Offer to Purchase
BACAP ALTERNATIVE MULTI-STRATEGY FUND, LLC
40 West 57th Street
Mail Code: NY1-040-31-01
New York, New York 10019
OFFER TO PURCHASE UP TO $13,000,000 IN OUTSTANDING
LIMITED LIABILITY COMPANY INTERESTS IN THE FUND
DATED MARCH 27, 2006
LETTER OF TRANSMITTAL MUST BE RECEIVED BY CITIGROUP GLOBAL TRANSACTION
SERVICES ("CITIGROUP") BY FRIDAY, APRIL 28, 2006
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, EASTERN TIME, ON FRIDAY, APRIL 28, 2006,
UNLESS THE OFFER IS EXTENDED
To the Investors of BACAP Alternative Multi-Strategy Fund, LLC:
BACAP Alternative Multi-Strategy Fund, LLC, a closed-end, non-diversified,
management investment company organized as a Delaware limited liability company
(the "Fund"), is offering to purchase for cash on the terms and conditions set
forth in this offer to purchase ("Offer to "Purchase") and the related Letter of
Transmittal (which together with this Offer to Purchase constitutes the "Offer")
up to $13,000,000 in limited liability company interests in the Fund and
portions thereof pursuant to tenders by investors of the Fund ("Investors") at a
price equal to their net asset value as of June 30, 2006 or, if the Offer is
extended, as of the next occurring last business day of a calendar month within
sixty-five (65) days from the date on which the Offer actually expires (the
"Valuation Date"). (As used in this Offer, the term "Interest" or "Interests,"
as the context requires, refers to the limited liability company interests in
the Fund and portions thereof representing beneficial interests in the Fund.)
This Offer is being made to all Investors and is not conditioned on any minimum
amount of Interests being tendered, but is subject to certain conditions
described below. Interests are not traded on any established trading market and
are subject to strict restrictions on transferability pursuant to the Fund's
Amended and Restated Limited Liability Company Agreement dated as of December 1,
2005 (the "LLC Agreement").
The Offer will remain open until 12:00 midnight, Eastern Time, on April 28, 2006
(the "Initial Expiration Date"), or, if the Offer is extended, until any later
date as corresponds to an extension of the Offer. The later of the Initial
Expiration Date or the latest time and date to which the Offer is extended is
called the "Expiration Date."
Investors who desire to tender an Interest, or a portion of an Interest, for
purchase must complete and sign the attached Letter of Transmittal and mail it
or fax it to Citigroup for receipt on or before the Expiration Date.
(See Section 5 of the Offer to Purchase for more information.)
Investors should realize that the value of the Interests tendered in this Offer
likely will change between February 28, 2006 (the last time net asset value was
calculated) and June 30, 2006 (or such later Valuation Date), when the value of
the Interests tendered to the Fund for purchase is determined. Investors
tendering their Interest should also note that although the tender offer expires
on April 28, 2006 (unless the Offer is extended), they remain Investors in the
Fund, with respect to the Interest tendered and accepted for purchase by the
Fund, through June 30, 2006, or such later Valuation Date when the net asset
value of their Interest is calculated. Any tendering Investors that wish to
obtain the estimated net asset value of their Interests should contact
Citigroup, at the telephone number or address set forth below, Monday through
Friday, except holidays, during normal business hours of 9:00 a.m. to 5:00 p.m.
(Eastern Time).
IMPORTANT
NONE OF THE FUND, BANC OF AMERICA INVESTMENT ADVISORS, INC., THE FUND'S
INVESTMENT ADVISER (THE "ADVISER"), OR ANY MEMBER OF THE BOARD OF MANAGERS MAKES
ANY RECOMMENDATION ON BEHALF OF THE FUND TO ANY INVESTOR AS TO WHETHER TO TENDER
OR REFRAIN FROM TENDERING INTERESTS. INVESTORS MUST MAKE THEIR OWN DECISIONS
WHETHER TO TENDER INTERESTS AND, IF THEY CHOOSE TO DO SO, THE PORTION OF THEIR
INTERESTS TO TENDER.
