Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH 8,000
UNITS OF LIMITED PARTNERSHIP INTEREST
OF
INLAND CAPITAL FUND, L.P.
AT
$320 per Unit
MPF INCOME FUND 21, LLC; MP VALUE FUND 6, LLC; MACKENZIE PATTERSON SPECIAL
FUND 6, LLC; MACKENZIE PATTERSON SPECIAL FUND 6A, LLC; MP VALUE FUND 6, LLC;
MPF SPECIAL FUND 8, LLC; MACKENZIE PATTERSON SPECIAL FUND 7, LLC; MPF DEWAAY
PREMIER FUND, LLC; MPF DEWAAY FUND 2, LLC; MPF DEWAAY FUND 3, LLC; ACCELERATED
HIGH YIELD INSTITUTIONAL INVESTORS, LTD., L.P.; ACCELERATED HIGH YIELD
INSTITUTIONAL FUND I, LTD., L.P.; and MPF-NY 2005, LLC
(collectively the "Purchasers")
THE OFFER, WITHDRAWAL RIGHTS, AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, PACIFIC DAYLIGHT TIME, ON MARCH 25, 2005, UNLESS THE OFFER IS
EXTENDED.
The Purchasers hereby seek to acquire 8,000 Units of limited partnership
interest (the "Units") in INLAND CAPITAL FUND, L.P. (the "Partnership"). The
Purchasers are not affiliated with the Partnership or its general partner. The
general partner of the Partnership is Inland Real Estate Investment Corporation
General Partner (the "General Partner"). The Purchasers hereby offer to purchase
8,000 Units at a purchase price equal to $320 per Unit, less the amount of any
distributions declared or made with respect to the Units between February 23,
2005 and March 25, 2005, or such other date to which this offer may be extended
(the "Expiration Date"), in cash, without interest, upon the terms and subject
to the conditions set forth in this offer to purchase (the "Offer to Purchase")
and in the related Letter of Transmittal, as each may be supplemented or amended
from time to time (which together constitute the "Offer"). As noted above, the
Offer price would be subject to reduction for distributions made or declared
prior to the Expiration Date. Any distributions made or declared after the
Expiration Date would, by the terms of the Offer and as set forth in the Letter
of Transmittal, be assigned by tendering Unit holders to the Purchasers.
Tender of Units will include the tender of any and all securities into which the
Units may be converted and any securities distributed with respect to the Units
from and after the Offer Date.
The Partnership had 2,583 holders of record owning an aggregate of 32,337 units
as of September 30, 2004, according to its quarterly report on Form 10-Q for the
quarter ended September 30, 2004. The Purchasers and their affiliates currently
beneficially own no Units, or 0% of the outstanding Units. The 8,000 Units
subject to the Offer constitute 24.74% of the outstanding Units. Consummation of
the Offer, if all Units sought are tendered, would require payment by the
Purchasers of up to $2,560,000 in aggregate purchase price, which the Purchasers
intend to fund out of their current working capital.
Holders of Units ("Unit holders") are urged to consider the following factors:
o Unit holders who tender their Units will give up the opportunity to
participate in any future benefits from the ownership of Units,
including potential future distributions by the Partnership from
property operations or dispositions, and the purchase price per Unit
payable to a tendering Unit holder by the Purchasers may be less than
the total amount which might otherwise be received by the Unit holder
with respect to the Unit over the remaining term of the Partnership.
o The Purchasers are making the Offer for investment purposes and with
the intention of making a profit from the ownership of the Units. In
establishing the purchase price of $320 per Unit, the Purchasers are
motivated to establish the lowest price which might be acceptable to
Unit holders consistent with the Purchasers' objectives. There is
no public market for the Units, and neither the Unit holders nor the
Purchasers have any accurate means for determining the actual present
value of the Units. Although there can be no certainty as to the actual
present value of the Units, the Purchasers have estimated, solely for
the purposes of determining an acceptable Offer price, that the
Partnership could have an estimated liquidation value of approximately
$722 per Unit. It should be noted, however, that the Purchasers have
not made an independent appraisal of the Units or the Partnership's
properties, and are not qualified to appraise real estate. Furthermore,
1
there can be no assurance as to the timing or amount of any future
Partnership distributions, and there cannot be any assurance that the
Purchasers' estimate accurately reflects an approximate value of the
Units or that the actual amounts which may be realized by holders for
the Units may not vary substantially from this estimate.
o The Depositary, MacKenzie Patterson Fuller, Inc., is an affiliate of
certain of the Purchasers. No independent party will hold securities
tendered until the offer closes and payment is made. Because there is
no independent intermediary to hold the Purchasers' funds and tendered
securities, the Purchasers may have access to the securities before all
conditions to the Offer have been satisfied and selling Unit holders
have been paid.
o The Purchasers may accept only a portion of the Units tendered by a
Unitholder if a total of more than 8,000 Units are tendered.
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. IF MORE THAN 8,000 Units ARE VALIDLY TENDERED AND NOT WITHDRAWN, THE
PURCHASERS WILL ACCEPT FOR PURCHASE 8,000 Units FROM TENDERING UNITHOLDERS ON A
PRO RATA BASIS, SUBJECT TO THE TERMS AND CONDITIONS HEREIN. A UNIT HOLDER MAY
TENDER ANY OR ALL UNITS OWNED BY SUCH UNIT HOLDER.
The Purchasers expressly reserve the right, in their sole discretion, at any
time and from time to time, (i) to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Units, (ii) upon the occurrence of any of the conditions specified in
Section 13 of this Offer to Purchase, to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or paid for, or to delay
the acceptance for payment of, or payment for, any Units not theretofore
accepted for payment or paid for, and (iii) to amend the Offer in any respect.
Notice of any such extension, termination, or amendment will promptly be
disseminated to Unit holders in a manner reasonably designed to inform Unit
holders of such change in compliance with Rule 14d-4(c) under the Securities
Exchange Act of 1934 (the "Exchange Act"). In the case of an extension of the
Offer, such extension will be followed by a press release or public announcement
which will be issued no later than 9:00 a.m., Eastern Daylight Time, on the next
business day after the scheduled Expiration Date, in accordance with Rule
14e-1(d) under the Exchange Act.
February 23, 2005
2
IMPORTANT
Any Unit holder desiring to tender any or all of such Unit holder's Units should
complete and sign the Letter of Transmittal (a copy of which is enclosed with
this Offer to Purchase, printed on green paper) in accordance with the
instructions in the Letter of Transmittal and mail, deliver or telecopy the
Letter of Transmittal and any other required documents to MacKenzie Patterson
Fuller, Inc. (the "Depositary"), an affiliate of certain of the Purchasers, at
the address or facsimile number set forth below.
MacKenzie Patterson Fuller, Inc.
1640 School Street
Moraga, California 94556
Telephone: 800-854-8357
Facsimile: 925-631-9119
E-Mail Address: offers@mpfi.com
Questions or requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to the Purchasers at
1-800-854-8357.
---------------------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY REPRESENTATION
ON BEHALF OF THE PURCHASERS OR TO PROVIDE ANY INFORMATION OTHER THAN AS
CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH RECOMMENDATION,
INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN AUTHORIZED.
---------------------------
The Partnership is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file reports and other
information with the Securities and Exchange Commission ("Commission") relating
to its business, financial condition and other matters. Such reports and other
information are available on the Commission's electronic data gathering and
retrieval (EDGAR) system, at its internet web site at www.sec.gov, may be
inspected at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of such material can also be obtained from the Public Reference Room of
the Commission in Washington, D.C. at prescribed rates.
The Purchasers have filed with the Commission a Tender Offer Statement on
Schedule TO (including exhibits) pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer. Such statement and any amendments thereto, including
exhibits, may be inspected and copies may be obtained from the offices of the
Commission in the manner specified above.
3
TABLE OF CONTENTS
Page
SUMMARY TERM SHEET.............................................................5
INTRODUCTION...................................................................8
TENDER OFFER..................................................................12
Section 1. Terms of the Offer..........................................12
Section 2. Acceptance for Payment and Payment for Units; Proration.....12
Section 3. Procedures for Tendering Units..............................13
Section 4. Withdrawal Rights...........................................14
Section 5. Extension of Tender Period; Termination; Amendment..........14
Section 6. Certain Federal Income Tax Consequences.....................15
Section 7. Effects of the Offer........................................17
Section 8. Future Plans................................................17
Section 9. The Business of the Partnership.............................18
Section 10. Conflicts of Interest.......................................21
Section 11. Certain Information Concerning the Purchasers...............21
Section 12. Source of Funds.............................................21
Section 13. Conditions of the Offer.....................................22
Section 14. Certain Legal Matters.......................................23
Section 15. Fees and Expenses...........................................23
Section 16. Miscellaneous...............................................23
4
SUMMARY TERM SHEET
The Purchasers are offering to purchase any and all outstanding Units for $320
per Unit in cash. The following are some of the questions that you, as a Unit
holder of the Partnership may have and answers to those questions. The
information in this summary is not complete, and we urge you to carefully read
the remainder of this Offer to Purchase and the accompanying Letter of
Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
The offer to purchase your Units is being made jointly by MPF INCOME FUND
21, LLC; MP VALUE FUND 6, LLC; MACKENZIE PATTERSON SPECIAL FUND 6, LLC;
MACKENZIE PATTERSON SPECIAL FUND 6A, LLC; MP VALUE FUND 6, LLC; MPF SPECIAL FUND
8, LLC; MACKENZIE PATTERSON SPECIAL FUND 7, LLC; MPF DEWAAY PREMIER FUND, LLC;
MPF DEWAAY FUND 2, LLC; MPF DEWAAY FUND 3, LLC; ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS, LTD., L.P.; ACCELERATED HIGH YIELD INSTITUTIONAL FUND
I, LTD., L.P.; and MPF-NY 2005, LLC. Each of the Purchasers is a real estate
investment fund managed or advised by MacKenzie Patterson Fuller, Inc., a
private, independent real estate investment firm. None of these entities is
affiliated with the Partnership or its General Partner.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase 8,000 Units of limited partnership interest, which
are the "Units" issued to investors in the Partnership.
HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are offering to pay $320 per Unit, net to you in cash, less the amount of any
distributions declared or made with respect to the Units between February 23,
2005 and the date the Offer expires. The Offer price would be reduced by the
amount of distributions made or declared prior to the Expiration Date. Any
distributions made or declared after the Expiration Date would, by the terms of
the Offer and as set forth in the Letter of Transmittal, be assigned by
tendering Unit holders to the Purchasers. If you tender your Units to us in the
Offer, you will not have to pay brokerage fees or similar expenses.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
If the total amount of Units sought is purchased, the Purchasers' capital
commitment will be approximately $2,560,000. The Purchasers have an aggregate of
approximately $31 million in total assets, and more than $21 million in total
net assets at their disposal to fund payment to selling Unit holders.
IS THE FINANCIAL CONDITION OF THE BIDDERS RELEVANT TO MY DECISION ON WHETHER TO
TENDER IN THE OFFER?
Because this is a cash offer that is not conditioned on financing being
available, and the Purchasers have more than adequate resources and no intention
to take control of the Partnership, other information concerning the Purchasers'
financial condition would seem to have little relevance to your decision.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 12:00 midnight, Pacific Daylight Time, on March 25,
2005, to decide whether to tender your Units in the Offer.
5
WILL ALL OF THE UNITS I TENDER BE ACCEPTED BY THE PURCHASERS?
The Purchasers desire to purchase up to 8,000 Units. If the number of Units
validly tendered and not properly withdrawn on or prior to the Expiration Date
is less than or equal to 8,000, we will purchase all Units so tendered and not
withdrawn, upon the terms and subject to the conditions of the Offer. However,
if more than 8,000 Units are so tendered and not withdrawn, we will accept for
payment and pay for 8,000 Units so tendered, pro rata according to the number of
Units so tendered, adjusted by rounding down to the nearest whole number of
Units tendered by each Unit holder to avoid purchases of fractional Units, as
appropriate. See "Tender Offer -- Section 2. Acceptance for Payment and Payment
for Units; Proration."
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
The Offer can be extended in our discretion.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will make a public announcement of the extension, not
later than 9:00 a.m., Eastern Daylight Time, on the day after the day on which
the Offer was scheduled to expire.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
There are no conditions to the offer based on a minimum number of Units
tendered, the availability of financing, or the success of the offer. However,
we may not be obligated to purchase any Units if certain conditions occur, such
as legal or government actions which would prohibit the purchase. Furthermore,
we are not obligated to purchase any Units which are validly tendered if, among
other things, there is a material adverse change in the Partnership or its
business. Please see the discussion in Section 13, Conditions of the Offer, for
a description of all conditions.
HOW DO I TENDER MY UNITS?
To tender your Units, you must deliver a completed Letter of Transmittal
(printed on green paper), to the Depositary at: MacKenzie Patterson Fuller,
Inc., 1640 School Street, Moraga, California 94556 (Telephone: 800-854-8357;
Facsimile Transmission: 925-631-9119), no later than the time the Offer expires.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED UNITS?
You can withdraw previously tendered Units at any time until the Offer has
expired and, if we have not agreed to accept your Units for payment by April 26,
2005, you can withdraw them at any time after such time until we do accept your
Units for payment.
HOW DO I WITHDRAW PREVIOUSLY TENDERED UNITS?
To withdraw Units, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the Depositary while you
still have the right to withdraw the Units.
WHAT DOES THE PARTNERSHIP'S GENERAL PARTNER THINK OF THE OFFER?
The Purchasers have not sought the approval or disapproval of the General
Partner. The General Partner may be expected to respond with the Partnership's
position on the offer in the next two weeks.
WILL THE PARTNERSHIP CONTINUE AS A PUBLIC COMPANY?
The Partnership reported 2,583 holders of its outstanding Units as of the date
of its most recent annual report. If the total number of Unit holders is below
300, the Partnership can elect to discontinue its status as a public reporting
company. Accordingly, it is possible that the Offer could result in the total
number of Unit holders falling below the 300 holder level. However, there has
never been a public trading market for the Units and none is expected to
develop, so the Partnership's status as a public company will not affect a
trading market in the Units. While the Partnership's Agreement of Limited
Partnership requires that all Unit holders be provided annual audited financial
statements, quarterly interim financial statements, and timely reports providing
other information regarding the operations and condition of the Partnership, a
6
change in the Partnership's status as a public company could reduce the
information available to Unit holders about the Partnership in the event the
information required by the Partnership Agreement is not as extensive as that
provided in reports required to be filed by public companies under applicable
rules of the Securities and Exchange Commission.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY UNITS?
The Purchasers do not anticipate that Units held by non-tendering Unit holders
will be affected by the completion of the offer.
WHAT ARE THE PURCHASERS' FUTURE INTENTIONS CONCERNING THE PARTNERSHIP?
The Purchasers have no present intention to seek control of the Partnership or
to change the management or operations of the Partnership. The Purchasers do not
have any present intention to take action in connection with the liquidation of
the Partnership or with any extraordinary transaction concerning the Partnership
or its assets. Although the Purchasers do not have any present intention to take
any action with respect to management or control of the Partnership, the
Purchasers reserve the right, at an appropriate time, to exercise their rights
as limited partners to vote on matters subject to a limited partner vote,
including any vote affecting the sale of the Partnership's assets and the
liquidation and dissolution of the Partnership.
WHAT IS THE MARKET VALUE OF MY UNITS?
The Units do not have a readily ascertainable market value, and neither the Unit
holders nor the Purchasers have any accurate means for determining the actual
present value of the Units. According to the Partnership, "There is no public
market for units nor is it anticipated that any public market for units will
develop." (Form 10-K for the year ended December 31, 2003). The Purchasers
review of independent secondary market reporting publications such as The Direct
Investments Spectrum (formerly The Partnership Spectrum) and The Stanger Report,
reported limited sales of Units on secondary markets during the last six months
of 2004 at $360 per Unit. The American Partnership Board, another independent,
third-party source, reported sales of 1 Unit at $311 per Unit in the 4th
quarter, 2004. The information published by these independent sources is
believed to be the product of their private market research and does not
constitute the comprehensive transaction reporting of a securities exchange.
Accordingly, the Purchasers do not know whether the foregoing information is
accurate or complete. Although there can be no certainty as to the actual
present value of the Units, the Purchasers have estimated, solely for the
purposes of determining an acceptable Offer price, that the Partnership could
have an estimated liquidation value of approximately $722 per Unit, or higher.
It should be noted, that the Purchasers have not made an independent appraisal
of the Units or the Partnership's properties, and are not qualified to appraise
real estate. Accordingly, there can be no assurance that this estimate
accurately reflects an approximate value of the Units or that the actual amounts
which may be realized by Unit holders for the may not vary substantially from
this estimate.
TO WHOM CAN I TALK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call MacKenzie Patterson Fuller, Inc., toll-free, at 800-854-8357.
7
To the Unit holders of INLAND CAPITAL FUND, L.P.:
INTRODUCTION
The Purchasers hereby offer to purchase up to 8,000 Units at a purchase
price of $320 per Unit ("Offer Price"), less the amount of any distributions
declared or paid with respect to the Units between February 23, 2005, and the
Expiration Date, in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer. The Purchasers are unaware of any
distributions declared or paid since February 23, 2005. Unit holders who tender
their Units will not be obligated to pay any Partnership transfer fees, or any
other fees, expenses or commissions in connection with the tender of Units. The
Purchasers will pay all such costs and all charges and expenses of the
Depositary, an affiliate of certain of the Purchasers, as depositary in
connection with the Offer.
For further information concerning the Purchasers, see Section 11 below
and Schedule I. None of the Purchasers or the Depositary is affiliated with the
Partnership or the Partnership's General Partner. The address of the
Partnership's principal executive offices is 2901 Butterfield Road, Oak Brook,
Illinois 60523, and its phone number is 630-218-8000.
Unit holders are urged to consider the following factors:
o The Offer will provide Unit holders with an opportunity to liquidate
their investment without the usual transaction costs associated with
market sales. Unit holders may have a more immediate need to use the
cash now tied up in an investment in the Units and may wish to sell
them to the Purchasers.
o Unit holders who tender their Units will give up the opportunity to
participate in any future benefits from the ownership of Units,
including potential future distributions by the Partnership from
property dispositions or operations from future development, if any,
and the purchase price per Unit payable to a tendering Unit holder by
the Purchasers may be less than the total amount which might otherwise
be received by the Unit holder with respect to the Unit over the
remaining term of the Partnership.
o The Purchasers are making the Offer for investment purposes and with
the intention of making a profit from the ownership of the Units. In
establishing the purchase price of $320 per Unit, the Purchasers are
motivated to establish the lowest price which might be acceptable to
Unit holders consistent with the Purchasers' objectives. There is no
public market for the Units, and neither the Unit holders nor the
Purchasers have any accurate means for determining the actual present
value of the Units. Although there can be no certainty as to the actual
present value of the Units, the Purchasers have estimated, solely for
the purposes of determining an acceptable Offer price, that the
Partnership could have an estimated liquidation value of approximately
$722 per Unit. It should be noted, however, that the Purchasers have
not made an independent appraisal of the Units or the Partnership's
properties, and are not qualified to appraise real estate. Furthermore,
although the Partnership has announced that it is attempting to sell
its remaining property, there can be no assurance as to the timing or
amount of any future Partnership distributions, and there can be no
assurance that the Purchasers' estimate accurately reflects an
approximate value of the Units or that the actual amounts which may be
realized by holders for the Units may not vary substantially from this
estimate.
o The Depositary, MacKenzie Patterson Fuller, Inc., is an affiliate of
certain of the Purchasers. No independent party will hold securities
tendered until the offer closes and payment is made. Because there is
no independent intermediary to hold the Purchasers' funds and tendered
securities, the Purchasers may have access to the securities before all
conditions to the Offer have been satisfied and selling Unit holders
have been paid.
o The Purchasers may accept only a portion of the Units tendered by a
Unitholder in the event a total of more than 8,000 Units are tendered.
