SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
JONES GROWTH PARTNERS II L.P.
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(Name of Registrant as Specified In Its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: Limited
Partnership Interests
(2) Aggregate number of securities to which transaction applies: 19,785
(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): Pursuant to
Rule 0-11(c)(2), the transaction valuation is based upon the $36,000,000
sales price that is to be paid to Jones Growth Partners II L.P. in
connection with the transaction that is the subject of the proxy
solicitation.
(4) Proposed maximum aggregate value of the transaction: $36,000,000
(5) Total fee paid: $7,200
[X] 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:
Notes:
REVISED PRELIMINARY COPY
[LOGO OF JONES SPACELINK CABLE CORPORATION APPEARS HERE]
9697 EAST MINERAL AVENUE
ENGLEWOOD, COLORADO 80112
NOTICE OF VOTE OF THE LIMITED PARTNERS OF JONES GROWTH PARTNERS II L.P.
To the Limited Partners of Jones Growth Partners II L.P.:
A special vote of the limited partners of Jones Growth Partners II L.P. (the
"Partnership") is being conducted through the mails on behalf of the
Partnership by Jones Spacelink Cable Corporation, the general partner of the
Partnership, for the purpose of obtaining limited partner approval of the
sale, to an unaffiliated third party, of the Partnership's cable television
system serving the City of Yorba Linda, a portion of the City of Anaheim,
known as Anaheim Hills, and certain portions of unincorporated Orange County,
all in the state of California (the "Yorba Linda System"), for $36,000,000 in
cash, subject to normal working capital closing adjustments that may have the
effect of increasing or reducing the purchase price by a non-material amount.
Information relating to this matter is set forth in the accompanying proxy
statement.
If the limited partners approve the proposed sale of the Yorba Linda System
and if the transaction is closed, the Partnership will distribute the net sale
proceeds to its limited partners of record as of June 30, 1997, and it is
estimated that the Partnership will distribute to the limited partners from
$1,101 to $1,209 for each $1,000 limited partnership interest, with the exact
amount dependent upon a limited partner's date of investment. Distributions
will be net of California non-resident withholding, if applicable, and
distribution checks will be issued to limited partners' account registration
or payment instruction of record. Upon the closing of the sale of the
Partnership's Yorba Linda System, the Partnership will be liquidated and
dissolved.
Only limited partners of record at the close of business on April 30, 1997
are entitled to notice of, and to participate in, this vote of limited
partners. It is very important that all limited partners participate in the
voting. The Partnership's ability to complete the transaction discussed in the
Proxy Statement and the Partnership's ability to make a distribution to its
partners of the net proceeds of the sale of the Partnership's Yorba Linda
System are dependent upon the approval of the transaction by the holders of a
majority of the Partnership's limited partnership interests.
The proposal that is the subject of this proxy solicitation will be adopted
only if approved by the holders of a majority of the limited partnership
interests. Each limited partnership interest entitles the holder thereof to
one vote on the proposal. Because the Partnership's limited partnership
agreement (the "Partnership Agreement") requires that the proposal to sell the
Yorba Linda System be approved by the holders of a majority of the limited
partnership interests, abstentions and non-votes will be treated as votes
against the proposal. A properly executed consent returned to the general
partner on which a limited partner does not mark a vote will be counted as a
vote for the proposed sale of the Yorba Linda System. Because limited partners
do not have dissenters' or appraisal rights in connection with the proposed
sale of the Yorba Linda System, if the holders of a majority of the limited
partnership interests approve the proposal, all limited partners will receive
a distribution of the net sale proceeds in accordance with the procedures
prescribed by the Partnership Agreement regardless of how or whether they vote
on the proposal.
Jones Spacelink Cable Corporation, as general partner of the Partnership,
urges you to sign and return the enclosed proxy as promptly as possible. The
proxy should be returned in the enclosed envelope.
JONES SPACELINK CABLE CORPORATION
General Partner
[SIGNATURE OF ELIZABETH M. STEELE
APPEARS HERE]
Elizabeth M. Steele
Secretary
Dated: May 15, 1997
[LOGO OF JONES SPACELINK CABLE CORPORATION APPEARS HERE]
9697 EAST MINERAL AVENUE
ENGLEWOOD, COLORADO 80112
PROXY STATEMENT
VOTE OF THE LIMITED PARTNERS
OF JONES GROWTH PARTNERS II L.P.
This Proxy Statement is being furnished in connection with the solicitation
of the written consents of the limited partners of Jones Growth Partners II
L.P. (the "Partnership") by Jones Spacelink Cable Corporation, the general
partner of the Partnership (the "General Partner"), on behalf of the
Partnership, for the purpose of obtaining limited partner approval of the sale
of the Partnership's cable television system serving the City of Yorba Linda,
a portion of the City of Anaheim, known as Anaheim Hills, and certain portions
of unincorporated Orange County, all in the state of California (the "Yorba
Linda System") for $36,000,000 in cash, subject to normal working capital
closing adjustments, to Citizens Century Cable Television Venture, a joint
venture formed under the laws of the state of New York (the "Purchaser"). The
Purchaser is not affiliated with the Partnership or with the General Partner.