BECAUSE EACH INVESTOR'S INVESTMENT DECISION IS A PERSONAL ONE BASED ON ITS
FINANCIAL CIRCUMSTANCES, NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY
RECOMMENDATION ON BEHALF OF THE FUND AS TO WHETHER INVESTORS SHOULD TENDER
INTERESTS PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED BY THE FUND TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
OTHER THAN THOSE CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR
MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE
RELIED ON AS HAVING BEEN AUTHORIZED BY THE FUND.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED ON THE FAIRNESS OR MERITS OF SUCH TRANSACTION OR ON
THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Questions, requests for assistance and requests for additional copies of the
Offer may be directed to the Fund's Sub-Transfer Agent:
Citigroup Global Transaction Services
P.O. Box 446
Portland, ME 04112-9925
Phone: (207) 879-6093
Fax: (207) 879-6206
BACAP ALTERNATIVE MULTI-STRATEGY FUND, LLC
OFFER TO PURCHASE
TABLE OF CONTENTS
1. SUMMARY TERM SHEET........................................1
2. BACKGROUND AND PURPOSE OF THE OFFER.......................2
3. OFFER TO PURCHASE AND PRICE...............................3
4. AMOUNT OF TENDER..........................................4
5. PROCEDURE FOR TENDERS.....................................4
6. WITHDRAWAL RIGHTS.........................................5
7. PURCHASES AND PAYMENT.....................................5
8. CERTAIN CONDITIONS OF THE OFFER...........................7
9. CERTAIN INFORMATION ABOUT THE FUND........................7
10. CERTAIN FEDERAL INCOME TAX CONSEQUENCES...................8
11. MISCELLANEOUS.............................................9
12. FINANCIAL STATEMENTS......................................9
1. SUMMARY TERM SHEET.
This summary highlights certain information concerning this Offer. To understand
the Offer fully and for a more complete discussion of the terms and conditions
of the Offer, please read carefully this entire Offer to Purchase and the
related Letter of Transmittal.
o The Fund's offering documents, as supplemented from time to time, state
that the Fund will offer from time to time to purchase a portion of its
Interests at their net asset value (that is, the value of the Fund's assets
minus its liabilities), calculated as of the Valuation Date. The Board of
Managers of the Fund has determined to offer to purchase Interests in the
Fund in an amount up to $13,000,000. This Offer will remain open until
12:00 midnight, Eastern Time, on the Expiration Date, which is April 28,
2006, unless the Offer is extended. The net asset value of an Interest will
be calculated for this purpose as of the Valuation Date, which is June 30,
2006 unless the Offer is extended. The Fund reserves the right to adjust
the Valuation Date to correspond to any extension of the Offer.
o The Offer is being made to all holders of Interests and is not conditioned
on any minimum amount of Interests being tendered. You may tender your
entire Interest or a portion of your Interest (defined as a specific dollar
value) up to an amount such that you maintain the required minimum capital
account balance of at least $25,000.
o If you tender your entire Interest or a portion of your interest and the
Fund purchases that Interest, subject to any extension of the Offer, you
will receive a promissory note, to be held by Banc of America Investment
Advisors, Inc. ("BAIA"), in its capacity as the Fund's administrator,
entitling you to receive an initial payment in cash and/or marketable
securities (valued in accordance with the LLC Agreement and distributed to
tendering investors on a pari passu basis) no later than 60 calendar days
after the Valuation Date, equal to at least 95% of the estimated unaudited
net asset value of your Interest tendered and accepted for purchase by the
Fund as of the Valuation Date. The promissory note also will entitle you to
receive a contingent payment equal to the balance promptly after the
completion of the audit of the Fund's financial statements for the fiscal
year ending March 31, 2007. See Section 7.
