SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.)
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Prometheus Income Partners, a California limited partnership
(Name of Registrant as Specified in Its Charter)
Everest Investors 12, LLC
Everest Properties II, LLC
(Name of Person(s) Filing Proxy Statement)
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11.
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Everest Properties
199 S. Los Robles Ave., Suite 440
Pasadena, CA 91101
Tel: (626) 585-5920
Fax: (626) 585-5929
July 12, 2002
Via facsimile
Mr. John J. Murphy
Prometheus Development Company, Inc.
350 Bridge Parkway
Redwood City, CA 94065
Re: Prometheus Income Partners (the "Partnership")
Dear Mr. Murphy:
We are in receipt of your letter to limited partners dated July 3, 2002,
filed with the Securities and Exchange Commission on July 5, 2002. We are
disturbed by the grossly misleading and untruthful statements contained in your
letter.
First, you contend that you have attempted to contact Aspen Square
Management, Inc. ("Aspen") on several occasions without getting a response from
Aspen. We are aware that in-fact you have had lengthy conversations with Aspen
during which Aspen answered your questions and subsequently provided you with
information about Aspen and their ability to effectuate their offer.
Further, you claim that Aspen's offer price is not clear. We do not know
how Aspen could be any clearer than offering $54,500,000 for both properties,
which is $1,300,000 above the price offered for the properties under the
proposed merger. The $1,600,000 in expense savings under the Aspen offer is also
obvious from Aspen's letter and your own explanation of the calculation of the
merger consideration on page 65 of your proxy statement. Your letter fails to
mention this savings, the resulting increase in proceeds to limited partners, or
the fact that you are charging a disposition fee which is not authorized by the
partnership agreement.
Further, you state that Aspen's offer has significant and substantial
contingencies. You must know that this statement is misleading. Aspen's offer
only requires a 15 day due diligence period, which is an extremely short time
given the size of the transaction. Aspen has also specifically stated in its
offer that it maintains the liquid funds to proceed with an all cash
transaction, without a financing contingency. You also failed to disclose in
your letter that your proposed merger has both due diligence and financing
contingencies that were more uncertain than Aspen's.
We are truly puzzled when you tell the limited partners that Everest's own
best interest may not be consistent with that of the limited partners. We have
brought to the limited partners an unaffiliated and very qualified third party
to purchase the properties for a higher price than you are offering and which
would result in a higher distribution to the limited partners. We want all
limited partners to receive the highest price from a disposition of this
investment.
Page 2
Mr. Murphy
7/12/2002
Also, your comments regarding the manner in which proceeds from a sale to
Aspen would be distributed conveniently fail to mention that all of those
results are entirely in your control as the general partner of the Partnership.
Nothing, other than the general partner's own decision, would delay the
immediate distribution of the proceeds of a full-value sale of the properties to
an unaffiliated purchaser, such as Aspen. The only interest that is inconsistent
with the limited partners' interest is the self-interest of the general partner.
Finally, your sudden concern for an accelerated closing is unwarranted. The
partnership has been in existence for over 14 years; a full value liquidation is
worth a short delay (which, by the way, is the fault of the general partner for
not openly marketing these properties earlier).
We expect you to contact Aspen, pursue a sale in good faith and present a
transaction to limited partners which is consistent with your fiduciary
obligations. We further request that you disclose to limited partners an
accurate description of the Aspen offer, which is superior to the offer made
under your merger proposal, without any misrepresentations and extend the date
of the limited partners' meeting to allow them to review the offer. We believe
that it is also appropriate that you send the Aspen offer to Houlihan Lokey and
ask them to provide a reasoned opinion regarding which proposal is financially
superior for the limited partners.
It is time to put the interest of the limited partners before yours and be
honest with all of us regarding which offer will result in higher distributions
to the limited partners.
