SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
(Name of Subject Company)
MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
(Name of Person Filing Statement)
Units of Limited Partnership Interests
(Title of Class of Securities)
751641109
(CUSIP Number of Class of Securities)
Robert E. Parsons, Jr.
President and Manager
RIBM ONE LLC
Marriott Residence Inn Limited Partnership
10400 Fernwood Road
Bethesda, Maryland 20817
(301) 380-2070
(Name, Address and Telephone Number of
Person Authorized to Receive Notice and Communications
On Behalf of the Person Filing Statement)
COPIES TO:
J. Warren Gorrell, Jr., Esq.
Joseph G. Connolly, Jr., Esq.
Hogan & Hartson L.L.P.
555 13th Street, N.W.
Washington, D.C. 20004
(202) 637-5600
[ ] CHECK THE BOX IF THE FILING RELATES SOLELY TO PRELIMINARY COMMUNICATIONS
MADE BEFORE THE COMMENCEMENT OF A TENDER OFFER
ITEM 1. SUBJECT COMPANY INFORMATION.
The name of the subject company is Marriott Residence Inn Limited
Partnership, a Delaware limited partnership (the "Partnership"). The principal
executive offices of the Partnership are located at 10400 Fernwood Road,
Bethesda, Maryland 20817; the telephone number for the Partnership at its
principal executive offices is 301-380-2070. The general partner of the
Partnership is RIBM ONE LLC (the "General Partner").
The class of equity securities to which this Solicitation/Recommendation
Statement on Schedule 14D-9 (this "Statement") relates is the Partnership's
units of limited partnership interests (the "Units"). As of May 25, 2001, there
were a total of 65,600 outstanding Units.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
The filing person is the subject company. The principal executive offices
and telephone number of the Partnership are set forth in response to Item 1 of
this Statement.
This Statement relates to the tender offer by Madison Liquidity Investors
114, LLC, a Delaware limited liability company (the "Purchaser") owned by MRI
Partners LLC, a joint venture between subsidiaries of Madison Capital
Management, LLC ("Madison") and Haberhill LLC ("Haberhill") and other affiliates
of Madison, disclosed in a Tender Offer Statement on Schedule TO dated May 16,
2001, to purchase up to 13,120 Units for cash at a price equal to $300 per Unit
in cash, reduced by any cash distributions made or declared on or after May 16,
2001, with interest at the rate of 7% per annum from the expiration date of the
tender offer to the date of payment, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated May 16, 2001 (the "Offer to
Purchase").
Based on the information in the Schedule TO, the business address of the
Purchaser is 410 Park Avenue, Suite 540, New York, New York 10022; telephone
number 212-687-0518.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
There is no material agreement, arrangement or understanding or any
material actual or potential conflict of interest between: (i) the Partnership
and the General Partner; (ii) the Partnership and the Purchaser or (iii) the
General Partner and the Purchaser except as described below.
The General Partner is entitled to receive distributions of the
Partnership's operating cash flow and net sale or refinancing proceeds as set
forth in the Partnership's Amended and Restated Agreement of Limited
Partnership, dated as of March 29, 1988 (the "Partnership Agreement"), and
summarized below.
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The Partnership generally distributes cash available for distribution as
follows: (i) first, 99% to the limited partners and 1% to the General Partner,
until the partners have received, with respect to such year, an amount equal to
10% of their Invested Capital, defined as the excess of original capital
contributions over cumulative distributions of net refinancing and sales
proceeds ("Capital Receipts"); (ii) second, remaining cash available for
distribution will be distributed as follows, depending on the amount of Capital
Receipts previously distributed:
(a) 99% to the limited partners and 1% to the General Partner, if the
partners have received aggregate cumulative distributions of Capital
Receipts of less than 50% of their original capital contributions; or
(b) 85% to the limited partners and 15% to the General Partner, if the
partners have received aggregate cumulative distributions of Capital
Receipts equal to or greater than 50% but less than 100% of their
original capital contributions; or
(c) 70% to the limited partners and 30% to the General Partner, if the
partners have received aggregate cumulative distributions of Capital
Receipts equal to 100% or more of their original capital
contributions.