o If you tender only a portion of your Interest, you will be required to
maintain a capital account balance of at least $25,000. We reserve the
right to purchase less than the amount you tender if the amount you tender
would cause your account in the Fund to have a value less than the required
minimum balance. See Section 7.
o If the Fund accepts the tender of your entire Interest or a portion of your
Interest, your proceeds will be funded from one or more of the following
sources: cash on hand, withdrawals of capital from the portfolio funds in
which the Fund invests, the proceeds of the sale of and delivery of
portfolio securities held by the Fund and/or borrowings, though the Fund
does not presently intend to make any such borrowings. See Section 7.
o Until the expiration of the Offer, you have the right to change your mind
and withdraw any tenders of your Interest. If the Fund has not accepted
your tender of an Interest (or portion of an Interest) before May 22, 2006,
you will also have the right to withdraw the tender of your Interest on or
after such date. Interests withdrawn prior to the Expiration Date may be
re-tendered on or before the Expiration Date by following the tender
procedures described herein. See Section 6.
1
o If you would like the Fund to purchase your Interest or a portion of your
Interest, you must complete, sign and either mail or fax the enclosed
Letter of Transmittal to Citigroup at the address/fax number listed on page
(ii) of this Offer to Purchase, so that it is received before 12:00
midnight, Eastern Time, on the Expiration Date, which is April 28, 2006
unless the Offer is extended. If you choose to fax the Letter of
Transmittal, please mail the original Letter of Transmittal to Citigroup
promptly after you fax it (although the original does not have to be
received before the Expiration Date). See Section 5.
o If you would like to obtain the estimated net asset value of your Interest,
which is calculated monthly, contact Citigroup at the address listed on
page (ii) or at (207) 879-6093, Monday through Friday, except holidays,
during normal business hours of 9:00 a.m. to 5:00 p.m., Eastern Time. The
value of your Interest will likely change between the date its net asset
value was last calculated and the Valuation Date, which is June 30, 2006
unless the Offer is extended, when the value of Interests tendered and
accepted for purchase will be determined for purposes of calculating the
purchase price for Interests. See Section 3. Please note that the Fund has
the right to cancel, amend or postpone this Offer at any time before
midnight, Eastern Time, on the Expiration Date, which is April 28, 2006
unless the Offer is extended. Also note that although the Offer, unless
amended, will expire on the Expiration Date, you will remain an Investor in
the Fund, with respect to any Interest you tended that is accepted for
purchase by the Fund, through the Valuation Date, when the net asset value
of your Interest is calculated. Accordingly, the value of your tendered
Interests may rise or fall until the Valuation Date.
o If you elect to tender, it is your responsibility to confirm, and it is
strongly recommended that you confirm, receipt of the Letter of Transmittal
with Citigroup. See Section 5.
2. BACKGROUND AND PURPOSE OF THE OFFER.
The purpose of this Offer is to provide liquidity to Investors that hold
Interests in the Fund, as contemplated by and in accordance with the procedures
set forth in the Fund's Prospectus, as updated and supplemented from time to
time (the "Prospectus"), and the LLC Agreement. The Prospectus and the LLC
Agreement, which were provided to each Investor in advance of subscribing for
Interests, provide that the Board of Managers of the Fund (the "Board of
Managers") has the discretion to determine whether the Fund will purchase
Interests from time to time from Investors pursuant to written tenders. The
Prospectus also states that the Adviser expects that it will recommend to the
Board of Managers that the Fund purchase Interests from Investors twice each
year, in June and December. Because there is no secondary trading market for
Interests and transfers of Interests are prohibited without prior approval of
the Fund, the Board of Managers has approved the Offer, after consideration of
various matters, including but not limited to those set forth in the Prospectus,
and the recommendation of the Adviser, in order to provide liquidity for
Interests as contemplated in the Prospectus and the LLC Agreement.
