EXHIBIT (a)(2)
SUPPLEMENT DATED SEPTEMBER 9, 2008
TO
OFFER TO PURCHASE FOR CASH
BY
BELLAVISTA CAPITAL, INC.
OF
UP TO 750,000 SHARES OF ITS COMMON STOCK
AT $1.75 NET PER SHARE
THE TENDER OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., PACIFIC
DAYLIGHT TIME, ON SEPTEMBER 29, 2008, UNLESS THE TENDER OFFER IS EXTENDED.
The information in this Supplement is intended to supplement and update the
information in the Offer to Purchase dated August 14, 2008, in which the Company
has offered to purchase up to 750,000 of the Shares of common stock for a cash
purchase price of $1.75 per Share. We are also extending the Expiration Date of
the Offer to September 29, 2008.
Financial Results
On September 9, 2008 we filed our quarterly report on Form 10-QSB, including
our quarterly financial information at June 30, 2008 and for the quarter then
ended. In that report, we have estimated the Net Realizable Value of the
Company's assets at $3.57 per share as of June 30, 2008, a decrease of $0.33 per
share from our September 30, 2007 estimated NRV. The estimated NRV per Share is
unchanged from our March 31, 2008 estimate. We remind you that this estimated
value does not represent a market price for the shares or any independent
valuation of the assets, but is the Company's best estimate of the current Net
Realizable Value of our assets.
The following table summarizes our financial results through June 30, 2008:
Three Months Ended June 30, Nine Months ended June 30,
-----------------------------------------------------------------------
2008 2007 2008 2007
----------------- ----------------- ----------------- -----------------
Total Revenues 2,575,919 1,884,079 4,011,238 13,740,948
Cost of Sales (902,746) (456,029) (1,008,728) (11,288,647)
----------------- ----------------- ----------------- -----------------
Gross Profit 1,673,173 1,428,050 3,002,510 2,452,301
Total Expenses 3,306,349 2,790,130 12,477,275 3,560,375
----------------- ----------------- ----------------- -----------------
Net Loss (1,628,649) (1,352,062) (9,458,836) (1,069,405)
================= ================= ================= =================
Our revenues for the three months and nine months ended June 30, 2008 include
approximately $1.8 million which reflects proceeds we received from the sale of
our Livermore project, which we had previously fully impaired.
The real estate market remains challenging. Due to declining real estate values
and extended marketing periods for properties we have developed, our Total
Expenses includes impairment charges totaling $2,680,990 and $11,036,866 during
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the three months and nine months ended June 30, 2008 and $2,303,348 during the
three months and nine months ended June 30, 2007. These impairments result from
write downs we have taken in our portfolio as current information indicates that
the estimated future cash flows from these investments will not be sufficient to
recover the amount we have invested. We continue to closely monitor our
investments and will make appropriate adjustments as circumstances warrant.
Investment Portfolio
As of June 30, 2008 we had 24 active projects in our investment portfolio.
Fourteen of these investments, totaling $10.0 million, are investments whose
purpose is to provide diversification through smaller loan size (typically under
$1.0 million) and whose terms provide for monthly interest collection,
representing a consistent and reliable source of cash flow.
Of the remaining ten investments, two are land development projects with
estimated NRV totaling $5.4 million. Once development approval is obtained we
anticipate that our investment will be repaid with proceeds from sale of the
property or new financing.
Five investments are development projects with estimated NRV totaling $31.6
million, that have completed construction and are currently selling or renting
completed units. Of the 89 residential units remaining in these projects, 54 are
currently held as rental units and 35 are held and offered for sale.
The remaining three investments, comprising NRV totaling $14.5 million, finance
construction of 63 residential condominium units and 6 office condominiums. Two
of those projects are expected be completed by the end of October and the final
project, comprised of 40 residential condominiums, is expected to be completed
by mid-2009.
Further information on the portfolio is set forth below:
Loans Receivable Secured By Real Estate
The following table summarizes our loans receivable secured by real estate by
location as of June 30, 2008:
Amount Carrying
Invested Impairments Amount In Default
------------------- ------------------ ------------------ -------------------
First trust deeds
SF Bay Area $ 7,543,000 $ 165,000 $ 7,378,000 $ 6,130,000
California Central Valley 210,000 -- 210,000 210,000
------------------- ------------------ ------------------ -------------------
Total first trust deeds 7,753,000 165,000 7,588,000 6,340,000
Subordinate loans
SF Bay Area 2,139,247 -- 2,139,247 701,247
California Central Valley 70,000 -- 70,000 --
Southern California 185,100 -- 185,100 --
------------------- ------------------ ------------------ -------------------
Total subordinate loans 2,349,347 -- 2,349,347 701,247
------------------- ------------------ ------------------ -------------------
Total $ 10,147,347 $ 165,000 $ 9,982,347 $ 7,041,247
=================== ================== ================== ===================
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The following table summarizes our loans receivable secured by real estate by
location as of September 30, 2007:
Description Amount Carrying
Invested Impairments Amount In Default
------------------- ------------------ ------------------ -------------------
SF Bay Area $ 9,353,000 $ -- $ 9,353,000 $ 600,000
California Central Valley 960,000 -- 960,000 --
Other Western States 850,000 -- 850,000 --
------------------- ------------------ ------------------ -------------------
Total $ 11,163,000 $ -- $ 11,163,000 $ 600,000
=================== ================== ================== ===================
Joint Venture Investments In Real Estate Developments
The following table summarizes our joint venture investments in real estate
developments by location as of June 30, 2008:
Remaining
Amount Carrying Funding
Invested Impairments Amount Obligation
Description ------------------- ------------------ ------------------ -------------------