Cash available for distribution means, with respect to any fiscal period,
the cash revenues of the Partnership from all sources during the fiscal period,
other than Capital Receipts less (i) all cash expenditures of the Partnership
during such fiscal period, including, without limitation, debt service,
repayment of advances made by the General Partner, fees for management services
and administrative expenses (excluding expenditures incurred by the Partnership
in connection with a transaction resulting in Capital Receipts), and (ii) such
reserves as may be determined by the General Partner in its reasonable
discretion to be necessary to provide for the foreseeable cash needs of the
Partnership or for the maintenance, repair or restoration of the Partnership's
Inns.
As of December 31, 2000, the Partnership had distributed a total of
$43,669,801 to the partners ($659 per limited partner unit) since inception.
The Partnership made no distributions during the years ended December 31, 2000
and 1999. In February 1998, $3,313,131 ($50 per limited partner unit) was
distributed from 1997 operations. No distributions of Capital Receipts have
been made since inception.
Under the Partnership Agreement, the General Partner has the exclusive
right to conduct the business and affairs of the Partnership subject only to
the management agreement. The General Partner is required to devote to the
Partnership such time as may be necessary for the proper performance of its
duties, but the officers and managers of the General Partner are not required to
devote their full time to the performance of such duties. The Partnership
reimburses the General Partner or Host Marriott, L.P., the owner of a Class A 1%
managing economic interest in the General Partner ("Host Marriott"), as
applicable, for the cost of providing such administrative and other services to
the extent that any officer or manager devotes time to the Partnership.
The following sets forth amounts paid by the Partnership to Host Marriott
and its subsidiaries, including the General Partner, as distributions with
respect to the general partner interest and for the cost of providing all
administrative and other services as General Partner for the years ended
December 31, 2000, 1999 and 1998 (in thousands):
2000 1999 1998
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Administrative expenses reimbursed.............. $ 344 $ 109 $ 229
Cash distributions.............................. -- -- 33
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$ 344 $ 109 $ 262
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ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Solicitation or Recommendation. The General Partner is not expressing
an opinion, nor making a recommendation, and is remaining neutral towards the
Offer to Purchase.
(b) Reasons. In deciding to remain neutral on the Offer to Purchase, the
General Partner considered the following:
As previously disclosed in the Partnership's Quarterly Report on Form
10-Q filed with the Securities and Exchange Commission on May 7, 2001, which was
distributed to all limited partners, and consistent with the terms of the
Partnership Agreement and the original investment objectives contemplated at the
formation of the Partnership, the General Partner is currently attempting to
sell the Partnership's Inns or, in the alternative, find a buyer for the Units.
In this regard, on April 9, 2001, the General Partner engaged Merrill Lynch &
Co. ("Merrill Lynch) as its financial advisor to solicit bids from interested
parties. Merrill Lynch has prepared a list of over 20 parties who they believe
may have an interest in acquiring either the Partnership's Inns or the Units and
has begun contacting these parties. Several of these parties have already
requested additional information in order to explore a possible transaction with
the Partnership. The solicitation process has only recently commenced, however,
and accordingly, there can be no assurance that a transaction will occur or, if
it were to occur, of the timing or value of any such transaction. If the General
Partner determines that any such bids would be in the best interests of the
limited partners, then it will attempt to effectuate such a transaction. No such
transaction is pending as of the date of this Statement.
Although the General Partner is not making a recommendation, the
General Partner believes that limited partners should carefully consider the
following in making their own decision about whether to accept or reject the
offer. Prior to commencement of the tender offer, Haberhill, together with
Madison, had been in discussions with representatives of the General Partner
regarding a possible acquisition transaction involving the Partnership. Douglas
Greene, the principal of Haberhill, is a former employee of Host Marriott
Corporation, an affiliate of the General Partner, and during his period of
employment worked on several matters concerning the Partnership. As part of
these discussions, Haberhill entered into a Confidentiality Agreement, dated
February 1, 2001, with Host Marriott Corporation and as a result received
certain material non-public information about the Partnership. During these
discussions, Haberhill was informed of the General Partner's plan to conduct a
broader marketing of the Partnership's Inns or, in the alternative, the Units in
order to maximize value for the limited partners. Although repeatedly requested
to do so, Haberhill refused to enter into a second agreement under which
Haberhill, and any organization it represents or acts in concert with, would
have agreed for a period of time not to engage in, or undertake, certain actions
which were viewed by the General Partner as hostile and which the General
Partner believed would be disruptive to the Merrill Lynch solicitation process,
in which Haberhill was requested to participate.
