OFFER TO PURCHASE FOR CASH
317 UNITS
of Limited Partnership Interests in
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
by
EVEREST INVESTORS 14, LLC
at a Cash Purchase Price of
$13,000 per Unit
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 5:00 P.M., LOS
ANGELES TIME, ON FRIDAY, FEBRUARY 20, 2004, UNLESS THE OFFER IS EXTENDED.
Everest Investors 14, LLC ("Everest" or the "Purchaser"), a California
limited liability company, is offering to purchase 317 Units of Wilder Richman
Historic Properties II, L.P. (the "Partnership"), at a cash purchase price of
$13,000 per Unit, without interest, less the amount of the Distributions (as
defined below) per Unit, if any, made to the Unit Holders by the Partnership
after the date of this Offer. Transfer fees, if any, will be paid by the
Purchaser and will not be deducted from your proceeds. The Offer (as defined
below) is subject to certain terms and conditions set forth in this Offer to
Purchase, as it may be supplemented from time to time (the "Offer to Purchase")
and in the related Agreement of Transfer and Letter of Transmittal, as it may be
supplemented or amended from time to time (the "Letter of Transmittal," which
together with the Offer to Purchase, constitutes the "Offer"). This Offer is not
subject to brokerage commissions and is not conditioned upon financing.
The enclosed Letter of Transmittal may be used to tender Units for the
Offer. Please read all Offer materials completely before completing and
returning the Letter of Transmittal (blue form).
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For More Information or for Further Assistance,
Please Call or Contact the Purchaser at:
Everest Properties II, LLC
(Manager)
155 North Lake Avenue
Suite 1000
Pasadena, California 91101
(626) 585-5920
(800) 611-4613 (toll free)
January 22, 2004
TABLE OF CONTENTS
Page
INTRODUCTION..................................................................1
SUMMARY OF THE OFFER..........................................................1
DETAILS OF THE OFFER..........................................................3
1. Terms of the Offer; Expiration Date; Proration....................3
2. Acceptance for Payment and Payment of Purchase Price..............4
3. Procedure to Accept the Offer.....................................4
4. Determination of Validity; Rejection of Units;
Waiver of Defects; No Obligation to Give Notice of Defects........5
5. Withdrawal Rights.................................................5
6. Extension of Tender Period; Termination; Amendment................6
7. Conditions of the Offer...........................................6
8. Backup Federal Income Tax Withholding.............................8
9. FIRPTA Withholding................................................8
CERTAIN INFORMATION CONCERNING THE PARTNERSHIP................................8
General................................................................8
Outstanding Units......................................................8
Trading History of the Units...........................................8
Selected Financial and Property Related Data...........................9
DETERMINATION OF OFFER PRICE..................................................10
CERTAIN INFORMATION CONCERNING THE PURCHASER..................................10
The Purchaser..........................................................10
General................................................................10
Prior Acquisitions of Units and Prior Contacts.........................11
Source of Funds........................................................11
FUTURE PLANS OF THE PURCHASER.................................................11
EFFECTS OF THE OFFER..........................................................12
Future Benefits of Unit Ownership......................................12
Limitations on Resales.................................................12
Control Over Future Voting Decisions...................................12
CERTAIN FEDERAL INCOME TAX MATTERS............................................13
CERTAIN LEGAL MATTERS.........................................................14
General................................................................14
State Takeover Statutes................................................14
Fees and Expenses......................................................15
Miscellaneous..........................................................15
SCHEDULE I - EXECUTIVE OFFICERS
APPENDIX A - PARTNERSHIP INFORMATION
APPENDIX B - PURCHASER FINANCIAL INFORMATION
INTRODUCTION
The Purchaser hereby offers to purchase 317 Units of limited partnership
interests in the Partnership at a cash purchase price of $13,000 per Unit,
without interest, less the amount of Distributions (defined below) per Unit, if
any, made to Unit Holders by the Partnership after the date of this Offer.
Transfer fees, if any, will be paid by the Purchaser and will not be deducted
from your proceeds.
SUMMARY OF THE OFFER.
The purpose of the Offer is for the Purchaser to acquire a substantial
equity interest in the Partnership for investment purposes, and to hold enough
Units to prevent any sale of the Partnership's assets at a price or on terms of
which the Purchaser and its affiliates do not approve.
