July 25, 2005
Daniel Duchovny
Office of Mergers and Acquisitions
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0303
Re: Angeles Partners XII, Schedule TO-T filed July 1, 2005 by MacKenzie
Patterson Fuller, Inc. and its affiliates, the Purchasers
SEC File No. 5-50745
Dear Mr. Duchovny:
Thank you for your letter dated July 8, 2005 regarding our recent Schedule TO-T.
I will respond to the questions you asked in your letter in the order in which
you posed them.
1. This is a newspaper with national circulation. In conjunction with our
mailing, we believe that this satisfies our obligation to disseminate
materials to all unitholders. Further, our only purpose of publishing the
advertisement is to force the General Partner to provide us the list of
limited partners.
2. We have extended the Offer.
3. Financial statements of the purchasers would not add material disclosure
to the available information. As disclosed, the offer will be funded
through the existing capital of the purchasers. As stated in the offer
materials, the purchasers have aggregate capital which is more than
adequate to fund the offer. The specific facts and circumstances of this
offer should be understood. Absent a tender offer filed under Section
14(d)(1) of the Securities Exchange Act, the purchasers would have little
or no access to the security holders and the holders would have little or
no access to potential purchasers. Because of the lack of liquidity of the
securities, the uncertainty as to the underlying value of the securities
and the issuer's assets, and the extraordinary per unit costs of using a
tender offer as the means for purchasing the securities, the offer prices
are substantially discounted from the estimates of liquidation value of the
issuers. It is therefore anticipated that only those securities holders who
have an immediate need for liquidity will seek to sell their securities.
Based on the extensive past experience of both the purchasers and others
who have tendered for illiquid securities in similar circumstances, the
purchasers do not reasonably expect to receive more than 10% to 25% of the
total number of securities sought and will likely receive substantially
less than that. Of course, the purchasers could have tendered for 100% and
would not have expected any different response, but such a tender would
have been unrealistic. Accordingly, while the purchasers are prepared and
able to fund the entire offer, as a practical matter, the actual funds
July 25, 2005
Page 2 of 3
necessary to complete the offer are reasonably expected to be substantially
less than the cash reserves held by the purchasers. This offer is for
immediate cash payment and no securities of the bidder are to be used. No
evaluation of securities or credit risk is therefore relevant to this
offer. The bidder neither seeks control, nor would it, if successful in
purchasing all securities sought, gain control of any issuer, so no
evaluation of the bidders' financial condition is relevant in that respect.
No market exists for the securities and no competing bidder is seeking to
purchase the securities, so no real alternative opportunities are available
to be evaluated over the period of the offer. Given the circumstances and
terms of this offer, to require inclusion of financial statements for this
offer would involve unnecessary and unreasonable time, effort, and expense,
without providing any more material information to prospective sellers than
the information presented in the Offer. Any additional document
preparation, financial statement preparation, and subsequent mailing costs
would add substantial additional cost to the offer without any material
impact on disclosure. Based on the foregoing, we believe the financial
statements presented together with disclosure of the other sources of funds
provide all financial information material to a security holder's
evaluation of the offer. We not only disclose that we will finance the
Offer with cash on hand, we also disclose the amount of cash on hand that
we have to finance the Offer as well as the fact that we have sufficient
cash on hand to finance all other outstanding offers.
Furthermore, we note that a tender offer for limited partnership differs
substantially from a tender offer for shares of a corporation in that a
large ownership of stock in a corporation can result in effective control,
whereas the same is not true for a limited partnership. A 15% stockholder
in a public corporation might be able to influence the make-up if not the
decisions of the board of directors, and therefore of the company, but a
15% limited partner has no control over the management of the partnership
whatsoever. In fact, by state law, a limited partner CANNOT have control
over the day-to-day management of the Partnership or the limited partner
loses limited liability. The only way a limited partner can influence the
Partnership is by replacing the general partner, which usually requires a
majority vote (as opposed to plurality for boards of directors), and often
the replacement of a general partner is subject to other restrictions.
Thus, the threshold for when a bidder in a tender offer for limited
partnership units is tendering for a sufficient number of units such that
those deciding whether to tender might find the bidder's financial
statements material must be higher (at least 50%, I would argue).
4. We agree that all conditions must be satisfied or waived prior to
expiration and that we cannot accept securities prior to expiration.
Nonetheless, the depository has signed letters of transmittal prior to
expiration, hence the disclosure.
5. The protections are too numerous to describe in detail and are not
material to an investor's decision as to whether or not to tender.
6. Thank you for pointing out the typographical error. We are noting that
in the revised materials.
July 25, 2005
Page 3 of 3
7. It is not a condition to the Offer any more than actually tendering
shares would be. I.e., if a tendering unit holder does not own any units,
they will not be paid for the units. SEC guidance has recognized that
limited partnership tender offers may delay payment until confirmation of
ownership; that is all this is doing.
8. Reviewing the definition, it would appear that you are commenting that
we should not define business day with respect to Pacific Time but should
use Eastern Time. Given that our Offer expires at midnight Pacific Time, it
made sense to define "business day" with respect to Pacific Time. If we
extend the Offer, we have to keep it open for another ten business days. If
we defined "business day" with respect to Eastern Time, we'd be extending
the Offer from midnight Pacific Time to midnight Eastern Time 10 business
days later, which would be less than 10 full business days. Furthermore,
the definition is modified with respect to announcements of extensions of
the Offer such that the press release is issued by 9 a.m. Eastern Time.
Moreover, it does not appear that withdrawal rights are dependent upon this
definition.
9. The Partnership has been selling properties. That is what we mean by
"ongoing liquidation."
10. We confirm that our estimate of fees includes payment of transfer fees.
11. Any authorizations or approvals from "any court, administrative agency
or other governmental authority necessary for the consummation of the
transactions contemplated by the Offer."
12. This is our standard allocation scheme; given that no Purchasers own
Units, that preference will have no effect. We will delete it.
13. You have requested that we acknowledge, and we hereby acknowledge (and
we have the authority to do so on behalf of all filing persons), that we
are responsible for the adequacy and accuracy of the disclosure in the
filings and that staff comments or changes to disclosure in response to
staff comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing and that we
may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the
United States.
Please let me know if you have any questions or further comments.
Very Truly Yours,
/s/ Chip Patterson
Chip Patterson
Vice President and General Counsel
(925) 631-9100 ext. 206
(925) 871-4046 (Fax)
chip@mpfi.com