In addition, in deciding whether to accept or reject the offer, limited
partners should carefully read, in its entirety, the Offer to Purchase provided
by the Purchaser. In particular, limited partners should consider the following
statements made by the Purchaser in its Offer to Purchase:
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"Although the Purchaser cannot predict with certainty the future value
of the Partnership's assets on a per Unit basis, the Offer Price could
differ significantly from the net proceeds that would be realized from
a sale of the properties owned by the Partnership or that may be
realized upon a future liquidation of the Partnership."
"The Purchaser is making the Offer for investment purposes and with
the intention of making a profit from the ownership of the Units. In
establishing the Offer Price of $300 per Unit, the Purchaser is
motivated to establish the lowest price that might be acceptable to
Unitholders consistent with the Purchaser's objectives. Such
objectives and motivations may conflict with the interests of the
Unitholders in receiving the highest price for their Units."
"Upon the liquidation of the Partnership, the Purchaser will benefit
to the extent, if any, that the amount per Unit it receives in the
liquidation exceeds the Offer Price, if any. Therefore, Unitholders
might receive more value if they hold their Units, rather than tender,
and receive proceeds from the liquidation of the Partnership.
Alternatively, Unitholders may prefer to receive the Offer Price now
rather than wait for uncertain future net liquidation proceeds."
(See the cover page of the Purchaser's Offer to Purchase dated May 16,
2001.)
Limited partners will have to make the determination as to whether to
wait for a possible transaction resulting from Merrill Lynch's solicitation
efforts or to sell their Units now at the tender offer price. If a limited
partner is interested in liquidating its Units immediately, the tender offer
gives the limited partner this opportunity. Additionally, there can be no
assurance that a better offer for the purchase of the Units will be available
now or in the future. As limited partners are no doubt aware, however, by
accepting the Purchaser's or any other offer, limited partners will surrender
their right to participate in any future benefits from ownership of the Units.
There can be no assurance that the tender offer price is equal to or greater
than the amount limited partners might otherwise receive with respect to their
Units over the remaining term of the Partnership. If limited partners choose to
accept the tender offer, payment will come directly from the Purchaser.
(c) Intent to Tender. Neither the Partnership nor the General Partner or,
to the knowledge of the Partnership, any affiliate of the Partnership or the
General Partner intends to tender any Units that are held of record or
beneficially by such person to the Purchaser.
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ITEM 5. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
Neither the Partnership, the General Partner nor any person acting on their
behalf has employed, retained or compensated, or intends to employ, retain or
compensate, any person to make solicitations or recommendations to the limited
partners on their behalf concerning the Offer to Purchase.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
Neither the Partnership nor the General Partner or any of their executive
officers, directors, affiliates or subsidiaries have effected any transactions
in the Units during the past sixty days.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(a) The Partnership has not undertaken or engaged in any negotiations in
response to the Offer to Purchase which relates to: (i) a tender offer or other
acquisition of the Units by the Partnership, any of its subsidiaries or any
other person; (ii) any extraordinary transaction, such as a merger,
reorganization or liquidation, involving the Partnership; (iii) a purchase, sale
or transfer of a material amount of assets by the Partnership; or (iv) any
material change in the present dividend rate or policy, or indebtedness or
capitalization of the Partnership. However, as described in Item 4 above, prior
to receipt of the Offer to Purchase, the Partnership had commenced its efforts
to find a party interested in acquiring either the Partnership's Inns or, in the
alternative, the Units.
(b) There are no transactions, resolutions, agreements in principle or
signed contracts in response to the Offer to Purchase that relate to or would
result in one or more of the events referred to in Item 7(a).
ITEM 8. ADDITIONAL INFORMATION.
None.
ITEM 9. EXHIBITS.
(a)(1) Letter to Limited Partners.
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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.
MARRIOTT RESIDENCE INN LIMITED PARTNERSHIP
By: RIBM ONE LLC
General Partner
Date: May 29, 2001 By: /s/ Robert E. Parsons, Jr.
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Robert E. Parsons, Jr.
Title: President and Manager