Proxies in the form enclosed, properly executed and duly returned, will be
voted in accordance with the instructions thereon. Limited partners are urged
to sign and return the enclosed proxy as promptly as possible. Proxies cannot
be revoked except by delivery of a proxy dated as of a later date. Officers
and other employees of the General Partner may solicit proxies by mail, by
fax, by telephone or by personal interview. The deadline for the receipt of
proxy votes is June 15, 1997, unless extended, but the vote of the
Partnership's limited partners will be deemed to be concluded on the date that
the General Partner, on behalf of the Partnership, is in receipt of proxies
executed by the holders of a majority of the limited partnership interests
either consenting to or disapproving of the proposed transaction. The General
Partner may extend the deadline for receipt of proxy votes if a majority of
the limited partners fail to express an opinion on the transaction by June 15,
1997. If the General Partner extends the deadline for receipt of proxy votes,
the limited partners will be informed by mail of the reason for the extension
and the new deadline. The cost of the proxy solicitation will be paid by the
Partnership.
The Partnership has only one class of limited partners and no limited
partner has a right of priority over any other limited partner. The
participation of the limited partners is divided into limited partnership
interests and each limited partner owns one limited partnership interest for
each $1,000 of capital contributed to the Partnership.
As of April 30, 1997, the Partnership had 19,785 limited partnership
interests outstanding, held by approximately 2,300 persons. There is no
established trading market for such interests. To the best of the General
Partner's knowledge, no person or group of persons beneficially own more than
five percent of the limited partnership interests, except for the Naomi Ruth
Wilden Trust, which owns 1,000 limited partnership interests, representing
5.05 percent of the outstanding limited partnership interests. The General
Partner owns no limited partnership interests. Officers and directors of the
General Partner also do not own any limited partnership interests. Only
limited partners of record at the close of business on April 30, 1997 will be
entitled to notice of, and to participate in, the vote.
Upon the consummation of the proposed sale of the Yorba Linda System, the
Partnership will pay all of its indebtedness, which totalled approximately
$12,821,077 at December 31, 1996, and then the Partnership will distribute the
net sale proceeds to its limited partners of record as of June 30, 1997.
Because limited partners will not receive distributions in an amount equal to
100 percent of the capital initially contributed to the Partnership by the
limited partners plus an amount equal to 8 percent per annum, cumulative and
noncompounded, on an amount equal to their initial capital contributions (the
"8% Return"), the General Partner will not receive any of the net proceeds
from the Yorba Linda System's sale. Based upon pro forma financial information
as of December 31, 1996, as a result of the Yorba Linda System's sale, the
limited partners of the Partnership, as a group, will receive approximately
$22,823,356. Limited partners will receive from $1,101 to $1,209 for each
$1,000 limited partnership interest from the net proceeds of the Yorba Linda
System's sale. The specific amount of a limited partner's distribution will be
dependent upon a limited partner's date of investment, i.e., because the 8%
Return is calculated from the date of investment, the earlier the date of
investment the larger will be the return to an investor. Distributions will be
net of California non-resident withholding, if applicable, and distribution
checks will be issued to limited partners' account registration or payment
instruction of record. See "Federal Income Tax Consequences."
The proposal that is the subject of this proxy solicitation will be adopted
only if approved by the holders of a majority of the limited partnership
interests. Each limited partnership interest entitles the holder thereof to
one vote on the proposal. Because the Partnership's limited partnership
agreement (the "Partnership Agreement") requires that the proposal to sell the
Yorba Linda System be approved by the holders of a majority of the limited
partnership interests, abstentions and non-votes will be treated as votes
against the proposal. A properly executed consent returned to the General
Partner on which a limited partner does not mark a vote will be counted as a
vote for the proposed sale of the Yorba Linda System. Because limited partners
do not have dissenters' or appraisal rights in connection with the proposed
sale of the Yorba Linda System, if the holders of a majority of the limited
partnership interests approve the proposal, all limited partners will receive
a distribution of the net sale proceeds in accordance with the procedures
prescribed by the Partnership Agreement regardless of how or whether they vote
on the proposal.
The Board of Directors of the General Partner has approved the proposed sale
of the Yorba Linda System and the General Partner recommends approval of the
transaction by the holders of the Partnership's limited partnership interests.
The approximate date on which this Proxy Statement and Form of Proxy are
being sent to limited partners is May 15, 1997.
PARTNERSHIP INFORMATION
THE PARTNERSHIP'S INVESTMENT OBJECTIVES
The Partnership was formed to acquire, develop, operate and, ultimately,
sell cable television systems. The primary objectives of the Partnership have
been to obtain capital appreciation in the value of the Partnership's cable
television properties; to preserve and protect invested capital; and to obtain
equity build-up through debt reduction. It has been contemplated from the
outset of the Partnership's existence that capital appreciation in Partnership
cable television properties would be converted to cash by a sale of such
properties at such time as the General Partner determined that the
Partnership's investment objectives had substantially been achieved.
The Partnership was formed in March 1991 as a Colorado limited partnership
in connection with a public offering of its limited partnership interests.
Since its formation, the Partnership has engaged primarily in the ownership
and operation of the Yorba Linda System. The purpose of the sale of the Yorba
Linda System, from the Partnership's perspective, is to attain the
Partnership's primary investment objective, i.e., to convert the Partnership's
capital appreciation in the Yorba Linda System to cash. The sale proceeds will
be used to repay all
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outstanding indebtedness of the Partnership, and the remaining sale proceeds
will be distributed to the limited partners of the Partnership in accordance
with the distribution procedures established by the Partnership Agreement. The
sale of the Yorba Linda System is thus the necessary final step in the
Partnership's accomplishment of its investment objectives with respect to the
Yorba Linda System.