In considering the Offer, Unit Holders are urged to consider the following:
o The price offered for the Units is $13,000 in CASH, less any
Distributions made after the date of this Offer. See "Details of the
Offer - Acceptance for Payment and Payment of Purchase Price."
o The Offer is $1,500 per Unit (13%) more than the lower offer from
MacKenzie Patterson Fuller, Inc. (the "Lower Offer"), and in our Offer
no transfer fees will be deducted, like they are in the Lower Offer.
The Lower Offer is for only 32 Units, and is irrevocable, while our
Offer is for 317 Units and you may withdraw your Units until the
Expiration Date.
o The Offer is, effectively, $1,325 per Unit more than the maximum
amount the General Partner estimated could be expected from a proposed
sale of the Partnership's properties, based on the Partnership's
consent solicitation dated July 1, 2003, and the subsequent
distribution of approximately $1,325 per Unit of cash held by the
Partnership. See "Certain Information Concerning the Partnership -
Selected Financial and Property Related Data."
o Approximately 48% of the Unit Holders approved selling the properties
in 2003 at a price that would have resulted in less proceeds per Unit
than our Offer, according to the General Partner.
o The Purchaser and its affiliates would hold approximately 52% of the
outstanding Units if the Offer is fully subscribed, giving them the
ability to control the outcome of any vote of Unit Holders. The
Purchaser will vote Units in its own interest, which may conflict with
the interests or preferences of the other Unit Holders. See "Future
Plans of the Purchaser" and "Effects of the Offer - Control Over
Future Voting Decisions."
o The General Partner has stated in its last Quarterly Report (Form
10-Q) that the Partnership's properties need $12 Million in capital
improvements, according to the operating general partner's preliminary
capital needs assessment. The substantial capital needs of the
Partnership's properties, as described by the General Partner, would
be likely to adversely affect the sales price obtainable for the
properties and the time it will take to sell the properties, in the
Purchaser's opinion. The General Partner also stated that it will
establish a due diligence review process to allow interested parties
to make firm proposals to purchase the properties, but the General
Partner has not committed to any time frame. The General Partner has
been claiming it would take such steps since at least August 2003.
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o Our Offer gives you the opportunity to receive $13,000 per Unit in
CASH without waiting. The Purchaser estimates that it would take at
least six months for a sale of the properties to be completed, and
that the Partnership would not be liquidated until 2005 at the
earliest.
o The Units are illiquid. Partnership Spectrum, an independent third
party publication that reports on trading activity for partnership
interests, shows no trading activity for the Partnership's Units for
over two years. The Offer allows Unit Holders to dispose of their
Units without incurring the sales commissions (typically up to 8% with
a minimum of $150-$200) associated with sales arranged through brokers
or other intermediaries. See "Certain Information Concerning the
Partnership - Trading History of the Units."
o The Purchaser is not affiliated with the Partnership or its sole
general partner, Wilder Richman Historic Corporation (the "General
Partner"). The General Partner may be expected to communicate its
position on the Offer in the next two weeks.
o The Purchaser is making the Offer with a view to making a profit for
itself. Accordingly, the desire of the Purchaser to purchase Units at
a low price conflicts with the desire of the Unit Holders to sell
their Units at a high price.
o The Offer is an immediate opportunity for Unit Holders to liquidate
their investment in the Partnership, but Unit Holders who tender their
Units will be giving up the opportunity to participate in any
potential future benefits from ownership of Units, including
distributions resulting from any future sale of the Partnership's
properties. Unit Holders may have a more immediate need to use the
cash now tied up in the Units, and may consider the Offer more certain
to achieve a prompt liquidation of their investment in the Units. Unit
Holders who sell all of their Units will also eliminate the need to
file Form K-1 information for the Partnership with their federal tax
returns for years after 2004. See "Details of the Offer - Acceptance
for Payment and Payment of Purchase Price."
o The Offer allows Unit Holders the option to sell "All or None" of
their Units, thereby allowing Unit Holders the option to avoid
proration if more than 317 Units are tendered. See "Details of the
Offer - Terms of the Offer; Expiration Date; Proration" and "-
Acceptance for Payment and Payment of Purchase Price."
o The Offer has a "Minimum Tender Condition" whereby the Purchaser is
not obligated to accept for purchase or pay for any Units unless at
least 317 Units are Properly Tendered and not withdrawn and which the
Purchaser is otherwise able to accept for payment and purchase. See
"Details of the Offer - Conditions of the Offer."
o Unit Holders who do not sell their Units in the Offer may have to wait
to sell their Units for up to a year after the Offer is completed. See
"Effects of the Offer - Limitations on Resales."
