SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
(Name of Subject Company)
MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
(Name of Person Filing Statement)
Units of Limited Partnership Interests
(Title of Class of Securities)
751641109
(CUSIP Number of Class of Securities)
Robert E. Parsons, Jr.
President and Manager
RIBM ONE LLC
Marriott Residence Inn Limited Partnership
10400 Fernwood Road
Bethesda, Maryland 20817
(301) 380-2070
(Name, Address and Telephone Number of
Person Authorized to Receive Notice and Communications
On Behalf of the Person Filing Statement)
COPIES TO:
J. Warren Gorrell, Jr., Esq.
Joseph G. Connolly, Jr., Esq.
Hogan & Hartson L.L.P.
555 13th Street, N.W.
Washington, D.C. 20004
(202) 637-5600
[ ] CHECK THE BOX IF THE FILING RELATES SOLELY TO PRELIMINARY COMMUNICATIONS
MADE BEFORE THE COMMENCEMENT OF A TENDER OFFER
ITEM 1. Subject Company Information.
The name of the subject company is Marriott Residence Inn Limited
Partnership, a Delaware limited partnership (the "Partnership"). The principal
executive offices of the Partnership are located at 10400 Fernwood Road,
Bethesda, Maryland 20817; the telephone number for the Partnership at its
principal executive offices is 301-380-2070. The general partner of the
Partnership is RIBM ONE LLC (the "General Partner").
The class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (this "Statement")
relates is the Partnership's units of limited partnership interests (the
"Units"). As of September 14, 2001, there were a total of 65,600 outstanding
Units.
ITEM 2. Identity and Background of Filing Person.
The filing person is the subject company. The principal executive
offices and telephone number of the Partnership are set forth in response to
Item 1 of this Statement.
This Statement relates to the tender offer by Madison Liquidity
Investors 114, LLC, a Delaware limited liability company (the "Purchaser") owned
by MRI Partners LLC, a joint venture between Madison Capital Management, LLC
("Madison") and Haberhill LLC ("Haberhill"), disclosed in a Tender Offer
Statement on Schedule TO dated August 31, 2001, to purchase up to 13,120 Units
for $400 per Unit in cash, reduced by any cash distributions made or declared on
or after August 31, 2001, with interest at the rate of 7% per annum from the
expiration date of the tender offer to the date of payment, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated August 31,
2001 (the "Offer to Purchase").
Based on the information in the Schedule TO, the business address of
the Purchaser is 410 Park Avenue, Suite 540, New York, New York 10022; telephone
number 212-687-0518.
ITEM 3. Past Contacts, Transactions, Negotiations and Agreements.
There is no material agreement, arrangement or understanding or any
material actual or potential conflict of interest between: (i) the Partnership
and the General Partner; (ii) the Partnership and the Purchaser or (iii) the
General Partner and the Purchaser except as described below.
The General Partner is entitled to receive distributions of the
Partnership's operating cash flow and net sale or refinancing proceeds as set
forth in the Partnership's Amended and Restated Agreement of Limited
Partnership, dated as of March 29, 1988 (the "Partnership Agreement"), and
summarized below.
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The Partnership generally distributes cash available for distribution
as follows: (i) first, 99% to the limited partners and 1% to the General
Partner, until the partners have received, with respect to such year, an amount
equal to 10% of their Invested Capital, defined as the excess of original
capital contributions over cumulative distributions of net refinancing and sales
proceeds ("Capital Receipts"); (ii) second, remaining cash available for
distribution will be distributed as follows, depending on the amount of Capital
Receipts previously distributed:
(a) 99% to the limited partners and 1% to the General Partner, if
the partners have received aggregate cumulative distributions
of Capital Receipts of less than 50% of their original capital
contributions; or
(b) 85% to the limited partners and 15% to the General Partner, if
the partners have received aggregate cumulative distributions
of Capital Receipts equal to or greater than 50% but less than
100% of their original capital contributions; or
(c) 70% to the limited partners and 30% to the General Partner, if
the partners have received aggregate cumulative distributions
of Capital Receipts equal to 100% or more of their original
capital contributions.
Cash available for distribution means, with respect to any fiscal
period, the cash revenues of the Partnership from all sources during the fiscal
period, other than Capital Receipts less (i) all cash expenditures of the
Partnership during such fiscal period, including, without limitation, debt
service, repayment of advances made by the General Partner, fees for management
services and administrative expenses (excluding expenditures incurred by the
Partnership in connection with a transaction resulting in Capital Receipts), and
(ii) such reserves as may be determined by the General Partner in its reasonable
discretion to be necessary to provide for the foreseeable cash needs of the
Partnership or for the maintenance, repair or restoration of the Partnership's
Inns.