Establishment of the Offer Price
The Purchasers have set the Offer Price at $320 per Unit, less the
amount of any distributions declared or made with respect to the Units between
February 23, 2005 and the Expiration Date. In determining the Offer Price, the
8
Purchasers analyzed a number of quantitative and qualitative factors, including:
(i) the lack of a secondary market for resales of the Units and the resulting
lack of liquidity of an investment in the Partnership; (ii) the estimated value
of the Partnership's real estate assets; and (iii) the costs to the Purchasers
associated with acquiring the Units.
The Partnership made the following statements in its annual report on
Form 10-K for the year ended December 31, 2003: "There is no public market for
units nor is it anticipated that any public market for units will develop." The
lack of any public market for the sale of Units means that Unit holders have
limited alternatives if they seek to sell their Units. As a result of such
limited alternatives for Unit holders, the Purchasers may not need to offer as
high a price for the Units as they would otherwise. On the other hand, the
Purchasers take a greater risk in establishing a purchase price as there is no
prevailing market price to be used for reference and the Purchasers themselves
will have limited liquidity for the Units upon consummation of the purchase. The
Purchasers review of independent secondary market reporting publications such as
The Direct Investments Spectrum, and The Stanger Report, reported limited sales
of Units on secondary markets during the last six months of 2004 at $360 per
Unit. The American Partnership Board, another independent, third-party source,
reported sales of 1 Unit at $311 per Unit in the 4th quarter, 2004. The
information published by these independent sources is believed to be the product
of their private market research and does not constitute the comprehensive
transaction reporting of a securities exchange. Accordingly, the Purchasers do
not know whether the foregoing information is accurate or complete.
The Purchasers are offering to purchase Units which are an illiquid
investment and are not offering to purchase the Partnership's underlying assets.
The Partnership has disclosed that it "[i]n addition to [the $28,353,000 in]
sales which occurred in 2004, we anticipate additional future sales of over 300
acres of Parcels 2, 8, 14 and 17.... We plan to enhance the value of our land
through pre-development activities such as rezoning, annexation and land
planning. We have already been successful in, or are in the process of,
pre-development activity on a majority of our land investments. Parcel 2,
annexed to the village of McHenry and zoned for a business park, has two phases
of improvements complete and sites are being marketed to potential buyers, of
which 34 of the 167 lots were sold as of September 30, 2004. Parcel 4 was zoned
for a variety of business uses and has improvements underway. Sites are being
marketed to potential buyers, of which approximately 67 acres were sold in
various transactions as of September 30, 2004. Parcels 15 and 16 were annexed to
the village of Huntley and zoned for residential and commercial development.
Parcels 15 and 16 were sold in 2004. Parcels 7 and 10 have been zoned for
commercial use and are being marketed." No other offers have been announced or
sales consummated. The Purchasers' valuation is based upon the sale of the
assets of the Partnership, but such assets may not be liquidated for an
indefinite period of time even though the Partnership has sold some of its
assets recently and announced plans to develop or market other assets.
Accordingly, the underlying asset value of the Partnership is only one factor
used by the Purchasers in arriving at the Offer Price. However, in the absence
of trading price information, the Purchasers estimate of the net asset value of
the Partnership may be relevant to Unit holders' review of the Offer Price.
Using publicly available information concerning the Partnership contained in the
Partnership's Form 10-K for the fiscal year ended December 31, 2003 and the
quarterly reports for the quarters ended March 30, 2004, June 30, 2004, and
September 30, 2004, the Purchasers derived an estimated net asset value for the
Units. The Purchasers are not qualified as real estate appraisers and have
relied solely on publicly available information in making their estimate of the
value of the Partnership's assets. The Purchasers estimated value of Partnership
assets was calculated solely for purposes of formulating their offer and cannot
be relied upon as representing an amount which might actually be realized upon a
liquidation of the Partnership's assets, whether now or at any time in the
future.
In determining their estimated value of the Units, the Purchasers first
calculated the "Estimated Net Sales Value" of the Partnership's real property
investments. The Estimated Net Sales Value was determined by first determining
the properties' probable sales price by multiplying the number of unsold acres
by the estimated per acre selling price. We determined the per acre selling
price by using the price from the previous sales by the Partnership in 2004. The
result reduced by 1.5% to take into account the estimated closing costs which
would be incurred upon sale by the Partnership of the properties, including
brokerage commissions, title costs, surveys, appraisals, legal fees and transfer
taxes. The number of unsold acres and the per acre selling price were obtained
from the Partnership's quarterly reports on Form 10-Q for the quarters ending
March 30, 2004, June 30, 2004, and September 30, 2004 (available on the
Commission's EDGAR system, at its internet web site at www.sec.gov, and
available for inspection at the Commission's principal office in Washington,
D.C.)
The Purchasers believe that the per acre selling prices utilized are
within a range of sales prices currently observed in the marketplace for
properties of similar type, age, and quality. Different per acre prices,
however, could also be appropriate. In this regard, Unit holders should be aware
9
that the use of higher per acre selling prices would result in a higher
Estimated Net Sales Value.
To determine the Estimated Liquidation Value of the Partnership's
assets, the Purchaser added to the Estimated Net Sales Value of the
Partnership's properties the net current assets, as reported in the
Partnership's most recent Form 10-Q for the quarter ended September 30, 2004,
and calculated the amount of the balance allocable to the Units. The resulting
Estimated Liquidation Value of the Partnership's assets per was approximately
$722 per Unit. The Purchasers emphasize that this value was calculated by them
solely for purposes of selecting an Offer Price. There can be no assurance as to
the actual liquidation value of Partnership assets or as to the amount or timing
of distributions of liquidation proceeds which may be received by Unit holders.
The Partnership has not announced any pending offer to purchase its assets.
Accordingly, there can be no assurance as to the availability or timing of any
liquidation proceeds. Additional quantitative detail is given below:
-------------------------------------------------------- ------------------
Gross valuation of partnership properties $14,525,066
-------------------------------------------------------- ------------------
Less: Selling Costs at 1.5% (217,876)
-------------------------------------------------------- ------------------
Plus: Net Current Assets 10,324,567
-------------------------------------------------------- ------------------
Estimated net valuation of your partnership $24,631,757
-------------------------------------------------------- ------------------
Percentage of estimated net valuation allocated to 95%
holders of units based upon subordinated general
partner participation
-------------------------------------------------------- ------------------
Estimated net valuation of units $23,332,188
-------------------------------------------------------- ------------------
Total number of units 32,337
-------------------------------------------------------- ------------------
Estimated valuation per unit $722
-------------------------------------------------------- ------------------
The Offer Price represents the price at which the Purchasers are
willing to purchase Units. The Purchasers arrived at the $320 Offer Price by
applying a liquidity discount to their calculations of Estimated Liquidation
Value of the Partnership's assets, after deducting selling and liquidation
costs. The Purchasers apply such a discount with the intention of making a
profit by holding on to the Units until the Partnership is liquidated, hopefully
at close to the full Estimated Liquidation Value. No independent person has been
retained to evaluate or render any opinion with respect to the fairness of the
Offer Price and no representation is made by the Purchasers or any affiliate of
the Purchasers as to such fairness. Other measures of the value of the Units may
be relevant to Unit holders. Unit holders are urged to consider carefully all of
the information contained herein and consult with their own advisers, tax,
financial or otherwise, in evaluating the terms of the Offer before deciding
whether to tender Units.
The Offer is not made with any current view toward or plan or purpose
of acquiring Units in a series of successive and periodic offers. Nevertheless,
the Purchasers reserve the right to gauge the response to this solicitation,
and, if not successful in purchasing 8,000 Units pursuant to this Offer, may
consider future offers. Factors affecting the Purchasers' future interest in
acquiring additional Units include, but are not limited to, the relative success
of the current Offer, any increase or decrease in the availability of capital
for investment by the Purchasers and their investment fund affiliates, the
current diversification and performance of each affiliated fund's portfolio of
real estate interests, the development of any public market in the Units or
actions by unrelated parties to tender for or purchase Units, the status of and
changes and trends in the Partnership's operations, announcement of pending
property sales and the proposed terms of sales, and local and national real
estate and financial market developments and trends.
General Background Information
Certain information contained in this Offer to Purchase which relates
to, or represents, statements made by the Partnership or the General Partner,
has been derived from information provided in reports filed by the Partnership
with the Securities and Exchange Commission.
Tendering Unit holders will not be obligated to pay transfer fees,
brokerage fees, or commissions on the sale of the Units to the Purchasers
pursuant to the Offer. The Purchasers will pay all charges and expenses incurred
in connection with the Offer. The Purchasers desire to purchase up to 8,000
Units. If the number of Units validly tendered and not properly withdrawn on or
prior to the Expiration Date is less than or equal to 8,000, we will purchase
all Units so tendered and not withdrawn, upon the terms and subject to the
conditions of the Offer. However, if more than 8,000 Units are so tendered and
not withdrawn, we will accept for payment and pay for 8,000 Units so tendered,
10
pro rata according to the number of Units so tendered, adjusted by rounding down
to the nearest whole number of Units tendered by each Unit holder to avoid
purchases of fractional Units, as appropriate. (See "Tender Offer -- Section 2.
Acceptance for Payment and Payment for Units; Proration.")
If, prior to the Expiration Date, the Purchasers increase the
consideration offered to Unit holders pursuant to the Offer, such increased
consideration will be paid with respect to all Units that are purchased pursuant
to the Offer, whether or not such Units were tendered prior to such increase in
consideration.
Unit holders are urged to read this Offer to Purchase and the
accompanying Letter of Transmittal carefully before deciding whether to tender
their Units.
11
TENDER OFFER
Section 1. Terms of the Offer. Upon the terms and subject to the conditions of
the Offer, the Purchasers will accept for payment and pay for Units validly
tendered on or prior to the Expiration Date and not withdrawn in accordance with
Section 4 of this Offer to Purchase. The term "Expiration Date" shall mean 12:00
midnight, Pacific Daylight Time, on March 25, 2005, unless and until the
Purchasers shall have extended the period of time for which the Offer is open,
in which event the term "Expiration Date" shall mean the latest time and date on
which the Offer, as so extended by the Purchasers, shall expire.
