SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9/A
Amendment No. 1
Solicitation/Recommendation Statement under Section 14(d)(4)
of the Securities Exchange Act of 1934
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
a California Limited Partnership
(Name of Subject Company)
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.
a California Limited Partnership
(Name(s) of Person(s) Filing Statement)
LIMITED PARTNERSHIP ASSIGNEE UNITS
(Title of Class of Securities)
59159T 10 1
(CUSIP Number of Class of Securities)
Herman Howerton
SSR Realty Advisors, Inc.
One California Street, Suite 1400
San Francisco, CA 94111
Telephone Number: (415) 678-2000
(Name, address and telephone number of person authorized to receive notices
and communications on behalf of the person(s) filing statement)
With a copy to:
Crosby, Heafey, Roach & May Professional Corporation
Attention: Kenneth J. Philpot
Two Embarcadero Center, Suite 2000
San Francisco, CA 94111
Telephone Number: (415) 543-8700
[ ] Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender offer
This Amendment No. 1 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission on August 6, 2002 (the "Schedule 14D-9") by
Metric Partners Growth Suite Investors, L.P., a California Limited Partnership
(the "Partnership"), relating to the tender offer by Equity Resources Arlington
Fund, Limited Partnership, a Massachusetts limited partnership, Eggert
Dagbjartsson, its general partner, and Equity Resources Group, Inc., its manager
(collectively the "Purchaser"), to purchase 8,990 Units of the Partnership, at
$20.00 for each Unit, net to the seller in cash, less the amounts of any
distributions declared or paid from any source by the Partnership with respect
to the Units after July 24, 2002 (without regard to the record date), upon the
terms and conditions set forth in an Offer to Purchase and related Agreement of
Sale which were attached as Exhibits to the Tender Offer Statement on Schedule
TO (the "Schedule TO") dated July 24, 2002, as amended by Amendment No. 1 to
Schedule TO dated August 8, 2002 (as amended the Schedule TO is referred to as
"Amended Schedule TO"). Capitalized terms used but not defined herein have the
meanings ascribed to them in the Schedule 14D-9.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
Item 2 is hereby amended by adding the following at the end thereof:
The Purchaser filed Amendment No. 1 to Schedule TO on August 8, 2002,
and filed an amended form of Agreement of Sale pursuant thereto.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Item 4 is hereby amended and restated in its entirety as follows:
The Partnership is not making a recommendation and is expressing no
opinion and is remaining neutral with respect to the Offer. The Partnership
believes that holders of the Units should consult with their own personal
financial advisors about this decision.
In addition, the Partnership hereby advises that in order to comply
with the provisions of Section 12.3 of the Limited Partnership Agreement which
provides in part:
"Notwithstanding any provisions of this Paragraph 12 or Paragraph 13 to
the contrary, no transfer or assignment of any Unit, or any fraction thereof,
may be made if the Managing General Partner reasonably believes, in accordance
with advice from Counsel, that such transfer or assignment could ... (iii) cause
the Partnership to be classified as a publicly traded partnership for federal
income tax purposes, ... ,"
the Partnership shall not transfer any Units, which when combined with prior
transfers during 2002, would exceed in the aggregate 5% of the number of Units
currently outstanding. Through August 1, 2002, 0.42% of the Units have been
transferred in 2002.
If following the consummation of the Offer the Purchaser tenders for
transfer Units in a number in excess of the number which may be transferred by
the Partnership in 2002 without exceeding the 5% limit described above, the
Partnership will not be able to process all of the requested transfers.
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In connection with the foregoing, the Managing General Partner notes
that because the Partnership is no longer actively conducting business
operations and has never previously been classified as a publicly traded
partnership, there may be no material adverse income tax consequence if more
than 5% of the number of Units are transferred and the Partnership is classified
as a publicly traded partnership. The Managing General Partner, therefore, is
reviewing the costs, risks and benefits of amending the Limited Partnership
Agreement to remove the restriction set forth in clause (iii) of Section 12.3 of
the Limited Partnership Agreement. Such an amendment would effectively allow
transfers of Units without regard to the 5% limit described above or whether
transfers would cause classification as a publicly traded partnership. The
Managing General Partner will set forth its conclusions in a subsequent
Partnership Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission.
The Partnership may also request any information from the Purchaser
needed to ensure compliance with the terms of the Limited Partnership Agreement
and any applicable requirements.
The Partnership suggests that the Unit holders also consider the
following in making a decision as to whether to tender Units in the Offer.