Each Unit Holder must make his own decision, based on the Unit Holder's
particular circumstances, whether to tender Units. Unit Holders should consult
with their respective advisors about the financial, tax, legal and other
implications of accepting the Offer.
The above statements are intended only as a brief overview of the principal
terms and considerations regarding the Offer. The entire Offer to Purchase,
which follows, provides substantially greater detail about the Offer, and all of
the statements above are qualified by the entire Offer to Purchase. You should
read it completely and carefully before deciding whether or not to tender your
Units. The Offer is subject to certain terms and conditions set forth in this
Offer to Purchase, and in the related Agreement of Transfer and Letter of
Transmittal, that are not summarized above.
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DETAILS OF THE OFFER
1. Terms of the Offer; Expiration Date; Proration. On the terms and subject
to the conditions of the Offer, the Purchaser will accept and purchase up to 317
validly tendered, and not withdrawn, Units in accordance with the procedures set
forth in this Offer to Purchase ("Properly Tendered"). For purposes of the
Offer, the term "Expiration Date" means 5:00 p.m., Los Angeles time, on Friday,
February 20, 2004, unless the Purchaser extends the period of time during which
the Offer is open, in which event the term "Expiration Date" shall mean the
latest time and date to which the Offer is extended by the Purchaser.
If, prior to the Expiration Date, the Purchaser increases the price offered
to the Unit Holders pursuant to the Offer, the increased price will be paid for
all Units accepted for payment pursuant to the Offer, whether or not the Units
were tendered prior to the increase in consideration.
If more than 317 Units are Properly Tendered the Purchaser will, upon the
terms and subject to the conditions of the Offer, accept for payment and pay for
an aggregate of 317 Units, pro rata, according to the number of Units that are
Properly Tendered by each Unit Holder, with appropriate adjustments to avoid
purchases of fractional Units. If transfers of Units are limited by the
Partnership Agreement to a number of Units (the "Transfer Limit") less than 317
Units and the Purchaser elects to waive the Minimum Tender Condition, and the
number of Units that are Properly Tendered exceeds the Transfer Limit, the
Purchaser will, upon the terms and subject to the other conditions of the Offer,
accept for payment and pay for Units equal to the Transfer Limit, pro rata,
according to the number of Units that are Properly Tendered by each Unit Holder,
with appropriate adjustments to avoid purchases of fractional Units. Subject to
its obligation to pay for Units promptly after the Expiration Date, the
Purchaser intends to pay for any Units accepted for payment pursuant to the
Offer after determining the final proration or other adjustments. The Purchaser
does not believe it would take any longer than five business days to determine
the effects of any proration required. If the number of Units that are Properly
Tendered is less than or equal to 317 Units (or the Transfer Limit, if any) and
the Purchaser elects to waive the Minimum Tender Condition (defined below), the
Purchaser will purchase all Units that are Properly Tendered, upon the terms and
subject to the other conditions of the Offer. See "Effects of the Offer -
Limitations on Resales."
Unit Holders may indicate, by checking a box on the Letter of Transmittal
(the "All or None Box"), that they only wish to sell their Units if they will be
able to sell all of their Units, without any proration. If on the Expiration
Date more than 317 Units (or the Transfer Limit, if any) have been Properly
Tendered, unless the Purchaser amends the Offer to increase the number of Units
to be purchased, the Purchaser will not accept for payment any Units from Unit
Holders that checked the All or None Box. If more than 317 Units (or the
Transfer Limit, if any) have been Properly Tendered without checking the All or
None Box, then the above description of proration will apply only to tenders of
such Units that do not have the All or None Box checked.
If prior to the Expiration Date any or all of the conditions of the Offer
have not been satisfied, or waived by the Purchaser, the Purchaser reserves the
right to: (i) decline to purchase any of the Units tendered, terminate the Offer
and return all tendered Units, (ii) waive the unsatisfied conditions and,
subject to complying with applicable rules and regulations of the Securities and
Exchange Commission (the "Commission"), purchase all Units that are Properly
Tendered, (iii) extend the Offer and, subject to the right of Unit Holders to
withdraw Units until the Expiration Date, retain previously tendered Units for
the period or periods for which the Offer is extended, and (iv) amend the Offer.
