UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION 14(d)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
IDM Participating Income Company-II
(A CALIFORNIA LIMITED PARTNERSHIP)
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(Name of Subject Company)
IDM Participating Income Company-II
(A CALIFORNIA LIMITED PARTNERSHIP)
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(Names of Persons Filing Statement)
Limited Partnership Units
(Title of Class of Securities)
_____N/A_____
(CUSIP Number of Class of Securities)
Chris W. Halling
Agapay, Levyn & Halling LLP
10801 National Boulevard, Fourth Floor
Los Angeles, California 90064-4184
Telephone: (310) 470-1700
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(Name, address, and telephone numbers of person authorized to receive
notices and communications on behalf of the persons filing statement)
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
ITEM 1. SUBJECT COMPANY INFORMATION.
(a) IDM Participating Income Co. - II, a California limited partnership (the
"Partnership"), 19401 South Vermont, Suite K100, Torrance, CA 90502.
Telephone number: (562) 590-1390.
(b) As of December 31, 2000, the issuer had issued and outstanding 200,000
Limited Partnership Units (the "Units").
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
(a) The filing person's name and address is: IDM Participating Income Co. -
II, a California limited partnership, 19401 South Vermont, Suite K100,
Torrance, CA 90502. Telephone number: (562) 590-1390. The filing person is
the subject company.
(d) This Schedule relates to the offer by DVM Properties, Inc., a Texas
corporation (the "Offeror") to purchase any and all of the Partnership's
outstanding Limited Partnership Units (the "Units"), at $6.75 per Unit as
set forth in the Offer to Purchase, dated May 14, 2001 (the "Offer to
Purchase"), and the related Letter of Transmittal. DVM Properties, Inc.'s
business address is: 2424 SE Bristol Street Suite 333, Newport Beach, CA
92660, and business phone is (213)498-0141.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
(d) Neither the filing person nor its affiliates has been a party to any
contract or transaction with the Offeror. However, as more fully described
in "Item 8- Other Information," the filing person is engaged in litigation
against William J. Carden, an officer, director and shareholder of the
Offeror, and others including the former general partner of the
Partnership. In the course of that litigation negotiations have been
undertaken through counsel on the subject of settlement through payment of
money to the Partnership from one or more of the defendants. Aside from
those negotiations, there have been no other negotiations between the
filing person and its affiliates, on the one hand, and the Offeror and its
affiliates, on the other hand. Neither the filing person nor any of its
affiliates has been a party to contacts, negotiations or transactions with
the Offeror concerning a merger, consolidation or acquisition of the
Partnership, a tender offer or acquisition of securities of the
Partnership, an election of a new general partner of the Partnership, or a
sale or other transfer of a material amount of assets of the Partnership.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) The filing person is advising holders of the subject securities to REJECT
the tender offer.
(b) The information set forth in the May 29, 2001 Letter to Limited Partners
(Exhibit (a)(2)) is incorporated herein by this reference.
(c) To the extent known by the filing person after making reasonable inquiry,
neither the filing person nor any executive officer, director, affiliate
or subsidiary of the filing person currently intends to tender or sell the
subject securities that are held of record or beneficially owned by that
person. Such persons intend to hold the subject securities.
ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
(a) No persons or classes of persons are directly or indirectly employed,
retained, or to be compensated to make solicitations or recommendations in
connection with the transaction.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(b)(1) Neither the filing person, its General Partner (NewPic GP Corporation,
a California corporation), any associate or majority owned subsidiary
of the filing person, any executive officer, director, affiliate or
subsidiary of the filing person, nor any pension, profit-sharing or
similar plan of the issuer or any affiliate has effected a transaction
in Units other than the acquisition of Units as part of the original
offering by the Partnership in 1986.