2
The purchase of Interests pursuant to the Offer will have the effect of
increasing the proportionate interest in the Fund of Investors who do not tender
Interests. Investors who retain their Interests may be subject to increased
risks due to the reduction in the Fund's aggregate assets resulting from payment
for the Interests tendered. These risks include the potential for greater
volatility due to decreased diversification. However, the Fund believes that
this result is unlikely given the nature of the Fund's investment program. A
reduction in the aggregate assets of the Fund may result in Investors who do not
tender Interests bearing higher costs to the extent that certain expenses borne
by the Fund are relatively fixed and may not decrease if assets decline. These
effects may be reduced or eliminated to the extent that new and existing
Investors make additional subscriptions for Interests from time to time. Payment
for Interests and portions of Interests purchased pursuant to this Offer may
also require the Fund to liquidate portfolio holdings earlier than the Adviser
would otherwise have caused these holdings to be liquidated, potentially
resulting in losses or increased investment related expenses.
Interests that are tendered to the Fund in connection with this Offer will be
retired, although the Fund may issue new Interests from time to time. The Fund
currently expects that it will accept subscriptions for Interests on the first
day of each month thereafter, but is under no obligation to do so.
Net Assets of the Fund
December 31, 2005 $64,044,841
January 31, 2006 $65,545,637
February 28, 2006 $65,650,510 (estimate)
March 1, 2006 $74,125,960 (estimate including subscriptions invested as
of March 1)
3. OFFER TO PURCHASE AND PRICE.
The Fund will, on the terms and subject to the conditions of the Offer, purchase
up to $13,000,000 of Interests that are properly tendered by Investors, and not
withdrawn (in accordance with Section 6 below) before 12:00 midnight, Eastern
Time, on the Expiration Date, which is April 28, 2006 (this time and date is the
Initial Expiration Date), unless the Offer is extended. (The later of the
Initial Expiration Date or the latest time and date to which the Offer is
extended is the Expiration Date.) The Fund reserves the right to extend, amend
or suspend the Offer as described in Sections 4 and 8 below. The purchase price
of an Interest, or portion thereof, tendered and accepted for purchase will be
its net asset value as of the close of the Valuation Date, determined taking
into account any Incentive Allocation in respect of such Interest or portion
thereof then due, payable as set forth in Section 7. The Fund reserves the right
to adjust the Valuation Date to correspond with any extension of the Offer.
As of the start of business on March 1, 2006, the Fund had approximately
$74,125,960 in Interests outstanding (based on the estimated unaudited net asset
value of such Interests and including subscriptions made as of March 1, 2006).
Investors may obtain monthly estimated net asset value information, which the
Fund calculates based on information it receives from the managers of the
portfolio funds in which the Fund invests, as of the most recent month-end, by
contacting Citigroup at the telephone number or address set forth on page (ii),
Monday through Friday, except holidays, during normal business hours of 9:00
a.m. to 5:00 p.m. Eastern Time. The value of an Investor's Interest will likely
change between any such date and the Valuation Date, which is June 30, 2006
unless the Offer is extended, when the value of the Interests tendered by
Investors will be determined for purposes of calculating the purchase price of
Interests tendered and accepted for purchase.
3
4. AMOUNT OF TENDER.
The Offer is being made to all Investors and is not conditioned on any minimum
amount of Interests being tendered. Subject to the limitations set forth below,
Investors may tender their entire Interest or a portion of their Interest
(defined as a specific dollar value) up to an amount such that they maintain a
capital account balance of least $25,000. The Fund reserves the right to reduce
the amount to be purchased from any Investor tendering a portion of its Interest
so that the required minimum capital account balance is maintained.
