EXHIBIT (a)(1)(A)
OFFER TO PURCHASE
IDM PARTICIPATING INCOME COMPANY-II
A CALIFORNIA LIMITED PARTNERSHIP
OFFER TO PURCHASE FOR CASH
ANY AND ALL LIMITED PARTNERSHIP UNITS
AT $6.75 NET PER UNIT
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON JUNE 18, 2001, UNLESS THE OFFER IS EXTENDED.
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DVM Properties, Inc., a Texas corporation (the "Offeror"), is offering to
purchase any and all of the Limited Partnership Units ("Units") of IDM
Participating Income Company-II, a California Limited Partnership (the
"Partnership"), at $6.75 per Unit, net to the seller in cash, on the terms and
subject to the conditions set forth herein and in the related Letter of
Transmittal.
The Offeror is an affiliate of IDM Participating Income General Partners'
Co.-II ("GPCo") which acted as the general partner of the Partnership until it
was enjoined from doing so by a preliminary injunction on February 2, 2001. The
preliminary injunction required GPCo to turn over management of the Partnership
to Newpic GP Corporation ("Newpic"), which is not affiliated with the Offeror.
The preliminary injunction was granted in connection with an action in which
Newpic has alleged that GPCo violated various fiduciary duties which it owed to
the Partnership and which seeks substantial damages on behalf of the
Partnership. In that action, Newpic claims that holders of a majority of the
Units have removed GPCo as the general partner of the Partnership and elected
Newpic as the successor general partner. GPCo believes that it was not validly
removed and that Newpic was not validly elected as its successor, but GPCo will
refrain from acting as general partner so long as the preliminary injunction
remains in effect. See "Special Factors -- Certain Litigation."
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THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF UNITS BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE "SPECIAL FACTORS
- CERTAIN CONDITIONS OF THE OFFER."
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THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
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NEITHER GPCO NOR ANY OF ITS AFFILIATES MAKES ANY RECOMMENDATION TO ANY LIMITED
PARTNER AS TO WHETHER TO TENDER ANY UNITS. EACH LIMITED PARTNER MUST MAKE HIS
OR HER OWN DECISION AS TO WHETHER TO TENDER UNITS AND, IF SO,
HOW MANY UNITS TO TENDER
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IMPORTANT FACTORS TO CONSIDER
o THE OFFEROR INDIRECTLY OWNS 48% OF THE CORPORATION WHICH OWNS THE GENERAL
PARTNER OF GPCO. ACCORDINGLY, THE OFFEROR MAY BE DEEMED TO BE AN AFFILIATE
OF THE PARTNERSHIP.
o THE INTEREST OF THE OFFEROR IN PURCHASING UNITS AT THE LOWEST POSSIBLE
PRICE MAY CONFLICT WITH THE INTEREST OF LIMITED PARTNERS IN OBTAINING A
HIGHER PRICE.
o THE OFFEROR'S PURCHASE OF UNITS WILL REDUCE THE NUMBER OF LIMITED PARTNERS
AND THE NUMBER OF UNITS THAT MAY OTHERWISE TRADE, THEREBY POSSIBLY
ADVERSELY AFFECTING THE LIQUIDITY AND MARKET VALUE OF THE REMAINING UNITS
HELD BY THE PUBLIC.
o IF THE OFFEROR ACQUIRES SUFFICIENT UNITS TO REMOVE NEWPIC AS THE ACTING
GENERAL PARTNER, IT MIGHT ATTEMPT TO DO SO IF NOT PROHIBITED BY ANY COURT
ORDER THEN IN EFFECT.
o THE NUMBER OF LIMITED PARTNERS MAY BE REDUCED BELOW 500 BY REASON OF THE
OFFER, WHICH WOULD ALLOW THE TERMINATION OF REGISTRATION OF THE UNITS UNDER
THE SECURITIES AND EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT"), WHICH
TERMINATION WOULD SUBSTANTIALLY REDUCE THE INFORMATION REQUIRED TO BE
FURNISHED BY THE PARTNERSHIP TO HOLDERS OF THE UNITS AND WHICH WOULD MAKE
CERTAIN PROVISIONS OF THE EXCHANGE ACT WITH RESPECT TO "GOING PRIVATE"
TRANSACTIONS NO LONGER APPLICABLE TO THE PARTNERSHIP.
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IMPORTANT
Any Limited Partner desiring to tender all or any portion of his or her
Units should complete and sign the Letter of Transmittal or a photocopy thereof
in accordance with the instructions in the Letter of Transmittal and mail or
deliver it and any other required documents to the Offeror at the Partnership.
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NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF GPCO
OR ANY OF ITS AFFILIATES AS TO WHETHER LIMITED PARTNERS SHOULD TENDER UNITS
PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED 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 UPON
AS HAVING BEEN AUTHORIZED BY GPCO OR THE OFFEROR.
TABLE OF CONTENTS
PAGE
SUMMARY TERM SHEET 1
INTRODUCTION 4
SPECIAL FACTORS 6
1. Purpose of the Offer 6
2. Certain Litigation 7
3. Certain Federal Income Tax Consequences 8
4. Fairness of the Transaction; Reports, Opinions, Appraisals and Certain
Negotiations; No Approvals Required; No Appraisal Rights 9
5. Number of Units; Expiration Date; Extension of Offer; Subsequent
Offering Period 10
6. Procedure for Tendering Units 11
7. Withdrawal Rights 12
8. Payment of Purchase Price 12
9. Certain Conditions of the Offer 13
10. Price Range of Units; Distributions; Trading Volume 15
11. Certain Information Concerning the Offeror 16
12. Source and Amount of Funds 16
13. Past Contracts, Transactions or Negotiations; Transactions and
Agreements Concerning the Units 16
14. Interest in Units 17
15. Extension of Tender Period; Subsequent Offering Period; Termination;
Amendments 17
16. Persons Retained; Fees and Expenses 19
17. Miscellaneous 20
Schedule A: Number of Units Purchased by Affiliates of the Offeror, Range of
Prices Paid and Average Purchase Price
Schedule B: Summary of Certain Financial Information
Schedule C: The Business of the Partnership
SUMMARY TERM SHEET
DVM Properties, Inc. is offering to purchase any and all of the
outstanding Limited Partnership Units of IDM Participating Income Company-II for
$6.75 per Unit, net to the seller, in cash. The following are some of the
questions you, as a limited partner, may have and the answers to those
questions. We urge you to carefully read the remainder of this Offer to Purchase
and the accompanying Letter of Transmittal because the information in this
summary is not complete and additional important information is contained in the
remainder of this Offer to Purchase and the Letter of Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
DVM Properties is the indirect parent of the general partner of GPCo,
which has acted in the past as the Partnership's general partner and which
claims to be the general partner of the Partnership, although it is precluded by
a preliminary injunction from acting as such. Accordingly, DVM Properties may be
deemed to be in control of the Partnership.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase all of the outstanding Limited Partnership
Units of IDM Participating Income Company-II. See "Introduction."
HOW MUCH ARE YOU OFFERING TO PAY FOR MY SECURITIES AND WHAT IS THE
FORM OF PAYMENT? WILL I HAVE TO PAY ANY FEES OR COMMISSIONS?
We are offering to pay $6.75 per Unit, net to you, in cash. If you are the
record owner of your Units and you tender your Units to us in the offer, you
will not have to pay brokerage fees, commissions or similar expenses. If you own
your Units through a custodian, and your custodian tenders your Units on your
behalf, your custodian may charge you a fee for doing so. You should consult
your custodian to determine whether any charges will apply. See "Introduction."