VOTING PROVISIONS OF THE PARTNERSHIP AGREEMENT
Section 2.2(k) and Section 3.2(m) of the Partnership Agreement provide that
the sale of all or substantially all of the Partnership's assets is subject to
the approval of the holders of a majority of the Partnership's limited
partnership interests. Because the Yorba Linda System represents all of the
Partnership's assets, the proposed sale of the Yorba Linda System to the
Purchaser is being submitted for limited partner approval.
PROPOSED SALE OF ASSETS
GENERAL
Pursuant to the terms and conditions of an asset purchase agreement dated
August 16, 1996, as amended (the "Purchase and Sale Agreement") by and between
the Partnership and the Purchaser, as assignee of Century Communications
Corp., the Partnership has agreed to sell the Yorba Linda System to the
Purchaser for a sales price of $36,000,000, subject to normal working capital
closing adjustments. The Purchaser, Citizens Century Cable Television Venture,
is a joint venture of Citizens Cable Company and Century Telecommunications
Venture Corp. The Purchaser's principal office is 50 Locust Avenue, New
Canaan, Connecticut 06840. The Purchaser is managed by Century Communications
Corp., which is engaged in the ownership and operation of cable television
systems in California and other states. The Purchaser is not affiliated with
either the Partnership or the General Partner. The Partnership has been
informed that the Purchaser intends to finance its acquisition of the Yorba
Linda System through cash on hand and through borrowings from commercial
lending institutions.
THE CLOSING
The closing of the sale will occur on a date approximately ten business days
after all of the closing conditions set forth in the Purchase and Sale
Agreement have been satisfied or waived. It is anticipated that the closing
will occur on June 30, 1997. Because the closing is conditioned upon, among
other things, the approval of the limited partners and the receipt of material
third party consents necessary for the transfer of the Yorba Linda System to
the Purchaser, there can be no assurance that the proposed sale will occur. If
all conditions precedent to the Purchaser's obligation to close are not
satisfied or waived by June 30, 1997, the Purchaser's obligations will
terminate.
THE YORBA LINDA SYSTEM
The assets to be acquired by the Purchaser consist primarily of the tangible
and intangible assets of the Yorba Linda System. The Yorba Linda System was
purchased by the Partnership in April 1992 for an aggregate purchase price of
$28,276,415. The Yorba Linda System was purchased using $13,357,000 of limited
partner capital contributions to the Partnership and $15,500,000 of borrowings
available under the Partnership's credit facility with a commercial bank.
At the date of acquisition in April 1992, the Yorba Linda System served
approximately 14,540 basic subscribers using cable plant passing approximately
20,400 homes. As of December 31, 1996, the Yorba Linda System served
approximately 17,170 basic subscribers using cable plant passing approximately
23,300 homes.
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The Purchaser will purchase all of the tangible assets of the Yorba Linda
System that are leased or owned by the Partnership and used in the operation
of the system, including the system's real estate, vehicles, headend
equipment, underground and aboveground cable distribution systems, towers,
earth satellite receive stations and furniture and fixtures. The Purchaser
also will acquire certain of the intangible assets of the system, including
all of the system's franchises necessary for the operation of the system, and
all of the system's leases, agreements, permits, licenses and other contracts
and contract rights necessary for the operation of the system. Also included
in the sale are the subscriber accounts receivable of the system and the
system's records, files, schematics, maps, reports, promotional graphics,
marketing materials and reports filed with federal, state and local regulatory
agencies. The foregoing notwithstanding, certain of the system's assets will
be retained by the Partnership, including cash or cash equivalents on hand and
in banks, insurance policies, and any federal, state or local income or other
tax refunds to which the Partnership may be entitled. Because an affiliate of
the Purchaser already has a franchise from the City of Anaheim, the Purchaser
has determined that it does not need the Partnership's Anaheim franchise to
operate the portion of the Yorba Linda System that serves the community of
Anaheim Hills and the Partnership therefore will not transfer the
Partnership's Anaheim franchise to the Purchaser.
PURCHASE PRICE
Subject to the adjustments described below, the purchase price for the Yorba
Linda System is $36,000,000. The purchase price will be reduced if at closing
the Yorba Linda System has less than the number of basic subscribers
represented to the Purchaser in the Purchase and Sale Agreement. The purchase
price also will be reduced if the Yorba Linda System's annualized gross
revenues as of the closing date are less than the amount represented to the
Purchaser in the Purchase and Sale Agreement. In addition, prorations will be
made at closing to reflect the principle that all liabilities, expenses and
income attributable to the Yorba Linda System for the period on and prior to
the closing date are for the account of the Partnership and all liabilities,
expenses and income attributable to the Yorba Linda System for the period
subsequent to the closing date are for the account of the Purchaser. Items to
be prorated will include prepaid assets for which the Purchaser will receive a
benefit following the closing, pole rents, franchise fees, taxes, copyright
royalty payments, fees and payments under cable service agreements, power and
utility fees and deposits, rentals and other payments under leases. Such items
will be prorated as of the close of business on the closing date. In addition,
the purchaser price will be increased by an amount equal to 95 percent of the
Partnership's subscriber accounts receivable relating to the Yorba Linda
System and the purchase price will be reduced by an amount equal to the sum of
all obligations and liabilities in respect to customers of the Yorba Linda
System and any liabilities or other obligations of the Partnership relating to
the Yorba Linda System that have matured on or prior to the closing date
including, without limitation, accrued taxes, accrued employee vacation pay,
severance pay, sick pay and other fringe benefits. Because the determination
of the final purchase price relates to the number of subscribers and the
annualized gross revenues of the Yorba Linda System as of a date shortly prior
to closing and prorations that cannot be calculated until shortly before or
after the closing date, the final purchase price will be determined after the
voting and revocation period has ended. The General Partner believes that the
closing adjustments will neither increase nor decrease the purchase price by a
material amount. Please see Note 3 of the Notes to Unaudited Pro Forma
Financial Statements for a detailed accounting of the estimated closing
adjustments.