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2. Acceptance for Payment and Payment of Purchase Price. On the terms and
subject to the conditions of the Offer, the Purchaser will purchase and will pay
for up to 317 Properly Tendered Units, promptly following the Expiration Date.
In all cases, payment for Units purchased pursuant to the Offer will be made
only after timely receipt by the Purchaser of: (i) a properly completed and duly
executed and acknowledged Letter of Transmittal, (ii) any other documents
required in accordance with the Letter of Transmittal, and (iii) written
confirmation from the Partnership of the transfer of the Units to the Purchaser.
Any Distributions made or declared on or after the date of this Offer
would, by the terms of the Offer and as set forth in the Letter of Transmittal,
be assigned by tendering Unit Holders to the Purchaser and deducted from your
proceeds. No transfer fees will be deducted. UNDER NO CIRCUMSTANCE WILL INTEREST
ON THE PURCHASE PRICE BE PAID, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
If any tendered Units are not purchased for any reason (other than
proration adjustments), the Purchaser may destroy the original Letter of
Transmittal with respect to the Units. If for any reason acceptance for payment
of, or payment for, any Units tendered pursuant to the Offer is delayed or the
Purchaser is unable to accept for payment, purchase or pay for Units tendered,
then, without prejudice to the Purchaser's rights under Section 4 herein, the
Purchaser may, nevertheless, retain documents concerning tendered Units, and
those Units may not be withdrawn except to the extent that the tendering Unit
Holders are otherwise entitled to withdrawal rights as described in Section 5
herein, subject, however, to the Purchaser's obligation under Rule 14e-1(c)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to
pay Unit Holders the purchase price in respect of Units tendered or return
documents, if any, representing those Units promptly after termination or
withdrawal of the Offer.
3. Procedure to Accept the Offer. For the tender of any Units to be valid,
the Purchaser must receive, at the address listed on the back page of this Offer
to Purchase on or prior to the Expiration Date, a properly completed and duly
executed Letter of Transmittal and all documents required by the Instructions.
The method of delivery of the Letter of Transmittal and all other required
documents is at the option and risk of the tendering Unit Holder, and delivery
will be deemed made only when actually received by the Purchaser. If delivery is
by mail, registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to assure timely
delivery.
By executing and delivering a Letter of Transmittal, a tendering Unit
Holder irrevocably appoints the Purchaser and its officers and any other
designee of the Purchaser, and each of them, the attorneys-in-fact and proxies
of the Unit Holder, in the manner set forth in the Letter of Transmittal, each
with full power of substitution, to the full extent of the Unit Holder's rights
with respect to the Units tendered by the Unit Holder and accepted for payment
by the Purchaser (and with respect to any and all distributions, other Units,
rights or other securities issued or issuable in respect thereof (collectively,
"Distributions")), including without limitation the right to direct any IRA
custodian, trustee or other record owner to execute and deliver the Letter of
Transmittal, the right to accomplish a withdrawal of any previous tender of the
Unit Holder's Units and the right to complete the transfer contemplated thereby.
All such proxies will be considered coupled with an interest in the tendered
Units, are irrevocable and are granted in consideration of, and are effective
upon, the acceptance for payment of the Units by the Purchaser in accordance
with the terms of the Offer. Upon acceptance for payment, all prior powers of
attorney and proxies given by the Unit Holder with respect to the Units and
Distributions will, without further action, be revoked, and no subsequent powers
of attorney or proxies may be given (and, if given, will be without force or
effect). The officers and designees of the Purchaser will, with respect to the
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Units for which the appointment is effective, be empowered to exercise all
voting and other rights of the Unit Holder as they in their discretion may deem
proper at any meeting of the Partnership or any adjournment or postponement
thereof.
By executing and delivering a Letter of Transmittal, a tendering Unit
Holder irrevocably assigns to the Purchaser and its assigns all of the right,
title and interest of the Unit Holder in and to any and all Distributions made
by the Partnership, effective upon and after the date of acceptance with respect
to Units accepted for payment and thereby purchased by the Purchaser.