The Partnership has recently become aware that on August 5, 2002,
Peachtree Partners (Ira Gaines/Barry Zemel) ("Peachtree Partners") made an offer
to purchase Units of the Partnership at a price of $29.00 per Unit for up to a
total of 4.9% of the total Units outstanding, including the number of Units
already owned by Peachtree Partners (the "Peachtree Offer"). The contract price
offered by Peachtree Partners is to be reduced by a one time $75.00 transfer fee
and the amount of all distributions, from any source whatsoever, paid or going
to be paid to the holders of Units after August 5, 2002. The offer made by
Peachtree Partners was made pursuant to an Offer to Purchase Limited Partnership
Interests by Peachtree Partners dated 08/05/02 and an accompanying Assignment
Form and Limited Power of Attorney (collectively the "Peachtree Offer
Documents").
The Peachtree Offer Documents provide that the offer expires September
9, 2002 although Peachtree Partners reserved the right to terminate or amend the
Peachtree Offer without notice. As the Peachtree offer is for an amount of Units
which would not cause Peachtree Partners to beneficially own more than 5% of the
Units, Peachtree Partners was not required to file a Tender Offer Statement on
Schedule TO with the Securities and Exchange Commission.
Under applicable securities laws, the Partnership is required to notify
its Unit holders of the Partnership's views regarding the Peachtree Offer.
The Partnership is not making a recommendation and is expressing no
opinion and is remaining neutral with respect to the Peachtree Offer. The
Partnership believes that holders of the Units should consult with their own
personal financial advisors about this decision.
Due to the provisions of Section 12.3(iii) of the Limited Partnership
Agreement described above if, following the consummation of the Peachtree
Partners Offer, Peachtree Partners tenders for transfer Units in a number in
excess of the number which may be transferred by the Partnership in 2002 without
exceeding the 5% limit described above, the Partnership will not be
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able to process all of the requested transfers.
There is no formal, liquid market where Units are traded on a regular
basis. Rather resales of Units occur only periodically in an informal,
"secondary" market. The desirability of the Offer or the Peachtree Offer to any
particular Unit holder may differ greatly depending on such Unit holder's
financial, tax, and other individual circumstances. The Partnership suggests
that Unit holders also consider the following facts in making a decision as to
whether to tender Units:
- Units were originally marketed for sale between April 1988 and June
1989 at $1,000 per Unit. There are currently 59,924 Units outstanding.
- Through August 1, 2002, investors have received cash distributions
ranging from $696 to $789 per original $1,000 investment Unit, depending on the
individual investors' date of acceptance into the Partnership. These
distributions have included a total of $395 per original $1,000 investment Unit
in proceeds from the sale of the Partnership's hotels.
- Completed resale transactions known to the Partnership from January
1, 2002 through August 1, 2002 have ranged from $10.00 to $300.00, with a simple
average price of $104.69, representing 252 Units, or 0.42% of the outstanding
Units. The knowledge of the Partnership on these transactions is based solely on
the books and records of the Transfer Agent.
- The Partnership remains involved in a number of legal proceedings
involving disputes and claims relating to transactions and contracts between the
Partnership and affiliates of the companies that at one time managed certain of
the Partnership's hotels. The Partnership cannot be dissolved until these legal
proceedings have been resolved, nor can a prediction be made as to when these
matters will finally be concluded.
In connection with one of these legal proceedings involving claims by
GP Credit Co. LLC against the Partnership, its Managing General Partner and
certain affiliates of the Managing General Partner, and certain current and
former employees of an affiliate of the Managing General Partner, and a class of
all the limited partners of the Partnership, all non-limited partner defendants
were served in March and April, 2002 and answers have been filed on their
behalf. The court set a trial date of March 3, 2003, but subsequently vacated
the trial date. The court set a case management conference for November 22,
2002.
- As stated above, the Partnership will not be able to transfer in 2002
Units tendered in connection with the Offer and the Peachtree Offer once the
aggregate number of Units transferred in 2002 reaches 5% of the outstanding
Units.
- Pursuant to the terms of the Limited Partnership Agreement,
immediately prior to the liquidation of the Partnership, and if certain
distribution levels to the holders of Units are not met, the General Partners of
the Partnership may be obligated to return all or a portion of the cumulative
amounts received by the General Partners in distributions. At June 30, 2002,
such amount was approximately $917,000 and the Partnership believes
circumstances will be such that the General Partners will be required to
re-contribute this amount prior to the liquidation of the Partnership.
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- The Partnership received a proposal from Kenneth E. Nelson on August
12, 2002, pursuant to which Mr. Nelson offered to present a tender offer for a
majority of the Units at $65 per Unit in cash. According to the proposal, the
limited partners who tendered Units would also receive a release of claims
previously asserted against them on a purported class basis by a party
affiliated with Mr. Nelson in a lawsuit pending in San Francisco Superior Court,
San Francisco, California.