The Offer is conditioned on satisfaction of certain conditions. See
Section 13, which sets forth in full the conditions of the Offer. The Purchasers
reserve the right (but shall not be obligated), in their sole discretion and for
any reason, to waive any or all of such conditions. If, by the Expiration Date,
any or all of such conditions have not been satisfied or waived, the Purchasers
reserve the right (but shall not be obligated) to (i) decline to purchase any of
the Units tendered, terminate the Offer and return all tendered Units to
tendering Unit holders, (ii) waive all the unsatisfied conditions and, subject
to complying with applicable rules and regulations of the Commission, purchase
all Units validly tendered, (iii) extend the Offer and, subject to the right of
Unit holders to withdraw Units until the Expiration Date, retain the Units that
have been tendered during the period or periods for which the Offer is extended
or (iv) to amend the Offer. Notwithstanding the foregoing, upon the expiration
of the Offer, if all conditions are either satisfied or waived, the Purchasers
will promptly pay for all validly tendered Units, and the Purchasers do not
intend to imply that the foregoing rights of the Purchasers would permit the
Purchasers to delay payment for validly tendered Units following expiration.
The Purchasers do not anticipate and have no reason to believe that any
condition or event will occur that would prevent the Purchasers from purchasing
tendered Units as offered herein.
Section 2. Acceptance for Payment and Payment for Units; Proration. Upon 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 Purchasers will accept for payment, and will pay for, Units validly tendered
and not withdrawn in accordance with Section 4, promptly 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 (or facsimile thereof) and any other
documents required by the Letter of Transmittal.
The Purchasers desire to purchase up to 8,000 Units. If the number of
Units validly tendered and not properly withdrawn on or prior to the Expiration
Date is less than or equal to 8,000, we will purchase all Units so tendered and
not withdrawn, upon the terms and subject to the conditions of the Offer.
However, if more than 8,000 Units are so tendered and not withdrawn, we will
accept for payment and pay for 8,000 Units so tendered, pro rata according to
the number of Units so tendered, adjusted by rounding down to the nearest whole
number of Units tendered by each Unit holder to avoid purchases of fractional
Units, as appropriate.
In the event that proration is required, because of the difficulty of
immediately determining the precise number of Units to be accepted, the
Purchasers will announce the final results of proration as soon as practicable,
but in no event later than five business days following the Expiration Date. The
Purchasers will not pay for any Units tendered until after the final proration
factor has been determined.
For purposes of the Offer, the Purchasers shall be deemed to have
accepted for payment (and thereby purchased) tendered Units when, as and if the
Purchasers give oral or written notice to the Depositary of the Purchasers'
acceptance for payment of such Units pursuant to the Offer. Upon 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 Offer Price with the
Depositary, which will act as agent for the tendering Unit holders for the
purpose of receiving payment from the Purchasers and transmitting payment to
tendering Unit holders.
Under no circumstances will interest be paid on the Offer Price by
reason of any delay in making such payment.
If any tendered Units are not purchased for any reason (other than due
to proration as described above), the Letter of Transmittal with respect to such
Units not purchased will be of no force or effect. If, for any reason
whatsoever, acceptance for payment of, or payment for, any Units tendered
pursuant to the Offer is delayed or the Purchasers are unable to accept for
payment, purchase or pay for Units tendered pursuant to the Offer, then, without
12
prejudice to the Purchasers' rights under Section 13 (but subject to compliance
with Rule 14e-1(c) under the Exchange Act), the Depositary may, nevertheless, on
behalf of the Purchasers, retain tendered Units, subject to any limitations of
applicable law, and such Units may not be withdrawn except to the extent that
the tendering Unit holders are entitled to withdrawal rights as described in
Section 4.
If, prior to the Expiration Date, the Purchasers shall increase the
consideration offered to Unit holders 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.
Section 3. Procedures for Tendering Units.
Valid Tender. For Units to be validly tendered pursuant to the Offer, a properly
completed and duly executed Letter of Transmittal (a copy of which is enclosed
with this Offer to Purchase, printed on green paper) with any other documents
required by the Letter of Transmittal must be received by the Depositary at its
address set forth on the back cover of this Offer to Purchase on or prior to the
Expiration Date. A Unit holder may tender any or all Units owned by such Unit
holder.
In order for a tendering Unit holder to participate in the Offer, Units must be
validly tendered and not withdrawn prior to the Expiration Date, which is 12:00
midnight, Pacific Daylight Time, on March 25, 2005, or such date to which the
Offer may be extended.
The method of delivery of the Letter of Transmittal and all other required
documents is at the option and risk of the tendering Unit holder and delivery
will be deemed made only when actually received by the Depositary.
Backup Federal Income Tax Withholding. To prevent the possible application of
31% backup federal income tax withholding with respect to payment of the Offer
Price for Units purchased pursuant to the Offer, a tendering Unit holder must
provide the Depositary with such Unit holder's correct taxpayer identification
number and make certain certifications that such Unit holder is not subject to
backup federal income tax withholding. Each tendering Unit holder must insert in
the Letter of Transmittal the Unit holder's taxpayer identification number or
social security number in the space provided on the front of the Letter of
Transmittal. The Letter of Transmittal also includes a substitute Form W-9,
which contains the certifications referred to above. (See the Instructions to
the Letter of Transmittal.)
FIRPTA Withholding. To prevent the withholding of federal income tax in an
amount equal to 10% of the sum of the Offer Price plus the amount of Partnership
liabilities allocable to each Unit tendered, each Unit holder must complete the
FIRPTA Affidavit included in the Letter of Transmittal certifying such Unit
holder's taxpayer identification number and address and that the Unit holder is
not a foreign person. (See the Instructions to the Letter of Transmittal and
"Section 6. Certain Federal Income Tax Consequences.")
Other Requirements. By executing a Letter of Transmittal as set forth above, a
tendering Unit holder irrevocably appoints the designees of the Purchasers as
such Unit holder's proxies, in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
Unit holder's rights with respect to the Units tendered by such Unit holder and
accepted for payment by the Purchasers. Such appointment will be effective when,
and only to the extent that, the Purchasers accept such Units for payment. Upon
such acceptance for payment, all prior proxies given by such Unit holder with
respect to such Units will, without further action, be revoked, and no
subsequent proxies may be given (and if given will not be effective). The
designees of the Purchasers will, with respect to such Units, be empowered to
exercise all voting and other rights of such Unit holder as they in their sole
discretion may deem proper at any meeting of Unit holders, by written consent or
otherwise. In addition, by executing a Letter of Transmittal, a Unit holder also
assigns to the Purchasers all of the Unit holder's rights to receive
distributions from the Partnership with respect to Units which are accepted for
payment and purchased pursuant to the Offer, other than those distributions
declared or paid during the period commencing on the Offer Date and terminating
on the Expiration Date.
Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation
to Give Notice of Defects. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance for payment of any tender of Units
pursuant to the procedures described above will be determined by the Purchasers,
in their sole discretion, which determination shall be final and binding. The
Purchasers reserve the absolute right to reject any or all tenders if not in
13
proper form or if the acceptance of, or payment for, the absolute right to
reject any or all tenders if not in proper form or if the acceptance of, or
payment for, the Units tendered may, in the opinion of the Purchasers' counsel,
be unlawful. The Purchasers also reserve the right to waive any defect or
irregularity in any tender with respect to any particular Units of any
particular Unit holder, and the Purchasers' interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
Instructions thereto) will be final and binding. Neither the Purchasers, the
Depositary, nor any other person will be under any duty to give notification of
any defects or irregularities in the tender of any Units or will incur any
liability for failure to give any such notification.
A tender of Units pursuant to any of the procedures described above will
constitute a binding agreement between the tendering Unit holder and the
Purchasers upon the terms and subject to the conditions of the Offer, including
the tendering Unit holder's representation and warranty that (i) such Unit
holder owns the Units being tendered within the meaning of Rule 14e-4 under the
Exchange Act and (ii) the tender of such Unit complies with Rule 14e-4. Rule
14e-4 requires, in general, that a tendering security holder actually be able to
deliver the security subject to the tender offer, and is of concern particularly
to any Unit holders who have granted options to sell or purchase the Units, hold
option rights to acquire such securities, maintain "short" positions in the
Units (i.e., have borrowed the Units) or have loaned the Units to a short
seller. Because of the nature of limited partnership interests, the Purchasers
believe it is unlikely that any option trading or short selling activity exists
with respect to the Units. In any event, a Unit holder will be deemed to tender
Units in compliance with Rule 14e-4 and the Offer if the holder is the record
owner of the Units and the holder (i) delivers the Units pursuant to the terms
of the Offer, (ii) causes such delivery to be made, (iii) guarantees such
delivery, (iv) causes a guaranty of such delivery, or (v) uses any other method
permitted in the Offer (such as facsimile delivery of the Transmittal Letter).
Section 4. Withdrawal Rights. Except as otherwise provided in this Section 4,
all tenders of Units pursuant to the Offer are irrevocable, provided that Units
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment as provided in this
Offer to Purchase, may also be withdrawn at any time on or after April 26, 2005.
For withdrawal to be effective a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at the address or
the facsimile number set forth in the attached Letter of Transmittal. Any such
notice of withdrawal must specify the name of the person who tendered the Units
to be withdrawn and must be signed by the person(s) who signed the Letter of
Transmittal in the same manner as the Letter of Transmittal was signed.
If purchase of, or payment for, Units is delayed for any reason or if
the Purchasers are unable to purchase or pay for Units for any reason, then,
without prejudice to the Purchasers' rights under the Offer, tendered Units may
be retained by the Depositary on behalf of the Purchasers and may not be
withdrawn except to the extent that tendering Unit holders are entitled to
withdrawal rights as set forth in this Section 4, subject to Rule 14e-1(c) under
the Exchange Act, which provides that no person who makes a tender offer shall
fail to pay the consideration offered or return the securities deposited by or
on behalf of security holders promptly after the termination or withdrawal of
the tender offer.
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Purchasers, in their sole
discretion, which determination shall be final and binding. Neither the
Purchasers, nor the Depositary, nor any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or will incur any liability for failure to give any such notification.
Any Units properly withdrawn will be deemed not to be validly tendered
for purposes of the Offer. Withdrawn Units may be re-tendered, however, by
following the procedures described in Section 3 at any time prior to the
Expiration Date.
