SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) Securities
Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
REAL ESTATE ASSOCIATES LIMITED III
(Name of Registrant as Specified in Its Charter)
Bond Purchase, L.L.C.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
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Bond Purchase, L.L.C.
104 Armour Road
North Kansas City, Missouri 64116
To The Limited Partners:
Enclosed is a Solicitation of Consents seeking the approval by written
consent (the "Consents") of the limited partners (the "Limited Partners") of
Real Estate Associates Limited III, a California limited partnership (the
"Partnership"), to remove the current general partners and to continue the
Partnership and elect New G.P., LLC, a Missouri limited liability company ("New
G.P.") as the new general partner of the Partnership.
New G.P. is an affiliate of Bond Purchase, L.L.C., a limited partner of the
Partnership ("Bond Purchase"). The goal of Bond Purchase in soliciting the
Consents is to elect New G.P. as the new general partner of the Partnership so
that Bond Purchase can (i) distribute cash on hand, (ii) investigate claims
against the Partnership's current general partners, (iii) reduce management fees
ten percent (10%) as New G.P. has indicated it intends to do and (iv) review the
Partnership's books and records to analyze alternatives, including the possible
liquidation of the limited and general partner interests that the Partnership
holds.
A review of documents and reports publicly filed by the Partnership indicates
that the remaining assets held by the Partnership include a significant amount
of cash on hand ($5,609,069 as of September 30, 2000) and potentially valuable
real estate assets. Bond Purchase believes the Partnership should be exploring
opportunities to sell the Partnership's assets (limited and general partner
interests) to third parties now to maximize the potential cash returns to the
Limited Partners on their original investment. On October 12, 2000, Bond
Purchase requested the Partnership's general partner to allow Bond Purchase to
review the Partnership's books and records to analyze the Partnership's
alternatives, but the general partner has not responded. Bond Purchase has also
written to the Partnership regarding its concern that the levels of cash held by
the Partnership is inappropriate and requesting information as to how these
funds have been invested. The Partnership has not responded to these inquiries.
We urge you to carefully read the enclosed Consent Solicitation Statement in
order to vote your interests. Please note that we can give no assurance that
limited partner value will be increased by the election of New G.P. as the new
general partner. YOUR VOTE IS IMPORTANT. FAILURE TO VOTE, ABSTENTIONS AND BROKER
NON-VOTES WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE PROPOSALS. To be sure
your vote is represented, please sign, date and return the enclosed Consent of
Limited Partner form as promptly as possible in the enclosed, prepaid envelope.
If you have any questions, please do not hesitate to contact Bond Purchase at
(816) 303-4500.
Very Truly Yours,
Bond Purchase, L.L.C.
SOLICITATION OF CONSENTS
of
LIMITED PARTNERS
of
Real Estate Associates Limited III
by
Bond Purchase, L.L.C.
a Missouri limited liability company
March 13, 2001
CONSENT SOLICITATION STATEMENT
Bond Purchase, L.L.C., a Missouri limited liability company, is a limited
partner of the Partnership ("Bond Purchase"). Bond Purchase is seeking the
approval by written consent (the "Consents") of the limited partners (the
"Limited Partners") of Real Estate Associates Limited III, a California limited
partnership (the "Partnership"), to remove the current general partners and to
continue the Partnership and elect New G.P., LLC ("New G.P.") as the new general
partner of the Partnership. New G.P., LLC, a Missouri limited liability company
is an affiliate of Bond Purchase. The election of New G.P. as a general partner
is conditioned upon the approval of the removal of the current general partners.
In the event that the current general partners are removed and the Limited
Partners do not approve continuing the Partnership and electing New G.P. as the
new general partner, Bond Purchase will initiate an additional consent
solicitation to continue the Partnership and elect a general partner. In the
event that the Limited Partners do not elect to continue the Partnership and
elect a new general partner within sixty (60) days after the removal of the
current general partners, the Partnership will be dissolved and the assets of
the Partnership will be liquidated pursuant to Sections 13.3 and 13.4 of the
Partnership's Restated Certificate and Agreement of Limited Partnership dated
January 5, 1981 (the "Partnership Agreement").
This Consent Solicitation Statement and the accompanying form of Consent of
Limited Partners are first being mailed to Limited Partners on or about March
23, 2001. The participants in this solicitation are Bond Purchase, David L.
Johnson and Christine A. Robinson.
In reviewing this Consent Solicitation Statement please consider the
following:
- The remaining assets of the Partnership are eleven limited partner
interests and one remaining general partner interest in real estate limited
partnerships (the "Limited Partnership Assets"). Based on the fact that the
Partnership has not disclosed that it is exploring the alternative of
selling the Limited Partnership Assets, Bond Purchase believes that the
current general partners are not actively seeking opportunities to sell the
Limited Partnership Assets.