4. Determination of Validity; Rejection of Units; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions about the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Units pursuant to the Offer will be determined by the Purchaser, which
determination will be final and binding. The Purchaser reserves the right to
reject any or all tenders of any particular Units determined by it not to be in
proper form or if the acceptance of or payment for those Units may, in the
opinion of Purchaser's counsel, be unlawful. The Purchaser also reserves the
right to waive or amend any of the conditions of the Offer that it is legally
permitted to waive and to waive any defect in any tender with respect to any
particular Units. The Purchaser's interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal) will be final and binding. No
tender of Units will be deemed to have been validly made until all defects have
been cured or waived. Neither the Purchaser nor any other person will be under
any duty to give notification of any defects in the tender of any Units or will
incur any liability for failure to give any such notification.
A tender of Units pursuant to the procedure described above and the
acceptance for payment of such Units will constitute a binding agreement between
the tendering Unit Holder and the Purchaser on the terms set forth in the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment pursuant to this Offer, and thereby purchased, Properly Tendered
Units if, as and when the Purchaser gives written notice to the Partnership or
its Transfer Agent of the Purchaser's acceptance of those Units for payment
pursuant to the Offer. Upon the terms and subject to the conditions of the
Offer, payment for Units accepted for payment pursuant to the Offer will be made
and transmitted directly to Unit Holders whose Units have been accepted for
payment.
5. Withdrawal Rights. Tenders of Units made pursuant to the Offer are
irrevocable, except that Units tendered pursuant to the Offer may be withdrawn
at any time on or prior to the Expiration Date and, unless already accepted for
payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after March 22, 2004. If purchase of, or payment for, Units is delayed for
any reason, including extension by the Purchaser of the Expiration Date, or if
the Purchaser is unable to purchase or pay for Units for any reason (for
example, because of proration adjustments) then, without prejudice to the
Purchaser's rights under the Offer, tendered Units may be retained by the
Purchaser and may not be withdrawn, except to the extent that tendering Unit
Holders are otherwise entitled to withdrawal rights as set forth in this Section
5; subject, however, to the Purchaser's obligation, pursuant to Rule 14e-1(c)
under the Exchange Act, to pay Unit Holders the purchase price in respect of
Units tendered promptly after termination or withdrawal of the Offer.
For withdrawal to be effective, a written notice of withdrawal must be
timely received by the Purchaser at its address listed on the back cover of this
Offer to Purchase. Any notice of withdrawal must specify the name of the
person(s) who tendered the Units to be withdrawn and must be signed by the
person(s) who signed the Letter of Transmittal in the same manner as the Letter
of Transmittal was signed. Any Units properly withdrawn will be deemed not
5
validly tendered for purposes of the Offer. Withdrawn Units may be re-tendered,
however, by following the procedures described in Section 3 herein at any time
prior to the Expiration Date.
All questions about the validity and form (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, which determination
shall be final and binding. Neither the Purchaser nor any other person will be
under any duty to give notice of any defects in any notice of withdrawal or
incur any liability for failure to give any such notice.
6. Extension of Tender Period; Termination; Amendment. The Purchaser
expressly reserves the right at any time:
o to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any
Units;
o to delay for a reasonable period the acceptance for payment of, or
payment for, any Units not already accepted for payment or paid for,
if the Purchaser reasonably anticipates the prompt receipt of any
authorization, consent, order of, or filing with, or the expiration of
waiting periods imposed by, any court, government, administrative
agency or other governmental authority, necessary for the consummation
of the transactions contemplated by the Offer;
o to amend the Offer in any respect (including, without limitation, by
increasing or decreasing the price, increasing or decreasing the
number of Units being sought, or both).
Notice of any such extension, termination or amendment will promptly be
disseminated to Unit Holders in a manner reasonably designed to inform Unit
Holders of such change in compliance with Rule 14d-4(c) under the Exchange Act.
In the case of an extension of the Offer, the extension will be followed by a
press release or public announcement which will be issued no later than 9:00
a.m., New York City time, on the next business day after the scheduled
Expiration Date, in accordance with Rule 14e-1(d) under the Exchange Act. If the
Purchaser makes a material change in the terms of the Offer or waives a
condition that constitutes a material change in the terms of the Offer, the
Purchaser will extend the Offer and disseminate additional tender offer
materials to the extent required by Rules 14d-4(c) and 14d-6(d) under the
Exchange Act. If a Distribution occurs before the Expiration Date and the
Purchaser reduces its Offer price as a result, the Purchaser will provide notice
thereof to Unit Holders and extend the Expiration Date in accordance with Rule
14e-1(b) under the Exchange Act.