Section 5. Extension of Tender Period; Termination; Amendment. The Purchasers
expressly reserve the right, in their sole discretion, at any time and from time
to time, (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Units by
giving oral or written notice of such extension to the Depositary, (ii) upon the
occurrence or failure to occur of any of the conditions specified in Section 13,
to delay the acceptance for payment of, or payment for, any Units not heretofore
accepted for payment or paid for, or to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or paid for, by giving
oral or written notice of such termination to the Depositary, and (iii) to amend
14
the Offer in any respect (including, without limitation, by increasing or
decreasing the consideration offered or the number of Units being sought in the
Offer or both or changing the type of consideration) by giving oral or written
notice of such amendment to the Depositary. Any extension, termination, or
amendment will be followed as promptly as practicable by public announcement,
the announcement in the case of an extension to be issued no later than 9:00
a.m., Eastern Daylight Time, on the next business day after the previously
scheduled Expiration Date, in accordance with the public announcement
requirement of Rule 14d-4(c) under the Exchange Act. Without limiting the manner
in which the Purchasers may choose to make any public announcement, except as
provided by applicable law (including Rule 14d-4(c) under the Exchange Act), the
Purchasers will have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by issuing a release to the
Dow Jones News Service. The Purchasers may also be required by applicable law to
disseminate to Unit holders certain information concerning the extensions of the
Offer and any material changes in the terms of the Offer.
If the Purchasers extend the Offer, or if the Purchasers (whether
before or after its acceptance for payment of Units) are delayed in their
payment for Units or are unable to pay for Units pursuant to the Offer for any
reason, then, without prejudice to the Purchasers' rights under the Offer, the
Depositary may retain tendered Units on behalf of the Purchasers, and such Units
may not be withdrawn except to the extent tendering Unit holders are entitled to
withdrawal rights as described in Section 4. However, the ability of the
Purchasers to delay payment for Units that the Purchasers have accepted for
payment is limited by Rule 14e-1 under the Exchange Act, which requires that the
Purchasers pay the consideration offered or return the securities deposited by
or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer.
If the Purchasers make a material change in the terms of the Offer or
the information concerning the Offer or waive a material condition of the Offer,
the Purchasers will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an
offer must remain open following a material change in the terms of the offer or
information concerning the offer, other than a change in price or a change in
percentage of securities sought, will depend upon the facts and circumstances,
including the relative materiality of the change in the terms or information.
With respect to a change in price or a change in percentage of securities sought
(other than an increase of not more than 2% of the securities sought), however,
a minimum ten business day period is generally required to allow for adequate
dissemination to security holders and for investor response. As used in this
Offer to Purchase, "business day" means any day other than a Saturday, Sunday or
a federal holiday, and consists of the time period from 12:01 a.m. through 12:00
midnight, Pacific Daylight Time.
Section 6. Material Federal Income Tax Consequences. THE FEDERAL INCOME TAX
DISCUSSION SET FORTH BELOW DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF TAXATION
THAT MAY BE RELEVANT TO A PARTICULAR UNIT HOLDER. For example, this discussion
does not address the effect of any applicable foreign, state, local or other tax
laws other than federal income tax laws. Certain Unit holders (including trusts,
foreign persons, tax-exempt organizations or corporations subject to special
rules, such as life insurance companies or S corporations) may be subject to
special rules not discussed below. This discussion is based on the Internal
Revenue Code of 1986, as amended (the "Code"), existing regulations, court
decisions and Internal Revenue Service ("IRS") rulings and other pronouncements.
EACH UNIT HOLDER TENDERING UNITS SHOULD CONSULT SUCH UNIT HOLDER'S OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH UNIT HOLDER OF ACCEPTING
THE OFFER, INCLUDING THE APPLICATION OF THE ALTERNATIVE MINIMUM TAX AND FEDERAL,
FOREIGN, STATE, LOCAL AND OTHER TAX LAWS.
The following discussion is based on the assumption that the
Partnership is treated as a partnership for federal income tax purposes and is
not a "publicly traded partnership" as that term is defined in the Code.
Gain or Loss. A taxable Unit holder will recognize a gain or loss on the sale of
such Unit holder's Units in an amount equal to the difference between (i) the
amount realized by such Unit holder on the sale and (ii) such Unit holder's
adjusted tax basis in the Units sold. The amount realized by a Unit holder will
include the Unit holder's share of the Partnership's liabilities, if any (as
determined under Code section 752 and the regulations thereunder). If the Unit
holder reports a loss on the sale, such loss generally could not be currently
deducted by such Unit holder except against such Unit holder's capital gains
from other investments. In addition, such loss would be treated as a passive
activity loss. (See "Suspended Passive Activity Losses" below.)
The adjusted tax basis in the Units of a Unit holder will depend upon
individual circumstances. (See also "Partnership Allocations in Year of Sale"
15
below.) Each Unit holder who plans to tender hereunder should consult with the
Unit holder's own tax advisor as to the Unit holder's adjusted tax basis in the
Unit holder's Units and the resulting tax consequences of a sale.
If any portion of the amount realized by a Unit holder is attributable
to such Unit holder's share of "unrealized receivables" or "substantially
appreciated inventory items" as defined in Code section 751, a corresponding
portion of such Unit holder's gain or loss will be treated as ordinary gain or
loss. It is possible that the basis allocation rules of Code Section 751 may
result in a Unit holder's recognizing ordinary income with respect to the
portion of the Unit holder's amount realized on the sale of a Unit that is
attributable to such items while recognizing a capital loss with respect to the
remainder of the Unit.
A tax-exempt Unit holder (other than an organization described in Code
Section 501(c)(7) (social club), 501(c)(9) (voluntary employee benefit
association), 501(c)(17) (supplementary unemployment benefit trust), or
501(c)(20) (qualified group legal services plan)) should not be required to
recognize unrelated trade or business income upon the sale of its Units pursuant
to the Offer, assuming that such Unit holder does not hold its Units as a
"dealer" and has not acquired such Units with debt financed proceeds.
Partnership Allocations in Year of Sale. A tendering Unit holder will be
allocated the Unit holder's pro rata share of the annual taxable income and
losses from the Partnership with respect to the Units sold for the period
through the date of sale, even though such Unit holder will assign to the
Purchasers their rights to receive certain cash distributions with respect to
such Units. Such allocations and any Partnership distributions for such period
would affect a Unit holder's adjusted tax basis in the tendered Units and,
therefore, the amount of gain or loss recognized by the Unit holder on the sale
of the Units.
Possible Tax Termination. The Code provides that if 50% or more of the capital
and profits interests in a partnership are sold or exchanged within a single
12-month period, such partnership generally will terminate for federal income
tax purposes. It is possible that the Partnership could terminate for federal
income tax purposes as a result of consummation of the Offer (although the
Partnership Agreement prevents transfers of Units that would cause such a
termination). A tax termination of the Partnership could have an effect on a
corporate or other non-individual Unit holder whose tax year is not the calendar
year, as such a Unit holder might recognize more than one year's Partnership tax
items in one tax return, thus accelerating by a fraction of a year the effects
from such items.
Suspended "Passive Activity Losses". A Unit holder who sells all of the Unit
holder's Units would be able to deduct "suspended" passive activity losses from
the Partnership, if any, in the year of sale free of the passive activity loss
limitation. As a limited partner of the Partnership, which was engaged in real
estate activities, the ability of a Unit holder, who or which is subject to the
passive activity loss rules, to claim tax losses from the Partnership was
limited. Upon sale of all of the Unit holder's Units, such Unit holder would be
able to use any "suspended" passive activity losses first against gain, if any,
on sale of the Unit holder's Units and then against income from any other
source.
Foreign Unit holders. Gain realized by a foreign Unit holder on a sale of a Unit
pursuant to the Offer will be subject to federal income tax. Under Section 1445
of the Code, the transferee of a partnership interest held by a foreign person
is generally required to deduct and withhold a tax equal to 10% of the amount
realized on the disposition. The Purchasers will withhold 10% of the amount
realized by a tendering Unit holder from the purchase price payment to be made
to such Unit holder unless the Unit holder properly completes and signs the
FIRPTA Affidavit included as part of the Letter of Transmittal certifying the
Unit holder's TIN, that such Unit holder is not a foreign person and the Unit
holder's address. Amounts withheld would be creditable against a foreign Unit
holder's federal income tax liability and, if in excess thereof, a refund could
be obtained from the Internal Revenue Service by filing a U.S. income tax
return.
16
Section 7. Effects of the Offer.
Limitations on Resales. The Purchasers do not believe the provisions of the
Partnership Agreement should restrict transfers of Units pursuant to the Offer,
although no more than 50% of the Units may be transferred in any 12-month
period. This limitation will not affect the tender of Units under this Offer
because, subject to the terms of the Offer, we will pay for the Units upon
confirmation that the general partner will recognize the change of address for
distributions and correspondence on the Units, and, under the terms of the
Letter of Transmittal, we will take a power of attorney over your Units that
will permit us to change the address to which distributions are sent. We will
then wait to transfer the Units tendered until the Partnership can effect the
transfer of record title in accordance with the Partnership Agreement.
Effect on Trading Market. If a substantial number of Units are purchased
pursuant to the Offer the result would be a reduction in the number of Unit
holders. Reducing the number of security holders in certain kinds of equity
securities might be expected to result in a reduction in the liquidity and
volume of activity in the trading market for the security. However, there is no
established public trading market for the Units and none is expected to develop.
Therefore, the Purchasers do not believe a reduction in the number of Unit
holders will materially further restrict the Unit holders' ability to find
purchasers for their Units through secondary market transactions.
Voting Power of Purchasers. If the Purchasers acquire a significant number of
the Units sought hereunder could give the Purchasers a controlling voting
interest in matters subject to a limited partner vote. The Partnership does not
hold annual or regular meetings to elect directors, and does not have a
representative board of directors overseeing management. Votes of Unit holders
would only be solicited, if ever, for matters affecting the fundamental
structure of the Partnership, such as the sale of the properties and termination
of the Partnership, and the affirmative vote of more than 50% of the outstanding
Units (not a mere quorum) is required to effect action. The Purchasers and their
affiliates do not intend to call for any such vote in the foreseeable future. A
Unit holder who tenders Units to the Purchasers grants a proxy to the Purchasers
as of the date of acceptance of the tender, granting the Purchasers the right to
vote such Units it their sole discretion as to any matters for which the
Partnership has established a record date prior to the time such. Units are
transferred by the Partnership to the Purchasers. The Purchasers reserve the
right to exercise any and all rights they might hold in the event that any vote
is called by the General Partner, or if, in the future, changes in circumstances
would dictate that they or other limited partners exercise their right to call a
vote.