ITEM 7: PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(d)(1) The filing person is the subject company and has not engaged in or
undertaken any negotiations in response to the tender offer that relate
to the tender offer or other acquisition of the Partnership by the
Offeror, or any of its subsidiary or any other person. Nor has the
filing person engaged in or undertaken any negotiations that relate to
(1) any extraordinary transaction, such as a merger, reorganization or
liquidation, involving the Partnership or any of its subsidiaries, (2)
any purchase, sale or transfer of a material amount of assets of the
Partnership or any of its subsidiaries; or (3) any material change in
the present dividend rate or policy, or indebtedness or capitalization
of the Partnership.
(d)(2) On May 25, 2001, the filing person filed an ex parte application for
temporary restraining order and application for order to show cause re
preliminary injunction in the Legal Action (as defined in "Item 8-
Additional Information" below) in the United States District Court,
Central District of California, seeking to enjoin the Offeror, William
J. Carden, and their affiliates, from proceeding with the tender offer,
acquiring any Units through the tender offer, seeking to dissolve the
Partnership, or seeking to remove NewPic GP Corporation as General
Partner of the Partnership, among other relief. Aside from the Legal
Action and the application for temporary restraining order and order to
show cause, the filing person has not entered into any other
transaction, board resolution, agreement in principle, or signed
contract in response to the tender offer. Those applications are
pending as of the date of this Schedule.
ITEM 8. ADDITIONAL INFORMATION.
(b) The Partnership, along with NewPic, is the plaintiff in a legal action
originally filed in the Los Angeles Superior Court on October 25, 2000
(the "Legal Action"). The Legal Action seeks, among other things,
damages and injunctive relief based upon allegations of, among other
things, breach of fiduciary duty, negligence and breach of the
partnership agreement against the Partnership's former general partner
(IDM Participating Income General Partners' Co. - II), the former
general partner's general partner (IDM Participating Income
Corporation), and the directors and former directors (William J.
Carden, Morris Cohen and Steven Speier) of IDM Participating Income
Corporation. These entities, and William J. Carden and Morris Cohen,
are affiliates with the Offeror in the tender offer. Damages sought in
the Legal Action include recovery of loan balances written off,
forgiven, or re-lent by the former general partner. The Partnership
estimates that these damages total in excess of $8,500,000. The
complaint in the Legal Action alleges, among other things, that the
defendants: improperly failed and refused to turn over Partnership
records to NewPic; failed to comply with the requirements of the
Partnership Agreement with respect to the maintenance of, preparation
of, and dissemination of books, records, and financial statements and
reports pertaining to the Partnership; failed to make distributions to
the limited partners as required by the Partnership Agreement;
misappropriated Partnership funds, assets and business opportunities to
benefit themselves and their affiliates; re-loaned interest and
principal in violation of the Partnership Agreement, including
re-loaning principal more than once and for terms beyond the maximum
aggregate term specified in the Partnership Agreement; made loans
without using the Partnership's required Master Loan Agreement and
Participating Note forms; made loans without obtaining appraisals from
an AIREA member within 90 days of their loans; made loans where the
aggregate amount of the Partnership loan and the senior debt exceeded
85% of the appraised value of the property; and did not collect
participating profits on Partnership loans.
The former general partner removed the Legal Action to the United
States District Court, Central District of California. This removal was
predicated upon a counterclaim filed by the former general partner
against NewPic and its principals alleging a violation of federal
Securities Laws in connection with their solicitation of the
consent/proxies. On January 29, 2001, the District Court heard NewPic's
application for a preliminary injunction, and on February 2, 2001 it
issued a preliminary injunction that, among other things, restrained
the defendants from acting or purporting to act as general partner of
the Partnership, and further ordered the defendants to turn over
Partnership records to NewPic. At the time the former general partner
turned over the books, records and assets of the Partnership to NewPic
GP Corporation, there was less than $700 in the Partnership bank
account. The Partnership believes that the only asset left in the
Partnership is the Legal Action.
The former general partner's requests to stay the preliminary
injunction were denied by the District Court and the United States
Circuit Court of Appeals for the Ninth Circuit. The subsequent appeal
of the preliminary injunction was denied by the Ninth Circuit, and it
affirmed the Order granting the preliminary injunction.