CONDITIONS TO CLOSING
The Purchaser's obligations under the Purchase and Sale Agreement are
subject to the following conditions: (a) all material consents to the
transaction from third parties shall have been obtained; (b) the Partnership
shall have delivered all necessary instruments of transfer in form and
substance reasonably satisfactory to the Purchaser; (c) all of the
representations and warranties of the Partnership contained in the Purchase
and Sale Agreement or in any other document delivered by the Partnership in
connection with the sale of the Yorba Linda System shall be true and correct
in all material respects, and the Partnership shall have performed and
complied in all material respects with all covenants, agreements and
conditions required by the Purchase and Sale Agreement to be performed or
complied with by it on or prior to the closing date, and the Partnership shall
have tendered to the Purchaser a certificate executed by a vice president of
the General Partner representing and
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certifying that the foregoing conditions have been fulfilled; (d) all of the
documents required to be delivered by the Partnership under the Purchase and
Sale Agreement, including all conveyance documents and instruments delivered
by the Partnership in connection with the sale of the Yorba Linda System,
shall be in form and substance reasonably acceptable to the Purchaser's
counsel; (e) the Partnership shall have tendered to the Purchaser certain
legal opinions of the Partnership's counsel; (f) the Partnership shall have
tendered all such additional instruments and other documents as shall be
reasonably necessary to consummate the sale of the Yorba Linda System; (g) no
action or proceeding shall be pending or threatened against the Partnership
before any court, governmental or arbitration body seeking to restrain or
prohibit or seeking damages or other relief in connection with the Purchase
and Sale Agreement or the consummation of the sale of the Yorba Linda System
and there shall be no legal proceedings pending or threatened which, either
individually or in the aggregate, could materially adversely affect the
business, operations or financial condition of the Yorba Linda System; (h) the
Partnership and the General Partner shall have executed and delivered to the
Purchaser an agreement not to compete with the Purchaser; (i) the Partnership
shall have tendered to the Purchaser duly executed satisfactions of any and
all liens, pledges, mortgages, security interests or other encumbrances with
respect to the assets of the Yorba Linda System; (j) between the date of the
Purchase and Sale Agreement and the closing date there shall have been no
material adverse change in the Yorba Linda System or its financial condition;
(k) all waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, shall have terminated or shall have expired; (l) the
downward adjustments to the purchase price as a result of the Partnership
failing to meet its representations about the number of subscribers to the
Yorba Linda System and/or the annualized gross revenues of the Yorba Linda
System shall not be greater than $1,800,000; and (m) any adverse environmental
conditions relating to the assets of the Yorba Linda System shall have been
remediated, corrected or otherwise addressed to the Purchaser's satisfaction.
The General Partner anticipates that each of the foregoing conditions to
closing will be satisfied prior to the June 30, 1997 outside closing date.
The Partnership's obligations under the Purchase and Sale Agreement are
subject to the following conditions: (a) all of the representations and
warranties of the Purchaser contained in the Purchase and Sale Agreement or in
any other document delivered by the Purchaser in connection with the sale of
the Yorba Linda System shall be true and correct in all material respects, and
the Purchaser shall have performed and complied in all material respects with
all covenants, agreements and conditions required by the Purchase and Sale
Agreement to be performed or complied with by it prior to or on the closing
date, and the Purchaser shall have tendered to the Partnership a certificate
executed by an officer of the Purchaser representing and certifying to the
fulfillment of the foregoing conditions; (b) the Purchaser shall have
delivered to the Partnership an opinion of the Purchaser's legal counsel; (c)
the Purchaser shall have delivered to the Partnership the purchase price, as
adjusted, and shall have executed and delivered all closing documents required
by the Purchase and Sale Agreement; (d) all of the documents of the Purchaser
in connection with the transaction shall be in form and substance reasonably
acceptable to counsel for the Partnership; (e) no action or proceeding shall
be pending or threatened against the Purchaser before any court, governmental
or arbitration body seeking to restrain or prohibit or seeking damages or
other relief in connection with the Purchase and Sale Agreement or the
consummation of the sale of the Yorba Linda System; (f) all waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
shall have terminated or shall have expired; (g) the downward adjustments to
the purchase price as a result of the Partnership failing to meet its
representations about the number of subscribers to the Yorba Linda System
and/or the annualized gross revenues of the Yorba Linda System shall not be
greater than $1,800,000; and (h) the Partnership shall have obtained the
approval of the sale of the Yorba Linda System by the holders of a majority of
the limited partnership interests in the Partnership. The General Partner
anticipates that each of the foregoing conditions to closing will be satisfied
prior to the June 30, 1997 outside closing date.
All waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, have expired, thereby removing this as a condition to
closing. The City of Yorba Linda has not yet approved the transfer of the
cable television franchise authorizing the Yorba Linda System to serve
residents of the City of Yorba Linda. This approval is expected to be obtained
by the end of June 1997, although there can be no assurance that such approval
will be obtained. The sale of the Yorba Linda System will not close if such
approval is not obtained.
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REASONS FOR THE SALE
The decision to proceed with the sale of the Yorba Linda System at this time
was based upon the General Partner's determination that the Partnership has
achieved its investment objectives with respect to the Yorba Linda System. The
Yorba Linda System has appreciated in value during the holding period. At the
time of their investment in the Partnership, the limited partners were
informed that "the Partnership's cable systems will be sold, and cash
distributions from such sales completed five to seven years following initial
acquisition of each cable system by the Partnership; however, the timing of
any sales will be dictated by market conditions, and such sales could occur
earlier or later than this time frame." In addition, investors were informed
that if "in the opinion of the General Partner, market conditions are
conducive to the sale of cable television systems, the General Partner will
use its best efforts to cause the sale of the Partnership's cable systems
commencing on the fifth anniversary of the closing of the offering of
interests in the Partnership." The offering of interests in the Partnership
closed on June 30, 1992. The General Partner determined, therefore, that now
was an appropriate time for the Partnership to sell the Yorba Linda System.
When investing in the Partnership, by virtue of the provisions of the
Partnership Agreement, the limited partners vested in the General Partner the
right and the responsibility to determine when the Partnership's investment
objectives had been achieved. The Yorba Linda System was acquired because, in
the opinion of the General Partner at the time of the Yorba Linda System's
acquisition, it had the potential for capital appreciation within a reasonable
period of time. It is the General Partner's opinion that during the almost
five years that the Yorba Linda System has been held by the Partnership, the
Partnership's investment objectives with respect to the Yorba Linda System
have been achieved. The General Partner used no specific benchmarks or
measurement tools in determining that the Partnership's investment objectives
have been achieved. The General Partner conducted a subjective evaluation of a
variety of factors including the length of the holding period, the prospect
for future growth as compared to the potential risks, the cash on cash return
to investors, the after-tax internal rate of return to limited partners and
the amount of gain to be recognized on the sale of assets.
The General Partner generally considered the benefits to the limited
partners that might be derived by holding the Yorba Linda System for an
additional period of time. The General Partner assumed that the Yorba Linda
System probably would continue to appreciate in value and that as a result the
Yorba Linda System might be able to be sold for a greater sales price in the
future. The General Partner weighed these assumptions against the potential
risks to investors from a longer holding period, i.e., the risks that
regulatory, technology and/or competitive developments could cause the Yorba
Linda System to decline in value, which would result in a lesser sales price
in the future. A longer holding period would expose investors to the risk that
competition from direct broadcast satellite companies, telephone companies
and/or neighboring cable companies could diminish the number of subscribers to
the Yorba Linda System's basic and premium services, thereby decreasing the
value of the Yorba Linda System. A longer holding period also would expose
investors to the risk that changes in the regulations promulgated by the
governmental agencies that oversee cable operations could make cable systems a
less desirable investment, thereby decreasing the value of the Yorba Linda
System. Weighing all of these factors, the General Partner concluded that now
rather than later was the time to sell the Yorba Linda System.
RECOMMENDATION OF THE GENERAL PARTNER AND FAIRNESS OF THE PROPOSED SALE OF
ASSETS
The General Partner believes that the proposed sale of the Yorba Linda
System and the distribution of the net proceeds therefrom are fair to all
limited partners of the Partnership, and it recommends that the limited
partners approve the transaction. In determining the fairness of the proposed
transaction, the General Partner considered each of the following factors, all
of which had a positive effect on its fairness determination:
(i) The limited partnership interests are at present illiquid and the
cash to be distributed to limited partners as a result of the proposed sale
of the Yorba Linda System will provide limited partners with liquidity and
with the means to realize the appreciation in the value of the Yorba Linda
System;
(ii) The purchase price represents the fair market value of the Yorba
Linda System because the purchase price was determined in an arm's length
negotiation between the General Partner, representing the Partnership, and
the Purchaser, an unaffiliated cable television system operator;
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(iii) The Partnership has held the Yorba Linda System for five years, the
holding period originally anticipated by investors in the Partnership;
(iv) The conditions and prospects of the cable television industry in
which the Partnership is engaged, including the developing threat of
competition from DBS services and telephone companies, and the working
capital and other financial needs of the Partnership if it were to continue
to operate the Yorba Linda System; and
(v) The terms and conditions of the Purchase and Sale Agreement by and
between the Partnership and the Purchaser, including the fact that the
purchase price will be paid in cash and the fact that the Purchaser's
obligation to close is not contingent upon its ability to obtain financing.