Other Potential Effects. The Units are registered under the Exchange Act, which
requires, among other things that the Partnership furnish certain information to
its Unit holders and to the Commission and comply with the Commission's proxy
rules in connection with meetings of, and solicitation of consents from, Unit
holders. Registration and reporting requirements could be terminated by the
Partnership if the number of record holders falls below 300, or below 500 if the
Partnership's total assets are below $10 million for three consecutive preceding
fiscal years. The Partnership reported a total of 2,583 limited partners as of
its most recent fiscal year end, but the Purchasers are offering to purchase up
to 8,000 Units. Accordingly, it is possible that the Offer could result in the
total number of Unit holders falling below the foregoing 300 holder level. As
disclosed by the Partnership in its public reports, however, there has never
been a public trading market for the Units and none is expected to develop, so
the Partnership's status as a public company will not affect a trading market in
the Units. While the Partnership's Agreement of Limited Partnership requires
that all Unit holders be provided annual audited financial statements, quarterly
interim financial statements and timely reports providing other information
regarding the operations and condition of the Partnership, a change in the
Partnership's status as a public company could reduce the information available
to Unit holders about the Partnership in the event the information required by
the Partnership Agreement is not as extensive as that provided in reports
required to be filed by public companies under applicable rules of the
Securities and Exchange Commission.
Section 8. Future Plans. Following the completion of the Offer, the Purchasers,
or their affiliates, may acquire additional Units. Any such acquisitions may be
made through private purchases, one or more future tender offers or by any other
means deemed advisable or appropriate. Any such acquisitions may be at a
consideration higher or lower than the consideration to be paid for the Units
purchased pursuant to the Offer. The Purchasers are seeking to purchase a total
of 8,000 Units. If the Purchasers acquire fewer than 8,000 Units pursuant to the
Offer, the Purchasers may seek to make further purchases on the open market at
prevailing prices, or solicit Units pursuant to one or more future tender offers
at the same price, a higher price or, if the Partnership's circumstances change,
at a lower price. Alternatively, the Purchasers may discontinue any further
purchases of Units after termination of the Offer, regardless of the number of
Units purchased. The Offer is not made with any current view toward or plan or
17
purpose of acquiring Units in a series of successive and periodic offers.
Nevertheless, as noted above, the Purchasers reserve the right to gauge the
response to this solicitation, and, if not successful in purchasing 8,000 Units
in this Offer, may consider future offers. Factors affecting the Purchasers'
future interest in acquiring additional Units include, but are not limited to,
the relative success of the current Offer, any increase or decrease in the
availability of capital for investment by the Purchasers and their investment
fund affiliates, the current diversification and performance of each affiliated
fund's portfolio of real estate interests, the development of any public market
in the Units or actions by unrelated parties to tender for or purchase Units,
the status of and changes and trends in the Partnership's operations,
announcement of pending property sales and the proposed terms of sales, and
local and national real estate and financial market developments and trends.
The Purchasers are acquiring the Units pursuant to the Offer solely for
investment purposes. The Purchasers have no present intention to seek control of
the Partnership or to change the management or operations of the Partnership.
The Purchasers do not have any present intention to take any action in
connection with the ongoing liquidation of the Partnership. The Purchasers
nevertheless reserve the right, at an appropriate time, to exercise their rights
as limited partners to vote on matters subject to a limited partner vote,
including, but not limited to, any vote to affecting the sale of the
Partnership's properties and the liquidation and dissolution of the Partnership.
Except as expressly set forth herein, the Purchasers have no present intention
to seek control of the Partnership, to cause the Partnership to engage in any
extraordinary transaction, to cause any purchase, sale or transfer of a material
amount of the assets of any Partnership, to make any change in the distribution
policies, indebtedness or capitalization of any Partnership or to change the
structure, management or operations of the Partnership, the listing status of
the Units or the reporting requirements of the Partnership.
Section 9. The Business of the Partnership. Information included herein
concerning the Partnership is derived from the Partnership's publicly filed
reports. Information concerning the Partnership, its assets, operations, and
management is contained in its Annual Reports on Form 10-K and Quarterly Reports
on Form 10-Q, and other filings with the Securities and Exchange Commission.
Such reports and filings are available on the Commission's EDGAR system, at its
internet web site at www.sec.gov, and are available for inspection at the
Commission's principal office in Washington, D.C. The Purchasers have relied on
such information to the extent information is presented herein concerning the
Partnership, but the Purchasers have no ability to independently verify this
information. Thus, the information is provided for informational purposes only;
the Purchasers make no statements about, and cannot guaranty the accuracy of,
the information included in such reports and extracted in this Offer. The
Purchasers can only take responsibility for accurately reporting what the
Partnership has reported in its filings.
General. The Partnership was organized on June 21, 1991 under the laws of
the State of Delaware. Its primary business is the ownership of multiple parcels
of land surrounding the Chicago Metropolitan area and related operations. The
Partnership was formed for the purpose of acquiring, holding, selling, disposing
of, and otherwise dealing with these 18 parcels of land.
The Partnership's real estate portfolio currently consists of
approximately 597 acres of land out of the originally purchased 3,302 acres on 7
remaining parcels of land. The general partner of the Partnership is Inland Real
Estate Investment Corporation General Partner. As of December 31, 2003, there
are 32,337 Units outstanding, which are held of record by 2,583 limited
partners. The Partnership's principal executive offices are located at 2901
Butterfield Road, Oak Brook, Illinois 60523, telephone 630-218-8000.
For additional information about the Partnership, please refer to the
annual report prepared by the Partnership which was sent to you earlier last
year, particularly Item 2 of Form 10-K, which contains detailed information
regarding the properties owned, including mortgages, rental rates, and taxes. In
addition, the Partnership is subject to the information and reporting
requirements of the Exchange Act and information about the Partnership can be
obtained on the Commission's EDGAR system, at its internet web site at
www.sec.gov, and are available for inspection at the Commission's principal
office in Washington, D.C.
Liquidation Of the Partnership. Limited partners could, as an alternative
to tendering their Units, take a variety of possible actions, including voting
to liquidate the Partnership or amending the Agreement of Limited Partnership to
authorize limited partners to cause the Partnership to merge with another entity
or engage in a "roll-up" or similar transaction.
Competition. There is other land within the market areas of the
Partnership's properties. The number and quality of competitive properties in
18
such areas could have a material effect on the price received by the Partnership
upon sale of its property or after development, if any.
Financial Data. The selected financial information of the Partnership set
forth below for the years ended December 31, 2003, 2002, and 2001 is based on
audited financial statements. The selected financial information set forth below
for the periods ended September 30, 2004 and 2003 is based on unaudited
financial statements. This information should be read in conjunction with such
financial statements, including notes thereto, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Annual Report
on Form 10-K of the Partnership for the year ended December 31, 2003, and the
Quarterly Reports on Form 10-Q for the periods ended September 30, 2004 and
2003.
INLAND CAPITAL FUND, L.P.
------------------------------------- ---------------------------- ------------------------------------------------
Nine Months Ended Year Ended December 31,
September 30,
------------------------------------- ---------------------------- ------------------------------------------------
2004 2003 2003 2002 2001
------------------------------------- -------------- ------------- -------------- --------------- -----------------
Total Revenue $29,385,067 $8,309,899 8,397,317 8,120,541 2,320,989
------------------------------------- -------------- ------------- -------------- --------------- -----------------
Net (loss) earnings 20,511,375 4,783,640 4,791,865 5,522,385 729,463
------------------------------------- -------------- ------------- -------------- --------------- -----------------
Net (loss) earnings allocated 536.22 147.95 135.93 159.15 22.66
per unit of limited
partnership interest
------------------------------------- -------------- ------------- -------------- --------------- -----------------
Total assets 18,150,198 25,605,883 17,909,721 21,039,772 22,117,537
------------------------------------- -------------- ------------- -------------- --------------- -----------------
Description of Property. The following shows the location, Gross Acres
Purchased, the remaining acres owned, and the date of purchase of Partnership's
property.
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel & Location Gross Acres Remaining Purchase
Purchased Acres Date
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 1, Kendall County, Illinois 108.8960 0 07/22/92
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 2, McHenry County, Illinois 201.0000 145.3454 11/09/93
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 3, Will County, Illinois 34.0474 0 03/04/94
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 4, Will County, Illinois 86.9195 20.1214 03/30/94
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 5, LaSalle County, Illinois 190.9600 0 04/01/94
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 6, DeKalb County, Illinois 59.0800 0 05/11/94
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 7, Kendall County, Illinois 200.8210 32.6470 07/28/94
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 8, Kendall County, Illinois 133.0000 133.0000 08/17/94
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 9, LaSalle County, Illinois 335.9600 0 08/30/94
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 10, Kendall County, Illinois 230.7860 93.3700 09/16/94
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 11, Kane County, Illinois 123.0000 0 09/26/94
------------------------------------------ ------------------------- ------------------------ ---------------------
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------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 12, Kendall County, Illinois 110.2530 0 09/28/94
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 13, LaSalle County, Illinois 352.7390 0 10/06/94
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 14, Kendall County, Illinois 134.7760 124.1330 10/26/94
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 15, McHenry County, Illinois 169.5400 169.5400 10/31/94
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 16, McHenry County, Illinois 207.0754 207.0754 11/30/94
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 17, LaSalle County, Illinois 236.4400 236.4400 12/07/94
------------------------------------------ ------------------------- ------------------------ ---------------------
Parcel 18, Kendall County, Illinois 386.9900 0 11/02/95
------------------------------------------ ------------------------- ------------------------ ---------------------
Income. As of December 31, 2003, the general partner disclosed that it
anticipated that the land owned by the Partnership will produce sufficient
income to pay property taxes, insurance, and other miscellaneous expenses, with
surplus funds, if any, to be retained in the working capital reserve for
pre-development activities. Income is expected to be derived from leases to
farmers or from other activities compatible with the Partnership's business plan
for land parcels.