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
We have sufficient funds to purchase all Units validly tendered and not
withdrawn in the offer. See "Special Factors - Source and Amount of Funds."
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 5:00 P.M., New York City time, on Monday,
June 18, 2001, to tender your Units in the offer. In addition, if we extend the
expiration date of the offer or provide a subsequent offering period, you will
have an additional opportunity to tender your Units. See "Special Factors --
Number of Units; Expiration Date; Extension of the Offer; Subsequent Offering
Period" and "Special Factors -- Procedure for Tendering Units."
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
We can extend the offer in our discretion. See "Special Factors -- Number
of Units; Expiration Date; Extension of Offer; Subsequent Offering Period."
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we decide to extend the offer, we will inform the Partnership and will
make a public announcement of the extension. "Special Factors -- Number of
Units; Expiration Date; Extension of Offer; Subsequent Offering Period."
WILL THERE BE A SUBSEQUENT OFFERING PERIOD?
Maybe. We may elect to provide a "subsequent offering period" for the
Offer. A subsequent offering period, if one is provided, will be an additional
period of time, from three to 20 business days in length, following the
expiration of the Offer and the purchase of Units by us in the Offer, during
which you may tender Units not tendered in the Offer. During any subsequent
offering period, tendering Limited Partners will not have withdrawal rights and
we will promptly purchase and pay for any Units tendered, at the same price paid
in the Offer. See "Special Factors -- Extension of Tender Offer Period;
Subsequent Offering Period; Termination; Amendments."
HOW DO I TENDER MY UNITS?
You may tender your Units by delivering a completed Letter of Transmittal
and any other documents required, to Wilmington Trust Company, the depositary
for the offer, not later than the time the offer expires. See "Special Factors--
Procedure for Tendering Units."
HOW DO I WITHDRAW PREVIOUSLY TENDERED UNITS?
To withdraw Units, you must deliver a properly executed written notice of
withdrawal (or a facsimile of one) with the required information to Wilmington
Trust Company while you still have the right to withdraw the Units. See "Special
Factors -- Withdrawal Rights."
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED UNITS?
You can withdraw Units at any time until the offer has expired and, if we
have not accepted your Units for payment by July 12, 2001, you can withdraw them
at any time after such time until we accept Units for payment. This right to
withdraw will not apply to Units tendered during a subsequent offering period,
if any. See "Special Factors -- Withdrawal Rights."
WHAT ARE THE TAX CONSEQUENCES OF THE TRANSACTION?
The receipt of cash by you in exchange for your Units pursuant to the
offer is a taxable transaction for federal, and possibly state, income tax
purposes. In general, you will recognize capital gain or loss equal to the
difference between the adjusted tax basis of your Units and the amount of cash
that you receive from us for the Units. We encourage you to consult with your
own tax adviser about the particular effect a tender would have on you. See
"Special Factors-- Certain Federal Income Tax Consequences."
WHAT DOES THE GENERAL PARTNER THINK OF THE OFFER?
We do not at this time know what, if any, position Newpic, which is acting
as the general partner, may take on the offer. GPCo, which has in the past acted
as general partner but is precluded from doing so by the terms of a preliminary
injunction, is taking no position on the offer.
IF A LARGE NUMBER OF UNITS ARE TENDERED AND ACCEPTED FOR PAYMENT,
WILL THE PARTNERSHIP CONTINUE AS A PUBLIC ENTITY?
Possibly not. If we purchase all the tendered Units, there may be so few
remaining publicly held Units that the Partnership may cease making filings with
the Securities and Exchange Commission or otherwise cease being required to
comply with the rules of the Securities and Exchange Commission relating to
publicly held entities. See "Special Factors -- "Purpose of the Offer."
WHAT IS THE MARKET VALUE OF MY UNITS AS OF A RECENT DATE?
There is no public market for the Units. At September 30, 2000, however,
the book value of a Unit was $6.62. Newpic caused the Partnership to write off
its assets during the fourth quarter of 2000, with the result that the book
value of a Unit as of December 31, 2000 was zero. If the assets had not been
written off, we estimate that the book value of a Unit as of December 31, 2000
would have been approximately $6.75. See "Special Factors -- Fairness of the
Transaction; Reports, Opinions, Appraisals and Certain Negotiations; No
Approvals Required; No Appraisal Rights."
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE OFFER?
You can call MacKenzie Partners, Inc. at 800-322-2885 (toll free) or
212-929-5500 (collect). MacKenzie Partners, Inc. is acting as the Information
Agent for the offer.
TO THE HOLDERS OF LIMITED PARTNERSHIP UNITS OF
IDM PARTICIPATING INCOME COMPANY-II,
A CALIFORNIA LIMITED PARTNERSHIP:
INTRODUCTION
DVM Properties, Inc., a Texas corporation (the "Offeror"), is offering to
purchase any and all of the Limited Partnership Units ("Units") of IDM
Participating Income Company-II, a California Limited Partnership (the
"Partnership"), at $6.75 per Unit (the "Purchase Price"), net to the seller in
cash, on the terms and subject to the conditions set forth herein and in the
related Letter of Transmittal (which together constitute the "Offer"). The
Offeror is the indirect owner of approximately 48% of the outstanding capital
and voting stock of the parent of the corporate general partner of IDM
Participating Income General Partners' Co.-II ("GPCo"), which acted as the
general partner of the Partnership until it was enjoined from doing so by a
preliminary injunction on February 2, 2001. The preliminary injunction required
GPCo to turn over management of the Partnership to Newpic GP Corporation
("Newpic"). The preliminary injunction was granted in connection with an action
in which Newpic has alleged that GPCo violated various fiduciary duties which it
owed to the Partnership and seeks substantial damages on behalf of the
Partnership. In that action, Newpic claims that holders of a majority of the
Units have removed GPCo as the general partner of the Partnership and elected
Newpic as the successor general partner. GPCo believes that it was not validly
removed and that Newpic was not validly elected as its successor, but GPCo will
refrain from acting as general partner so long as the preliminary injunction
remains in effect. See "Special Factors -- Certain Litigation." Accordingly, the
Offeror may be deemed to be an affiliate of the Partnership. The last known
address of Newpic and the Partnership is Suite K100, 19401 South Vermont,
Torrance, CA 90502, and its telephone number is 562-590-1390.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 9.
Tendering Limited Partners will not be obligated to pay brokerage
commissions, solicitation fees, transfer fees or transfer taxes on the purchase
of Units by the Offeror. HOWEVER, ANY TENDERING LIMITED PARTNER WHO FAILS TO
COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 THAT IS INCLUDED IN THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO A REQUIRED FEDERAL INCOME TAX BACKUP WITHHOLDING
OF 31% OF THE GROSS PAYMENTS PAYABLE TO SUCH LIMITED PARTNER PURSUANT TO THE
OFFER.
NEITHER GPCO NOR ANY OF ITS DIRECTORS OR EXECUTIVE OFFICERS OR AFFILIATES
MAKES ANY RECOMMENDATION TO ANY LIMITED PARTNER AS TO WHETHER TO TENDER ANY
UNITS. EACH LIMITED PARTNER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO
TENDER UNITS AND, IF SO, HOW MANY UNITS TO TENDER. THE OFFEROR HAS BEEN ADVISED
THAT NO DIRECTOR OR EXECUTIVE OFFICER OF GPCO OR ANY OF ITS AFFILIATES INTENDS
TO TENDER UNITS PURSUANT TO THE OFFER.
As of December 31, 2000, the Partnership had issued and outstanding
200,000 Units and there were approximately 1,645 Limited Partners. The Units are
not currently listed for trading on any exchange.