Mr. Nelson's proposal was conditioned on the General Partners
recommending to the limited partners (should Mr. Nelson make a tender offer)
that his tender offer be accepted. It also contained certain conditions with
which the Managing General Partner could not comply. One of those conditions in
Mr. Nelson's proposal was that the General Partners agree (should Mr. Nelson
make a tender offer) that the General Partners would transfer or permit to be
transferred Units tendered to Mr. Nelson even if the amount of such transfers in
a calendar year would exceed five percent (5%) of the Units outstanding. In
addition, Mr. Nelson's proposal relates to a tender offer for a majority of the
Units. Sections 12.3(ii) and 12.3(iii) of the Limited Partnership Agreement
preclude the Managing General Partner from recognizing any transfer of Units
that could either "result in a termination of the Partnership for tax purposes"
(which would occur if a majority of the Units were tendered to Mr. Nelson) or
"cause the Partnership to be classified as a publicly traded partnership for
federal income tax purposes" (which could occur if more than 5% of the Units
were transferred in one calendar year). Accordingly, without a formal amendment
to the Limited Partnership Agreement, the General Partners could not agree to
Mr. Nelson's proposal.
Accordingly, the Managing General Partner, on behalf of the
Partnership, advised Mr. Nelson by letter dated August 16, 2002 that the
Managing General Partner rejected his proposal.
As disclosed above in this Item 4, the Managing General Partner has
noted that there may be no material adverse income tax consequence if the
Partnership is classified as a publicly traded partnership. That may also be the
case if the Partnership were to be terminated "for tax purposes." Accordingly,
the Managing General Partner is reviewing the costs, risks and benefits of
amending the Limited Partnership Agreement to remove either or both of these
restrictions which are set forth in Section 12.3 of the Limited Partnership
Agreement.
Mr. Nelson also indicated in his proposal letter that he would seek to
be elected the general partner of the Partnership if he made a tender offer and
was successful in acquiring a majority in interest of the Units.
Kenneth E. Nelson is one of the principals of the parties who are
adverse to the Partnership, the Managing General Partner, certain of its
affiliates and others in a series of litigations pending in the state courts of
California, Tennessee and Wisconsin. These litigations all arise out of a
disputed settlement in which Mr. Nelson was to sell to the Partnership the land
underlying a hotel then leased by the Partnership from an entity controlled by
Mr. Nelson. The Managing General Partner has reason to believe that Mr. Nelson's
proposed plan for a tender offer may be connected with his efforts to resolve
the litigations on terms favorable to the parties with whom he is affiliated.
The information contained in "Item 1 - Legal Proceedings" of Part II of the
Partnership's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002
is
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incorporated herein by reference for a description of the pending litigations.
Further, the Managing General Partner is unable to predict if Mr.
Nelson would choose to pursue a tender offer, and what price and other
consideration he might choose to offer, should the Limited Partnership Agreement
be amended to allow a transfer of Units under the terms he has proposed.
To the knowledge of the Partnership, no executive officer, director,
affiliate or subsidiary of the Partnership currently intends to tender Units in
the Offer or the Peachtree Offer or sell any Units of the Partnership that are
held of record or beneficially by that person.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
Item 7 is hereby amended by adding the following at the end thereof:
As indicated in Item 4 above, the Partnership was contacted by Kenneth
E. Nelson with respect to a proposal and the Managing General Partner responded
as described above. In addition, as described in Item 4 above, up of 4.9% of the
Units of the Partnership (less the number of Units already owned by Peachtree
Partners) are also subject to a purchase offer from Peachtree Partners.
ITEM 9. EXHIBITS
The second exhibit listed in Item 9 is hereby amended and restated in
its entirety as follows:
Exhibit Number Description
(a)(2) Quarterly Report on Form 10-Q for the quarter ended
March 31, 2002, filed on May 15, 2002, is incorporated
herein by reference.
Item 9 is hereby further amended by adding the following exhibit:
Exhibit Number Description
(a)(4) Letter of Transmittal, dated August 20, 2002.
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SIGNATURE
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.
Dated: August 20, 2002 METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.,
a California Limited Partnership
By: Metric Realty,
an Illinois general partnership
its Managing General Partner
By: SSR Realty Advisors, Inc.,
a Delaware corporation
its Managing General Partner
By: /s/ Herman H. Howerton
Herman H. Howerton
its Managing Director,
General Counsel
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