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 [ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS
PERMITTED BY RULE14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III
(NAME OF PERSON(s) FILING PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III
24 FRANK LLOYD WRIGHT DRIVE
LOBBY L, 4TH FLOOR
ANN ARBOR, MICHIGAN 48105
_____________________, 2001
Dear Limited Partner:
This letter is being sent to the limited partners of Captec Franchise
Capital Partners L.P. III, a Delaware limited partnership, in connection with
the solicitation by the partnership of written consents to:
- transfer the general partner's interest owned by Captec Net Lease
Realty, Inc., a Delaware corporation, to GP3 Asset Acquisition,
LLC, a Michigan limited liability company;
- admit GP3 Asset Acquisition as the general partner of the
partnership; and
- continue the business of the partnership with GP3 Asset Acquisition
as the general partner.
The proposal to which this letter and the enclosed consent relates is
more fully set forth below. This letter and the enclosed consent are first
being furnished on or about __________, 2001, to the limited partners
reflected on the partnership's list of record and beneficial holders of
limited partnership units as of ___________, 2001. The general partner has
established ___________, 2001 as the record date for determining the limited
partners eligible to act by written consent with respect to the proposal. Only
limited partners of record on the record date are eligible to consent to the
proposal and the enclosed consent form may be utilized only by such limited
partners. We urge you to read this letter carefully and sign, date and
promptly mail the enclosed consent form to the partnership.
LIMITED PARTNERS ARE BEING ASKED TO CONSENT TO THE PROPOSAL BY
SIGNING, DATING AND PROMPTLY MAILING THE ENCLOSED CONSENT FORM NO LATER THAN
____________, 2001.
THE PROPOSAL
The proposal provides for:
- the transfer to GP3 Asset Acquisition of Captec's general
partner's interest in the partnership and the withdrawal of Captec
as general partner;
- the admission of GP3 Asset Acquisition as general partner; and
- the continuation of the business of the partnership with GP3 Asset
Acquisition as general partner.
GP3 ASSET ACQUISITION
GP3 Asset Acquisition is a wholly-owned subsidiary of CRC Asset
Acquisition, LLC, a Michigan limited liability company. GP3 Asset Acquisition
has been created solely to acquire and own the general partner's interest in
the partnership and to serve as the general partner of the partnership,
subject to the consent of the limited partners.
Patrick L. Beach, Captec's Chairman of the Board of Directors and
President and Chief Executive Officer, is the sole member of CRC Acquisition,
which was created solely to own, directly or through its wholly-owned
subsidiaries, certain assets to be acquired from Captec pursuant to a July 1,
2001 Asset Purchase Agreement. Mr. Beach is also the Chairman of the Board of
Directors, President and Chief Executive Officer of Captec Financial Group,
Inc. and Captec Net Lease Realty Advisors, Inc. and served as a co-general
partner of the partnership from its inception in 1994 until the sale of the
general partner's interest to Captec in 1998. Mr. Beach is a graduate of the
University of Michigan School of Business Administration (B.B.A. 1977).
LIMITED PARTNERSHIP OWNERSHIP AND CONSENT
As of ____, 2001, there were ___ outstanding limited partnership units
eligible to consent to the proposal. Consents from the record owners of at
least __ limited partnership units are required to approve the proposal.
Pursuant to Section 15.1.2 of the partnership agreement, limited partnership
units owned by
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Captec and its affiliates are excluded from determining whether a majority
vote has been obtained. As of the record date, neither Captec nor any of its
affiliates owned any limited partnership units.
REASON FOR THE PROPOSAL
MERGER AGREEMENT
The proposed transfer of the general partner's interest to GP3 Asset
Acquisition for which limited partner consent is sought is related to the
proposed merger of Captec with and into Commercial Net Lease Realty, Inc., a
Maryland corporation, pursuant to a July 1, 2001 Agreement and Plan of Merger.
The separate corporate existence of Captec will terminate upon completion of
the merger.