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- If Bond Purchase is successful in replacing the current general partners
with New G.P., Bond Purchase plans to cause New G.P. to consider
opportunities to sell the Limited Partnership Assets.
- If New G.P. is appointed as the new general partner, it or its affiliates
would generally be entitled to the same fees as previously paid to the
current general partners. Although New G.P. will not be contractually bound
to do so, New G.P. has indicated it intends, upon its election as the new
general partner, to reduce the annual management fees set forth in Section
9.5 of the Partnership Agreement and any other fees payable to the general
partner or its affiliates by at least 10%.
- If New G.P. is appointed as the new general partner, it will be entitled to
at least a 1% interest in all profits and losses and distributions, as well
as liquidation proceeds of the Partnerships to the same extent as the
former general partners pursuant to Sections 7.1 and 8.1 of the Partnership
Agreement.
- The current general partners have received $129,292 in management fees and
$506,277 as reimbursement for administrative costs for the year ended
December 31, 1999. The current general partners will continue to collect
management fees until they sell the Limited Partnership Assets, and
therefore have a financial incentive not to sell the Limited Partnership
Assets. Based on publicly available information, the current general
partners own less than 1% of Limited Partnership Interests. Because the
Partnership has recently sold a significant number of its assets in 1998,
Bond Purchase believes that the management fee should be reduced below .4%
of the Partnership's invested assets. Although New G.P. may have a
financial incentive not to sell the Limited Partnership Assets because it
also will receive management fees, New G.P.'s incentive not to sell the
Limited Partnership Assets is significantly less because (i) it will be
collecting management fees which are 10% less for managing the Limited
Partnership Assets if New G.P. decreases management fees as it has
indicated it intends to do and (ii) its affiliate holds approximately 4.1%
of the Limited Partnership Interests. Therefore, New G.P. has a stronger
incentive to ensure the prompt sale of the Limited Partnership Assets at a
favorable price.
Considerations other than those identified, such as investment and tax
considerations, exist which should be weighed in replacing the current general
partners with New G.P. Limited Partners are advised to read this entire Consent
Solicitation Statement carefully and to consult with their investment and tax
advisors before making a decision whether or not to consent. Please note that
Bond Purchase can give no assurance that limited partner value will be increased
by the election of New G.P. as the new general partner. YOUR VOTE IS IMPORTANT.
FAILURE TO VOTE WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE PROPOSALS.
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The Consents are solicited upon the terms and subject to the conditions of
this Consent Solicitation Statement and the accompanying form of Consent.
Removal of the current general partners and the election to continue the
Partnership and elect New G.P. as the new general partner requires the consent
of the record holders of a majority of the outstanding limited partnership
interests ("Limited Partnership Interests") of the Limited Partners (the
"Required Consents"). If Bond Purchase receives the Required Consents, New G.P.
will become the new general partner, as provided in the Partnership Agreement.
Section 9.9(d) of the Partnership Agreement provides that the vote of Limited
Partners owning a majority of the Limited Partnership Interests may remove a
general partner. Section 13.4 provides that the Limited Partners owning a
majority of the Limited Partnership Interests may elect to continue the
Partnership and elect a new general partner if an event of dissolution occurs by
the removal of a general partner.
Under the Partnership Agreement and California law, Limited Partners do not
have dissenters' rights of appraisal in connection with these Proposals.
THIS SOLICITATION IS BEING MADE BY BOND PURCHASE AND NOT ON BEHALF OF THE
PARTNERSHIP. CONSENTS SHOULD BE DELIVERED TO BOND PURCHASE AND NOT TO THE
PARTNERSHIP.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT PASSED UPON THE ACCURACY OR
ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
THIS SOLICITATION OF CONSENTS EXPIRES NO LATER THAN 11:59 P.M. EASTERN TIME
ON APRIL 30, 2001, UNLESS EXTENDED.
AVAILABLE INFORMATION
The Partnership is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, consent solicitation statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, consent solicitation statements and other information filed with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices, Seven World Trade Center,
13th Floor, New York, New York 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. In addition, the Commission
maintains a site on the World Wide Web portion of the Internet that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of such
site is http://www.sec.gov.
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INFORMATION CONCERNING BOND PURCHASE AND NEW G.P.
Bond Purchase is a Missouri limited liability company that was formed on
November 15, 1995. The principal office of the Purchaser is 104 Armour Road,
North Kansas City, Missouri 64116. David L. Johnson is the owner of 86% of Bond
Purchase, is the managing member of Bond Purchase and is the person that manages
Bond Purchase's affairs. Bond Purchase may solicit consents to remove the
general partners of Real Estate Associates Limited II and Real Estate Associates
Limited VI.
