EXHIBIT (a)(1)
BellaVista Capital, Inc.
420 Florence Street
Suite 200
Palo Alto, California 94301
March 20, 2008
Re: MPF Offer to Purchase Shares at $1.25 per Share; and the Company's Offer in
Response to Redeem at $2.00 per Share
Dear Fellow Shareholder:
I am writing to you on behalf of the entire Board of Directors (the
"Board") of BellaVista Capital Inc. ("BellaVista").
A group of entities associated with Mackenzie Patterson Fuller, Inc.
(collectively "MPF") have again made an unsolicited tender offer (the "MPF
Offer") to you and your fellow shareholders to purchase up to 500,000 shares of
BellaVista's common stock (the "Shares").
MPF are offering you and your fellow shareholders a price of $1.25 per
Share. You may have received information from MPF regarding the other terms and
conditions of the MPF Offer and may also have seen that information on a
Schedule TO ("Schedule TO") filed by MPF with the Securities and Exchange
Commission (the "SEC") on or about March 11, 2008. A copy of Schedule TO is
posted on the SEC's website at http://www.sec.gov.
BellaVista is required by the SEC's rules to either (1) make a
recommendation whether you should accept or reject the MPF Offer or (2) state
that BellaVista is remaining neutral with respect to the MPF Offer.
The Board has reviewed and carefully considered the MPF Offer and
concluded that the price offered to BellaVista shareholders for their Shares is
inadequate. We believe the MPF Offer, their seventh in a series of sequential
offers beginning three years ago, is another overly opportunistic attempt to
acquire Shares at an unreasonable discount. For that reason, the Board has
determined to make a competing offer to redeem up to 750,000 Shares at a price
of $2.00 per Share (the "Company Offer"). This $2.00 per Share offered by the
Company is also significantly below the Company's current estimated asset value
per Share. Nevertheless, if a Shareholder needs to liquidate Shares, the Company
believes that it is in the Shareholders' and the Company's best interest to use
a portion of its capital to make this competing Company Offer to permit those
Shareholders to liquidate a price in excess of the current MPF Offer, while any
such redemptions will enhance the value of the remaining Shares. The Board does
not intend to amend its redemption policy by making the Company Offer, but makes
the Company Offer solely in response to the overly opportunistic MPF Offer.
Before making any decision to tender Shares, please read the Company Offer
document which accompanies this letter.
ACCORDINGLY, THE BOARD UNANANIMOUSLY RECOMMENDS THAT YOU AND YOUR
FELLOW STOCKHOLDERS REJECT THE MPF OFFER AND NOT TENDER ANY SHARES IN CONNECTION
WITH THE MPF OFFER. AS THE COMPANY'S COMPETING OFFER IS MADE SOLELY IN RESPONSE
TO THE MPF OFFER, THE BOARD REMAINS NEUTRAL WITH RESPECT TO THE COMPANY OFFER
AND DOES NOT MAKE ANY RECOMMENDATION AS TO WHETHER YOU SHOULD TENDER OR REFRAIN
FROM TENDERING YOUR SHARES IN RESPONSE TO THE COMPANY OFFER.
No member of the Board and none of the Company's executive officers,
affiliates or subsidiaries intends to tender or sell any Shares in the MPF Offer
or the Company Offer.
The reasons for the Board's recommendation are discussed below.
The offered price was established based on MPF's objective to profit from
the acquisition at a discounted price and was not established in the best
financial interest of a selling shareholder.
In its Schedule TO, MPF indicated that the MPF Offer is being "made for
investment purposes and with the intention of making a profit from the
ownership of the Shares." MPF also acknowledged that they were "motivated
to establish the lowest price which might be acceptable" to you and your
fellow BellaVista shareholders.
MPF has included statements which appear intended to intimidate or frighten
shareholders into selling shares. At the same time MPF makes negative
statements about the Shares, it makes its seventh consecutive offer to
acquire Shares and increase its already substantial investment in the
Company. MPF has also stated in each offer, including the current one, that
its offer is "not made with any current view toward or plan or purpose of
acquiring Shares in a series of successive and periodic offers." Yet the
offer is the seventh consecutive offer alternating spring and fall of each
year over the past three years.
The Board believes that MPF's statements demonstrate that the price that is
being offered to you has been established based solely on MPF's desire to
profit from the illiquidity of the shares. Also, in determining the amount
to be offered to BellaVista shareholders for your Shares, MPF used a
so-called liquidity discount which reduces the value of the Shares on the
assumption that they cannot be easily sold. MPF gives no basis for the
calculation of this liquidity discount, and it appears to be arbitrarily
chosen to suit MPF's purposes. It is therefore not clear to the Board that
the liquidity discount used by MPF is appropriate or the correct measure
but instead it appears to be an arbitrary number picked by MPF to justify
the lowest possible price it may successfully offer.
The Company estimated the net realizable value of its assets to be $3.90
per Share, as of the end of our most recent fiscal quarter at December 31,
2007. This estimated net asset value per Share, while not reflecting a
current market value for the Shares as there is no established public
market, and while it reflects a decline in estimated asset value over the
past year, is nevertheless more than three times the $1.25 per Share offer
made by MPF.
The concentrated ownership of a large block of Shares may affect decisions
made by BellaVista in a manner disadvantageous to other stockholders.
MPF currently owns 1,367,622 shares, or approximately 10.75% of
BellaVista's outstanding shares, acquired in their previous Tender Offers,
and therefore owns the single largest block of the Company's stock. If MPF
acquire the desired percentage of Shares that constitute the MPF Offer,
they will own approximately 15% of our outstanding shares, all purchased at
prices substantially below the estimated value per share of the Company's
assets. This concentration of ownership may influence business decisions in
a manner that adversely affects you and the remaining shareholders. We
would further note that the various MPF investment programs have acquired
their shares at significantly lower prices, and may have significantly
different objectives and motivation with respect to their investment, than
other shareholders.
The Board does not believe that the $1.25 per Share offered by MPF in
connection with the MPF Offer represents fair value, nor does the Board believe
the $2.00 per Share price that the Company is offering to redeem shares in the
Company Offer represents fair value for the Shares, but you should carefully
evaluate your short term and long-term financial objectives with respect to your
investment in BellaVista. In the absence of any established market for the
Shares, we understand that shareholders may seek to explore liquidity options,
or to compare these options to the Company Offer and MPF Offer. As these offers
may provide the only current means to liquidate all or a portion of your Shares,
the Company remains neutral with respect to the Company Offer, and neither
recommends that you tender or refrain from tendering your Shares in response to
the Company Offer. You should make your own decision whether to tender or
refrain from tendering your Shares and should consider a multitude of factors
including (i) your investment objectives, (ii) your financial circumstances
including risk tolerance and need for liquidity, (iii) your views as to
BellaVista's prospects and outlook, (iv) an analysis and review of all publicly
available information about us, (v) other financial opportunities available to
you, (vi) your own tax position and tax consequences, and (vii) other factors
that you may deem relevant. Under any circumstances, you should be aware that a
sale of your Shares will have significant tax consequences.
PLEASE CONSULT WITH YOUR TAX ADVISOR ABOUT THE IMPACT OF A SALE ON YOUR
OWN PARTICULAR SITUATION.
If you need further information about your options, please feel free to
contact us at 15700 Winchester Blvd Los Gatos, California 95030 or by telephone
at (650) 328-3060.
Sincerely,
Michael Rider
President