CERTAIN EFFECTS OF THE SALE
Upon consummation of the sale of the Yorba Linda System, the proceeds of the
sale will be used to repay all indebtedness of the Partnership, and then the
Partnership will distribute the remaining net sale proceeds to the limited
partners pursuant to the terms of the Partnership Agreement. Because limited
partners will not receive distributions in an amount equal to 100 percent of
the capital initially contributed to the Partnership by the limited partners
plus the 8% Return, the General Partner will not receive any of the net
proceeds from the Yorba Linda System's sale. Based upon the pro forma
financial information as of December 31, 1996, as a result of this
distribution, the limited partners of the Partnership, as a group, will
receive approximately $22,823,356. The limited partners will be subject to
federal income tax on the income resulting from the sale of the Yorba Linda
System. See the detailed information below under the caption "Federal Income
Tax Consequences."
After the sale of the Yorba Linda System, the Partnership will be liquidated
and dissolved. Neither Colorado law nor the Partnership Agreement afford
dissenters' or appraisal rights to limited partners in connection with the
proposed sale of the Yorba Linda System. If the proposed transaction is
approved by the holders of a majority of limited partnership interests, all
limited partners will receive a distribution in accordance with the procedures
prescribed by the Partnership Agreement regardless of how or whether they vote
on the proposal. It is anticipated that if the proposed transaction is not
consummated, the General Partner's current management team will continue to
manage the Yorba Linda System on behalf of the Partnership until such time as
the Yorba Linda System can be sold.
FEDERAL INCOME TAX CONSEQUENCES
The purpose of the following discussion of the income tax consequences of
the proposed transaction is to inform the limited partners of the Partnership
of the federal income tax consequences to the Partnership and to its partners
arising from the sale of the Yorba Linda System. The tax information included
herein was prepared by the tax department of the General Partner. The tax
information is taken from tax data compiled by the General Partner in its role
as the Partnership's tax administrator and is not based upon the advice or
formal opinion of counsel. The tax discussion that follows is merely intended
to inform the limited partners of factual information and should not be
considered tax advice.
By the expected date of the Yorba Linda System's sale, the limited partners
will have been allocated ordinary taxable losses of approximately $14,866,578
($751 per $1,000 invested). Application of the passive activity loss rules has
limited these deductible losses in prior years and created passive loss
carryovers to the year of sale. The gain on sale incorporates all prior losses
disallowed under the loss limitations that are presumed deductible in the year
of sale.
The sale of the Yorba Linda System will result in a gain for federal income
tax purposes. The amount of this gain allocated to limited partners is
approximately $5,413,404. The General Partner estimates that $4,099,043 ($207
per $1,000 invested) of this total gain will be treated as ordinary income.
This amount of ordinary income results from the recapture of depreciation on
personal property under Section 1245. The General
7
Partner estimates that the remainder of the gain, or approximately $1,314,361
($66 per $1,000 invested), will be Section 1231 gain that will generally be
treated as long term capital gain by the limited partners.
Assuming the 31 percent rate applies to ordinary income and a 28 percent
rate applies to long term capital gain, as a result of the sale of the Yorba
Linda System, a limited partner will be subject to federal income taxes of $83
per $1,000 invested in the Partnership. The taxable income will be recognized
in the year of the closing of the sale, which is expected to be 1997.
The sale of the Yorba Linda System will cause the liquidation of the
Partnership, which will result in an additional tax deduction for the limited
partners. The final capital account balance reported on the 1997 Schedule K-1
of each limited partner will reflect a positive ending capital account balance
that is projected to equal $121 per $1,000 invested. This amount represents
partnership syndication costs that may be deducted on the limited partners'
tax return as a long term capital loss under Section 731. The deduction of
long term capital losses may be limited depending on each partners' specific
income tax situation.
Limited partners who are non-resident aliens or foreign corporations
("foreign persons") are subject to a withholding tax on their share of the
Partnership's income from the sale of the Yorba Linda System. The withholding
rates are 39.6 percent for individual partners and 35 percent for corporate
partners. The tax withheld will be remitted to the Internal Revenue Service
and the foreign person will receive a credit on their U.S. tax return for the
amount of the tax withheld by the Partnership. The tax withheld will be
treated as a distribution to the limited partner.
The state of California requires that state tax withholding occur on
California source income of non-resident partners of the Partnership. The
amount of tax withheld is calculated on the current year allocable income
without benefit of net operating loss carryforwards. Withholding is not
required on tax exempt limited partners. The rate of withholding is 7 percent
on all domestic non-resident partner distributions and 9.3 percent on foreign
non-resident partner distributions. The withholding process will require
affected partners to file non-resident income tax returns in California. Blank
forms and instructions will be provided in your annual tax packet by the
General Partner to assist in this reporting requirement.
CERTAIN INFORMATION ABOUT THE PARTNERSHIP, THE GENERAL
PARTNER AND THE PURCHASER OF THE SYSTEM
The principal executive offices of the Partnership and the General Partner
are located at 9697 East Mineral Avenue, Englewood, Colorado 80112, and their
telephone number is (303) 792-3111. The principal executive offices of the
Purchaser are located at 50 Locust Avenue, New Canaan, Connecticut 06840.
The limited partnership interests of the Partnership are registered pursuant
to Section 12(g) of the Exchange Act. As such, the Partnership currently is
subject to the informational reporting requirements of the Exchange Act and,
in accordance therewith, is obligated to file periodic reports, proxy
statements and other information with the Securities and Exchange Commission
relating to its business, financial condition and other matters. Reports and
other information filed by the Partnership can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at
the following regional offices of the Commission: 7 World Trade Center, Suite
1300, New York, New York 10048 and Northwest Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. After the net proceeds from the
sale of the Yorba Linda System are distributed to the Partnership's limited
partners, the Partnership will be liquidated and dissolved. The Partnership's
registration and reporting requirements under the Exchange Act will be
terminated upon the dissolution of the Partnership.