SPECIAL FACTORS
1. PURPOSE OF THE OFFER
The Offeror is making the Offer because it believes that the purchase of
the Units at this time pursuant to the Offer is economically attractive to the
Offeror, and at the same time Limited Partners who require or desire liquidity
are being afforded the opportunity to receive cash for their Units. Each Limited
Partner has the opportunity to make an individual decision on whether or not to
tender Units pursuant to the Offer.
The desire of the Offeror to purchase Units at a price it deems attractive
may be deemed to conflict with the desire of Limited Partners to realize a
higher value for their Units. Accordingly, the interests of the Offeror, which
may be deemed to be an affiliate of the Partnership, may be deemed to be in
conflict with the interests of the Limited Partners. However, neither the
Offeror nor GPCo is making any recommendation to Limited Partners to tender
Units or any representation to Limited Partners with respect to the adequacy or
fairness of the price of $6.75 per Unit, except that the Offeror believes that
the terms of the Offer are fair to unaffiliated Limited Partners for the reasons
set forth in Section 4 below.
Following the consummation of the Offer, except as discussed below, the
Offeror has no plans or proposals which relate to or would result in: (a) the
acquisition by any person of additional securities of the Partnership or the
disposition of securities of the Partnership; (b) an extraordinary transaction,
such as a merger, reorganization or liquidation, involving the Partnership; (c)
a sale or transfer of a material amount of assets of the Partnership; (d) any
change in the present management of the Partnership; (e) any material change in
the present distribution policy or capitalization or indebtedness of the
Partnership; or (f) any other material change in the Partnership's structure or
business. In the event that the Offeror acquires a substantial number of Units,
it might seek to remove Newpic as the general partner and replace it with its
own nominee if not prohibited by any court order then in effect. The Offeror
cannot predict what the Partnership may do following consummation of the Offer
so long as Newpic acts as the general partner of the Partnership.
The Offeror's purchase of Units pursuant to the Offer will reduce the
number of Limited Partners and the number of Units that might otherwise trade,
and depending on the number of Units so purchased, could adversely affect the
liquidity and market value of the remaining Units held by the public, although
there is currently no established trading market for the Units.
The Units are currently registered under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Registration of the Units under the
Exchange Act may be terminated upon application of the Partnership to the
Securities and Exchange Commission (the "Commission") if the Units are held by
fewer than 500 Limited Partners. It is possible that the number of Limited
Partners will be reduced below 500 by reason of the Offer; termination of
registration of the Units under the Exchange Act would substantially reduce the
information required to be furnished by the Partnership to holders of the Units
and would make certain provisions of the Exchange Act, such as the requirements
of Rule 13e-3 thereunder with respect to "going private" transactions, no longer
applicable in respect of the Partnership.
The Partnership has paid no dividends with respect to the Units since
January 1, 1998. Neither the Partnership nor the Offeror has made any public
offering of Units since before January 1, 1997, nor has either the Partnership
or the Offeror purchased any Units since before January 1, 1998, except for a
total of 2,507.5078 Units purchased by an affiliate of the Offeror for $3.00 per
Unit.
Following the expiration of the Offer, the Offeror may, in its sole
discretion, determine to purchase any remaining Units through privately
negotiated transactions, open market purchases or otherwise, on such terms and
at such prices as the Offeror may determine from time to time, the terms of
which purchases or offers could differ from those of the Offer, except that
neither the Offeror nor its affiliates will make any such purchases of Units
until the expiration of at least ten business days after the termination of the
Offer. Any possible future purchases of Units by the Offeror will depend on many
factors.
Purchases of Units by the Offeror will, in addition to the effects
described above, have the effect of increasing the Offeror's interest in the
Partnership's net book value and net earnings.
A Limited Partner who tenders Units pursuant to this Offer will not have
the benefit of any future appreciation in the value of the Units. A Limited
Partner who does not tender Units pursuant to this Offer could possibly lose the
benefits of the Exchange Act registration of the Partnership and could become a
member of a minority if the Offeror acquires a majority of the Units.
2. CERTAIN LITIGATION
In August 2000, Newpic and a committee of Limited Partners commenced a
solicitation of consents and proxies of Limited Partners to remove GPCo as the
general partner of the Partnership and to replace it with Newpic.
In October 2000, the Partnership and Newpic brought an action in
California Superior Court against GPCo, William J. Carden and others, in which
they alleged that the defendants violated fiduciary and other duties to the
Partnership and engaged in fraud against the Partnership in connection with
loans made by the Partnership to affiliates of GPCo. The plaintiffs, including
the Partnership, are seeking damages against the defendants in an amount in
excess of $8,500,000, and they claim that GPCo was removed, and Newpic was duly
elected, as the general partner of the Partnership as of September 29, 2000 by a
vote of Limited Partners holding a majority of the Units.
In October 2000, the defendants filed a counterclaim in which they allege
that Newpic and the members of the committee of Limited Partners violated
certain federal securities laws in connection with the solicitation of proxies
and consents and claim that there were not sufficient valid votes to remove GPCo
as the general partner and to replace it with Newpic. The litigation was removed
by motion of the defendants from the California Superior Court to the United
States District Court for the Central District of California in November 2000.
After a hearing on January 29, 2001, the United States District Court
issued a preliminary injunction on February 2, 2001, enjoining GPCo from, among
other things, "interfering with the operating and management of [the
Partnership] by the duly elected General Partner of the Partnership, Newpic. . .
." In compliance with that preliminary injunction, GPCo has ceased to act as a
general partner of the Partnership and has turned over the books and records of
the Partnership to Newpic. It continues to believe, however, that the vote to
remove it was not valid, and it intends to pursue that position in the
litigation, which it currently expects to go to trial early in 2002.
3. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The sale of Units by a Limited Partner pursuant to the Offer will be
treated for federal income tax purposes as a taxable sale of such tendered
Units. However, the specific federal income tax consequences to a Limited
Partner resulting from a sale of Units will depend on a number of factors
related to such Limited Partner's individual tax situation, including such
Limited Partner's adjusted basis in his or her Units, whether such Limited
Partner is subject to the limitation on utilization of "passive activity
losses," whether such Limited Partner has suspended "passive activity losses"
attributable to his or her ownership of Units, whether such Limited Partner
disposes of all of his or her Units pursuant to the Offer (which would generally
allow such Limited Partner to utilize in the year of sale any suspended "passive
activity losses" attributable to his or her ownership of Units) and whether such
Limited Partner would be able to utilize currently any capital losses resulting
from the sale of such Units pursuant to the Offer. The Offeror expects that a
Limited Partner who acquired his or her Units in the original offering and who
sells Units pursuant to the Offer will generally recognize ordinary income of
approximately $0.36 per Unit attributable to Partnership operations for 2001
through the estimated date of sale and a capital loss attributable to the sale
of his or her Units equal to the sum of (i) approximately $5.75 per Unit and
(ii) such Limited Partner's distributive share per Unit of syndication expenses
of the Partnership (generally, costs incurred by the Partnership in connection
with the sale of Units in the original offering). Although the Partnership was
unable to claim syndication expenses as a deductible expense for federal income
tax purposes, each Limited Partner who acquired his or her Units in the original
offering continues to have his or her share of such expenses reflected in the
adjusted basis of his or her Units. The federal income tax impact could be
significantly different, however, for a Limited Partner who acquired his or her
Units after the original offering. To the extent that a Limited Partner who is
subject to the "passive activity loss" restrictions has not previously utilized
such losses to offset passive activity income from other sources (and sells all
of his or her Units), such suspended losses will generally become available to
such Limited Partner in the year of sale. Any capital loss recognized by a
Limited Partner from the sale of Units may be applied to offset capital gains
from other sources. In addition, capital losses in excess of capital gains may
be used to offset up to $3,000 of ordinary income in any taxable year ($1,500
for a married individual filing a separate return). Any capital losses that are
not used currently may be carried forward and used in subsequent years (subject
to the same limitations).