ASSET PURCHASE AGREEMENT
Contemporaneously with the execution of the merger agreement, Captec,
Commercial Net Lease Realty, Mr. Beach, CRC Acquisition and certain
wholly-owned subsidiaries of CRC Acquisition, including GP3 Asset Acquisition,
executed the asset purchase agreement pursuant to which certain non-real
estate assets of Captec will be sold to CRC Acquisition and its subsidiaries
following completion of the merger, subject to limited partner approval. The
non-real estate assets to be sold include the general partner's interest in
the partnership. In consideration of the sale of these assets pursuant to the
asset purchase agreement, CRC Acquisition has agreed to:
- assume liabilities associated with those assets;
- pay to Commercial Net Lease Realty (as successor in interest
following the merger to the rights of Captec under the asset
purchase agreement) $750,000 in cash; and
- execute and deliver a promissory note in favor of Commercial Net
Lease Realty in the principal amount of $6.75 million pursuant to
the terms of a loan agreement between Commercial Net Lease Realty
and CRC Acquisition and certain wholly-owned subsidiaries of CRC
Acquisition, including GP3 Asset Acquisition.
No specific value has been assigned to the general partner's interest in the
partnership.
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EFFECTS OF THE MERGER
In connection with the management of the partnership, Captec does not
have its own administrative and professional infrastructure, but, rather,
contracts for advisory services from Financial Group and Captec Advisors,
which are affiliates of the partnership and Captec that are controlled by Mr.
Beach. Following consummation of the merger, neither Mr. Beach nor any other
member of Captec's management involved in the management of the partnership
will be employed by Commercial Net Lease Realty. The advisory agreement
pursuant to which Financial Group and Captec Advisors provide advisory
services to Captec in connection with the current management of the
partnership will be terminated upon completion of the merger. Section 16.5 of
the partnership agreement provides that Captec may merge into another
corporation which shall succeed to all of its rights and responsibilities as
general partner of the partnership without obtaining the consent of the
limited partners. If the merger is consummated prior to the consent of the
limited partners to the proposal, Commercial Net Lease Realty will become the
general partner of the partnership by operation of the merger, in which event
the asset purchase agreement provides that Commercial Net Lease Realty shall
assign to CRC Acquisition or one of its affiliates all economic benefits of
ownership of the general partner's interests and CRC Acquisition or one of its
affiliates shall assume all of Commercial Net Lease Realty's obligations,
responsibilities and duties as general partner under the partnership
agreement. If limited partner consent has not been obtained within two years
of the sale of the other assets pursuant to the asset purchase agreement,
Commercial Net Lease Realty can take back management control of the
partnership. For these reasons, continuity of management of the partnership
following completion of the merger of Captec into Commercial Net Lease Realty
can be assured only through limited partner consent to the proposal.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF THE GENERAL PARTNER
The Board of Directors of Captec, with Mr. Beach abstaining, has
unanimously determined that the proposed actions are in the best interests of
the limited partners and recommends, as the board of the general partner of
the partnership, that the limited partners:
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- approve the transfer of the general partner's interest to GP3 Asset
Acquisition;
- admit GP3 Asset Acquisition as general partner of the partnership;
and
- continue the business of the partnership with GP3 Asset Acquisition
as general partner.
OBLIGATION OF CRC ACQUISITION AND CAPTEC TO SOLICIT CONSENT
CRC Acquisition and Captec each are obligated to use commercially
reasonable best efforts to obtain the consent of the limited partners as well
as the consent of the limited partners of Captec Franchise Capital Partners
L.P. IV to transfer the general partner's interest in that partnership to
another wholly-owned subsidiary of CRC Acquisition. Consent of the limited
partners to the proposal is not a condition to closing the asset purchase
agreement or the merger nor is Captec's failure to obtain such consent a
breach of the asset purchase agreement.
FAILURE TO SOLICIT CONSENT
The merger agreement obligates Captec, in its capacity as general
partner of the partnership, to prepare and file with the SEC this consent
solicitation. In the merger agreement, Captec has agreed to recommend, to the
fullest extent permitted by its fiduciary duties as the general partner of the
partnership, that the limited partners consent to and approve the transfer of
Captec's general partner's interest to GP3 Asset Acquisition. Captec also
agreed to pay Commercial Net Lease Realty a fee of $250,000 if Captec did not
so recommend or if this consent solicitation did not include such a
recommendation or if Captec withdraws, amends or modifies, or proposes or
resolves to withdraw, amend or modify its recommendation, in each case, as a
result of Captec's determination that taking any of such actions is not
permitted by Captec's fiduciary duty as general partner of the partnership.