New G.P. is a Missouri limited liability company that was formed in 2000 for
the purpose of seeking to become the general partner of other real estate
limited partnerships. The sole Manager of New G.P. is David L. Johnson, who
manages all of the business affairs of New G.P. The principal office of New G.P.
is 104 Armour Road, North Kansas City, MO 64116; telephone (816) 303-4500. New
G.P. has no significant assets, net worth or business history.
New G.P. has consented to being named in this Consent Solicitation Statement
and to serving as the new general partner if elected.
The resumes of the individuals who will participate in the solicitation as
agents of Bond Purchase are set forth below. For information regarding any
purchases or sales of Limited Partnership Interests effected by such persons,
Bond Purchase, New G.P. or their affiliates within the past two years, please
refer to Appendix B hereto.
David L. Johnson. Since November 1999, Mr. Johnson, age 44, has served as
Chairman, Chief Executive Officer and a trustee of Maxus Realty Trust, Inc.
("MRTI"), a Missouri real estate investment trust located at 104 Armour Road,
North Kansas City, Missouri 64116 that holds commercial real estate properties
and is listed on NASDAQ. In addition, Mr. Johnson has also served as the Vice
President of Maxus Capital Corp., a Missouri corporation that serves as general
partner of Maxus Real Property Investors-Four, L.P., a real estate limited
partnership that is a reporting company under the Securities Exchange Act of
1934, as amended, since November 1999. Mr. Johnson is Chairman, Chief Executive
Officer and a majority shareholder of Maxus Properties, Inc. ("Maxus"), a
Missouri corporation that specializes in commercial property management for
affiliated owners. Mr. Johnson is also Vice President of KelCor, Inc.
("KelCor"), a Missouri corporation that specializes in the acquisition of
commercial real estate. Mr. Johnson has served such positions for KelCor and
Maxus for more than five years.
Christine A. Robinson. Ms. Robinson, age 34, is currently the Secretary of
MRTI and Vice President and a minority shareholder of Maxus. Ms. Robinson has
served as Secretary of MRTI since November 1999 and as Vice President of Maxus
since September 1997. Ms. Robinson also currently serves as Secretary of KelCor.
Ms. Robinson is also President of Nichols Resources, Ltd., a Missouri
corporation that serves as general partner of Secured Investment Resources Fund
III, L.P., a real estate limited partnership that is a reporting company under
the Securities Exchange Act of 1934, as amended. Prior to September 1997, Ms.
Robinson served as Sales/Marketing/Financial Analyst for American Italian Pasta
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Company, a retail pasta manufacturing and sales company, and also worked as an
independent contractor for American Management Association, a company that
provides management, finance and inventory seminars.
The participants are, and have not been within the last year, a party to any
contract, arrangement or understanding with any person with respect to any
securities of the Partnership.
INFORMATION CONCERNING THE PARTNERSHIP
Information contained in this section is based upon documents and reports
publicly filed by the Partnership, including the Annual Report on Form 10-K for
the fiscal year ended December 31, 1999 (the "Form 10-K"). Although Bond
Purchase has no information that any statements contained in this section are
untrue, Bond Purchase has not independently investigated the accuracy of the
information contained in this section or for the failure by the Partnership to
disclose events which may have occurred and may affect the significance or
accuracy of any such information.
Current General Partners
The Partnership is a limited partnership formed under the laws of the State
of California on January 25, 1980. The original objectives of the Partnership
were to own and operate its Limited Partnership Assets for investment so as to
obtain (i) tax benefits for the Limited Partners; (ii) reasonable protection for
the Partnership's capital investments; (iii) potential for appreciation, subject
to considerations of capital preservation; and (iv) potential for future cash
distributions from operations (on a limited basis), refinancings or sales of
assets.
The general partners of the Partnership are National Partnership Investments
Corp. ("NAPICO"), a California corporation, and Coast Housing Investments
Associates ("CHIA"), a limited partnership formed under the California Limited
Partnership Act and consisting of Messrs. Nicholas G. Ciriello, an unrelated
individual, as general partner, and Charles H. Boxenbaum as limited partner. The
business of the Partnership is conducted primarily by NAPICO.
Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden
Investment Corporation ("CIC"), which is wholly owned by Alan I. Casden. On
December 30, 1998, Casden Limited Partnership Assets Operating Partnership, L.P.
(the "Operating Partnership"), a majority owned subsidiary of Casden Limited
Partnership Assets Inc., a real estate investment trust organized by Alan I.
Casden, purchased a 95.25% economic interest in NAPICO. The current members of
NAPICO's Board of Directors are Charles H. Boxenbaum, Bruce E. Nelson and Alan
I. Casden.
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Partnership Assets
The Partnership holds limited partnership interests in 11 local limited
partnerships as of December 31, 1999, and a general partner interest in Real
Estate Associates ("REA"), which in turn holds limited partnership interests in
an additional partnership; therefore, the Partnership holds directly or
indirectly through REA, investments in 12 local limited partnerships. The
general partners of REA are the Partnership and NAPICO. In December 1998, the
Partnership sold its interest in 20 local limited partnerships to the Operating
Partnership. Each of the limited partnerships owns a low income housing project
which is subsidized and/or has a mortgage note payable to or insured by agencies
of the federal or local government.