THE FOREGOING TAX DISCUSSION IS INTENDED FOR GENERAL INFORMATIONAL
PURPOSES ONLY. THE TAX CONSEQUENCES OF A SALE PURSUANT TO THE OFFER MAY VARY
DEPENDING UPON, AMONG OTHER THINGS, THE PARTICULAR TAX CIRCUMSTANCES OF THE
TENDERING LIMITED PARTNER. NO INFORMATION IS PROVIDED HEREIN AS TO THE STATE,
LOCAL OR FOREIGN TAX CONSEQUENCES OF A SALE OF UNITS PURSUANT TO THE OFFER. EACH
LIMITED PARTNER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISER TO DETERMINE THE
PARTICULAR FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF A SALE OF UNITS
PURSUANT TO THE OFFER.
4. FAIRNESS OF THE TRANSACTION; REPORTS, OPINIONS, APPRAISALS AND CERTAIN
NEGOTIATIONS; NO APPROVALS REQUIRED; NO APPRAISAL RIGHTS
The Offeror believes that the terms of the Offer are fair to unaffiliated
Limited Partners principally for the reason that it provides a mechanism whereby
Limited Partners who desire liquidity are being afforded the opportunity to
receive cash for their Units on a voluntary basis. No Limited Partner is
compelled to accept this Offer and tender Units, although there could be certain
adverse effects to Limited Partners in the event that there are fewer than 500
Limited Partners after the consummation of the Offer or in the event that the
Offeror obtains a majority of the Units. See Section 1 above. The price of $6.75
per Unit was determined by the Offeror as the price which it believed
represented an attractive price for the Offeror economically. In determining
this price, the Offeror considered the following factors:
(a) that there is not an established trading market for the Units;
(b) that the Offeror may have to hold the Units for a lengthy period
of time; and
(c) that the Partnership is not currently making any distributions
and there is no assurance that the Partnership will resume making any
distributions.
Furthermore, the Offeror believes that the Offer is procedurally fair, since the
decision of whether to accept the Offer is voluntary on the part of each Limited
Partner, notwithstanding that the Offer does not require approval by a majority
in interest of unaffiliated Limited Partners and there has been no unaffiliated
representative retained to negotiate the terms of the Offer or to prepare a
report concerning its fairness.
The Offeror did not obtain any appraisals or valuations in connection with
its determination of the purchase price.
The Offeror believes that the purchase price is fair. The Offeror has not
had an appraisal of the Partnership's assets performed, has no knowledge of any
current appraisals and has not formed any conclusion as to the current net
realizable value of those assets. The Offeror does, however, believe that the
price of $6.75 per Unit represents an attractive investment to the Offeror
compared to the value it expects the Units to have in the future. The Offeror
has not sought or obtained any report, appraisal or opinion with respect to the
value of the Units and neither GPCo nor the Offeror is aware of any such report,
appraisal or opinion that may have been prepared by any other person.
Additionally, neither GPCo nor the Offeror is aware of any other firm offers
made by any person unaffiliated with the Partnership during the preceding
eighteen months (i) for the merger or consolidation of the Partnership with such
person, (ii) for the sale or other transfer of all or any substantial part of
the assets of the Partnership or (iii) for Units which would enable the holder
of the Units to exercise control of the Partnership. The Offeror has not
calculated a liquidation value or conducted a valuation analysis for the
Partnership, and it is not aware of any such value calculated by, or any such
analysis conducted by, the Partnership.
The Offeror is not aware of any license or regulatory permit that appears
to be material to the Partnership's business that might be adversely affected by
its acquisition of Units as contemplated in the Offer or of any approval or
other action by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
Offeror's acquisition or ownership of Units pursuant to the Offer. Should any
such approval or other action be required, the Offeror currently contemplates
that it will seek such approval or other action.
There is no vote of Limited Partners required in connection with the Offer
and there are no appraisal rights available to Limited Partners in connection
with the Offer. The Offeror has not retained, and does not intend to retain, an
unaffiliated representative to act solely on behalf of unaffiliated Limited
Partners or to prepare a report or an opinion with respect to the fairness of
the Offer, and the Offeror does not intend to grant any Limited Partner any
access to its corporate files.
Certain historical financial information regarding the Partnership and
certain information regarding its assets is set forth on Schedules B and C
hereto. This information has been derived from publicly available reports of the
Partnership filed with the Securities and Exchange Commission. The financial
information set forth on Schedule B reflects that Newpic caused the Partnership
to write off the assets of the Partnership during the fourth quarter of 2000,
with the result that the book value of a Unit as of December 31, 2000 was zero.
If the assets had not been written off, the Offeror estimates that the book
value of a Unit as of December 31, 2000 would have been approximately $6.75.
In the event the Offeror acquires a majority of the Units, it would be
able under the terms of the Partnership Agreement to amend the Partnership
Agreement to dissolve the Partnership, to remove the Newpic as the general
partner, and to elect GPCo or another person as a successor general partner if
not prohibited by any court order then in effect.
The scheduled termination date for the Partnership is December 31, 2016.
5. NUMBER OF UNITS; EXPIRATION DATE; EXTENSION OF THE OFFER; SUBSEQUENT
OFFERING PERIOD
On the terms and subject to the conditions described herein and in the
Letter of Transmittal, the Offeror will purchase any and all Units that are
validly tendered on or prior to the Expiration Date (and not properly withdrawn
in accordance with Section 7) at the Purchase Price. The later of 5:00 p.m., New
York City time, on June 18, 2001, or the latest time and date to which the Offer
is extended, is referred to herein as the "Expiration Date." The Offer is not
conditioned on any minimum number of Units being tendered.
If (i) the Offeror increases or decreases the price to be paid for Units
or decreases the number of Units being sought and (ii) the Offer is scheduled to
expire at any time earlier than the expiration of a period ending on the tenth
business day from, and including, the date that notice of such increase or
decrease is first published, sent or given in the manner described in Section
15, the Offer will be extended until the expiration of ten business days from
the date of publication of such notice.
The Offeror also expressly reserves the right, in its sole discretion, at
any time or from time to time, to (i) extend the period of time during which the
Offer is open and (ii) elect to provide a subsequent offering period for the
Offer in accordance with Rule 14d-11 under the Exchange Act, in the case of each
of clauses (i) and (ii), by giving oral or written notice of such extension or
subsequent offering period to the Partnership and making a public announcement
thereof. See Section 15. There can be no assurance, however, that the Offeror
will exercise its right to extend the Offer or provide a subsequent offering
period.
For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or federal holiday and consists of the time period from 12:01
a.m. through 12:00 midnight, New York City time.
Copies of this Offer to Purchase and the Letter of Transmittal are being
mailed to Limited Partners.
6. PROCEDURE FOR TENDERING UNITS
PROPER TENDER OF UNITS. To tender Units validly pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal or photocopy thereof,
together with any required signature guarantees and any other documents required
by the Letter of Transmittal, must be received by the Depositary at the address
set forth in the Letter of Transmittal.
FEDERAL BACKUP WITHHOLDING. TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING
EQUAL TO 31% OF THE GROSS PAYMENTS MADE PURSUANT TO THE OFFER, EACH TENDERING
LIMITED PARTNER MUST NOTIFY THE OFFEROR OF SUCH LIMITED PARTNER'S CORRECT
TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY PROPERLY
COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL.