On May 25, 2001, the filing person filed an ex parte application for
temporary restraining order and application for order to show cause re
preliminary injunction in the Legal Action seeking to enjoin the
Offeror, William J. Carden, and their affiliates, from proceeding with
the tender offer, acquiring any Units through the tender offer, seeking
to dissolve the Partnership, or seeking to remove NewPic GP Corporation
as General Partner of the Partnership, among other relief. Those
applications are now pending. Trial in the Legal Action is set for
January 8, 2002.
Additionally, Items 1, 2, 7 and 14 of the Partnership's Annual Report
on Form 10-K for the fiscal year ended December 31, 2000 filed with the
Securities Exchange Commission are incorporated herein by reference.
ITEM 9. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Form of recommendation letter to limited partners
(a)(3) Not applicable.
(a)(4) Not applicable.
(a)(5) Not applicable.
(e) Not applicable.
(f) Not applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the
information set forth in this statement is true, complete and correct.
IDM PARTICIPATING INCOME CO. - II,
A California Limited Partnership
NewPic GP Corporation
Its General Partner
May 29, 2001 /s/ Richard Meehan
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Richard Meehan
President and CEO
EXHIBIT (a)(2)
IDM PARTICIPATING INCOME CO. - II
19401 South Vermont, Suite K-100
Torrance, CA 90502
(562) 590-1390
May 29, 2001
To the Limited Partners of IDM Participating Income Company - II:
A few days ago you received an "Offer to Purchase" your limited partnership
units in IDM Participating Income Company - II (the "Partnership"). The Offer
price per unit was $6.75. The Offer was made by DVM Properties, Inc. ("DVM").
As your general partner, NewPic GP Corporation ("NewPic") would like to give you
our recommendation about this Offer. WE RECOMMEND THAT YOU IGNORE IT AND THROW
IT IN THE TRASH.
Some of our reasons for this recommendation are:
1. The Offer price is too low. This Offer is less than 7 cents return for
each $1 you invested.
2. The Partnership has filed a lawsuit against CGS Real Estate Company
("CGS") and William J. Carden for damages in excess of $8,500,000. The
lawsuit alleges that CGS and Carden violated fiduciary duties to the
Partnership and engaged in fraud against the Partnership. A successful
outcome of this suit cannot be guaranteed. However NewPic believes the
case is strong and, if successful, it would produce a significantly
higher return to you than does DVM's low Offer.
3. CGS and Carden control DVM, the company making this low Offer. Thus the
same people alleged to have defrauded the Partnership of over
$8,500,000 are now trying to buy you out for a few pennies on the
dollar. Even CGS itself acknowledges that it owes the Partnership a
$1.6 million loan it took (and immediately defaulted on) plus interest
of at least $300,000. This is already 40% higher than the low Offer DVM
has made.
4. NewPic believes the low Offer is a transparent attempt to interfere
with NewPic's operation of the Partnership. There can be little doubt
that CGS and Carden will attempt to remove NewPic as general partner.
5. NewPic believes the low Offer is an attempt to thwart justice by
preventing the lawsuit from bringing the alleged violations and fraud
into the light.
Remember that while CGS and Carden control IDM Corporation and DVM, thanks to
you they no longer control your Partnership. Let's keep it that way.
If you agree with us, then you don't need to do anything. You don't need to fill
out the Offer forms and you don't need to mail the forms to anyone. Just keep
them or throw them away.
If you have already responded to the Offer, we urge you to withdraw your tender
by delivering a properly executed written notice of withdrawal (or a facsimile
of one) to Wilmington Trust Company before the expiration date of the Offer.
Finally, as you may know, when the CGS/Carden entity was removed as general
partner, they left almost nothing in the Partnership's bank account and CGS had
defaulted on the loan it took. So if you would like a copy of the Partnership's
audited financial statements as of December 31, 2000, or any other Partnership
info, please send us your request along with a stamped, self-addressed envelope.
Thank you.
NewPic GP Corporation