If the amount of Interests that are properly tendered pursuant to the Offer and
not withdrawn pursuant to Section 6 below is less than or equal to $13,000,000
(or such greater amount as the Fund may elect to purchase pursuant to the
Offer), the Fund will, on the terms and subject to the conditions of the Offer,
purchase all of the Interests so tendered unless the Fund elects to suspend or
amend the Offer, or postpone acceptance of tenders made pursuant to the Offer,
as provided in Section 8 below. If more than $13,000,000 of Interests are duly
tendered to the Fund prior to the Expiration Date and not withdrawn pursuant to
Section 6 below, the Fund will in its sole discretion either (a) accept the
additional Interests permitted to be accepted pursuant to Rule 13e-4(f)(3) under
the Securities Exchange Act of 1934, as amended; (b) extend the Offer, if
necessary, and increase the amount of Interests that the Fund is offering to
purchase to an amount it believes sufficient to accommodate the excess Interests
tendered as well as any Interests tendered during the extended Offer; or (c)
accept Interests tendered on or before the Expiration Date for payment on a PRO
RATA basis based on the aggregate net asset value of tendered Interests. The
Offer may be extended, amended or suspended in various other circumstances
described in Section 8 below.
5. PROCEDURE FOR TENDERS.
Investors wishing to tender Interests pursuant to the Offer should send or
deliver a completed and executed Letter of Transmittal to Citigroup in the
enclosed envelope at the address set forth on page (ii), or fax a completed and
executed Letter of Transmittal to Citigroup at the fax number set forth on page
(ii). The completed and executed Letter of Transmittal must be received by
Citigroup, either by mail or by fax, no later than the Expiration Date. The Fund
recommends that all documents be submitted to Citigroup via certified mail,
return receipt requested, or by facsimile transmission. An Investor choosing to
fax a Letter of Transmittal to Citigroup must also send or deliver the original
completed and executed Letter of Transmittal to Citigroup promptly thereafter.
Investors wishing to confirm receipt of a Letter of Transmittal may contact
Citigroup at the address or telephone number set forth on page (ii). The method
of delivery of any documents is at the election and complete risk of the
Investor tendering an Interest including, but not limited to, the failure of
Citigroup to receive any Letter of Transmittal or other document submitted by
facsimile transmission. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of tenders will be determined by the
Fund, in its sole discretion, and such determinations shall be final and
binding.
4
The Fund reserves the absolute right to reject any or all tenders determined by
it not to be in appropriate form or the acceptance of or payment for which
would, in the opinion of counsel for the Fund, be unlawful. The Fund also
reserves the absolute right to waive any of the conditions of the Offer or any
defect in any tender with respect to any particular Interest or any particular
Investor, and the Fund's interpretation of the terms and conditions of the Offer
will be final and binding. Unless waived, any defects or irregularities in
connection with a tender must be cured within such time as the Fund shall
determine. A tender will not be deemed to have been made until the defects or
irregularities relating to that tender have been cured or waived. None of the
Fund, the Adviser or the Board of Managers shall be obligated to give notice of
any defects or irregularities in tenders, nor shall any of them incur any
liability for failure to give such notice.
6. WITHDRAWAL RIGHTS.
Any Investor tendering an Interest pursuant to this Offer may withdraw its
tender at any time before midnight, Eastern Time, on the Expiration Date, which
is April 28, 2006 unless the Offer is extended, and, if tendered Interests have
not been accepted by the Fund, at any time on or after May 22, 1006. To be
effective, any notice of withdrawal of a tender must be timely received by
Citigroup at the address or fax number set forth on page (ii). A form to give
notice of withdrawal of a tender is available by calling Citigroup at the
telephone number set forth on page (ii). All questions as to the form and
validity (including time of receipt) of notices of withdrawal of a tender are
determined by the Fund, in its sole discretion, and its determinations are final
and binding. Interests subject to a tender that has been properly withdrawn will
not thereafter be deemed to be tendered for purposes of the Offer. However,
withdrawn Interests may be tendered again prior to the Expiration Date by
following the procedures described in Section 5.
7. PURCHASES AND PAYMENT.
For purposes of the Offer, the Fund will be deemed to have accepted (and thereby
purchased) Interests that are tendered as, if and when it gives written notice
to the tendering Investor of its election to purchase the Investor's Interest.