7. Conditions of the Offer. Notwithstanding any other term of the Offer,
the Purchaser will not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to a bidder's obligation to pay for or return
tendered securities promptly after the termination or withdrawal of such
bidder's offer), to pay for any Units tendered, may delay the acceptance for
payment of the Units tendered, or may withdraw the Offer if, at any time on or
after the date of the Offer and before the Expiration Date, any of the following
conditions exists:
(a) a preliminary or permanent injunction or other order of any federal or
state court, government, administrative agency or other governmental authority
shall have been issued and shall remain in effect which: (i) makes illegal,
delays or otherwise directly or indirectly restrains or prohibits the making of
the Offer or the acceptance for payment, purchase of or payment for any Units by
the Purchaser; (ii) imposes or confirms limitations on the ability of the
Purchaser effectively to exercise full rights of both legal and beneficial
ownership of the Units; (iii) requires divestiture by the Purchaser of any
Units; (iv) might materially adversely affect the business, properties, assets,
6
liabilities, financial condition, operations, results of operations or prospects
of the Purchaser, or the Partnership; or (v) seeks to impose any material
condition to the Offer unacceptable to the Purchaser;
(b) there shall be any action taken, or any statute, rule, regulation or
order proposed, enacted, enforced, promulgated, issued or deemed applicable to
the Offer by any federal or state court, government, administrative agency or
other governmental authority which might, directly or indirectly, result in any
of the consequences referred to in paragraph (a) above;
(c) there shall be any authorization, consent, order of, or filing with, or
expiration of waiting periods imposed by, any court, government, administrative
agency or other governmental authority, necessary for the consummation of the
transactions contemplated by the Offer and requested by Purchaser, that shall
not have occurred or been filed or obtained;
(d) any event shall have occurred or been disclosed, or shall have been
threatened, regarding the business, properties, assets, liabilities, financial
condition, operations, results of operations or prospects of the Partnership,
which event is materially adverse, or which threatened event, if fulfilled,
would be materially adverse, to the Partnership or its business or properties,
or there shall be any material lien not disclosed in the Partnership's financial
statements, or the Purchaser shall have become aware of any previously
undisclosed fact that has or with the passage of time would have a material
adverse effect on the value of the Units or the Partnership's properties;
(e) the General Partner or the Partnership shall have stated or otherwise
indicated that it intends to refuse to take any action that the Purchaser deems
necessary, in the Purchaser's reasonable judgment, for the Purchaser to be the
registered owner of the Units tendered and accepted for payment hereunder, with
full voting rights, simultaneously with the consummation of the Offer or as soon
thereafter as is permitted under the Partnership Agreement, in accordance with
the Partnership Agreement and applicable law, or the Purchaser is unable to
confirm to its reasonable satisfaction that the General Partner or Partnership
will not refuse to take any such action;
(f) there shall have been threatened, instituted or pending any action or
proceeding before any court or governmental agency or other regulatory or
administrative agency or commission or by any other person, challenging the
acquisition of any Units pursuant to the Offer or otherwise directly or
indirectly relating to the Offer, or otherwise, in the reasonable judgment of
the Purchaser, adversely affecting the Purchaser, the Partnership or its
properties or the value of the Units;
(g) the Partnership shall have (i) issued, or authorized or proposed the
issuance of, any partnership interests of any class, or any securities
convertible into, or rights, warrants or options to acquire, any such interests
or other convertible securities, (ii) issued or authorized or proposed the
issuance of any other securities, in respect of, in lieu of, or in substitution
for, all or any of the presently outstanding Units, (iii) declared or paid any
Distribution, other than in cash, on any of the Units, or (iv) the Partnership
or the General Partner shall have authorized, proposed or announced its
intention to propose any merger, consolidation or business combination
transaction, acquisition of assets, disposition of assets or material change in
its capitalization, or any comparable event not in the ordinary course of
business, other than listing the Partnership's properties for sale;
(h) the General Partner shall have modified, or taken any step or steps to
modify, in any way, the procedures or regulations applicable to the registration
of Units or transfers of Units on the books and records of the Partnership or
the admission of transferees of Units as registered owners and as Unit Holders;
or
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(i) there are less than 317 Units that are Properly Tendered and not
withdrawn and that the Purchaser is able to accept for payment and purchase,
after considering the number of Units for which Unit Holders checked the "All or
None Box" and any limitation on the number of Units allowed to be transferred to
the Purchaser pursuant to the Partnership Agreement's provisions limiting
transfers that would result in 50% or more of the Units being transferred in a
12 month period (the "Minimum Tender Condition"). See "Effects of the Offer -
Limitations on Resales."