Distributions. All of the parcels purchased by the Partnership consist of
land, which generates revenue from farming or other leasing activities. It is
not expected that it will generate cash distributions to the partners from farm
leases or other leasing activities. However, sales of the parcels have produced
income to make distributions to the limited partners in the past, including
$7,343,986 in 2003 and $6,780,500 in 2002, or $227.11and $209.68 per Unit,
respectively. Over the life of the Partnership, the limited partners have
received distributions totaling $45,663,321, as of September 30, 2004.
Beneficial Ownership Of Interests In Your Partnership. The Purchasers
collectively have voting and dispositive power with respect to 0 Units, or 0%,
of the outstanding Units of the Partnership. Except as set forth in this offer
to purchase, neither we nor any of our affiliates, (i) beneficially own or have
a right to acquire any Units, (ii) has effected any transactions in the Units in
the past 60 days, or (iii) have any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Partnership, including, but not limited to, contracts, arrangements,
understandings or relationships concerning transfer or voting thereof, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss, or the giving or withholding of proxies.
Legal Proceedings. We are not aware of any material legal proceedings.
Environmental. Various Federal, state, and local laws subject property
owners or operators to liability for the costs of removal or remediation of
certain hazardous substances present on a property. Such laws often impart
liability without regard to whether the owner or operator knew of, or was
responsible for, the release of the hazardous substances. The presence of, or
failure to properly remediate, hazardous substances may adversely affect
occupancy at contaminated apartment communities and the Partnership's ability to
sell or borrow against contaminated properties. In addition to the costs
associated with investigation and remediation actions brought by governmental
agencies, the presence of hazardous wastes on a property could result in claims
by private plaintiffs for personal injury, disease, disability or other
infirmities. Various laws also impose liability for the cost of removal or
remediation of hazardous or toxic substances at the disposal or treatment
facility. Anyone who arranges for the disposal or treatment of hazardous or
toxic substances is potentially liable under such laws. These laws often impose
liability whether or not the person arranging for the disposal ever owned or
operated the disposal facility. In connection with the ownership or operation of
properties, the Partnership could potentially be liable for environmental
liabilities or costs associated with its properties or properties it may acquire
in the future. Any remaining costs are not expected to be material.
Additional Information Concerning the Partnership. The Partnership files
annual, quarterly, and special reports, proxy statements, and other information
20
with the Commission. You may read and copy any document the Partnership files at
the Commission's public reference room in Washington, D.C. Please call the
Commission at 1-800-SEC-0330 for further information on the public reference
rooms. The Partnership's most recent EDGAR filings are also available to the
public at the Commission's web site at http://www.sec.gov.
Section 10. Conflicts of Interest. The Depositary is affiliated with certain
Purchasers. Therefore, by virtue of this affiliation, the Depositary may have
inherent conflicts of interest in acting as Depositary for the Offer. The
Depositary's role is administrative only, however, and any conflict of interest
should not be deemed material to Unit holders.
Section 11. Certain Information Concerning the Purchasers. The Purchasers are
MPF INCOME FUND 21, LLC; MP VALUE FUND 6, LLC; MACKENZIE PATTERSON SPECIAL FUND
6, LLC; MACKENZIE PATTERSON SPECIAL FUND 6A, LLC; MP VALUE FUND 6, LLC; MPF
SPECIAL FUND 8, LLC; MACKENZIE PATTERSON SPECIAL FUND 7, LLC; MPF DEWAAY PREMIER
FUND, LLC; MPF DEWAAY FUND 2, LLC; MPF DEWAAY FUND 3, LLC; ACCELERATED HIGH
YIELD INSTITUTIONAL INVESTORS, LTD., L.P.; ACCELERATED HIGH YIELD INSTITUTIONAL
FUND I, LTD., L.P.; and MPF-NY 2005, LLC. For information concerning the
Purchasers and their respective principals, please refer to Schedule I attached
hereto. The principal business of each of the Purchasers is investment in
securities, particularly real estate-based securities. The principal business
address of each of the Purchasers is 1640 School Street, Moraga, California
94556.
The Purchasers have made binding commitments to contribute and have
available sufficient amounts of capital necessary to fund the acquisition of all
Units subject to the Offer, the expenses to be incurred in connection with the
Offer, and all other anticipated costs of the Purchasers. The Purchasers are not
public companies and have not prepared audited financial statements or financial
statements prepared in accordance with generally accepted accounting principles.
MacKenzie Patterson Fuller, Inc. and its affiliates have been in the business of
purchasing illiquid real estate securities, both in open market transactions and
by means of tender offers, since 1982 and have acquired more than $75 million in
such securities for affiliated portfolios during the last ten years. The
Purchasers have aggregate assets that are more than sufficient to fund their
collective obligation to purchase Units in this Offer.
Except as otherwise set forth herein, (i) neither the Purchasers nor, to the
best knowledge of the Purchasers, the persons listed on Schedule I nor any
affiliate of the Purchasers beneficially owns or has a right to acquire any
Units, (ii) neither the Purchasers nor, to the best knowledge of the Purchasers,
the persons listed on Schedule I nor any affiliate of the Purchasers, or any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Units within the past 60 days, (iii) neither the
Purchasers nor, to the best knowledge of the Purchasers, the persons listed on
Schedule I nor any affiliate of the Purchasers has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Partnership, including but not limited to, contracts,
arrangements, understandings or relationships concerning the transfer or voting
thereof, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies,
consents or authorizations, (iv) there have been no transactions or business
relationships which would be required to be disclosed under the rules and
regulations of the Commission between any of the Purchasers or, to the best
knowledge of the Purchasers, the persons listed on Schedule I, or any affiliate
of the Purchasers on the one hand, and the Partnership or its affiliates, on the
other hand, (v) there have been no contracts, negotiations or transactions
between the Purchasers, or to the best knowledge of the Purchasers any affiliate
of the Purchasers on the one hand, the persons listed on Schedule I, and the
Partnership or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets, (vi) no person listed on Schedule I has been convicted in a criminal
proceeding during the past five years (excluding traffic violations or similar
misdemeanors), and (vii) no person listed on Schedule I has been a party to any
judicial or administrative proceeding during the past five years (except for
matters dismissed without sanction or settlement) that resulted in a judgment,
decree, or final order enjoining the person from future violations of, or
prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws. .
Section 12. Source of Funds. The Purchasers expect that approximately $2,560,000
would be required to purchase 8,000 Units, if tendered, and an additional
$20,000 may be required to pay related fees and expenses. The Purchasers
anticipate funding all of the purchase price and related expenses through their
existing capital and assets. The cash and liquid securities necessary to
complete the entire purchase are readily available and are committed to that
purpose. Accordingly, there are no financing arrangements to fall through and no
alternative financing plans.
21
Section 13. Conditions of the Offer. Notwithstanding any other term of the
Offer, the Purchasers shall not be required to accept for payment or to pay for
any Units tendered unless all authorizations or approvals of, or expirations of
waiting periods imposed by, any court, administrative agency or other
governmental authority necessary for the consummation of the transactions
contemplated by the Offer shall have been obtained or occurred on or before the
Expiration Date.
The Purchasers shall not be required to accept for payment or pay for
any Units not theretofore accepted for payment or paid for and may terminate or
amend the Offer as to such Units if, at any time on or after the date of the
Offer and before the Expiration Date, any of the following conditions exists:
(a) a preliminary or permanent injunction or other order of any federal
or state court, government or governmental authority or agency shall have been
issued and shall remain in effect which (i) makes illegal, delays or otherwise
directly or indirectly restrains or prohibits the making of the Offer or the
acceptance for payment of or payment for any Units by the Purchasers, (ii)
imposes or confirms limitations on the ability of the Purchasers effectively to
exercise full rights of ownership of any Units, including, without limitation,
the right to vote any Units acquired by the Purchasers pursuant to the Offer or
otherwise on all matters properly presented to the Partnership's Unit holders,
(iii) requires divestiture by the Purchasers of any Units, (iv) causes any
material diminution of the benefits to be derived by the Purchasers as a result
of the transactions contemplated by the Offer (see the discussion of such
benefits in the Summary Term Sheet and Introduction sections of the Offer to
Purchase) or (v) materially adversely affect the business, properties, assets,
liabilities, financial condition, operations, results of operations or prospects
of the Purchasers or the Partnership, in the reasonable judgment of the
Purchasers;
(b) there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed applicable
to the Offer by any federal or state court, government or governmental authority
or agency, other than the application of the waiting period provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which will,
directly or indirectly, result in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) any change or development shall have occurred or been threatened
since the date hereof, in the business, properties, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Partnership, which, in the reasonable judgment of the Purchasers, is or will be
materially adverse to the Partnership, or the Purchasers shall have become aware
of any fact that, in the reasonable judgment of the Purchasers, does or will
have a material adverse effect on the value of the 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 in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any governmental authority on, or other
event which might affect, the extension of credit by lending institutions or
result in any imposition of currency controls in the United States, (iv) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States, (v) a material
change in United States or other currency exchange rates or a suspension of a
limitation on the markets thereof, or (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof; or
(e) it shall have been publicly disclosed or the Purchasers shall have
otherwise learned that (i) more than fifty percent of the outstanding Units have
been or are proposed to be acquired by another person (including a "group"
within the meaning of Section 13(d)(3) of the Exchange Act), or (ii) any person
or group that prior to such date had filed a Statement with the Commission
pursuant to Sections 13(d) or (g) of the Exchange Act has increased or proposes
to increase the number of Units beneficially owned by such person or group as
disclosed in such Statement by two percent or more of the outstanding Units.
The foregoing conditions are for the sole benefit of the Purchasers and
may be asserted by the Purchasers or may be waived by the Purchasers in whole or
in part at any time and from time to time prior to the Expiration Date in their
sole exercise of reasonable discretion, and the Offer will remain open for a
period of at least five business days following any such waiver of a material
condition. However, if we waive a certain condition for one tendering
Unitholder, we will waive that condition for all Unitholders tendering Units.
