1
(Enstar Letterhead)
November 18, 1996
Dear Limited Partner:
Enstar Income Program 1984-1, Ltd. (the "Partnership") has become
aware that two separate unsolicited offers, each for up to 1,467 units
(representing approximately 4.9% of the outstanding Units in the Partnership),
were commenced by:
1. Everest Cable Investors, L.L.C. ("Everest") at a price of $145 per
Unit, in a letter dated November 5, 1996; and
2. JJJ Group, L.L.C. ("JJJ Group") at a price of $200 per Unit, in a
letter dated November 6, 1996.
THESE OFFERS WERE MADE WITHOUT THE CONSENT OR THE INVOLVEMENT OF THE
GENERAL PARTNER.
One of the obligations of the General Partner is to endeavor to
preserve the status of the Partnership as a partnership under Federal income
tax laws. Failure to maintain this status could have a material adverse effect
on the Partnership and its partners. Among the related legal requirements
imposed upon the Partnership is that its partnership interests not be traded in
an established securities market. As it believes is customary, the Partnership
complies with this requirement by adhering to a safe harbor provision contained
in the Federal income tax regulations which limits most sales of limited
partnership interest to five percent of the outstanding units in any given
year. That limitation was reached during September 1996. ACCORDINGLY, NO
FURTHER RESALES OF UNITS, INCLUDING ANY ATTEMPTED SALES RELATED TO THE EVEREST
OFFER OR THE JJJ GROUP OFFER, WILL BE RECOGNIZED BY THE PARTNERSHIP FOR THE
BALANCE OF 1996.
Notwithstanding the fact that no further resales of limited
partnership interests may be made in 1996, we are required to furnish you with
our position with respect to the above offers. We have considered these offers
and, based on the very limited information made available by Everest and JJJ
Group, believe that each is inadequate, not representative of the inherent
value of the Partnership's cable systems and not in your best interest to
accept. Accordingly, the General Partner's recommendation is that you reject
both the Everest offer and the JJJ Group offer. We urge you not to sign either
the Agreement of Transfer for Limited Partnership Interest Form (sent by
Everest) or the Limited Power of Attorney (sent by JJJ Group) and not to tender
your Units to either Everest or JJJ Group. In evaluating the offers, the
General Partner believes that its limited partners should consider the
following information:
o As discussed above, as of September 1, 1996 the Partnership informed its
Transfer Agent, that in order to protect its tax status as a partnership
for Federal income tax purposes, it will not recognize any additional
resales of limited partnership assignee units for the remainder of 1996 in
order to remain in compliance with applicable Federal income tax
regulations. Transfers to which the above trading limit DOES NOT apply
include (i) carryover basis transactions, (ii) transfers at death, (iii)
transfers between siblings, spouses, ancestors or lineal descendants and
(iv) distributions from a qualified retirement plan.
2
o The offering price for each limited partnership unit during the offering
period was $250 per unit. Cash distributions of approximately $188 per unit
were paid from formation through January 31, 1990, at which time
distributions were terminated to preserve cash resources. In contrast,
Everest's offer is $145 per unit while JJJ Group's offer is $200 per unit.
Limited partners should note that the Partnership's cash flow (operating
income before depreciation and amortization) for the twelve months ended
September 30, 1996 was approximately $67 per unit. The Everest and JJJ Group
offer each represent a valuation of only approximately 3.1 times and 3.9
times said cash flow, respectively (after adjustment for the excess of total
liabilities over current assets as of September 30, 1996).
o As of the date of this letter, the General Partner believes that a
reasonable range of valuation per limited partnership unit is between $298
and $430 based on the factors noted below. The General Partner believes that
each of the above offers is inadequate because the price in each offer does
not even approach the $298 low end of the range provided. The General
Partner did not retain a third party to conduct an evaluation of the
Partnership's assets or otherwise obtain any appraisals. Rather, the per
unit valuations provided were derived by attributing a range of multiples to
the Partnership's cash flow (operating income before depreciation and
amortization) for the twelve months ended September 30, 1996, adjusted for
the excess of total liabilities over current assets. The General Partner has
selected market multiples based on, among other things, its understanding of
the multiples placed on other transactions involving comparable cable
television properties and the securities of companies in that industry. The
General Partner's belief as to the valuation range provided is necessarily
based on economic, industry and financial market conditions as they exist as
of the date of this letter, all of which are subject to change, and there
can be no assurance that the Partnership's cable properties could actually
be sold at a price within this range. Additionally, the valuations provided
do not give effect to any brokerage or other transaction fees that might be
incurred by the Partnership in any actual sale of the Partnership's system.
o Furthermore, you should also be aware that there is a limited secondary
market for sale of partnership units. Partnership Spectrum, an independent
industry publication, has reported that between August 1, 1996 and September
30, 1996, 48 Units were sold on the secondary market between a high of $199
per unit and a low of $146 per unit. The General Partner believes that the
price for units in the secondary market is not an accurate reflection of the
fair market value of such units due to the low volume of transactions in
that limited market and the legal and tax restrictions on such transfers.
For the reasons discussed above, the General Partner believes that the
Everest offer and the JJJ Group offer are not in the best interest of the
limited partners and recommends that you NOT transfer, agree to transfer, or
tender any units in response to either the Everest offer or the JJJ Group
offer.
If you have any questions regarding these matters or your investment,
please call our Investor Services Department at (800) 433-4287.
Sincerely,
Enstar Income Program 1984-1, Ltd.
A Georgia Limited Partnership
cc: Account Representative