As stated in Section 3 above, the purchase price of an Interest tendered by any
Investor and accepted for purchase will be the net asset value thereof as of the
Valuation Date, which is June 30, 2006 if the Offer expires on the Initial
Expiration Date, and otherwise the next occurring last business day of a
calendar month within sixty-five (65) days after the date on which the Offer
expires. The net asset value will be determined after all allocations to capital
accounts of the Investor required to be made by the LLC Agreement have been
made.
5
An Investor whose entire Interest or a portion thereof is tendered and accepted
for purchase by the Fund will receive as consideration a non-transferable
promissory note, to be held for such Investor by the Fund's administrator,
entitling the Investor to receive an initial payment in cash and/or marketable
securities (valued in accordance with the LLC Agreement and distributed to
tendering Investors on a pari passu basis) equal to 95% of the estimated
unaudited net asset value of the Interest tendered and accepted for purchase by
the Fund, determined as of the Valuation Date, taking into account any Incentive
Allocation payable to the Adviser (the "Initial Payment"). Payment of this
amount will be made to the Investor within 60 calendar days after the Valuation
Date. The promissory note also will entitle the Investor to receive a contingent
payment equal to the excess, if any, of (a) the net asset value of the Interest
tendered and accepted for purchase by the Fund as of the Valuation Date,
determined based on the audited financial statements of the Fund for the fiscal
year ending March 31, 2007 over (b) the Initial Payment. The Contingent Payment
will be payable in cash promptly after completion of the audit of the Fund's
financial statements for the fiscal year ending March 31, 2007. It is
anticipated that the audit of the Fund's financial statements for the fiscal
year ending March 31, 2007 will be completed by no later than 60 days after the
end of the fiscal year. Any amounts payable under the promissory note will not
include interest.
Although the Fund has retained the option to pay all or a portion of the
purchase price by distributing marketable securities, the purchase price will be
paid entirely in cash except in the unlikely event that the Board of Managers
determines that the distribution of securities is necessary to avoid or mitigate
any adverse effect of the Offer on the remaining Investors.
Any cash payments due under the note will be made by wire transfer directly to
the account in which the tendering Investor held its Interest or such other
account as the tendering Investor may designate in writing or by check directly
to the tendering Investor to an address designated by the Investor. Cash
payments wired directly to Investor accounts will be subject upon withdrawal
from the account to any fees that the institution at which the account is held
would customarily assess upon the withdrawal of cash from the account.
The Fund expects that cash payments for Interests acquired pursuant to the Offer
will not exceed $13,000,000 (unless the Fund elects to purchase a greater
amount) and will be derived from: (a) cash on hand; (b) withdrawal of capital
from one or more of the portfolio funds in which the Fund invests; (c) the
proceeds of the sale of securities and portfolio assets held by the Fund; and/or
(d) possibly borrowings, as described below. The Fund will segregate, with its
custodian, cash or U.S. government securities or other liquid securities equal
to the value of the amount estimated to be paid under any Note as described
above. Neither the Fund, the Board of Managers, nor the Adviser have determined
at this time to borrow funds to purchase Interests tendered in connection with
the Offer. However, depending on the dollar amount of Interests tendered and
prevailing general economic and market conditions, the Fund, in its sole
discretion, may decide to borrow money to finance any portion of the purchase
price, subject to compliance with applicable law. The Fund expects that the
repayment of any amounts borrowed will be financed from additional funds
contributed to the Fund by existing and/or new Investors, withdrawal of capital
from the portfolio funds in which it invests or from the proceeds of the sale of
securities and portfolio assets held by the Fund.