As of December 31, 2000, the Partnership had distributed a total of
$43,669,801 to the partners ($659 per limited partner unit) since inception. The
Partnership made no distributions during the years ended December 31, 2000 and
1999. In February 1998, $3,313,131 ($50 per limited partner unit) was
distributed from 1997 operations. No distributions of Capital Receipts have been
made since inception.
Under the Partnership Agreement, the General Partner has the exclusive
right to conduct the business and affairs of the Partnership subject only to the
management agreement. The General Partner is required to devote to the
Partnership such time as may be necessary for the proper performance of its
duties, but the officers and managers of the General Partner are not required to
devote their full time to the performance of such duties. The Partnership
reimburses the General Partner or Host Marriott, L.P., the owner of a Class A 1%
managing economic interest in the General Partner ("Host Marriott"), as
applicable, for the cost of providing such administrative and other services to
the extent that any officer or manager devotes time to the Partnership.
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The following sets forth amounts paid by the Partnership to Host
Marriott and its subsidiaries, including the General Partner, as distributions
with respect to the general partner interest and for the cost of providing all
administrative and other services as General Partner for the years ended
December 31, 2000, 1999 and 1998 (in thousands):
2000 1999 1998
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Administrative expenses reimbursed........... $ 344 $ 109 $ 229
Cash distributions........................... -- -- 33
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$ 344 $ 109 $ 262
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ITEM 4. The Solicitation or Recommendation.
(a) Solicitation or Recommendation. The General Partner is not
expressing an opinion, nor making a recommendation, and is remaining neutral
towards the Offer to Purchase.
(b) Reasons. In deciding to remain neutral on the Offer to Purchase,
the General Partner considered the following:
As previously disclosed in the Partnership's Quarterly Report on Form
10-Q filed with the Securities and Exchange Commission on May 7, 2001, and our
letter to limited partners dated May 29, 2001, both of which were distributed to
all limited partners, the General Partner is currently attempting to sell the
Partnership's Inns or, in the alternative, find a buyer for the Units. On April
9, 2001, the General Partner engaged Merrill Lynch & Co. ("Merrill Lynch") as
its financial advisor to solicit bids from interested parties. As part of that
process, Merrill Lynch prepared a list of over 20 parties who they believed
might have an interest in acquiring either the Partnership's Inns or the Units
and contacted those parties. Several of the parties contacted requested
additional information, conducted preliminary due diligence of the Partnership
and submitted acquisition proposals to the Partnership.
As of the date of this report, the Partnership has begun exclusive
discussions with one potential acquirer who is currently conducting additional
due diligence. Nonetheless, the sale process is still ongoing and, accordingly,
there can be no assurance that a transaction will occur or, if it were to occur,
of the timing or ultimate value of any such transaction. However, the proposed
per Unit purchase price submitted by several potential acquirers as a result of
the solicitation process (which proposals were subject to additional due
diligence and negotiation by such potential acquirers), exceeded the $400 per
Unit currently offered by the Purchaser. In addition, if a transaction were to
occur, it would require approval of the limited partners holding a majority of
the Units as well as the consent of the Partnership's lenders.
Although the General Partner is not making a recommendation, the
General Partner believes that limited partners should carefully consider the
following in making their own decision about whether to accept or reject the
offer. As previously reported, prior to commencement of the Purchaser's earlier
tender offer for Units in May 2001, Haberhill, together
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with Madison, had been in discussions with representatives of the General
Partner regarding a possible acquisition transaction with the Partnership.
Douglas Greene, the principal of Haberhill, is a former employee of Host
Marriott Corporation, an affiliate of the General Partner, and during his period
of employment worked on several matters concerning the Partnership. As part of
these discussions, Haberhill entered into a Confidentiality Agreement, dated
February 1, 2001, with Host Marriott Corporation, and as a result received
certain material non-public information about the Partnership. During these
discussions, Haberhill was informed of the General Partner's plan to conduct a
broader marketing of the Partnership's Inns or, in the alternative, the Units in
order to maximize value for the limited partners. Although repeatedly requested
to do so, Haberhill refused to enter into a second agreement under which
Haberhill, and any organization it represents or acts in concert with, would
have agreed for a period of time not to engage in, or undertake, certain actions
which were viewed by the General Partner as hostile and which the General
Partner believed would be disruptive to the Merrill Lynch solicitation process,
in which Haberhill was requested to participate. As limited partners are aware,
the Purchaser commenced a tender offer in May 2001 in which it offered to
purchase Units at $300 per Unit. Although the Purchaser was seeking to purchase
up to 13,120 Units in that offer (the same number being sought in the current
offer), the Purchaser has disclosed that only 2,271 Units were tendered and
accepted by the Purchaser. You should also be aware that, notwithstanding the
fact that this earlier offer expired on June 26, 2001, pursuant to the terms of
that offer, the Purchaser was not required to pay for the tendered Units until
the Units were transferred on the books of the Partnership which, pursuant to
the terms of the Partnership Agreement, did not occur until September 7, 2001. A
similar provision is included in the current offer. As disclosed in the Offer to
Purchase, although the current offer is scheduled to expire on October 2, 2001,
under the terms of the offer, the Purchaser will not pay the tender offer
consideration (with interest) until approximately January 1, 2002. In addition,
although you will be able to withdraw any tendered Units at any time prior to
the expiration date of the current offer (currently scheduled for October 2,
2001), once the offer has expired and the Purchaser has accepted your Units for
payment, you will no longer be the owner of those Units even though you will not
receive payment for them until approximately January 1, 2002.