FOREIGN LIMITED PARTNERS MAY BE REQUIRED TO SUBMIT A PROPERLY COMPLETED FORM
W-8, CERTIFYING NON-UNITED STATES STATUS, IN ORDER TO AVOID BACKUP WITHHOLDING.
IN ADDITION, FOREIGN STOCKHOLDERS MAY BE SUBJECT TO 30% (OR LOWER TREATY RATE)
WITHHOLDING ON GROSS PAYMENTS RECEIVED PURSUANT TO THE OFFER. FOR A DISCUSSION
OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO TENDERING LIMITED PARTNERS, SEE
SECTION 3. EACH LIMITED PARTNER IS URGED TO CONSULT WITH HIS OR HER OWN TAX
ADVISER.
DETERMINATIONS OF VALIDITY. All questions as to the Purchase Price, the
form of documents and the validity, eligibility (including time of receipt) and
acceptance for payment of any tender of Units will be determined by the Offeror,
in its sole discretion, and its determination shall be final and binding. The
Offeror reserves the absolute right to reject any or all tenders of Units that
it determines are not in proper form or the acceptance for payment of or payment
for Units that may, in the opinion of the Offeror's counsel, be unlawful. The
Offeror also reserves the absolute right to waive any defect or irregularity in
any tender of Units. Neither the Offeror, the Partnership, or any other person
will be under any duty to give notice of any defect or irregularity in tenders,
nor shall any of them incur any liability for failure to give any such notice.
7. WITHDRAWAL RIGHTS
Tenders of Units made pursuant to the Offer may be withdrawn at any time
on or prior to the Expiration Date. Thereafter, such tenders are irrevocable,
except that they may be withdrawn after July 12, 2001, unless theretofore
accepted for payment as provided in this Offer to Purchase. If the Offeror
extends the period of time during which the Offer is open, is delayed in
accepting for payment or paying for Units or is unable to accept for payment or
pay for Units pursuant to the Offer for any reason, then, without prejudice to
the Offeror's rights under the Offer, the Offeror may retain all Units tendered,
and such Units may not be withdrawn except as otherwise provided in this Section
7, subject to Rule 14e-1(c) under the Exchange Act, which provides that the
person making the tender offer shall either pay the consideration offered, or
return the tendered securities promptly after the termination or withdrawal of
the tender offer.
To be effective, a written or facsimile transmission notice of withdrawal
must be timely received by the Depositary at its address set forth in the Letter
of Transmittal and must specify the name of the person who tendered the Units to
be withdrawn and the number of Units to be withdrawn. Withdrawals may not be
rescinded, and Units withdrawn will thereafter be deemed not validly tendered
for purposes of the Offer. However, withdrawn Units may be retendered by again
following the procedures described in Section 6 at any time prior to the
Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Offeror, in its sole
discretion, which determination shall be final and binding. Neither of the
Offeror, the Partnership, nor any other person will be under any duty to give
notification of any defect or irregularity in any notice of withdrawal or incur
any liability for failure to give any such notification.
If the Offeror provides a subsequent offering period following the Offer
under Rule 14d-11 under the Exchange Act, no withdrawal rights will apply to
Units tendered during the subsequent offering period or to Units previously
tendered in the Offer and accepted for payment.
8. PAYMENT OF PURCHASE PRICE
On the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Offeror will accept for payment, and will pay for, Units validly
tendered and not withdrawn in accordance with the Offer, as promptly as
practicable following the Expiration Date. In all cases, payment for Units
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of a properly completed and duly executed Letter of Transmittal and
any other documents required by the Letter of Transmittal.
For purposes of the Offer, the Offeror shall be deemed to have accepted
for payment (and thereby purchased) tendered Units when, as and if the Offeror
gives oral or written notice to the Partnership of the Offeror's acceptance for
payment of such Units pursuant to the Offer. On the terms and subject to the
conditions of the Offer, payment for Units purchased pursuant to the Offer will
in all cases be made by deposit of the purchase price with the Depositary, which
will act as agent for the tendering Limited Partners for the purpose of
receiving payment from the Offeror and transmitting payment to tendering Limited
Partners. Under no circumstances will interest be paid on the purchase price by
reason of any delay in making such payment.
If any tendered Units are not accepted for payment pursuant to the terms
and conditions of the Offer, the Letter of Transmittal with respect to such
Units not purchased will be destroyed by the Depositary. If, for any reason
whatsoever, acceptance for payment of, or payment for, any Units tendered
pursuant to the Offer is delayed or the Offeror is unable to accept for payment,
purchase or pay for Units tendered pursuant to the Offer, then, without
prejudice to the Offeror's rights under the Offer (but subject to compliance
with Rule 14e-1(c) under the Exchange Act), the Offeror may retain tendered
Units, subject to any limitations of applicable law, and such Units may not be
withdrawn, except to the extent that the tendering Limited Partners are entitled
to withdrawal rights as described in the Offer.
If, prior to the Expiration Date, the Offeror shall increase the
consideration offered to Limited Partners pursuant to the Offer, such increased
consideration shall be paid for all Units accepted for payment pursuant to the
Offer, whether or not such Units were tendered prior to such increase.
The Offeror reserves the right to transfer or assign, at any time and from
time to time, in whole or in part, to one or more affiliates, the right to
purchase Units tendered pursuant to the Offer, but no such transfer or
assignment will relieve the Offeror of its obligations under the Offer or
prejudice the rights of tendering Limited Partners to receive payments for Units
validly tendered and accepted for payment pursuant to the Offer.
9. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, the Offeror will not be
required to accept for payment or pay for any Units tendered, and may terminate
or amend the Offer or may postpone (subject to the requirements of the Exchange
Act for prompt payment for or return of Units) the acceptance for payment of or
payment for Units tendered, if at the Expiration Date, as it may be extended,
any of the following events shall have occurred (or shall have been determined
by the Offeror in its reasonable judgment to have occurred) regardless of the
circumstances giving rise thereto (including any action or omission to act by
the Offeror):
(a) there shall have been threatened, instituted or pending any
action or proceeding by any government or governmental, regulatory or
administrative agency or authority or tribunal or any other person,
domestic or foreign, or before any court, authority, agency or tribunal
that (i) challenges or seeks to challenge the acquisition of Units
pursuant to the Offer or otherwise in any manner relates to or affects the
Offer or (ii) in the reasonable judgment of the Offeror, could materially
and adversely affect the business, condition (financial or other), income,
operations or prospects of the Partnership, or otherwise materially impair
in any way the contemplated future conduct of the business of the
Partnership or materially impair the contemplated benefits of the Offer to
the Offeror;
(b) there shall have been any action threatened, pending or taken,
or approval withheld, withdrawn or abrogated or any statute, rule,
regulation, judgment, order or injunction threatened, proposed, sought,
promulgated, enacted, entered, amended, enforced or deemed to be
applicable to the Offer or the Partnership, by any legislative body,
court, authority, agency or tribunal which, in the Offeror's reasonable
judgment, would or might directly or indirectly (i) make the acceptance
for payment of, or payment for, some or all of the Units illegal or
otherwise restrict or prohibit consummation of the Offer, (ii) delay or
restrict the ability of the Offeror, or render the Offeror unable, to
accept for payment or pay for some or all of the Units, (iii) imposes or
seeks to impose limitations on the ability of the Offeror to acquire or
hold or to exercise full rights of ownership of the Units, (iv) materially
impair the contemplated benefits of the Offer to the Offeror or (v)
materially affect the business, condition (financial or other), income,
operations or prospects of the Partnership, or otherwise materially impair
in any way the contemplated future conduct of the business of the
Partnership;
(c) it shall have been publicly disclosed or the Offeror shall have
learned that any person or "group" (within the meaning of Section 13(d)(3)
of the Exchange Act) has acquired or proposes to acquire beneficial
ownership of more than 5% of the outstanding Units;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, (ii) any significant decline
in the general level of market prices of equity securities in the United
States or abroad, (iii) any change in the general political, market,
economic or financial condition in the United States or abroad that could
have a material adverse effect on the Partnership's business, condition
(financial or other), income, operations or prospects, (iv) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or any limitation on, or any event
which, in the Offeror's reasonable judgment, might affect, the extension
of credit by lending institutions in the United States, (v) the
commencement of a war, armed hostilities or other international or
national crisis directly or indirectly involving the United States or (vi)
in the case of any of the foregoing existing at the time of the
commencement of the Offer, in the Offeror's reasonable judgment, a
material acceleration or worsening thereof;
(e) a tender or exchange offer with respect to some or all of the
Units (other than the Offer) or a merger, acquisition or other business
combination proposal for the Partnership, shall have been proposed,
announced or made;
(f) there shall have occurred any event or events that have
resulted, or may in the reasonable judgment of the Offeror result, in an
actual or threatened change in the business, condition (financial or
other), income, operations, stock ownership or prospects of the
Partnership; or materially impair the contemplated benefits of the Offer;
(g) there shall have occurred any decline in the S&P Composite 500
Stock Index by an amount in excess of 15% measured from the close of
business on May 14, 2001; or
(h) the Offeror shall not have received the approval of the
Partnership to the assignment to the Offeror of the Units tendered
pursuant to the Offer;
and, in the reasonable judgment of the Offeror, such event or events make it
undesirable or inadvisable to proceed with the Offer or with such acceptance for
payment or payment.
Any of the foregoing conditions may be waived by the Offeror, in whole or
in part, at any time and from time to time in its reasonable discretion. The
failure by the Offeror at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time. Any
determination by the Offeror concerning the events described above will be final
and binding on all parties.
10. PRICE RANGE OF UNITS; DISTRIBUTIONS; TRADING VOLUME
The Units are not listed on any national securities exchange or quoted in
the over-the-counter market, and there is no established public trading market
for the Units. Secondary sales activity for the Units has been extremely limited
and sporadic. The Offeror has no information regarding the prices at which all
secondary sales transactions in the Units have been effectuated. Various
organizations offer to purchase and sell limited partnership interests (such as
the Units) in secondary sales transactions. Various publications such as The
Partnership Spectrum summarize and report information (on a monthly, bimonthly
or less frequent basis) regarding secondary sales transactions in limited
partnership interests (including the Units), including the prices at which such
secondary sales transactions are effectuated.
The Offeror has been informed that GPCo believes, based solely on the
transfer records of the Partnership which GPCo maintained prior to February 2,
2001, that there have been no Units transferred in sales transactions (I.E.,
excluding transactions believed to be between related parties, family members or
the same beneficial owner) since January 1, 1998.
The Partnership Spectrum, a periodical published by Partnership Profiles,
Inc., summarizes secondary market prices for public limited partnerships based
on actual transactions. The Partnership Spectrum has reported no transactions in
the Partnership's Units since January 1, 1998. The following secondary-market
firms have provided high and low price data to The Partnership Spectrum since
January 1, 1998: Alliance Partnership Services - (800) 990-5604, American
Partnership Board - (800) 736-9797, DCC Securities - (800) 945-0440, Fox &
Henry/Secondary Income Funds (800) 578-6289/(630) 325-4445, Frain Asset
Management - (800) 654-6110/(813) 397-2701, MacKenzie-Patterson, Inc. - (800)
854-8357, National Partnership Exchange - (800) 356-2739/(813) 636-9299, New
York Partnership Exchange - (800) 444-7357/(941) 955-8816, North Coast
Securities - (800) 700-7998, Pacific Partnership Group - (800) 727-7244/(818)
591-3707, Partnership Marketing Company - (888) 824-8600/(707) 824-8600, A-1
Partnership Service Network. - (800) 483-0776/(813) 596-9898.
IN EVALUATING WHETHER OR NOT TO TENDER THEIR UNITS IN THE OFFER, LIMITED
PARTNERS MAY WISH TO CONTACT THESE FIRMS OR OTHER FIRMS INVOLVED IN SECONDARY
SALES OF INTERESTS IN LIMITED PARTNERSHIPS.
11. CERTAIN INFORMATION CONCERNING THE OFFEROR
DVM Properties, Inc., a Texas corporation, the Offeror, is the indirect
owner of 48% of the outstanding capital and voting stock of IDM Corporation,
which in turn is the owner of 100% of the outstanding capital and voting stock
of IDM Participating Income Corporation ("IDM PIC Corp."). IDM PIC Corp. is the
general partner of GPCo. See Section 2 for information concerning GPCo.
All of the outstanding capital and voting stock of DVM Properties, Inc. is
owned by William J. Carden, who is its sole director and officer. For more than
the last five years, Mr. Carden has been the chief executive officer and a
principal stockholder of CGS Real Estate Company, Inc., 1800 E. Deere Ave.,
Santa Ana, California 92705-5721.
The principal executive office of the Offeror is located at 5850 San
Felipe, Suite 450, Houston, Texas 77057, and its telephone number is
713-706-6278.
During the past five years, neither the Offeror nor Mr. Carden has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), nor has any of the foregoing been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
12. SOURCE AND AMOUNT OF FUNDS
Assuming that the Offeror purchases 200,000 Units pursuant to the Offer at
the Purchase Price, the total amount required by the Offeror to purchase such
Units will be $1,350,000, exclusive of fees and other expenses. The source of
these funds will be the Offeror's general corporate funds.
13. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS; TRANSACTIONS AND AGREEMENTS
CONCERNING THE UNITS
Neither the Offeror nor any of its affiliates has been a party to any
contract, transaction or negotiation since January 1, 1997 with the Partnership
where the aggregate amount of such transaction was not less than 1% of the
Partnership's revenues. Except as disclosed herein in connection with the Offer,
neither the Offeror nor any of its affiliates (including GPCo) has been a party
to contacts, negotiations or transactions with the Partnership concerning a
merger, consolidation or acquisition of the Partnership, a tender offer or
acquisition of securities of the Partnership, an election of a new general
partner of the Partnership, or a sale or other transfer of a material amount of
assets of the Partnership. Additionally, neither the Offeror nor any of its
affiliates is a party to any contract, arrangement, understanding or
relationship, directly or indirectly, with any other person with respect to any
securities of the Partnership, has not been a party to any contract, transaction
or negotiation with any person with respect to the Units, including any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any Units, joint ventures, loan or option arrangements, puts or
calls, guaranties of loans, guaranties against loss or the giving or withholding
of proxies, consents or authorizations and is not aware of any contacts or
negotiations between the Partnership and any of its affiliates, or between the
Partnership (including its affiliates) and any person not affiliated with the
Partnership concerning a merger, consolidation or acquisition of the
Partnership; a tender offer or acquisition of securities of the Partnership, an
election of a new general partner of the Partnership, or a sale or other
transfer of a material amount of assets of the Partnership.
Schedule A hereto sets forth the number of Units purchased by the Offeror
or others who may be deemed to be affiliates of the Offeror or GPCo since
January 1, 1998, the range of prices paid for such Units and the average
purchase price paid for each quarterly period since January 1, 1998. All such
purchases were made by a company in which Mr. Carden owns one-third of the
outstanding capital and voting stock.