The foregoing conditions are for the sole benefit of the Purchaser and may
be (but need not be) asserted by the Purchaser regardless of the circumstances
giving rise to such conditions or may be waived by the Purchaser in whole or in
part at any time prior to the Expiration Date, subject to the requirement to
disseminate to Unit Holders, in a manner reasonably designed to inform them of,
any material change in the information previously provided. Any determination by
the Purchaser, in its reasonable judgment, concerning the events described above
will be final and binding upon all parties.
8. Backup Federal Income Tax Withholding. To prevent the possible
application of backup federal income tax withholding with respect to payment of
the purchase price, a tendering Unit Holder must provide the Purchaser with the
Unit Holder's correct taxpayer identification number in the space provided in
the Letter of Transmittal.
9. FIRPTA Withholding. To prevent the withholding of federal income tax in
an amount equal to ten percent of the amount of the purchase price plus
Partnership liabilities allocable to each Unit purchased, the Letter of
Transmittal includes FIRPTA representations certifying the Unit Holder's
taxpayer identification number and address and that the Unit Holder is not a
foreign person.
CERTAIN INFORMATION CONCERNING THE PARTNERSHIP
The Partnership is subject to the information reporting requirements of the
Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial results and other matters. Such
reports and other documents may be examined and copies may be obtained from the
offices of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, or
electronically at http://www.sec.gov. Copies should be available by mail upon
payment of the Commission's customary charges by writing to the Commission's
principal offices at 450 Fifth Street, N.W., Washington, D.C. 20549.
General. Attached as Part I of Appendix A to this Offer to Purchase are
excerpts from the last Annual Report on Form 10-K filed by the Partnership with
the Commission (the "Form 10-K"), which excerpts describe the business and
operations of the Partnership.
Outstanding Units. According to the Form 10-K, there were 800 Units issued
and outstanding, held by approximately 733 Unit Holders, as of February 28,
2003.
Trading History of the Units. There is no established trading market for
the Units other than limited and sporadic trading through matching services or
privately negotiated sales. At present, privately negotiated sales and sales
through intermediaries (such as through the American Partnership Board) are the
only means available to a Unit Holder to liquidate an investment in Units (other
than this Offer or other occasional offers by other partnership investors, if
any) because the Units are not listed or traded on any exchange or quoted on any
NASDAQ list or system.
According to Partnership Spectrum, an independent third party publication,
between August 1, 2001 and September 30, 2003 (the most recent published
information), there were no trades of the Partnership's limited partnership
8
interests. Sales may be conducted which are not reported in the Partnership
Spectrum and the prices of sales through other channels may differ from those
reported by the Partnership Spectrum. The reported gross sales prices may not
reflect the net sales proceeds received by sellers of Units, which typically are
reduced by commissions (typically up to 8% with a minimum of $150-$200) and
other secondary market transaction costs. The Purchaser does not know whether
the information provided by the Partnership Spectrum is accurate or complete.
Selected Financial and Property Related Data. Attached as Part II of
Appendix A is a summary of certain financial and statistical information with
respect to the Partnership and its properties, all of which has been taken from
the Form 10-K and the Quarterly Report on Form 10-Q for the period ended
November 30, 2003 (the "Form 10-Q"). More comprehensive financial and other
information is included in such reports and other documents filed by the
Partnership with the Commission. Part II of Appendix A is qualified in its
entirety by reference to such publicly filed reports and documents, including,
without limitation, all the financial information and related notes contained
therein. Unit Holders should also refer to any other Quarterly Reports on Form
10-Q or Current Reports on Form 8-K filed with the Commission after the Form
10-K or after the date of this Offer for more recent information relating to the
business and operations of the Partnership.
