SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
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Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported) September 30, 1996
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American Income Partners V-A Limited Partnership
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(Exact name of registrant as specified in its charter)
Massachusetts 0-18364 04-3057303
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification Number)
98 North Washington Street, Boston, MA 02114
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 854-5800
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________________________________________________________________________________
(Former name or former address, if changed since last report.)
American Income Partners V-A Limited Partnership
Form 8-K
Page 2 of 6
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ITEM 2. Acquisition or Disposition of Assets.
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This report on Form 8-K provides information concerning the sale of certain
tangible equipment assets, lease receivables, and lease contracts of American
Income Partners V-A Limited Partnership (the "Registrant"). The equipment
assets represented approximately 34% of the Registrant's total equipment assets
at September 30, 1996.
Background
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The Registrant was organized in 1989 as a direct-participation equipment leasing
program to acquire a diversified portfolio of capital equipment subject to lease
agreements with third parties. Certain of the Registrant's equipment assets
represent partial ownership interests, whereby the Registrant owns less than a
100% interest in the equipment. The remaining interests in such equipment are
owned by one or more affiliated equipment leasing programs.
On September 30, 1996, the Registrant sold (i) a 23% ownership interest,
representing its entire ownership interest, in a cargo vessel leased by
KGJS/Gearbulk Holding Limited (the "Vessel"), having an original cost to the
Registrant of $1,829,796 and a net book value at September 30, 1996 of
$777,489 and (ii) a 50% ownership interest, representing its entire ownership
interest, in 22 locomotives leased by Union Pacific Railroad Company (the
"Locomotives"), having an original cost to the Registrant of $4,692,022 and a
net book value at September 30, 1996 of $2,545,686.
The foregoing equipment sales were effected in connection with a joint
remarketing effort involving 15 individual equipment leasing programs,
consisting of the Registrant and 14 affiliates (the "Other Affected
Partnerships"). Collectively, the Registrant and the Other Affected
Partnerships offered for sale all or a portion of their equipment assets (the
"Sale Assets"). The Registrant offered to sell only its interests in the Vessel
and the Locomotives. A second equipment leasing program, which holds a 36%
ownership interest in the Vessel, offered to sell only its interest in the
Vessel. Thirteen other programs offered to sell all of their equipment assets,
including the remaining ownership interests in the Vessel and the Locomotives,
and are expected to wind-up business operations in 1996.
The general partners of the latter thirteen programs engaged an investment
adviser (the "Adviser") to solicit interested third-party buyers of the Sale
Assets and (ii) an independent appraisal firm (the "Appraiser") to provide an
estimate of the amount that a third party might be willing to pay for the Sale
Assets. Equis Financial Group ("Equis", which serves as the Equipment Manager
of the Registrant and the Other Affected Partnerships) and the Adviser believed
the joint approach to remarketing the Sale Assets would maximize the disposition
prices of the Sale Assets while also facilitating an efficient wind-up of the
business operations of the thirteen programs anticipating wind-up in 1996.
American Income Partners V-A Limited Partnership
Form 8-K
Page 3 of 6
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ITEM 2. Acquisition or Disposition of Assets (Continued).
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The Sale Process
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To start the process of soliciting bids, the Adviser and Equis assembled a list
of 48 prospective purchasers, some of whom had conducted prior business with the
Registrant, Equis, the Other Affected Partnerships, or their affiliates. Each
recipient was provided abbreviated information concerning the remarketing effort
and asked to request, if interested in bidding, an Information Memorandum
containing, among other information, a listing of the equipment rental schedules
being offered for sale, a description of the assets and their original cost, and
a summary of the remaining lease payments expected to be collected from each
rental schedule, assuming no future default events. Additional background was
provided about the business operations and credit ratings of significant
lessees. All financial information assumed an August 1, 1996 sale date.
Fourteen of the 48 prospective purchasers requested and received an Information
Memorandum. After the Information Memoranda were distributed, and prior to
submitting a bid, the recipients were given the opportunity to request
additional information or ask questions. In addition, the recipients were
offered the opportunity, but were not required, to engage the equipment
management services of Equis subject to agreed-upon terms. Bidders were
encouraged to make all-cash bids.
On September 30, 1996, the Registrant and the Other Affected Partnerships
executed individual purchase and sale agreements with RSL Finance Limited
Partnership II (the "Buyer") for all Sale Assets, except one McDonnell Douglas
MD-82 aircraft leased to Northwest Airlines, Inc. (the "NWA Aircraft"),
hereafter the "Sale Assets, as Revised", for total cash consideration prior to
closing adjustments of $35 million. The Appraiser had estimated the potential
sale value of the Sale Assets, as Revised to be between $33 million and $38
million, assuming an August 1, 1996 sale date. Accordingly, the Buyer's
purchase price was established as of August 1, 1996 and any remarketing proceeds
or contracted lease rents earned after July 31, 1996 accrue to the benefit of
the Buyer. The Buyer's cash remuneration to the Registrant and the Other
Affected Partnerships was increased by an interest factor, at the annualized
rate of 8%, which was applied to the sales price for the period commencing
August 1, 1996 and ending on September 30, 1996, the date of closing.
In a separate negotiation, Equis, on behalf of certain of the Other Affected
Partnerships owning an interest in the NWA Aircraft, arranged to sell the NWA
Aircraft to the lessee for $13,200,000. A purchase and sale agreement for the
NWA Aircraft was executed and the closing was concluded on September 30, 1996.