14. INTEREST IN UNITS
NO-SO, Inc., an affiliate of the Offeror, beneficially owns 2,507.5078
Units, representing approximately 1.25% of the total outstanding Units. The
Offeror does not beneficially own any Units. Except as disclosed in Schedule A,
neither the Offeror nor any person affiliated with either GPCo or the Offeror
has engaged in any transactions with respect to the Units within the 60 days
immediately preceding the date of the Offer. The address of NO-SO, Inc. is 5850
San Felipe, Suite 450, Houston, Texas 77057.
15. EXTENSION OF TENDER PERIOD; SUBSEQUENT OFFERING PERIOD; TERMINATION;
AMENDMENTS
The Offeror expressly reserves the right, in its sole discretion and at
any time or from time to time, to (i) extend the period of time during which the
Offer is open and (ii) elect to provide a subsequent offering period for the
Offer in accordance with Rule 14d-11 under the Exchange Act, in the case of each
of clauses (i) and (ii), by giving oral or written notice of such extension or
subsequent offering period to the Partnership. There can be no assurance,
however, that the Offeror will exercise its right to extend the Offer or provide
a subsequent offering period. During any extension, all Units previously
tendered will remain subject to the Offer, except to the extent that such Units
may be withdrawn as set forth in Section 7.
Pursuant to Rule 14d-11 under the Exchange Act the Offeror may elect to
make available a "subsequent offering period" from three to 20 business days in
length following the Expiration Date. A subsequent offering period would be an
additional period of time following the expiration of the Offer and the purchase
of Units in the Offer, during which a Limited Partner may tender shares not
tendered in the Offer. A subsequent offering period, if one is provided, is not
an extension of the Offer, which already will have been completed. A subsequent
offering period may be provided regardless of whether the events or the facts
set forth in Section 9 - "Certain Conditions of the Offer" have occurred.
During a subsequent offering period, no tendering Limited Partner will
have withdrawal rights, and the Offeror will promptly purchase and pay for any
Units tendered at the same price paid in the Offer. Rule 14d-11 provides that
the Offeror may provide a subsequent offering period so long as, among other
things:
- the initial 20 business day period of the Offer has expired;
- the Offeror offers the same form and amount of consideration for Units
in the subsequent offering period as in the Offer;
- the Offeror accepts and promptly pays for all securities tendered during
the Offer;
- the Offeror announces the results of the Offer, including the
approximate number and percentage of Units deposited in the Offer, no
later than 9:00 a.m. New York City time on the next business day after
the Expiration Date and immediately begin the subsequent offering
period; and
- the Offeror immediately accepts and promptly pays for Units as they are
tendered during the subsequent offering period.
The Offeror also expressly reserves the right, in its sole discretion, (i)
to terminate the Offer and not accept for payment any Units not theretofore
accepted for payment or, subject to Rule 14e-1(c) under the Exchange Act, which
requires the Offeror either to pay the consideration offered or to return the
Units tendered promptly after the termination or withdrawal of the Offer, to
postpone payment for Units upon the occurrence of any of the conditions
specified in Section 9 hereof by giving oral or written notice of such
termination to the Partnership and making a public announcement thereof and (ii)
at any time or from time to time, to amend the Offer in any respect. Amendments
to the Offer may be effected by public announcement. Without limiting the manner
in which the Offeror may choose to make public announcement of any termination
or amendment, the Offeror shall have no obligation (except as otherwise required
by applicable law) to publish, advertise or otherwise communicate any such
public announcement, other than by making a release to the Dow Jones News
Service, except in the case of an announcement of an extension of the Offer, in
which case the Offeror shall have no obligation to publish, advertise or
otherwise communicate such announcement other than by issuing a notice of such
extension by press release or other public announcement, which notice shall be
issued no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date. Material changes to information
previously provided to Limited Partners in this Offer or in documents furnished
subsequent
thereto will be disseminated to Limited Partners in compliance with Rule
14d-6(d) promulgated under the Exchange Act.
If the Offeror materially changes the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Offeror will extend the Offer to the extent required by Rules
14d-6(c) and Rule 14e-1(b) under the Exchange Act. Accordingly, the minimum
period during which an offer must remain open following material changes in the
terms of the offer or information concerning the offer (other than a change in
the consideration, a change in a dealer's soliciting fee or the percentage of
securities sought) will depend on the facts and circumstances, including the
relative materiality of such terms or information. In a published release, the
Commission has stated that in its view, an offer should remain open for a
minimum of five business days from the date that notice of such a material
change is first published, sent or given. The Offer will continue or be extended
for at least ten business days from the time the Offeror publishes, sends or
gives to holders of Units a notice that it will (a) decrease the number of Units
it seeks, increase or decrease the consideration offered or provide for a
dealer's soliciting fee.
16. PERSONS RETAINED; FEES AND EXPENSES
The Offeror has retained MacKenzie Partners, Inc. to act as the
Information Agent and Wilmington Trust Company to act as the Depositary in
connection with the Offer. The Information Agent may contact Limited Partners by
mail, telephone, facsimile, email and other means. The Information Agent and the
Depositary will receive reasonable and customary compensation for their services
and will also be reimbursed for certain out-of-pocket expenses. The Offeror has
agreed to indemnify the Information Agent and the Depositary against certain
liabilities, including certain liabilities under the federal securities laws, in
connection with the Offer. The Depositary has not been retained to, and will
not, make solicitations or recommendations in connection with the Offer.
The Offeror will not pay any solicitation fees to any broker, dealer,
bank, trust company or other person (other than the Information Agent) for any
Units purchased in connection with the Offer. The Offeror will reimburse such
persons for customary handling and mailing expenses incurred in connection with
the Offer.
The Offeror will pay all transfer fees or transfer taxes, if any, payable
on account of the acquisition of the Units by the Offeror pursuant to the Offer.
The expenses incurred, or estimated to be incurred, by the Offeror in
connection with the Offer are set forth below. The Offeror will be responsible
for paying all such expenses.
Printing and Mailing Fees $ 5,000
Filing Fees $ 270
Legal Fees $20,000
Depositary Fees $ 7,500
Information Agent Fees $12,500
17. MISCELLANEOUS
The Partnership is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports and other information
with the Commission relating to its business, financial condition and other
matters. The Offeror has filed a Tender Offer Statement on Schedule TO (which
incorporates a Transaction Statement on Schedule 13E-3) with the Commission,
which includes certain additional information relating to the Offer. Such
reports, as well as such other material, may be inspected and copies may be
obtained at the Commission's Public Reference Section at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and should also be available for
inspection and copying at the regional offices of the Commission located at 7
World Trade Center, 13th Floor, New York, New York 10048, and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may be obtained by mail, upon payment of the Commission's customary
fees, from the Commission's Public Reference Section at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission maintains a Web site that
contains reports, proxy and information statements and other materials that are
filed through the Commission's Electronic Data Gathering, Analysis, and
Retrieval system. This Web site can be accessed at http://www.sec.gov. The
Offeror's Schedule TO may not be available at the Commission's regional offices.
The Offer is being made to all Limited Partners. The Offeror is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to a valid state statute. If the Offeror becomes aware
of any valid state statute prohibiting the making of the Offer, the Offeror will
make a good faith effort to comply with such statute. If, after such good faith
effort, the Offeror cannot comply with such statute, the Offer will not be made
to, nor will tenders be accepted from or on behalf of, holders of Units in such
state.