Very truly yours,
EVEREST PROPERTIES II, LLC
EVEREST INVESTORS 12, LLC
/s/ W. Robert Kohorst
W. Robert Kohorst
President
WRK/:ll
cc: Limited Partners of Prometheus Income Partners
Prometheus Income Partners
PIP General Partner's Merger Proposal vs. Aspen's Acquisition Offer
- --------------- --------------- ------------- -----------------------
Issue Prometheus Aspen Offer Misrepresentations in
Merger Prometheus' July 3
Proposal Letter
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Purchase $53,200,000 $54,500,000
price
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Expense $0 $1,600,000 Not disclosed
savings
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Per $1,736 $1,888 Not disclosed
unit
distributions
- --------------- --------------- ------------- -----------------------
Allocation of General Partner's Net income and debt Not disclosed
net Income and affiliate will reductions between
debt reduction receive the March 31, 2002 and
between now partnership's net the acquisition
and closing income and mortgage closing date
debt reduction will go to the limited
between partners. Based on a
March 31, 2001 and closing date of September
the closing date of 30, 2002, and based
the transaction. on the first quarter
operating results,
the limited partners
will receive $1,084,000
in net income and $174,000
in reduced debt.
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Both transactions The obligations This offer is The Prometheus'
have similar of the General structured as an letter misrepresents
financing Partner to complete all cash transaction the financing
contingencies the merger are and Aspen contingency in the
subject to the maintains the Aspen offer.
condition that liquid funds
the outstanding to purchase
indebtedness the properties with
with respect to the no financing
partnership' contingencies other
properties be than the possible
refinanced on terms loan assumption.
satisfactory to
the General
Partner in its
sole and absolute
discretion.
- --------------- --------------- ------------- -----------------------
Due diligence The Merger Aspen has asked Prometheus' letter
and other proposal for a 15 business misleadingly states
conditions specifically states day due diligence that "Aspen's letter
that conditions period (very short of intent is subject
still exist that for this type of to significant and
can prevent the transaction). substantial
merger. conditions" without
mentioning the
conditions that
could prevent the
merger.
- --------------- --------------- -------------- -----------------------
Closing date The earliest that The sale of the The Prometheus
the Merger could properties can letter
close is August close as early as misleadingly
14, 2002, that is August 31, 2002, states "a sale of
if the General which will include the Partnership's
Partner does not the timeframe to properties would
extend the proxy obtain limited take significant
period or the partners' approval time to complete"
date of the for the transaction. without mentioning
meeting. the similar time
frame required to
close both
transactions.
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Cash available Fixed at $1736/unit Cash available In reference to
at close with no upside for distribution to the the Aspen offer,
or downside limited partners would Prometheus' letter
adjustment INCREASE due to states "Cash
increases in cash available for
positions as well distribution would
as reduction of be reduced by
mortgage debt these
as a result of [contingent]
operations between liabilities:. This
the March 31, 2001 statement is
cutoff date under obviously not
the merger and the true.
acquisition's closing
date.
- --------------- --------------- ------------- -----------------------
Payment to Full cash payment It is entirely up The Prometheus'
limited at the close of to the General letter
partners at the merger Partner to determine misleadingly
closing what portion of states that
the sales proceeds to "it is unlikely
distribute to the you [the limited
limited partners. partners] would
While the cash receive the
available at closing proposed purchase
will likely be price in full."
subject to a
reserve provision,
there is no reason
that the limited
partners should
receive anything
less than the full
amount of the
sales proceeds.
Additionally, any
reserves should
earn interest to
the benefit of the
limited partners
until the reserves
are released.
- --------------- --------------- ------------- -----------------------
Everest's The General Everest is a limited Prometheus' letter
Interest Partner is partner just like you states that "We
merging the with the interest of believe that
partnership getting the highest Everest is acting
with a related possible distribution in what it
entity which wants to all the limited perceives to be
to acquire partners. its own best
properties at the interests, which
lowest possible may not be
price. consistent with
those of the other
limited partners."
Everest interests
are not only
consistent but the
same as other
limited partners.
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Everest vs. The General Partner Everest introduced Prometheus' letter
The General has never presented the properties to states "Everest
Partner a competitive offer Aspen and Aspen has made no
from unaffiliated submitted an offer proposal to us
companies to the that is effectively that would benefit
limited partners. over $2,900,000 the interests of
There has been no higher than the all the limited
true market test merger offer to an . partners." Everest
of the properties' entity directly introduced the
value. affiliated with the properties to
General Partner. Aspen and brought
the higher offer
to the
Partnership.
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