Maui in Hawaii, most of which will ultimately be devoted to
residential uses. Currently, the Company has entitlements for
the sale of 58 agricultural lots that can each include a farm
dwelling site. Since the time of the filing of the Schedule
13E-3, the Company has sold only two lots and currently has
none under contract. There can be no assurance as to when or
whether markets will rebound to enable the Company to achieve a
level of sales in excess of its ongoing cash requirements.
Reference is made to the Company's most-recent reports on
Form 10-Q for the quarterly period ended September 30, 2007 and
on Form 10-K for the annual period ended December 31, 2006 for
a discussion of the various material risks and developments
affecting the Company.
. The Company continues to seek to sell its non-strategic assets.
In the event that any such sale occurs, the Company would
obtain cash proceeds that will improve the Company's liquidity
position. It is expected that any such proceeds would be
devoted to the satisfaction of the Company's existing and
future liabilities and the pursuit of the Company's development
opportunities on Maui. The Company does not anticipate that any
such proceeds would be distributed to Holders of Shares.
However, there can be no assurance that the Company will be
able to arrange for any such sale or that any such sale will be
consummated.
. The Company has no current plans to liquidate or to make any
distributions, and it is unlikely that any distributions will
be made in the foreseeable future, and possibly not before the
Company ultimately liquidates when its properties are sold and
its liabilities are satisfied, which may be many years in the
future. There can be no assurance that any other liquidity
events will occur that will provide Holders of Shares with an
opportunity to sell at a reasonable price. A Holder's only
opportunity to sell Shares may be through secondary market
transactions. While Kaanapali Land has not listed the shares on
any recognized securities exchange and does not intend to do
so, a small secondary market for the Shares has developed,
without Company participation, on the "Other - OTC Securities"
market operated by The NASDAQ Stock Market, Inc. This market is
essentially unregulated and is not supported by market makers
or any institutionalized quotation system with centrally
collected bids and offers. Recent sales of Shares have been
reported to be at prices that approximate the price to be paid
pursuant to the Offer. However, the Company is not expressing
an opinion for the reasons stated herein, as to whether those
sales are representative of the market value of the Shares.
Although the Company expresses no opinion and remains neutral
with respect to the Offer, any Holder who either has a need or
a desire for liquidity with respect to its Shares may wish to
consider participating in the Offer to achieve that liquidity.
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. The Offer price of $30 per Share is approximately 69% of the
Proposed Merger Price. However, as noted above, market
conditions since the termination of the Merger Agreement have
deteriorated significantly and remain volatile and uncertain.
In addition, the Proposed Merger Price did not take into
account various matters that would often be considered in the
valuation of an illiquid, minority interest, and thus did not
give effect to any premium or discount that may be attributable
by reason of any control premium, minority or illiquidity
discounts or other rights, restrictions or limitations that may
be attributable to individual Shares or blocks of Shares. When
compared to its earlier determination of a fair Merger Price
and taking into account the intervening downturn in the housing
and financial markets, the Company is not in a position to
express what would be a reasonable current valuation of a
minority position in the Company.
THEREFORE, THE COMPANY EXPRESSES NO OPINION AND REMAINS NEUTRAL WITH RESPECT
TO THE OFFER.
ALL HOLDERS OF SHARES ARE DIRECTED TO THE COMPANY'S PUBLIC FILINGS WITH
THE SECURITIES AND EXCHANGE COMMISSION, WHICH CONTAIN IMPORTANT DISCLOSURES
CONCERNING THE COMPANY AND ITS PROSPECTS. REFERENCES TO OR EXCERPTS TAKEN FROM
SUCH REPORTS HEREIN ARE NOT SUBSTITUTES FOR THE REPORTS THEMSELVES, WHICH
SPEAK FOR THEMSELVES.
In general, a sale of Shares pursuant to the Offer will constitute a
taxable event. A Holder of Shares should consult his/her own tax advisor prior
to accepting the Offer and tendering his/her Shares.
The principal executive offices of Kaanapali Land, LLC are located at
900 North Michigan Avenue, Suite 1400, Chicago, Illinois 60611 and its
telephone number is (312) 915-1987. The address of the Purchasers is c/o
MacKenzie Patterson Fuller, LP, 1640 School Street, Moraga, CA 94556.
Based on information known to the Company after making reasonable
inquiry, the executive officers and all other affiliates of the Company intend
to continue to hold their Shares and not tender them to the Purchaser pursuant
to the Offer.
On January 18, 2008, the Company entered into an agreement with Stephen
Lovelette ("Lovelette"), an executive vice president of the Company, whereby
the Company agreed to issue up to 52,000 shares of a new class of common
shares (the "Class C Shares") in consideration for his services to the
Company. The Class C Shares have the same rights as the Shares except that
the Class C Shares will not participate in any distributions until the holders
of the Shares have received aggregate distributions equal to $19 per Share,
subject to customary antidilution adjustments. The Class C Shares became 50%
vested at the time of grant, an additional 25% will vest on December 31, 2008
if Lovelette remains employed by the Company through that date and the
remaining 25% will vest on December 31, 2009 if Lovelette remains employed by
the Company through that date.
The Company pays a non-accountable reimbursement of approximately $30
thousand per month to JMB Realty Corporation, an affiliate of the Manager, in
respect of general overhead expense.
The Company reimburses its affiliates for direct expenses incurred on
its behalf, including salaries and salary-related expenses incurred in
connection with the management of the Company's operations. Generally, the
entity that employs the person providing the services receives the
reimbursement. The total costs for the year ended December 31, 2006 was
approximately $2.6 million.
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As of January 25, 2008, there are 1,792,613.66 Shares outstanding.
IF YOU WISH TO RETAIN YOUR SHARES AND YOU HAVE NOT ALREADY TENDERED THEM
PURSUANT TO THE OFFER, YOU NEED NOT TAKE ANY ACTION REGARDING THE OFFER.
Very truly yours,
KAANAPALI LAND, LLC
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