8
USE OF PROCEEDS FROM THE YORBA LINDA SYSTEM'S SALE
The following is a brief summary of the Partnership's estimated use of the
proceeds from the sale of the Yorba Linda System. All of the following
selected financial information is based upon amounts as of December 31, 1996
and certain estimates of liabilities at closing. Final results may differ from
these estimates. A more detailed discussion of the financial consequences of
the sale of the system is set forth below under the caption "Unaudited Pro
Forma Financial Information." All limited partners are encouraged to review
carefully the unaudited pro forma financial statements and notes thereto.
If the holders of a majority of limited partnership interests of the
Partnership approve the proposed sale of the Yorba Linda System and the
transaction is closed, the Partnership will pay all of its indebtedness, and
then the Partnership will distribute the net sale proceeds pursuant to the
terms of the Partnership Agreement. The estimated uses of the sale proceeds
are as follows:
Contract Sales Price of the Yorba Linda System.................. $ 36,000,000
Add:Cash on Hand................................................ 210,331
Less:Estimated Net Closing Adjustments.......................... (469,831)
Repayment of Debt and Accrued Interest.......................... (12,917,144)
------------
Cash Available for Distribution by the Partnership......... $ 22,823,356
============
Taking into account the distributions to be made on the sale of the Yorba
Linda System, the estimated after-tax internal rate of return on an investment
in the Partnership is approximately 1.49 percent.
Based on financial information available at December 31, 1996, the following
table presents the estimated results of the Partnership when it has completed
the sale of the Yorba Linda System:
Dollar Amount Raised...................................... $ 19,785,000
Number of Cable Television Systems Purchased.............. One
Date of Closing of Offering............................... June 1992
Tax and Distribution Data per $1,000 of Limited
Partnership Capital:
Federal Income Tax Results
Ordinary Income (Loss)
--from operations..................................... $ (732)
--from recapture...................................... $ 959
Capital Gain (Loss)................................... $ (55)
Cash Distributions to Investors
Source (on GAAP basis)
--investment income................................... $ 101 to 209
--return of capital................................... $ 1,000
Source (on cash basis)
--sales............................................... $1,101 to 1,209
9
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF JONES GROWTH PARTNERS II L.P.
The following unaudited pro forma balance sheet assumes that as of December
31, 1996, the Partnership had sold the Yorba Linda System for $36,000,000. The
funds available to the Partnership, adjusting for the estimated net closing
adjustments of the Yorba Linda System, are expected to total approximately
$35,530,169. Such funds will be used to repay all indebtedness of the
Partnership and the balance will be distributed pursuant to the terms of the
Partnership Agreement. Because the limited partners will not receive
distributions totaling the amount initially contributed to the Partnership by
the limited partners plus the 8% Return, the General Partner will not receive
any of the net sale proceeds.
The unaudited pro forma balance sheet should be read in conjunction with the
appropriate notes to the unaudited pro forma balance sheet.
ALL OF THE FOLLOWING UNAUDITED PRO FORMA FINANCIAL INFORMATION IS BASED UPON
AMOUNTS AS OF DECEMBER 31, 1996 AND CERTAIN ESTIMATES OF LIABILITIES AT
CLOSING. FINAL RESULTS MAY DIFFER FROM SUCH INFORMATION.
10
JONES GROWTH PARTNERS II L.P.
UNAUDITED PRO FORMA BALANCE SHEET
DECEMBER 31, 1996
PRO FORMA PRO FORMA
AS REPORTED ADJUSTMENTS BALANCE
----------- ------------ -----------
ASSETS
Cash and Cash Equivalents............... $ 210,331 $ 22,613,025 $22,823,356
Trade Receivables, net.................. 180,326 (180,326) --
Investment in Cable Television
Properties:
Property, plant and equipment, net.... 11,542,507 (11,542,507) --
Intangible assets, net................ 8,300,830 (8,300,830) --
----------- ------------ -----------
Total investment in cable television
properties......................... 19,843,337 (19,843,337) --
Deposits, Prepaid Expenses and Other
Assets................................. 229,998 (229,998) --
----------- ------------ -----------
Total Assets............................ $20,463,992 $(20,463,992) $22,823,356
=========== ============ ===========
LIABILITIES AND PARTNERS' CAPITAL
(DEFICIT)
Liabilities:
Debt.................................. $12,821,077 $(12,821,077) $ --
Trade Accounts Payable and Accrued
Liabilities.......................... 546,347 (546,347) --
Subscriber Prepayments and Deposits... 322,430 (322,430) --
Accrued Distribution to Limited
Partners............................. -- 22,823,356 22,823,356
----------- ------------ -----------
Total Liabilities................... 13,689,854 (13,689,854) 22,823,356
----------- ------------ -----------
Partners' Capital (Deficit):
General Partner....................... (102,065) 102,065 --
Limited Partners...................... 6,876,203 (6,876,203) --
----------- ------------ -----------
Total Partners' Capital (Deficit)... 6,774,138 (6,774,138) --
----------- ------------ -----------
Total Liabilities and Partners'
Capital (Deficit).................... $20,463,992 $(20,463,992) $22,823,356
=========== ============ ===========
The accompanying notes to unaudited pro forma financial statements are an
integral part of this unaudited balance sheet.