The local partnerships in which the Partnership has invested were, in
general, organized by private developers who acquired the sites, or options
thereon, and applied for applicable mortgage insurance and subsidies. The
Partnership became the principal limited partner in these real estate holding
limited partnerships pursuant to arm's-length negotiations with these
developers, or others, who act as general partners. As a limited partner, the
Partnership's liability for obligations of the real estate holding limited
partnerships is limited to its investment. The general partners of such local
limited partnerships retain responsibility for maintaining, operating and
managing the Limited Partnership Assets.
During 1999, the projects in which the Partnership had invested were
substantially rented. The following is a schedule of the status as of December
31, 1999, of the projects owned by local limited partnerships in which the
Partnership is a limited partner.
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH THE PARTNERSHIP HAS AN INVESTMENT
DECEMBER 31, 1999
Units Authorized For
Rental Assistance
Under Section 8 or Percentage of
No. of Other Rent Supplement Units Total Units
Name and Location Units Program Occupied Occupied
- ----------------- ------ -------------------- --------- --------
Charlotte Lakeview, 553 0/0 517 93%
Riverview Residential
Project, Rochester, NY
Hidden Pines Apts 40 40/0 38 95%
Greenville, MI
Jenks School Apts 83 83/0 83 100%
Pawtucket, RI
Lakeside Apts 32 0/21 31 97%
Stuart, FL
Ramblewood Apts 64 0/13 62 97%
Fort Payne, AL
Santa Maria Apts 86 86/0 86 100%
San German, Puerto Rico
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Sunset Grove Apts 22 22/0 22 100%
Carson City, MI
Sunshine Canyon 26 26/0 23 88%
Stanton, MI
Village Apts 50 50/0 50 100%
La Follette, TN
Vincente Geigel 80 80/0 80 100%
Polanco Apts
Isabela, Puerto Rico
Vista De Jagueyes 73 73/0 73 100%
Aguas Buenas, PR
Westgate Apts 72 0/16 66 92%
Albertville, AL
--------- ------------ --------- ------------
TOTALS 1,181 460/50 1,131 96%
===== ====== =====
Outstanding Limited Partnership Interests
According to the Partnership's Form 10-K, there were 11,456 Limited
Partnership Interests (representing 5,728 units) issued and outstanding at
December 31, 1999, held by 1,950 holders of record. A Limited Partner is
entitled to one vote for each Limited Partnership Interest owned by such Limited
Partner. Bond Purchase owns 466 Limited Partnership Interests (representing 233
units), or approximately 4.1% of the outstanding Limited Partnership Interests.
According to the Form 10-K, the current general partners and their corporate
officers cumulatively own less than 1% of the outstanding Limited Partnership
Interests. No person is known to own beneficially in excess of 5% of the
outstanding Limited Partnership Interests.
LITIGATION
On September 1, 2000, affiliates of NAPICO gave written notice
to affiliates of David Johnson that serve as general partners of certain limited
partnerships unrelated to the Partnership of the NAPICO affiliates' notice of
exercise of contract rights as a consequence of alleged material breaches of the
terms of the partnership agreements governing the limited partnerships. On
December 8, 2000, the NAPICO affiliates brought suit against the general
partners of the limited partnerships and others (including David Johnson,
certain affiliates of David Johnson and unrelated parties) for breach of
contract, breach of fiduciary duty, negligence, fraud and RICO violations and
other claims in the United States District Court for the Central District of
California. Judgment is sought against the general partners and other defendants
for alleged monetary losses, punitive damages, damages under RICO, equitable
relief and attorney's fees.
Thereafter, certain of the defendants in the California suit
brought suit against the plaintiffs and others in the California suit in the
United States District Court for the Western District of Missouri seeking a
declaration that the general partners have not materially breached the various
partnership agreements.
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On February 23, 2001, Bond Purchase, as a limited partner,
filed suit in the United States District Court for the Western District of
Missouri against Century Hillcreste Apartment Investors, L.P., a real estate
limited partnership ("Century"), NAPICO, as the managing general partner of
Century, and others. The lawsuit is for a declaratory judgment, violations of
the California corporations code, breach of contract and breach of fiduciary
duty for the defendants failure to provide access to the books and records of
Century and for self dealing.
PROPOSALS AND SUPPORTING STATEMENT
The Limited Partners are being asked to approve by written consent the
following actions (the "Proposals") pursuant to the Partnership Agreement:
(1) the removal of the current general partners, NAPICO and CHIA,
as the general partners of the Partnership; and
(2) the continuation of the Partnership and the election of New G.P. as
the new general partner of the Partnership (which is conditioned upon the
approval of Proposal 1 above).