Any termination by the Purchasers concerning the events described above will be
final and binding upon all parties.
22
Section 14. Certain Legal Matters.
General. Except as set forth in this Section 14, the Purchasers are not aware of
any filings, approvals or other actions by any domestic or foreign governmental
or administrative agency that would be required prior to the acquisition of
Units by the Purchasers pursuant to the Offer. Should any such approval or other
action be required, it is the Purchasers' present intention that such additional
approval or action would be sought. While there is no present intent to delay
the purchase of Units tendered pursuant to the Offer pending receipt of any such
additional approval or the taking of any such action, there can be no assurance
that any such additional approval or action, if needed, would be obtained
without substantial conditions or that adverse consequences might not result to
the Partnership's business, or that certain parts of the Partnership's business
might not have to be disposed of or held separate or other substantial
conditions complied with in order to obtain such approval or action, any of
which could cause the Purchasers to elect to terminate the Offer without
purchasing Units thereunder. The Purchasers' obligation to purchase and pay for
Units is subject to certain conditions, including conditions related to the
legal matters discussed in this Section 14.
Antitrust. The Purchasers do not believe that the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of Units
pursuant to the Offer.
Margin Requirements. The Units are not "margin securities" under the regulations
of the Board of Governors of the Federal Reserve System and, accordingly, such
regulations are not applicable to the Offer.
State Takeover Laws. A number of states have adopted anti-takeover laws which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets, security holders, principal executive offices or principal places of
business therein. These laws are directed at the acquisition of corporations and
not partnerships. The Purchasers, therefore, do not believe that any
anti-takeover laws apply to the transactions contemplated by the Offer.
Although the Purchasers have not attempted to comply with any state
anti-takeover statutes in connection with the Offer, the Purchasers reserve the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer nor any action taken in
connection herewith is intended as a waiver of such right. If any state
anti-takeover statute is applicable to the Offer, the Purchasers might be unable
to accept for payment or purchase Units tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer. In such case, the Purchasers
may not be obligated to accept for purchase or pay for any Units tendered.
Section 15. Fees and Expenses. The Purchasers have retained MacKenzie Patterson
Fuller, Inc., an affiliate of certain Purchasers, to act as Depositary in
connection with the Offer. The Purchasers will pay the Depositary reasonable and
customary compensation for its services in connection with the Offer, plus
reimbursement for out-of-pocket expenses, and will indemnify the Depositary
against certain liabilities and expenses in connection therewith, including
liabilities under the federal securities laws. The Purchasers will also pay all
costs and expenses of printing, publication and mailing of the Offer and all
costs of transfer.
Section 16. Miscellaneous. THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE
ACCEPTED FROM OR ON BEHALF OF) UNIT HOLDERS IN ANY JURISDICTION IN WHICH THE
MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH
THE LAWS OF SUCH JURISDICTION. THE PURCHASERS ARE NOT AWARE OF ANY JURISDICTION
WITHIN THE UNITED STATES IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE
THEREOF WOULD BE ILLEGAL.
No person has been authorized to give any information or to make any
representation on behalf of the Purchasers not contained herein or in the Letter
of Transmittal and, if given or made, such information or representation must
not be relied upon as having been authorized.
February 23, 2005
MPF INCOME FUND 21, LLC
MP VALUE FUND 6, LLC
MACKENZIE PATTERSON SPECIAL FUND 6, LLC
MACKENZIE PATTERSON SPECIAL FUND 6A, LLC
23
MP VALUE FUND 6, LLC
MPF SPECIAL FUND 8, LLC
MACKENZIE PATTERSON SPECIAL FUND 7, LLC
MPF DEWAAY PREMIER FUND, LLC
MPF DEWAAY FUND 2, LLC
MPF DEWAAY FUND 3, LLC
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD., L.P.
ACCELERATED HIGH YIELD INSTITUTIONAL FUND I, LTD., L.P.
MPF-NY 2005, LLC
24
SCHEDULE I
THE PURCHASERS AND THEIR RESPECTIVE PRINCIPALS
The Purchasers are MPF INCOME FUND 21, LLC; MP VALUE FUND 6, LLC;
MACKENZIE PATTERSON SPECIAL FUND 6, LLC; MACKENZIE PATTERSON SPECIAL FUND 6A,
LLC; MP VALUE FUND 6, LLC; MPF SPECIAL FUND 8, LLC; MACKENZIE PATTERSON SPECIAL
FUND 7, LLC; MPF DEWAAY PREMIER FUND, LLC; MPF DEWAAY FUND 2, LLC; MPF DEWAAY
FUND 3, LLC; ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD., L.P.;
ACCELERATED HIGH YIELD INSTITUTIONAL FUND I, LTD., L.P.; and MPF-NY 2005, LLC.
Each of the Purchasers is organized as a limited liability company or limited
partnership. The Manager of each of the limited liability company Purchasers and
the general partner of each of the limited partnership Purchasers is MacKenzie
Patterson Fuller, Inc. The names of the directors and executive officers of
MacKenzie Patterson Fuller, Inc. are set forth below. The Purchasers have
jointly made the offer and are jointly and severally liable for satisfying its
terms. Other than the foregoing, the Purchasers' relationship consists of an
informal agreement to share the costs associated with making the offer and to
allocate any resulting purchases of Units among them in such manner and
proportions as they may determine in the future. Each of the entities is
organized in California.
MacKenzie Patterson Fuller, Inc.
The names of the directors and executive officers of MacKenzie Patterson Fuller,
Inc. are set forth below. Each individual is a citizen of the United States of
America. The principal business address of MacKenzie Patterson Fuller, Inc.,
each Purchaser, and each individual is 1640 School Street, Moraga, California
94556, and the business telephone number for each is 925-631-9100.
C.E. Patterson is President and a director of MacKenzie Patterson Fuller, Inc.,
which acts as manager and general partner of a number of real estate investment
vehicles, and has served in those positions since January 1989. In 1981, Mr.
Patterson founded Patterson Financial Services, Inc. (now MPF Advisers, Inc.), a
registered investment adviser ("MPFA"), with Berniece A. Patterson, as a
financial planning firm, and he has served as its President since that date. Mr.
Patterson founded Patterson Real Estate Services, a licensed California Real
Estate Broker, in 1982. As President of MPFA, Mr. Patterson is responsible for
all investment counseling activities. He supervises the analysis of investment
opportunities for the clients of the firm. Mr. Patterson has served as president
of Host Funding, Inc., an owner of lodging properties, since December 1999. Mr.
Patterson is also an officer and controlling shareholder of Cal-Kan, Inc., a
closely held real estate investment company. Mr. Patterson, through his
affiliates, manages a number of investment and real estate companies.
Berniece A. Patterson is a director of MacKenzie Patterson Fuller, Inc. and has
served in that capacity since January 1989. In 1981, Ms. Patterson and C.E.
Patterson established MPFA. She has served as Chair of the Board and Secretary
of MPFA since that date. Her responsibilities with MPFA include oversight of
administrative matters and monitoring of past projects underwritten by MPFA.
Since October 1990, Ms. Patterson has served as Chief Executive Officer of
Pioneer Health Care Services, Inc., and is responsible for the day-to-day
operations of its three nursing homes and over 300 employees.
Glen W. Fuller became senior vice president and a director of MacKenzie
Patterson Fuller, Inc. in May 2000. Since 2004 he has been a director and vice
president of MPFA. Prior to becoming senior vice president, from August 1998 to
April 2000, he was with MacKenzie Patterson Fuller, Inc. as a portfolio manager
and research analyst. Since December 1999, Mr. Fuller has served as an officer
and director of Host Funding, Inc. Prior to joining MacKenzie Patterson Fuller,
Inc., from May 1996 to July 1998, Mr. Fuller ran the over-the-counter trading
desk for North Coast Securities Corp. (previously Morgan Fuller Capital Group)
with responsibility for both the proprietary and retail trading desks. Mr.
Fuller was also the registered options principal and registered municipal bond
principal for North Coast Securities, a registered broker dealer. Mr. Fuller was
formerly a NASD-registered options principal and registered bond principal, and
he held his NASD Series 7, general securities license (now inactive). Mr. Fuller
has also spent time working on the floor of the New York Stock Exchange as a
trading clerk and on the floor of the Pacific Stock Exchange in San Francisco as
an assistant specialist for LIT America.
Chip Patterson is vice president, general counsel, and a director of the
MacKenzie Patterson Fuller, Inc. Since 2004 he has been a director and vice
president of MPFA. Prior to joining MacKenzie Patterson Fuller, Inc. in July
2003, he was a securities and corporate finance attorney with the national law
firm of Davis Wright Tremaine LLP from August 2000 to January 2003. From August
25
1997 to May 2000 he attended the University of Michigan Law School, where he
graduated magna cum laude with a Juris Doctor Degree. Prior to law school, Chip
Patterson taught physics, chemistry, and math at the high school level for three
years, from June 1994 to June 1997. He graduated with high distinction and Phi
Beta Kappa from the University of California at Berkeley with a Bachelor of Arts
Degree in Political Science. He also has prior experience in sales, retail, and
banking.
Christine Simpson is vice president of MacKenzie Patterson Fuller, Inc. and MPFA
and is responsible for the day-to-day management of research and securities
purchases and sales on behalf of the entities managed by MacKenzie Patterson
Fuller, Inc. Ms. Simpson has served in that position since January 1997; from
January 1994 until her promotion to vice president, she was a research analyst
with MacKenzie Patterson Fuller, Inc. She joined MacKenzie Patterson Fuller,
Inc. as an administrative assistant in July 1990.
Andrea K. Meyer is vice president of Trading and Portfolios for MPFA and
MacKenzie Patterson Fuller, Inc. As vice president of Trading and Portfolios,
Ms. Meyer is responsible for handling the day-to-day operations of the trading
department. She graduated from St. Mary's College of California in 1997 with a
Bachelor of Science in Business Administration with a concentration in Finance
and a Minor in Accounting. Prior to joining MPFA in 1998, she worked for a year
for State Street Bank and Trust, one of the leading financial services
specialists worldwide, as a portfolio accountant.
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