11
JONES GROWTH PARTNERS II L.P.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
PRO FORMA PRO FORMA
AS REPORTED ADJUSTMENTS BALANCE
----------- ----------- ---------
REVENUES.................................... $7,696,684 $(7,696,684) $ --
COSTS AND EXPENSES:
Operating expenses........................ 4,284,935 (4,284,935) --
Management fees and allocated overhead
from
General Partner.......................... 914,068 (914,068) --
Depreciation and Amortization............. 3,932,348 (3,932,348) --
---------- ----------- -----
OPERATING LOSS.............................. (1,434,667) 1,434,667 --
---------- ----------- -----
OTHER INCOME (EXPENSE):
Interest expense.......................... 904,667 904,667 --
Other, net................................ 32,259 32,259 --
---------- ----------- -----
Total other income (expense), net....... 936,926 936,926 --
---------- ----------- -----
NET LOSS.................................... $2,371,593 $ 2,371,593 $ --
========== =========== =====
NET LOSS PER LIMITED PARTNERSHIP INTEREST... $ 118.67 $ 118.67 $ --
========== =========== =====
The accompanying notes to unaudited pro forma financial statements are an
integral part of this unaudited statement.
12
JONES GROWTH PARTNERS II L.P.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1) The following calculations present the sale of the Yorba Linda System and
the resulting estimated proceeds expected to be received by the Partnership.
2) The unaudited pro forma balance sheet assumes that the Partnership had
sold the Yorba Linda System for $36,000,000 as of December 31, 1996. The
unaudited statements of operations assume that the Partnership had sold the
Yorba Linda System for $36,000,000 as of January 1, 1996.
3) The estimated gain recognized from the sale of the Yorba Linda System and
corresponding estimated distribution to limited partners as of December 31,
1996 has been computed as follows:
GAIN ON SALE OF ASSETS:
Contract sales price............................................. $ 36,000,000
Less: Net book value of investment in cable television properties
at December 31, 1996....................................... 19,843,337
------------
Gain on sale of assets........................................... $ 16,156,663
============
DISTRIBUTION TO PARTNERS:
Contract sales price............................................. $ 36,000,000
Working Capital Adjustment:
Add:Trade receivables, net....................................... 180,326
Prepaid expenses................................................. 122,553
Less:Accrued liabilities......................................... (450,280)
Subscriber prepayments........................................... (322,430)
------------
Adjusted cash received........................................... 35,530,169
Less:Outstanding debt to third parties........................... (12,821,077)
Interest and other accruals...................................... (96,067)
Add:Cash on hand................................................. 210,331
------------
Cash available for distribution.................................. $ 22,823,356
============
AVAILABLE INFORMATION
The Partnership's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 is being mailed to the limited partners of the Partnership
together with this Proxy Statement.
INCORPORATION BY REFERENCE
The Partnership's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 is incorporated by reference in this proxy statement. The
Partnership specifically incorporates by reference herein Item 1. Business,
Item 2. Properties, Item 5. Market for the Registrant's Common Stock and
Related Security Holder Matters, Item 6. Selected Financial Data, Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, Item 8. Financial Statements and Item 13. Certain Relationships
and Related Transactions from its 1996 Annual Report on Form 10-K.
13
[LOGO OF JONES SPACELINK CABLE CORPORATION APPEARS HERE]
9697 EAST MINERAL AVENUE
ENGLEWOOD, COLORADO 80112
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE PARTNERSHIP BY THE GENERAL PARTNER
The undersigned Limited Partner of Jones Growth Partners II L.P., a Colorado
limited partnership, hereby votes on the sale of Jones Growth Partners II
L.P.'s Yorba Linda, California cable television system pursuant to the terms
and conditions of that certain Asset Purchase Agreement dated August 16, 1996,
as amended, as follows:
[_] CONSENTS [_] WITHHOLDS CONSENT [_] ABSTAINS
(continued on other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED LIMITED PARTNER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE PROPOSED SALE TRANSACTION.
PLEASE SIGN EXACTLY AS NAME APPEARS.
When limited partnership
interests are held by more than one
person, all owners should sign. When
signing as attorney, as executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full corp-
oration name by authorized officer. If
a partnership, please sign in partner-
ship name by authorized person.
DATED: _________________________, 1997
______________________________________
Signature
______________________________________
Signature
______________________________________
Signature
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
[LOGO OF JONES SPACELINK CABLE CORPORATION APPEARS HERE]
9697 EAST MINERAL AVENUE
ENGLEWOOD, COLORADO 80112
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE PARTNERSHIP BY THE GENERAL PARTNER
The undersigned Limited Partner of Jones Growth Partners II L.P., a Colorado
limited partnership, hereby votes on the sale of Jones Growth Partners II
L.P.'s Yorba Linda, California cable television system pursuant to the terms
and conditions of that certain Asset Purchase Agreement dated August 16, 1996,
as amended, as follows:
[_] CONSENTS [_] WITHHOLDS CONSENT [_] ABSTAINS
(continued on other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED LIMITED PARTNER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE PROPOSED SALE TRANSACTION.
PLEASE SIGN EXACTLY AS NAME APPEARS.
DATED: _________________________, 1997
______________________________________
Beneficial Owner Signature (Investor)
______________________________________
Authorized Trustee/Custodian Signature
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.