The Registrant had no ownership interest in this aircraft.
As a result of both sale events, the Registrant and the Other Affected
Partnerships received aggregate sale proceeds of $48,200,000 for all Sale
Assets. Four other parties submitted bids to purchase the Sale Assets for
prices ranging from $34 million to $44 million, including the NWA Aircraft.
Pursuant to terms of their respective purchase and sale agreements, the Buyer
and
American Income Partners V-A Limited Partnership
Form 8-K
Page 4 of 6
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ITEM 2. Acquisition or Disposition of Assets (Continued).
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The Sale Process (Continued)
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Northwest Airlines, Inc. agreed to purchase the Sale Assets on a non-recourse
basis to the Registrant, the Other Affected Partnerships, and the general and
limited partners of each. Equis believes the sale to be in the best interests
of the Registrant and the Other Affected Partnerships.
Relationship with the Buyer
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The Buyer is a limited partnership established to acquire the Sale Assets, as
Revised and has no direct affiliation with the Registrant, the Other Affected
Partnerships, the General Partner, Equis, or its predecessor, American Finance
Group ("AFG"). The sole general partner of the Buyer is RSL Holdings, Inc. An
affiliate of the Buyer purchased a significant limited partner interest in a
direct-participation equipment leasing program co-sponsored by AFG in 1992. AFG
acquired this interest in 1993 for cash and assumption of indebtedness. There
have been no other business dealings between the Buyer and Equis (or AFG) and
their affiliates.
The Buyer paid cash for its acquisition of the Sale Assets, as Revised, a
significant portion of which was borrowed from three third-party institutional
lenders (the "Lenders"). Equis explored financing options and negotiated
certain terms of the financings on behalf of the Buyer. In addition, Equis and
the Buyer agreed to terms of a management contract whereby Equis will provide
equipment management services to the Buyer following the sale. Pursuant to the
terms of the management contract, Equis will earn a remarketing fee equal to 3%
of the gross disposition proceeds realized by the Buyer upon any subsequent re-
sale of the Sale Assets, as Revised and has agreed to subordinate, in favor of
the Lenders, its right to collect (i) an equipment management fee equal to 5% of
lease revenues and (ii) an initial documentation and set-up fee equal to 3% of
the Buyer's base purchase price for the Sale Assets, as Revised, until such time
as the Lenders' loans are fully repaid. Equis will accrue, but also has agreed
to subordinate in favor of the Lenders, interest on all subordinated fees at the
rate of 15% per annum until collected.
Relationship with Northwest Airlines, Inc .
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Equis (and AFG) and its affiliates, including the Registrant and certain of the
Other Affected Partnerships, have had a long-standing relationship with
Northwest Airlines, Inc. ("NWA"). NWA has leased commercial jet aircraft from
one or more of the parties in the ordinary course of business and has purchased
certain leased aircraft from the parties on prior occasions.
American Income Partners V-A Limited Partnership
Form 8-K
Page 5 of 6
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ITEM 2. Acquisition or Disposition of Assets (Continued).
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Terms of Sale
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The Registrant and the Other Affected Partnerships received aggregate cash
consideration prior to closing adjustments of $48,200,000 for the Sale Assets,
of which $13,200,000 was allocated to the owners of the NWA Aircraft according
to their respective percentage ownership interests. The remaining $35 million,
after closing adjustments, was allocated proportionately among the Registrant
and the Other Affected Partnerships based upon the Appraiser's estimated sale
prices for each partnership's respective share of the Sale Assets, as Revised.
This calculation resulted in the Registrant receiving $3,158,135 as its
proportionate share of the net sale proceeds. The appraised value of the
Registrant's equipment assets was estimated by the Appraiser to range between
$3.1 million and $3.6 million.
All expenses directly associated with the sale will be allocated first, to the
extent that such expenses pertain to the NWA Aircraft, to each of the respective
owners of the NWA Aircraft, and second, for all other costs, proportionately
among the Registrant and the Other Affected Partnerships according to the
Appraiser's estimated sale prices for each partnership's respective share of the
Sale Assets, as Revised. The Registrant's share of all such expenses is
expected to be approximately $83,000.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
American Income Partners V-A Limited Partnership
Form 8-K
Page 6 of 6
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ITEM 7. Financial Statements and Exhibits.
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Exhibits filed herewith pursuant to Item 601 of Regulation S-K:
Exhibit
Number
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99.1.(d) Purchase and Sale Agreement by and between American
Income Partners V-A Limited Partnership and RSL
Finance Limited Partnership II.
99.2.(e) Purchase and Sale Agreement by and between Investors
Asset Holding Corp., not in its individual capacity,
but solely as Trustee of "AFG/Soo Line Trust" and RSL
Finance Limited Partnership II.
99.3.(f) Assignment and Assumption Agreement and Bill of Sale by
and between Investors Asset Holding Corp., not in its
individual capacity, but solely as Trustee of "AFG/Soo
Line Trust" and RSL Finance Limited Partnership II.
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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.
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
(Registrant)
By: AFG Leasing IV Incorporated,
a Massachusetts corporation and the
General Partner of the Registrant.
By: /s/ Gary M. Romano Date: October 3, 1996
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Gary M. Romano
Clerk
(Principal Financial Officer)
By: /s/ Michael J. Butterfield Date: October 3, 1996
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Michael J. Butterfield
Treasurer
(Principal Accounting Officer)