SF Bay Area $ 12,778,659 $ -- $ 12,834,288 $ 472,059
California Central Valley 7,640,792 2,891,181 4,780,800 --
Southern California 7,143,683 4,749,322 4,132,046 --
------------------- ------------------ ------------------ -------------------
Total $ 27,563,134 $ 7,640,503 $ 21,747,134 $ 472,059
=================== ================== ================== ===================
The following table summarizes our joint venture investments in real estate
developments by location as of September 30, 2007:
Remaining
Amount Carrying Funding
Invested Impairments Amount Obligation
Description ------------------- ------------------ ------------------ -------------------
SF Bay Area $ 17,448,042 $ -- $ 17,497,206 $ 4,175,878
California Central Valley 11,697,253 2,303,348 9,429,120 1,283,679
Southern California 10,966,847 5,362,595 5,617,424 --
Other 1,157,425 -- 1,161,223 --
------------------- ------------------ ------------------ -------------------
Total $ 41,269,567 $ 7,665,943 $ 33,704,973 $ 5,459,557
=================== ================== ================== ===================
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Direct Investments In Real Estate Developments
The following table summarizes our Direct Investments in Real Estate
Developments by location as of June 30, 2008:
Amount Invested Recognized Carrying Costs to
(net of payments) Impairment Amount Complete
Description ------------------- ------------------ ------------------ -------------------
SF Bay Area $ 23,342,435 $ 2,929,867 $ 20,883,223 $ 474,836
------------------- ------------------ ------------------ -------------------
Total $ 23,342,435 $ 2,929,867 $ 20,883,223 $ 474,836
=================== ================== ================== ===================
The following table summarizes our Direct Investments in Real Estate
Developments by location as of September 30, 2007:
Amount Invested Recognized Carrying Costs to
(net of payments) Impairment Amount Complete
Description ------------------- ------------------ ------------------ -------------------
SF Bay Area $ 6,469,661 $ 1,492,052 $ 5,213,220 $ 50,000
------------------- ------------------ ------------------ -------------------
Total $ 6,469,661 $ 1,492,052 $ 5,213,220 $ 50,000
=================== ================== ================== ===================
Tender Offer
Except as modified by this supplemental letter, the terms of the Offer dated
August 14, 2008 remain in full effect. Capitalized terms used in this Supplement
are defined as in the Offer, unless otherwise noted, and the Offer now consists
of the original Offer as supplemented by this Supplement.
Expiration Date Extended
The Offer has been amended to extend the original Expiration Date, which was
September 19, 2008, to September 29, 2008. The tender offer will now expire on
September 29, 2008, at 5:00 p.m., Pacific Daylight Time, unless we further
extend it. We may choose to extend the tender offer for any reason, subject to
applicable laws. See Section 13 of the Offer.
Source and Amount of Funds
Assuming the Company purchases 750,000 shares in the tender offer at the
purchase price of $1.75 per share, approximately $1,312,500 will be required to
purchase such shares. The Company currently holds liquid capital in the amount
of the funds necessary to purchase shares tendered in the tender offer, as well
as to pay related fees and expenses. Such liquid capital consists of cash on
hand, liquid short term interest bearing investments and cash flow from interest
bearing investments. The tender offer is not conditioned upon the receipt of
financing. See Section 6 of the Offer.
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Incorporation by Reference
In addition to the information incorporated by reference into the offer to
purchase in Section 9 of the Offer, the Company's quarterly report on Form
10-QSB for the quarter ended June 30, 2008, as filed with the Securities and
Exchange Commission, is hereby deemed incorporated into the Offer by this
reference and shall be deemed to be a part of the Offer from the date of filing
of such report. Any statement contained in a document incorporated or deemed to
be incorporated by reference into the Offer, or contained in the Offer to
purchase, shall be deemed to be modified or superseded for purposes of the Offer
to the extent that a statement contained herein or in any subsequently filed
document or report that also is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified shall not be
deemed to constitute a part of the Offer, except as so modified or superseded.
Shareholders can obtain the Quarterly Report on Form 10-QSB for the quarter
ended June 30, 2008, or any of the other documents incorporated by reference in
the Offer from the Company or from the Securities and Exchange Commission's web
site at http://www.sec.gov/. Documents incorporated by reference are available
from the Company without charge, excluding any exhibits to those documents.
Shareholders can obtain documents incorporated by reference in this document by
requesting them in writing or by telephone from the Company at 15700 Winchester
Blvd, Los Gatos, California 95030; telephone (650) 328-3060. Any Shareholder
requesting information should be sure to include his or her complete name and
address in the request. If a stockholder requests any incorporated documents,
the Company will mail them to you by first class mail, or another equally prompt
means, within one business day after the Company receives your request. In
addition, any such material and other information may be inspected at the public
reference facilities maintained by the Securities and Exchange Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of this
material can also be obtained by mail, upon payment of the Securities and
Exchange Commission's customary charges, by writing to the Public Reference
Section at 450 Fifth Street, N.W., Washington, D.C. 20549. The Securities and
Exchange Commission also maintains a web site on the Internet at
http://www.sec.gov that contains periodic reports and information statements and
other information regarding registrants such as the Company that file
electronically with the Securities and Exchange Commission.
You may contact the Company at the following address with any questions you may
have concerning the Offer:
BellaVista Capital, Inc.
15700 Winchester Blvd
Los Gatos, CA 95030
Telephone (650) 328-3060
Facsimile (650) 328-3066
Attention: Michael Rider
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