FAILURE TO OBTAIN CONSENT PRIOR TO MERGER
In the event the necessary consents are not obtained prior to the
completion of the merger, Commercial Net Lease Realty will become the general
partner of the partnership by operation of the merger. Upon closing of the
sale of the other assets pursuant to the asset purchase agreement, Captec's
economic
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interest in the partnership will be transferred to CRC Acquisition. If the
consents are not obtained prior to completion of the merger, Mr. Beach has
agreed to pledge 10,000 shares of Commercial Net Lease Realty preferred stock
that he will receive in partial consideration of the exchange of his shares of
Captec common stock pursuant to the merger agreement to secure CRC
Acquisition's obligation to continue to seek approval of the limited partners
of each partnership to the transfer of the respective general partner's
interests. Those shares of Commercial Net Lease Realty preferred stock
represent $250,000 in value based upon a stated value and liquidation
preference of $25.00 per share. One-half of the pledged shares will be
released to Mr. Beach at such time as, with respect to each partnership,
limited partner consent has been obtained, the partnership is dissolved or
Commercial Net Lease Realty elects to take control of the partner's interest,
which, as successor in interest to Captec under the partnership agreement, it
shall have the right to do two years after the effective date of the sale of
the other assets pursuant to the asset purchase agreement, if such consents
have not been received at that time. If Commercial Net Lease Realty does not
elect to take control of the partnership interests, the pledged shares will be
returned to Mr. Beach.
EFFECT OF OBTAINING CONSENT PRIOR TO MERGER
If the requisite limited partner consents are obtained, the general
partner's interest currently owned by Captec will be transferred and assigned
to GP3 Asset Acquisition and GP3 Asset Acquisition will be admitted as general
partner of the partnership upon the later to occur of the closing of the
merger, which Captec anticipates will occur in the fourth quarter of 2001, or
the date on which Captec receives the requisite limited partner consents. The
merger is subject to the approval of Captec's stockholders and other
conditions of closing. If the merger is not completed and the merger agreement
is terminated for any reason or if the sale of the general partner's interest
to GP3 Asset Acquisition pursuant to the asset purchase agreement is not
completed for any reason, Captec's general partner's interest will not be
transferred to GP3 Asset Acquisition even if the consent of the limited
partners has been obtained. Subject to the consent of the limited partners,
simultaneous with the transfer of the general partner's interest owned by
Captec to GP3 Asset Acquisition, GP3 Asset Acquisition will become the
successor general partner of the partnership and
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the business of the partnership will continue.
THE PARTNERSHIP AGREEMENT
OBLIGATIONS AND RIGHTS UNDER THE PARTNERSHIP AGREEMENT
The agreement of limited partnership of the partnership sets forth the
respective rights, duties and obligations of the general partners and the
limited partners. Section 15.1.1(g) provides that, prior to assigning the
general partner's interest, Captec, as general partner, must obtain the
approval of the limited partners by a vote of limited partners owning a
majority of the limited partnership interests outstanding. Upon withdrawal of
Captec as general partner, the limited partners, by a majority vote, may elect
to continue the business of the partnership and elect a successor general
partner pursuant to section 18.1.1 of the partnership agreement. In
determining the existence of a majority vote, the general partner's interest
and/or units owned by Captec and its affiliates (as defined in the partnership
agreement) are excluded pursuant to section 15.1.2 of the partnership
agreement.
COMPENSATION TO GP3 ASSET ACQUISITION UNDER THE PARTNERSHIP AGREEMENT
Upon approval and assignment of Captec's general partner's interest to
GP3 Asset Acquisition, for its services as the general partner, GP3 Asset
Acquisition will be entitled to receive compensation from the partnership
pursuant to the partnership agreement. This compensation (which in many cases
is subordinated to certain distributions to the limited partners) includes
real property and equipment acquisition fees, a property management fee based
on the gross rental revenue of the partnership, reimbursement of expenses and
specified percentages of the net proceeds from the sale, refinancing or
liquidation of property or equipment. Based upon its 1.0% general partner's
interest in the partnership, pursuant to the partnership agreement, GP3 Asset
Acquisition also will receive 1.0% of all cash distributions made by the
partnership, the amount and timing of which distributions will be determined
by GP3 Asset Acquisition as the general partner. The compensation to be
received by GP3 Asset Acquisition will be identical to the compensation that
Captec currently receives for serving as general partner of the partnership.