8. CERTAIN CONDITIONS OF THE OFFER.
The Fund reserves the right, at any time and from time to time, to extend the
period of time during which the Offer is pending by notifying Investors of such
extension and of the new Expiration Date. In the event that the Fund so elects
to extend the tender period, the Valuation Date for the purpose of determining
the purchase price for tendered Interests will be the next occurring last
business day of a calendar month within sixty-five (65) days from the new
Expiration Date. During any such extension, all Interests previously tendered
and not withdrawn will remain subject to the Offer. The Fund also reserves the
right, at any time and from time to time, up to and including acceptance of
tenders pursuant to the Offer, to: (a) cancel or suspend the Offer in the
circumstances set forth in the following paragraph and in the event of such
cancellation or suspension not to purchase or pay for any Interests tendered
pursuant to the Offer; (b) amend the Offer; and/or (c) postpone the acceptance
of Interests tendered. If the Fund determines to amend the Offer or to postpone
the acceptance of Interests tendered, it will, to the extent necessary, extend
the period of time during which the Offer is open as provided above and will
promptly notify Investors.
6
The Fund, by action of a majority of the Board of Managers, may suspend the
Offer at any time, including but not limited to: (a) any period during which an
emergency exists as a result of which it is not reasonably practicable for the
Fund to dispose of securities it owns or determine the value of the Fund's net
assets; (b) for any other periods that the Securities Exchange Act of 1934
permits by order for the protection of Investors; or (c) other unusual
circumstances as the Board of Managers deems advisable to the Fund and its
Investors. The Board of Managers may deem it advisable to suspend the Offer in
the event, among other things, that: (x) the Fund would not be able to liquidate
portfolio securities in a manner that is orderly and consistent with the Fund's
investment objectives and policies in order to purchase Interests tendered
pursuant to the Offer; (y) there is, in the judgment of the Board of Managers,
any (i) legal action or proceeding instituted or threatened challenging the
Offer or otherwise materially adversely affecting the Fund, (ii) declaration of
a banking moratorium by federal or state authorities or any suspension of
payment by banks in the United States that is material to the Fund, (iii)
limitation imposed by federal or state authorities on the extension of credit by
lending institutions, (iv) suspension of trading on any organized exchange or
over-the-counter market where the Fund has a material investment, (v)
international or national calamity directly or indirectly involving the United
States that is material to the Fund, (vi) material decrease in the net asset
value of the Fund from the net asset value of the Fund as of commencement of the
Offer, or (vii) other event or condition that would have a material adverse
effect on the Fund or its Investors if Interests tendered pursuant to the Offer
were purchased; or (z) the Board of Managers determines that it is not in the
best interest of the Fund to purchase Interests pursuant to the Offer.
9. CERTAIN INFORMATION ABOUT THE FUND.
The Fund is registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as a closed-end, non-diversified, management investment company,
and Interests are registered under the Securities Act of 1933, as amended. It is
organized as a Delaware limited liability company. The principal office of the
Fund is located at 40 West 57th Street, Mail Code: NY1-040-31-01, New York, New
York 10019 and the phone number is (888) 786-9977. Interests are not traded on
any established trading market and are subject to strict restrictions on
transferability pursuant to the LLC Agreement.
Neither the Fund, the Adviser, nor the Board of Managers currently has any
plans, proposals or negotiations that relate to or would result in: (a) the
acquisition by any person of additional Interests (other than the Fund's
intention to accept subscriptions for Interests on the first day of each month
and from time to time in the discretion of the Fund) or the disposition of
Interests; (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Fund; (c) any material change in
the present distribution policy or indebtedness or capitalization of the Fund;
(d) any change in the identity of the Adviser, its Board of Managers or in the
management of the Fund, including, but not limited to, any plans or proposals to
change the number or the term of the members of the Board of Managers or to fill
any existing vacancy on the Board of Managers; (e) a sale or transfer of a
material amount of assets of the Fund (other than as the Board of Managers
determines may be necessary or appropriate to fund any portion of the purchase
price for Interests acquired pursuant to this Offer or in connection with
ordinary portfolio transactions of the Fund); (f) any other material change in
the Fund's structure or business, including any plans or proposals to make any
changes in its fundamental investment policies for which a vote would be
required by Section 13 of the 1940 Act; or (g) any changes in the LLC Agreement
or other actions that may impede the acquisition of control of the Fund by any
person.