In addition, in deciding whether to accept or reject the
offer, limited partners should carefully read, in its entirety, the Offer to
Purchase. In particular, limited partners should consider the following
statements made by the Purchaser in its Offer to Purchase:
"Although the Purchaser cannot predict with certainty the
future value of the Partnership's assets on a per Unit basis,
the Offer Price could differ significantly from the net
proceeds that would be realized from a sale of the properties
owned by the Partnership or that may be realized upon a future
liquidation of the Partnership."
"The Purchaser is making the Offer for investment purposes and
with the intention of making a profit from the ownership of
the Units. In establishing the Offer Price of $400 per Unit,
the Purchaser is motivated to establish the lowest price that
might be acceptable to Unitholders consistent with the
Purchaser's objectives. Such objectives and motivations may
conflict with the
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interests of the Unitholders in receiving the highest price
for their Units."
"Upon the liquidation of the Partnership, the Purchaser will
benefit to the extent, if any, that the amount per Unit it
receives in the liquidation exceeds the Offer Price, if any.
Therefore, Unitholders might receive more value if they hold
their Units, rather than tender, and receive proceeds from the
liquidation of the Partnership. Alternatively, Unitholders may
prefer to receive the Offer Price now rather than wait for
uncertain future net liquidation proceeds."
(See the cover page of the Purchaser's Offer to Purchase dated
August 31, 2001.)
Limited partners will have to make the determination as to
whether to wait for a possible transaction resulting from Merrill Lynch's
solicitation efforts or to sell their Units now at the tender offer price. If a
limited partner is interested in liquidating its Units immediately, the tender
offer gives the limited partner this opportunity. (Although please recognize
that, pursuant to the terms of the Offer to Purchase, the cash consideration
would not be received until January 2002.) Additionally, there can be no
assurance that a better offer for the purchase of the Units will be available
now or in the future. As limited partners are no doubt aware, however, by
accepting the Purchaser's or any other offer, limited partners will surrender
their right to participate in any future benefits from ownership of the Units.
There can be no assurance that the tender offer price is equal to or greater
than the amount limited partners might otherwise receive with respect to their
Units over the remaining term of the Partnership. If limited partners choose to
accept the tender offer, payment will come directly from the Purchaser.
(c) Intent to Tender. Neither the Partnership nor the General Partner
or, to the knowledge of the Partnership, any affiliate of the Partnership or the
General Partner intends to tender any Units that are held of record or
beneficially by such person to the Purchaser.
ITEM 5. Persons/Assets, Retained, Employed, Compensated or Used.
Neither the Partnership, the General Partner nor any person acting on
their behalf has employed, retained or compensated, or intends to employ, retain
or compensate, any person to make solicitations or recommendations to the
limited partners on their behalf concerning the Offer to Purchase.
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ITEM 6. Interest in Securities of the Subject Company.
Neither the Partnership nor the General Partner or any of their
executive officers, directors, affiliates or subsidiaries have effected any
transactions in the Units during the past sixty days.
ITEM 7. Purposes of the Transaction and Plans or Proposals.
(a) The Partnership has not undertaken or engaged in any negotiations
in response to the Offer to Purchase which relates to: (i) a tender offer or
other acquisition of the Units by the Partnership, any of its subsidiaries or
any other person; (ii) any extraordinary transaction, such as a merger,
reorganization or liquidation, involving the Partnership; (iii) a purchase, sale
or transfer of a material amount of assets by the Partnership; or (iv) any
material change in the present dividend rate or policy, or indebtedness or
capitalization of the Partnership. However, as described in Item 4 above, prior
to receipt of the Offer to Purchase, the Partnership had commenced its efforts
to find a party interested in acquiring either the Partnership's Inns or, in the
alternative, the Units.
(b) There are no transactions, resolutions, agreements in principle
or signed contracts in response to the Offer to Purchase that relate to or would
result in one or more of the events referred to in Item 7(a).
ITEM 8. Additional Information.
None.
ITEM 9. Exhibits.
(a)(1) Letter to Limited Partners.
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After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
MARRIOTT RESIDENCE INN LIMITED
PARTNERSHIP
By: RIBM ONE LLC
General Partner
Date: September 14, 2001 /s/ Robert E. Parsons, Jr.
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Robert E. Parsons, Jr.
President and Manager