May 14, 2001 DVM PROPERTIES, INC.
SCHEDULE A
Average
Number of Units Purchased by Range of Prices Purchase
Period Affiliates of the Offeror Paid Price
- ------------------ ---------------------------- ----------------- -----------
1/1/98 to 3/31/98 215.5154 $3.00 $3.00
4/1/98 to 6/30/98 194.4180 $3.00 $3.00
7/1/98 to 9/30/98 449.6341 $3.00 $3.00
10/1/98 to 12/31/98 510.5632 $3.00 $3.00
1/1/99 to 3/31/99 85.5596 $3.00 $3.00
4/1/99 to 6/30/99 201.2080 $3.00 $3.00
7/1/99 to 9/30/99 85.5596 $3.00 $3.00
10/1/99 to 12/31/99 171.1192 $3.00 $3.00
1/1/00 to 3/31/00 404.6884 $3.00 $3.00
4/1/00 to 6/30/00 103.6825 $3.00 $3.00
7/1/00 to 9/30/00 -- -- --
10/1/00 to 12/31/00 85.5596 $3.00 $3.00
1/1/01 to present -- -- --
SCHEDULE B
SUMMARY OF CERTAIN FINANCIAL INFORMATION
The following sets forth certain summarized financial information for the
Partnership. This information should be read in conjunction with the
Partnership's annual, quarterly and other reports filed with the Securities and
Exchange Commission.
OPERATING DATA:
--------------------------------------------
For the Year Ended December 31,
--------------------------------------------
2000 1999 1998
-------------- -------------- --------------
Revenues $ 200,000 $ 183,000 $ 159,000
Expenses (1,882,000) 58,000 73,000
Net Income (Loss) (1,682,000) 125,000 86,000
Net Income (Loss) per Unit $(6.22) $.62 $.43
Cash Distributions 0 0 0
BALANCE SHEET DATA:
As of December 31,
--------------------------------------------
2000 1999
------------------ ------------------
Cash and Cash Equivalents $1,000 $ 37,000
Loans to Affiliates 0 1,646,000
Total Assets 0 1,683,000
Limited Partners' Equity 0 1,243,000
Limited Partners' Equity
Per Unit $0 $6.22
SCHEDULE C
THE BUSINESS OF THE PARTNERSHIP
LOAN SUMMARY
In October 1988, the Partnership funded a $1,380,000 loan to Harbor Plaza,
Ltd. (an affiliate of the GPCo) to refinance an existing loan on Harbor Plaza
located in Port Hueneme, California. The project is comprised of an operating
single-story garden office building totaling approximately 14,000 square feet.
The loan is secured by a first deed of trust. At December 31, 1995, a reserve of
$565,000 was outstanding against this loan. At December 31, 1996, an additional
provision of $400,000 was recorded for a total reserve of $965,000. During 1997,
the Partnership wrote off $1,030,000 of the outstanding note balance and $24,000
of outstanding interest receivable. The remaining note balance of $350,000 was
paid off in January 1998.
In October 1989, the Partnership began funding a $12,000,000 loan
($7,100,000 at December 31, 1996) to IDM Apartments Corporation (an affiliate of
GPCo) for the Villa Redondo Apartments project located in Long Beach,
California. The project is a 125 unit apartment complex. The loan is secured by
a junior deed of trust. Under a bankruptcy reorganization plan, the secured
principal balance was reduced to $3,017,000. The remainder was converted to an
unsecured non-interest-bearing note due December 31, 1997. IDM Apartments
Corporation filed a second bankruptcy proceeding in November 1994. This loan was
fully reserved at December 31, 1996. During 1997, the Partnership received a
$300,000 principal payment. This payment was recorded as a reserved receivable
recovery. In the first quarter of 1997, the remaining note receivable and
interest receivable balances were written off against the previously established
reserves.
In December 1991, the Partnership funded a $3,500,000 loan to IDM
Corporation (an affiliate of GPCo) on Pads A, E, and F of the Beach and Lampson
retail center. The borrower repaid $1,100,000 during 1992. The loan is secured
by a first deed of trust. Under a bankruptcy reorganization plan, the secured
principal balance was reduced to $1,333,000 and the remainder was converted to
shares of IDM common stock and distributed to the limited partners of the
Partnership. During 1996, IDM Corporation sold Pad F of the Beach and Lampson
retail center for $525,000. The net sales proceeds received of $474,085 were
repaid to the Partnership and applied as a principal reduction on this loan.
During 1996, the remaining principal balance of $858,915 was reserved in its
entirety.
In 1997, the Partnership funded four new participating loans to affiliates
of GPCo. Each loan was secured by real property and bore interest at a variable
rate determined by the Federal Reserve of San Francisco's discount rate plus a
3% premium with a minimum of 12.12% and a maximum of 15.15%. The interest rate
was adjustable on the last day of March, June, September and December of each
year .
On April 15, 1997, the Partnership funded a loan to Sierra Pacific Pension
Investors `84, an affiliate of GPCo, in the amount of $200,000. The loan is
secured by a second trust deed on the Sierra Valencia property located in
Tucson, Arizona. Monthly payments of $6,659, consisting of both interest and
principal, commenced on May 15, 1997. As of December 31, 1999, the loan balance
was $32,000. The loan was paid in full in March, 2000.
The Partnership entered into two loan agreements with CGS Real Estate
Company, Inc., an affiliate of GPCo. On August 1, 1997, the Partnership funded
$165,000 to secure financing for a land acquisition in San Diego, California
(Sorrento II Land). On December 1, 1997, an additional $316,500 was funded to
provide financing for a land acquisition in Long Beach, California (Bally Land).
Both loans are secured by second trust deeds and have a term of five years.
Interest only payments are due monthly in arrears. In 1998, the Partnership
funded an additional $585,000 to CGS Real Estate Company, Inc.. The existing
secured loan made in August 1997 was amended, increasing the loan amount to
$750,110. The loan term was extended to December 31, 2003. During the first
quarter of 2000, the Sorrento II Land was sold; the notes secured by the
Sorrento II Land were not repaid, but they are currently secured by the second
deed of trust on the land referred to below in Phoenix, Arizona.
On December 24, 1997, the Partnership funded a $372,500 loan to NO-SO,
Inc., an affiliate of GPCo, to provide financing for a land development in
Phoenix, Arizona. In 1999, CGS Real Estate Company, Inc. purchased the land from
NO-SO, Inc. and assumed the loan. The loan is secured by a second deed of trust
on the land and has a term of five years. Interest only payments are due monthly
in arrears.
During 2000, CGS Real Estate Company, Inc. issued a new note to the
Partnership, consolidating all then-existing notes, in the principal amount of
$1,643,530, which included accrued interest through December 31, 1999. This note
is secured by second deeds of trust on the Bally Land in Long Beach, California
and the land in Phoenix, Arizona.
THE DEPOSITARY FOR THE OFFER IS:
WILMINGTON TRUST COMPANY
BY MAIL: BY HAND OR OVERNIGHT COURIER:
Corporate Trust Reorganization Services Wilmington Trust Company
Wilmington Trust Company 1105 North Market Street, 1st Floor
P.O. Box 8861 Wilmington, DE 19801
Wilmington, DE 19899-8861 Attn: Corporate Trust Reorganization Services
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DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
Any questions and requests for assistance or additional copies of
this Offer to Purchase, the Letter of Transmittal and related materials may be
directed to the Information Agent at its address and telephone number set forth
below. Shareholders may also contact their broker, dealer, commercial bank or
trust company for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
212-929-5500 (Call Collect)
or
CALL TOLL-FREE: 800-322-2885