GSI
METRIC PARTNERS GROWTH SUITE INVESTORS, L.P.
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Exhibit 20.1
September 16, 2002
Re: Offer By Peachtree Partners dated 09/03/02
To Unit Holders,
Metric Partners Growth Suite Investors, L.P., a California Limited Partnership
(the "Partnership"), has recently become aware that on September 3, 2002,
Peachtree Partners (Ira Gaines/Barry Zemel) ("Peachtree Partners") made an offer
to purchase Limited Partnership Assignee Units (the "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 09/03/02 and an accompanying Assignment Form & Limited Power of
Attorney (collectively the "Peachtree Offer Documents").
The Peachtree Offer Documents provide that the offer expires on October 3, 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.
This Peachtree Offer follows an offer to purchase Units made by Peachtree
Partners by an Offer to Purchase Limited Partnership Interests dated 08/05/02
(the "Prior Peachtree Offer"). The Prior Peachtree Offer expired by its terms on
September 9, 2002.
To the knowledge of the Partnership, before the Prior Peachtree Offer and since
1995, various affiliates of Peachtree Partners (including Messrs. Gaines and
Zemel) have engaged in communications with the Managing General Partner of the
Partnership and various of its affiliates with regard to ownership of Units of
the Partnership. These communications have principally involved requests to
obtain the list of holders of the Units of the Partnership and other information
concerning the Partnership.
ONE CALIFORNIA STREET, SUITE 1400 - SAN FRANCISCO, CA 94111-5415
In addition, the Partnership hereby advises that in order to comply with the
provisions of Section 12.3 of the Limited Partnership Agreement for the
Partnership (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 September 12, 2002, 2.81% of the Units have been
transferred in 2002 and requests to transfer an additional 0.74% of the Units
have been submitted.
If following the consummation of the Peachtree 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 able to process all of the requested transfers.
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 suggests that the Unit holders also consider the following in
making a decision as to whether to tender Units in the Offer.
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 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 September 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 September 12, 2002 have ranged from $10.00 to $300.00, with a
simple average price of $27.59, representing 1684 Units, or 2.81% of the
outstanding Units. In addition, requests to transfer an additional 0.74% of the
Units have been submitted. The knowledge of the Partnership regarding 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.
In connection with another of these legal proceedings involving claims by 2300
Elm Hill Pike, Inc. and Nashville Lodging Company, entities affiliated with
Kenneth E. Nelson (the "Nelson Entities") against the Partnership relating to
allegations that the Partnership failed to purchase certain land in Nashville,
Tennessee, as required by a certain lawsuit settlement, on September 3, 2002,
the Nelson Entities and Metric signed and the court entered an agreed final
order under which the Nelson Entities waived their sole remaining damage claims.
All other damage claims asserted by the Nelson Entities in the case had been
dismissed by prior orders of the court. Entry of the agreed final order makes
the prior orders final and immediately appealable. Thus, the effect of the order
is a final judgment of no damages for the Nelson Entities, which final judgment
is now appealable. The agreed final order was proposed by the Nelson Entities,
who have stated that they intend to appeal the final judgment of no damages.
- As stated above, the Partnership will not be able to transfer in 2002
Units tendered in connection with the Peachtree Offer if and when 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.
- 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, 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. These litigations
have been described in the quarterly reports on Form 10-Q filed with the
Securities and Exchange Commission by the Partnership, copies of which are
mailed to holders of Units.
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
Peachtree Offer or sell any Units of the Partnership that are held of record or
beneficially by that person.
The Partnership does not know if Peachtree Partners will make another offer to
purchase Units following the expiration of the current Peachtree Offer. The
Partnership believes that the current Peachtree Offer commenced prior to the
expiration of the Prior Peachtree Offer. If the Partnership becomes aware of
another offer to purchase units from Peachtree Partners subsequent to the
current Peachtree Offer, it is the intention of the Managing General Partner of
the Partnership to view such offer (if any) as a modification to the existing
Peachtree Offer and respond, to the extent required by applicable law,
accordingly.
Holders of Units having questions are urged to contact Marlene Knecht of SSR
Realty at (800) 347-6707, extension 2025.
On behalf of the Partnership
Sincerely,
Metric Realty,
An Illinois general partnership,
Its Managing General Partner
By: SSR Realty Advisors, Inc.,
A Delaware corporation.
Its Managing Partner
/s/ HERMAN H. HOWERTON
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Herman H. Howerton
Managing Director, General Counsel