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THE CONSENT
GENERAL
As of _________________, 2001, the partnership had _________ limited
partnership units outstanding. No limited partnership units are owned by
Captec or any affiliates and no single person or entity owns more than 5.0% of
the limited partnership units. Written consents from the record owners of at
least _____ limited partnership units are required to approve the proposal. At
such time as the partnership receives valid and unrevoked written consents
from limited partners owning at least a majority of the limited partnership
units outstanding, the consent of the limited partners will be deemed to have
been obtained, the consent process will be closed and the transfer of the
general partner's interest will take effect upon the closing of the asset
purchase agreement following, and contingent upon, the closing of the merger,
or, if later, the date on which the requisite limited partner consents have
been received.
VOTING; RECORD DATE
Each limited partnership unit entitles the limited partner to one vote
with respect to the written consent solicited hereby. Only limited partners of
record on the record date may consent to the proposal. If your units are held
in the name of a brokerage firm, bank, nominee or other institution, only such
institution can sign a written consent with respect to your units and can do
so only at your direction. Accordingly, if your units are so held, please
contact your account representative and give instructions to have the enclosed
consent executed with respect to your units. Notwithstanding the foregoing,
with respect to any units owned by an IRA or other account of which you are
the beneficiary and of which MAVRICC Management Services, Inc. (MAVRICC) is
the servicer (which units would be held in the name of the bank or other
institution which is the custodian or trustee of the account), MAVRICC will
obtain written instructions from such custodian or trustee confirming your
instructions as expressed in your consent with respect to the voting of your
units in connection with the proposal and directing and authorizing the
partnership to vote your units as indicated by you on the consent you return
to the partnership.
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Because approval of the proposal requires the affirmative consent of
limited partners owning of record at least a majority of the limited
partnership units outstanding, abstentions and broker non-votes, which are
consents from brokers or nominees indicating that such persons have not
received instructions from beneficial owners or other persons entitled to give
consents with respect to limited partnership units as to matters for which the
brokers or nominees do not have discretionary power, will have the effect of
votes against the proposal. Captec, as general partner of the partnership,
recommends that limited partners consent to the proposal.
CLOSE OF CONSENT SOLICITATION
It is the present intention of the partnership to close this consent
solicitation as of the date on which valid and unrevoked written consents of
limited partners owning at least a majority of the limited partnership units
outstanding have been received by the partnership. The partnership is seeking,
if possible, to close this consent solicitation on or about ________________,
2001, although, if necessary, the partnership may continue to solicit consents
after that time.
REVOCABILITY OF CONSENT
A consent signed, dated and mailed by a limited partner subsequently
may be revoked by written notice of revocation to the partnership at any time
prior to the closing of the consent solicitation. A revocation may be in any
written form validly signed by the record holder provided it clearly states
that such holder's consent previously given is no longer effective. To prevent
confusion, the revocation must be dated. To be effective, a written revocation
of a previously executed and delivered consent must be delivered prior to the
time that the requisite number of executed, unrevoked consents have been
received by the partnership as set forth above. Any revocation may be
delivered to Captec Franchise Capital Partners L.P. III at 24 Frank Lloyd
Wright Drive, Lobby L, 4th Floor, Ann Arbor, Michigan 48105.
RESULT OF CONSENT
If the requisite consents are obtained, subject to, and
contemporaneously with, the closing of the asset purchase agreement, which is
conditioned upon the closing of the merger,
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- Captec's general partner's interest will be transferred and assigned
to GP3 Asset Acquisition, and, simultaneously with such transfer;
- GP3 Asset Acquisition will be admitted as the successor general
partner of the partnership;
- the partnership agreement will be amended accordingly; and
- the business of the partnership will continue.
Such amendment will reflect
- the transfer of Captec's general partner's interest to GP3 Asset
Acquisition;
- the withdrawal of Captec from the partnership; and
- the admission of GP3 Asset Acquisition as a successor general
partner with respect to the transferred general partner's interest.
The amendment will be executed by GP3 Asset Acquisition and by Commercial Net
Lease Realty as successor in interest to Captec following the merger as
general partner on their own behalves and as attorney-in-fact for the limited
partners in accordance with section 19.1 of the partnership agreement.