A review of documents and reports publicly filed by the Partnership
indicates that the remaining assets held by the Partnership are potentially
valuable real estate assets. These assets are interests in low income housing
projects which are subsidized and/or have a mortgage note payable to or insured
by agencies of the federal or local government. The Quarterly Report on Form
10-Q for the quarter ended September 30, 2000 filed by the Partnership (the
"Form 10-Q") notes the economic impact of the combination of the reduced
payments under the Housing Assistance Payment contracts and the restructuring of
the existing FHA-insured mortgage loans under MAHRAA is uncertain. Bond Purchase
believes the Partnership should be exploring opportunities to sell the Limited
Partnership Assets to third parties now to maximize the potential cash returns
to the Limited Partners on their original investment. The Partnership has not
disclosed that it is exploring this alternative.
NAPICO, the current general partner primarily responsible for managing
the Partnership, has received $129,292 in management fees and $506,277 as
reimbursement for administrative costs for the twelve months ended December 31,
1999. Bond Purchase has committed to reduce annual management fees pursuant to
Section 9.5 of the Partnership Agreement and any other fees payable to the
general partner or its affiliates by at least 10%.
The current managing general partner will continue to collect
management fees until it sells the Limited Partnership Assets, and therefore has
a financial incentive not to sell the Limited Partnership Assets. Although New
G.P. may have a financial incentive not to sell the Limited Partnership Assets
because it also will receive management fees, New G.P.'s incentive to sell the
Limited Partnership Assets is significantly less because (i) it will receive
management fees which are 10% less than the current fees for managing the
Limited Partnership Assets if New G.P. decreases management fees as it has
indicated it intends to
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do and (ii) it has an affiliate that owns a significant number of Limited
Partnership Interests. Therefore, New G.P. has a stronger incentive to ensure
the prompt sale of the Limited Partnership Assets at a favorable price. The
current general partners and its affiliates own significantly fewer Limited
Partnership Interests in the Partnership and therefore do not have the same
financial incentive to sell the Limited Partnership Assets as do the Limited
Partners.
Bond Purchase believes that removing the current general partners and
electing New G.P. as the new general partner will provide the Limited Partners
with the best potential to maximize the potential cash returns to the Limited
Partners in the near future. The goal of Bond Purchase in soliciting the
Consents is to elect New G.P. as the new general partner of the Partnership so
that New G.P. can (i) distribute cash and cash equivalents on hand ($5,609,069
as of September 30, 2000) to the extent not required for the continued operation
of the Partnership, (ii) investigate claims against the Partnership's current
general partners, (iii) reduce management fees ten percent (10%) based on New
G.P.'s indication of its intent to do so and (iv) review the Partnership's books
and records to analyze alternatives, including the possible liquidation of the
limited and general partner interests that the Partnership holds.
Bond Purchase cannot give any assurances that limited partner value
will be increased by the election of New G.P. as the new general partner.
The Form 10-Q indicates that the Partnership's revenues are increasing.
Bond Purchase believes this is a result of the increased interest income from
the cash and cash equivalents held by the Partnership. Bond Purchase believes
that the cash (to the extent not required for the continued operation of the
Partnership) should be distributed to the Limited Partners. The Partnership had
previously made cash distributions of $6,881,025 to the Limited Partners in
March 1999 following the Partnership's sale of 20 partnership interests in late
1998. As indicated above, the Partnership, however, still holds a significant
amount of cash and cash equivalents that Bond Purchase believes is not necessary
for the continued operation of the Partnership and should be distributed to the
Limited Partners.
Admission of New General Partner
If the Required Consents are obtained to remove the current general
partners and elect New G.P. as the new general partner, the current general
partners will not retain any of the rights, powers or authority accruing to the
general partner following their removal as general partners; provided, however,
that the Partnership must purchase the current general partners' interest in the
Partnership at its fair value on the date of such removal as provided in Section
9.9 of the Partnership Agreement, with the fair value determined, if necessary,
in accordance with the arbitration procedure of the American Arbitration
Association. If New G.P. is appointed as the new general partner, it will be
entitled to a 1% interest in all profits and losses, and cash distributions made
by the Partnership prior to dissolution or liquidation (the same as which the
current general partners are entitled to).
New G.P. has indicated its desire to become the new general partner
and, other than a subsequent material adverse change in the Partnership, Bond
Purchase does not anticipate
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any circumstance under which New G.P. would not desire to become the new general
partner. A material adverse change would include bankruptcy, foreclosure or
other impairments on the value or operations of the Partnership's assets. New
G.P. has reserved the right to withdraw before admission as the new general
partner in the event of a material adverse change in the Partnership.
