EXHIBIT (a)(1)
BellaVista Capital, Inc.
15700 Winchester Blvd
Los Gatos, California 95030
August 14, 2008
Re: MPF Offer to Purchase Shares at $1.00 per Share; and the Company's Offer in
Response to Redeem at $1.75 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 400,000 shares of
BellaVista's common stock (the "Shares").
MPF are offering you and your fellow shareholders a price of $1.00 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 August 1, 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 eighth in a series of sequential offers beginning
four 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 $1.75 per Share
(the "Company Offer"). This $1.75 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 eighth 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 eighth 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
approximately $3.57 per Share, as of the end of our most recent fiscal
quarter at March 31, 2008. 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
$1.00 per Share offer made by MPF. The Company's Board of Directors is
currently analyzing the Company's investment portfolio in order to
determine its estimated net asset value as of June 30, 2008, and has not
yet made a final determination. The Company expects to complete its
analysis and file its quarterly report on form 10-QSB for the quarter ended
June 30, 2008 in the next two weeks, and that report will state the
estimated net asset value as of June 30, 2008.
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 1,369,622 shares, or approximately 11.60% 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 $1.00 per Share offered by MPF in
connection with the MPF Offer represents fair value, nor does the Board
believe the $1.75 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