7
As of March 1, 2006, NB Funding Company, LLC ("NB Funding"), a subsidiary of
Bank of America, N.A., the parent company of the Adviser and Distributor, owned
approximately $18,155,865 (approximately 27.66%) of the outstanding Interests
and has no plans to tender. In addition, the Adviser, BAIA, may be entitled
under the terms of the LLC Agreement to receive an incentive allocation (if
earned and subject to certain limitations), as specified in the LLC Agreement
and described in the Prospectus.
Other than the acceptance of subscriptions as of February 1, 2006 and March 1,
2006, there have been no transactions involving the Interests that were effected
during the past 60 days by the Fund, the Adviser, any member of the Board of
Managers or any person controlling the Fund or the Adviser.
10. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following discussion is a general summary of the federal income tax
consequences of the purchase of Interests by the Fund from Investors pursuant to
the Offer. Investors should consult their own tax advisors for a complete
description of the tax consequences of a purchase of their Interests by the Fund
pursuant to the Offer.
In general, an Investor from whom an Interest is purchased by the Fund will be
treated as receiving a distribution from the Fund. Such Investors generally will
not recognize income or gain as a result of the purchase, except to the extent
(if any) that the amount of money received by the Investor exceeds such
Investor's then adjusted tax basis in such Investor's Interest. An Investor's
basis in such Investor's remaining Interest will be reduced (but not below zero)
by the amount of money received by the Investor from the Fund in connection with
the purchase. An Investor's basis in such Investor's Interest will be adjusted
for income, gain or loss allocated (for tax purposes) to such Investor for
periods through the Valuation Date. Money distributed to an Investor in excess
of the adjusted tax basis of such Investor's Interest is taxable as capital gain
or ordinary income, depending on the circumstances. An Investor whose entire
Interest is purchased by the Fund may recognize a loss, but only to the extent
that the amount of money received from the Fund is less than the Investor's then
adjusted tax basis in the Investor's repurchased Interest. In the unlikely event
that the Fund uses securities rather than cash as consideration, there would be
different tax consequences.
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11. MISCELLANEOUS.
The Offer is not being made to, nor will tenders be accepted from, Investors in
any jurisdiction in which the Offer or its acceptance would not comply with the
securities or other laws of such jurisdiction. The Fund is not aware of any
jurisdiction in which the Offer or tenders pursuant thereto would not be in
compliance with the laws of such jurisdiction. However, the Fund reserves the
right to exclude Investors from the Offer in any jurisdiction in which it is
asserted that the Offer cannot lawfully be made. The Fund believes such
exclusion is permissible under applicable laws and regulations, provided the
Fund makes a good faith effort to comply with any state law deemed applicable to
the Offer.
The Fund has filed an Issuer Tender Offer Statement on Schedule TO with the
Securities and Exchange Commission, which includes certain information relating
to the Offer. A free copy of such statement may be obtained from the Fund by
contacting Citigroup at the address and telephone number listed on page (ii) or
from the Securities and Exchange Commission's internet web site,
http://www.sec.gov. For a fee, a copy may be obtained from the public reference
office of the Securities and Exchange Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, DC 20549.
12. FINANCIAL STATEMENTS.
The following financial statements of the Fund are incorporated herein by
reference: audited financial statements for the fiscal year ended March 31,
2005, previously filed on EDGAR on Form N-CSR on June 6, 2005; audited financial
statements for the fiscal year ended March 31, 2004, previously filed on Form
N-CSR on June 1, 2004; and unaudited financial statements for the six month
period ending September 30, 2005, previously filed on EDGAR on Form N-CSR on
December 7, 2005.
You may obtain copies of these financial statements by visiting the SEC's
website at WWW.SEC.GOV, or may be obtained free of charge by calling the Fund at
(888) 786-9977.
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