New G.P., as the new general partner, will be entitled to a 1% interest
in all profits, losses and distributions of the Partnership pursuant to the
Partnership Agreement. Upon total or partial liquidation of the Partnership or
the disposition or partial disposition of a Limited Partnership Asset and
distribution of the proceeds, pursuant to the Partnership Agreement, New G.P.
would be entitled to a liquidation fee equal to the lesser of (i) 10% of the net
proceeds to the Partnership from the sale of a Limited Partnership Asset or (ii)
1% of the sales price (including the mortgage) plus 3% of the net proceeds after
deducting an amount sufficient to pay federal and state taxes, if any,
calculated at the maximum rate then applicable. No part of such liquidation fee
shall be paid, unless the Limited Partners shall have first received an amount
equal to (i) the greater of (A) their aggregate capital contributions, or (B) an
amount sufficient to satisfy the cumulative state and federal income tax
liability, if any, arising from the disposition of all Limited Partnership
Assets disposed of to date, calculated at the maximum tax rate then applicable,
less, (ii) all amounts previously distributed to Limited Partners under the
Partnership Agreement. Prior to the receipt by the Limited Partners of an amount
equal to the greater of (i) their aggregate capital contributions, or (ii) an
amount sufficient to satisfy the cumulative tax liability arising from the
disposition of all Limited Partnership Assets disposed of to date, the unpaid
liquidation fee shall accrue for later payment to the General Partners.
VOTING PROCEDURE FOR LIMITED PARTNER
Distribution and Expiration Date of Solicitation
This Consent Solicitation Statement and the related Consent are first
being mailed to Limited Partners on or about March 23, 2001. Limited Partners
who are record owners of Limited Partnership Interests as of March 12, 2001 (the
"Record Date") may execute and deliver a Consent. A beneficial owner of Limited
Partnership Interests who is not the record owner of such Limited Partnership
Interests must arrange for the record owner of such Limited Partnership
Interests to execute and deliver to Bond Purchase a Consent that reflects the
vote of the beneficial owner.
This solicitation of Consents will expire at 11:59 p.m. Eastern Time on
the earlier to occur of the following dates (the "Expiration Date"): (i) April
30, 2001 or such later date to which Bond Purchase determines to extend the
solicitation, and (ii) the date the Required Consents are received. Bond
Purchase reserves the right to extend this solicitation of Consents for such
period or periods as it may determine in its sole discretion from time to time;
provided, however that it will not extend this solicitation past March 15, 2002.
Any such extension will be followed as promptly as practicable by notice thereof
by press release or by written notice to the Limited Partners. During any
extension of this solicitation of
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Consents, all Consents delivered to Bond Purchase will remain effective, unless
validly revoked prior to the Expiration Date.
Bond Purchase reserves the right for any reason to terminate the
solicitation of Consents at any time prior to the Expiration Date by giving
written notice of such termination to the Limited Partners.
Voting Procedures and Required Consents
The consent of Limited Partner form included with this Consent
Solicitation Statement is the ballot to be used by Limited Partners to cast
their votes. For each Proposal, Limited Partners should mark a box adjacent to
the Proposal indicating that the Limited Partner votes "For" or "Against" the
Proposal, or wishes to "Abstain." All Consents that are properly completed,
signed and delivered to Bond Purchase, and not revoked prior to the Expiration
Date, will be given effect in accordance with the specifications thereof. If
none of the boxes on the Consent is marked, but the Consent is otherwise
properly completed and signed, the Limited Partner delivering such Consent will
be deemed to have voted "For" the Proposals.
Each Proposal requires the consent of the record holders of a majority
of the Limited Partnership Interests of the Limited Partners (the "Required
Consents"). Accordingly, adoption of each Proposal requires the receipt without
revocation of the Required Consents indicating a vote "For" the Proposal. Bond
Purchase is seeking approval of each of the Proposals. The election of New G.P.
as the new general partner is conditioned on the approval of the removal of the
current general partners. Otherwise, the Proposals are not conditioned on the
approval of the other Proposals. The failure of a Limited Partner to deliver a
Consent or a vote to "Abstain" will have the same effect as if such Limited
Partner had voted "Against" the Proposals. Limited Partnership Interests not
voted on Consents returned by brokers, banks or nominees will have the same
effect as Limited Partnership Interests voted against the Proposals.