EXPENSES OF SOLICITATION
The expenses of this consent solicitation will be paid by Captec.
Captec will pay Georgeson Shareholder Communications, Inc. a fee of $5,000
plus reimbursement of out-of-pocket expenses for its services in soliciting
consents. In addition to solicitation by mail, directors, officers and
employees of Captec may solicit consents by telephone, facsimile, or
otherwise. Directors, officers and employees of Captec will not be
additionally compensated for any such solicitation, but may be reimbursed for
out-of-pocket expenses incurred. Brokerage firms, fiduciaries and other
custodians that forward soliciting material to limited partners will be
reimbursed for their reasonable expenses incurred in forwarding such material.
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RECOMMENDATION
CAPTEC, AS THE GENERAL PARTNER OF THE PARTNERSHIP, RECOMMENDS THAT YOU CONSENT
TO THE TRANSFER OF THE GENERAL PARTNER'S INTEREST FROM CAPTEC TO GP3
ACQUISITION AND THE CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP
WITH GP3 ACQUISITION AS GENERAL PARTNER.
YOUR CONSENT IS IMPORTANT. TO GIVE YOUR CONSENT PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED CONSENT AND MAIL IT PROMPTLY IN THE ENCLOSED
RETURN ENVELOPE.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
If you would like additional copies of this correspondence or have
questions about the proposal, you should contact:
GEORGESON SHAREHOLDER COMMUNICATIONS, INC.
17 STATE STREET
10TH FLOOR
NEW YORK, NEW YORK 10004
800-223-2064
The merger agreement is an appendix to a proxy statement-prospectus
included in a registration statement on Form S-4 filed by Commercial Net Lease
Realty with the United States Securities and Exchange Commission on October
11, 2001. The asset purchase agreement is filed as an exhibit to this
registration statement. This information may be inspected and copied at public
reference facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's Regional Office
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
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60661. Copies may be obtained at prescribed rates from the Public Reference
Section of the SEC at its principal office in Washington, D.C. The SEC also
maintains an Internet web site on which information electronically filed with
the SEC may be obtained. The address of the SEC's web site is
http://www.sec.gov.
Sincerely,
CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III
By: Captec Net Lease Realty, Inc.
General Partner
By: ________________________________
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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III
CONSENT
The undersigned, a limited partner of Captec Franchise Capital
Partners L.P. III, a Delaware limited partnership, does hereby vote, with
respect to all units owned by the undersigned, as follows:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
APPROVAL of the proposal more particularly described in the letter
accompanying this consent, dated ___________, 2001, receipt of which is hereby
acknowledged, to
- transfer the units owned by Captec Net Lease Realty, Inc., a Delaware
corporation, as general partner of the partnership, to GP3 Asset
Acquisition, LLC, a Michigan limited liability company;
- admit GP3 Asset Acquisition as general partner of the partnership and
effective simultaneously with such transfer; and
- continue the business of the partnership with GP3 Asset Acquisition
as general partner of the partnership.
THIS CONSENT IS SOLICITED BY CAPTEC FRANCHISE CAPITAL PARTNERS L.P.
III. WHEN THIS CONSENT FORM IS PROPERLY EXECUTED, THE UNITS REPRESENTED
HEREBY WILL BE VOTED AS SPECIFIED. IF A PROPERLY EXECUTED CONSENT FORM IS
RETURNED WITHOUT ANY VOTE BEING SPECIFIED, THE UNITS REPRESENTED HEREBY WILL
BE DEEMED TO HAVE CONSENTED TO THE PROPOSAL.
Dated:__________________________________________
Signature:_______________________________________
Signature:_______________________________________
(if held jointly)
Title:___________________________________________
Please sign exactly as name appears on the envelope in which this
material is delivered. When units are held by joint tenants, each joint tenant
should sign. When signing as an attorney, as executor, administrator, trustee
or guardian, please give full title as such. If a corporation, please sign in
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS CONSENT FORM PROMPTLY USING THE
ENCLOSED PREPAID ENVELOPE TO:
___________________________________________________________. If you have any
questions, please call Georgeson Shareholder Communications, Inc. at (800)
223-2064 (toll free) or (212) 440-9800 if outside the U.S.