If Limited Partnership Interests to which a Consent relates are held of
record by two or more joint holders, all such holders must sign the Consent. If
a Consent is signed by a trustee, partner, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, such person must so indicate when signing and must
submit with the Consent form appropriate evidence of authority to execute the
Consent. In addition, if a Consent relates to less than the total number of
Limited Partnership Interests held in the name of such Limited Partner, the
Limited Partner must state the number of Limited Partnership Interests recorded
in the name of such Limited Partner to which the Consent relates. If a Consent
is executed by a person other than the record owner, then it must be accompanied
by a valid proxy duly executed by the record owner.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and revocation of Consents, and the interpretation of the
terms and conditions of this solicitation of Consents, will be determined by
Bond Purchase, subject to the provisions of the Partnership Agreement, as well
as state and federal law. Bond Purchase
11
reserves the absolute right to reject any or all Consents that are not
acceptable. Bond Purchase also reserves the right to waive any conditions as to
particular Consents or Limited Partnership Interests. Neither Bond Purchase, nor
any of its affiliates, shall be under any duty to give any notification of any
such defects, irregularities or waiver, nor shall any of them incur any
liability for failure to give such notification. Deliveries of Consents will not
be deemed to have been made until any irregularities or defects therein have
been cured or waived.
Completion Instructions
Limited Partners are requested to complete, sign and date the Consent
of Limited Partner form included with this Consent Solicitation Statement and
mail, hand deliver, or send by overnight courier the original signed Consent to
Bond Purchase.
Consents should be sent or delivered to Bond Purchase, and not to the
Partnership, at the address set forth on the back cover of this Consent
Solicitation Statement and on the back of the Consent. A prepaid, return
envelope is included herewith.
Power of Attorney
Upon approval of a Proposal, Bond Purchase will be expressly authorized
to prepare any and all documentation and take any further actions necessary to
implement the actions contemplated under this Consent Solicitation Statement
with respect to the approved Proposal. Furthermore, each Limited Partner who
votes for a Proposal described in this Consent Solicitation Statement, by
signing the attached Consent, constitutes and appoints Bond Purchase, acting
through its officers and employees, as his or her attorney-in-fact for the
purposes of executing any and all documents and taking any and all actions
required under the Partnership Agreement in connection with this Consent
Solicitation Statement or in order to implement the approved Proposal, including
the execution of an amendment to the Partnership Agreement to reflect New G.P.
as the new general partner of the Partnership or to reflect the dissolution of
the Partnership in accordance with the applicable Proposal, and including the
selection of an appraiser to appraise the Partnership's assets as may be
required by the Partnership Agreement.
Revocation of Consents
Consents may be revoked at any time prior to the Expiration Date, or a
Limited Partner may change his vote on one or both Proposals, in accordance with
the following procedures. For a revocation or change of vote to be effective,
Bond Purchase must receive prior to the Expiration Date a written notice of
revocation or change of vote (which may be in the form of a subsequent, properly
executed Consent) at the address set forth on the Consent. The notice must
specify the name of the record holder of the Limited Partnership Interests and
the name of the person having executed the Consent to be revoked or changed (if
different), and must be executed in the same manner as the Consent to which the
revocation or change relates or by a duly authorized person that so indicates
and that submits with the notice appropriate evidence of such authority as
determined by Bond Purchase. A
12
revocation or change of a Consent shall be effective only as to the Limited
Partnership Interests listed on such notice and only if such notice complies
with the provisions of this Consent Solicitation Statement.
Bond Purchase reserves the right to contest the validity of any
revocation or change of vote and all questions as to validity (including time of
receipt) will be determined by New G.P., subject to the provisions of the
Partnership Agreement, as well as state and federal law.
No Dissenters' Rights of Appraisal
Under the Partnership Agreement and California law, Limited Partners do
not have dissenters' rights of appraisal in connection with these Proposals.
Solicitation of Consents
Neither the Partnership nor the current general partners are
participants in this solicitation of Consents. Bond Purchase, New G.P., David L.
Johnson and Christine A. Robinson are the only participants in the solicitation.
Bond Purchase will initially bear all costs of this solicitation of Consents,
including fees for attorneys, solicitors and the cost of preparing, printing and
mailing this Consent Solicitation Statement. Bond Purchase shall seek
reimbursement for such costs from the Partnership to the extent allowed under
the Partnership Agreement and applicable law. In addition to the use of mails,
certain officers or regular employees of Bond Purchase may solicit Consents, for
which no additional compensation will be paid to those persons engaged in such
solicitation. Bond Purchase expects to retain a proxy solicitor to solicit
Consents with expected fees of approximately $10,000 to $20,000. The total fees
and expenses to be incurred by Bond Purchase in connection with this
solicitation are estimated to be $25,000. Bond Purchase has incurred fees and
expenses in connection with this solicitation as of March 12, 2001 of
approximately $5,000.
Limited Partners are encouraged to contact Bond Purchase at the address
and telephone number set forth on the back cover of this Consent Solicitation
Statement with any questions regarding this solicitation of Consents and with
requests for additional copies of this Consent Solicitation Statement and form
of Consent.
13
SOLICITATION OF CONSENTS
of
LIMITED PARTNERS
of
Real Estate Associates Limited III
a California Limited Partnership
Deliveries of Consents, properly completed and duly executed, should be
made to Bond Purchase at the address set forth below.
Questions and requests for assistance about procedures for consenting
or other matters relating to this solicitation may be directed to Bond Purchase
at the address and telephone number listed below. Additional copies of this
Consent Solicitation Statement and form of Consent may be obtained from Bond
Purchase as set forth below.
No person is authorized to give any information or to make any
representation not contained in this Consent Solicitation Statement regarding
the solicitation of Consents made hereby, and, if given or made, any such
information or representation should not be relied upon as having been
authorized by Bond Purchase or any other person. The delivery of this Consent
Solicitation Statement shall not, under any circumstances, create any
implication that there has been no change in the information set forth herein or
in the affairs of Bond Purchase or the Partnership since the date hereof.
Bond Purchase, L.L.C.
104 Armour Road
North Kansas City, MO 64116
(816) 303-4500
14
APPENDIX A
(Form of Consent - Definitive Copy)
Real Estate Associates Limited III
a California Limited Partnership (the "Partnership")
CONSENT OF LIMITED PARTNER
This Consent is Solicited on Behalf of Bond Purchase
The undersigned has received the Consent Solicitation Statement dated
March 13, 2001 ("Consent Solicitation Statement") by Bond Purchase, L.L.C., a
Missouri limited liability company ("Bond Purchase."), seeking the approval by
written consent of the following proposals:
(1) the removal of the current general partners, National Partnership
Investments Corp., a California corporation and Coast Housing Investments
Associates, a California limited partnership; and
(2) the continuation of the Partnership and the election of New G.P. as
the new general partner of the Partnership (which is conditioned on the approval
of proposal (1) above).
Each of the undersigned, by signing and returning this Consent, hereby
constitutes and appoints Bond Purchase, acting through its officers and
employees as his or her attorney-in-fact for the purposes of executing any and
all documents and taking any and all actions required under the Partnership
Agreement in connection with this Consent and the Consent Solicitation Statement
or in order to implement an approved proposal; and hereby votes all limited
partnership interests of the Partnership held of record by the undersigned as
follows for the proposals set forth above, subject to the Consent Solicitation
Statement.
Proposal FOR AGAINST ABSTAIN
1. Removal of General Partners [ ] [ ] [ ]
2. Continuation of the Partnership
and election of new general partner,
New G.P. [ ] [ ] [ ]
15
(Please sign exactly as your name appears on the Partnership's records. Joint
owners should each sign. Attorneys-in-fact, executors, administrators, trustees,
guardians, corporation officers or others acting in representative capacity
should indicate the capacity in which they sign and should give FULL title, and
submit appropriate evidence of authority to execute the Consent)
Dated: _______________, 2001
(Important - please fill in)
------------------------
Signature
------------------------
Signature
------------------------
Telephone Number
PLEASE MARK, SIGN, DATE & PROMPTLY RETURN THIS CONSENT BY APRIL 30, 2001.
16
THIS CONSENT IS SOLICITED BY BOND PURCHASE. LIMITED PARTNERS WHO RETURN A SIGNED
CONSENT BUT FAIL TO INDICATE THEIR APPROVAL OR DISAPPROVAL AS TO ANY MATTER WILL
BE DEEMED TO HAVE VOTED TO APPROVE SUCH MATTER. THIS CONSENT IS VALID FROM THE
DATE OF ITS EXECUTION UNLESS DULY REVOKED.
REAL ESTATE ASSOCIATES LIMITED III
a California Limited Partnership (the "Partnership")
CONSENT OF LIMITED PARTNER
Deliveries of Consents, properly completed and duly executed, should be
made to Bond Purchase at the address set forth below. A prepaid, return envelope
is included herewith.
Questions and requests for assistance about procedures for consenting
or other matters relating to this Solicitation may be directed to Bond Purchase
at the address and telephone number listed below. Additional copies of this
Consent Solicitation Statement and form of Consent may be obtained from Bond
Purchase as set forth below.
Bond Purchase, L.L.C.
104 Armour Road
North Kansas City, Missouri 64116
(816) 303-4500
17
APPENDIX B
Transactions in the Limited Partnership Interests of the Partnership
within the Past Two Years
The following table sets forth information with respect to all purchases and
sales of Limited Partnership Interests of the Partnership by participants and
their affiliates in this Consent Solicitation. Each of the transactions was
effected on the open market, except where otherwise noted.
BOND PURCHASE, L.L.C.
Limited Partnership Date of
- -------------------
Interests Purchased Purchase
- -------------------- --------
3 11-1-98
2 11-1-98
12 11-1-98
3 11-1-98
1 11-1-98
4 11-1-98
40 11-1-98
6 11-1-98
1 11-1-98
1 11-1-98
2 11-1-98
4 11-1-98
1 12-1-98
6 10-1-99
18