The General Partner filed on July 1, 2003, a definitive consent
solicitation statement with the Commission ("Consent Solicitation") asking
limited partners to authorize the sale of the Partnership's properties for any
amount that would result in a distribution of cash to the limited partners of at
least $9,000 per Unit. The following information is summarized from the Consent
Solicitation. The Partnership hired a broker to approach privately about 30
potentially interested parties to solicit offers to purchase the Partnership
property. This resulted in two non-binding offers, which are subject to due
diligence, for $32.9 million and $33 million. Because of the age of the
property's historic shell and the recent deterioration of the local rental
market, the Operating General Partner (see "Appendix A" for definition) believed
it was likely the offers would be reduced after due diligence investigations. In
addition, because the rental market in Jersey City, New Jersey had declined
since the solicitations were made, the broker had advised that a contingency
should be made to allow for a likely reduction of the offering prices, and had
suggested allowing for a reduction of approximately $1 million. The General
Partner estimated that a sale of the property for $33 million, after payment of
all debt and brokerage fees, and including distribution of the Partnership's
cash on hand, would result in net proceeds to the Unit Holders of approximately
$13,000 per Unit. The General Partner assumed the offers could be reduced after
due diligence and estimated the final actual net sales proceeds would be in the
range of $9,000 to $13,000 per Unit, including the cash available for a
distribution then being contemplated. That distribution of approximately $1,325
per Unit was made in August 2003, therefore, the sales proceeds estimated above
would be reduced by such amount, and increased by any subsequent net cash from
operations.
Since the Consent Solicitation, the Partnership has reported in filings
with the Securities and Exchange Commission ("SEC"), including the Form 10-Q,
that the Partnership has received additional indications of interest in its
properties. The General Partner has commissioned a review by the Operating
General Partner of the capital improvement needs of the properties and the
preliminary report estimates $12 Million of capital needs over the next ten
years. The General Partner has stated it intends to establish a 90-day period
for interested parties to conduct due diligence and determine what, if any, firm
proposal to make to the Partnership; however, no time frame has been announced
regarding when such process might begin.
9
DETERMINATION OF OFFER PRICE
In establishing the Offer price, the Purchaser reviewed certain publicly
available information including among other things: (i) the Partnership's
limited partnership agreement (the "Partnership Agreement"), (ii) Annual Reports
on Form 10-K, (iii) Quarterly Reports on Form 10-Q, and (iv) other reports filed
with the Commission. The Purchaser determined the Offer price pursuant to its
independent evaluation of the Partnership and its properties. The Purchaser did
not obtain current independent valuations or appraisals of the assets.
Purchaser is making a speculative offer based on the unique circumstances
of the Partnership. Purchaser set its offer price by reviewing the prior offers
of which Purchaser is aware and the Partnership's previous publicly stated
estimates of the potential net proceeds of a sale of the Partnership's
properties, and selecting a price that Purchaser believes is sufficiently higher
than such prior offers and estimations to motivate Unit Holders to sell their
Units. Purchaser has assumed that the calculations of potential distributions
provided in the Consent Solicitation were accurate and has relied thereon.
CERTAIN INFORMATION CONCERNING THE PURCHASER
The Purchaser. The Purchaser is a California limited liability company that
was formed on September 29, 2000. The principal office of the Purchaser is 155
North Lake Avenue, Suite 1000, Pasadena, CA 91101. The Manager of the Purchaser
is Everest Properties II, LLC ("EPII") and it is the person that manages the
Purchaser's affairs. For certain information concerning the directors and
executive officers of EPII, see Schedule I to this Offer to Purchase.
The Purchaser and EPII and their affiliates invest in limited partnerships
such as the Partnership, and in other forms of real estate oriented investments,
and conduct activities incident thereto. For certain selected unaudited
financial information available with respect to the Purchaser, see Appendix B to
this Offer to Purchase. The inclusion of this information is for informational
purposes only and is not intended to imply that such information is material to
a decision whether to sell, tender or hold the Units.
General. Except as set forth elsewhere in this Offer to Purchase: (i) the
Purchaser does not beneficially own or have a right to acquire, and, to the best
knowledge of the Purchaser, no associate or majority-owned subsidiary of
Purchaser or the persons listed in Schedule I hereto, beneficially owns or has a
right to acquire any Units or any other equity securities of the Partnership;
(ii) the Purchaser has not, and to the best knowledge of the Purchaser, none of
the persons and entities referred to in clause (i) above or any of their
executive officers, directors or subsidiaries has, effected any transaction in
the Units or any other equity securities of the Partnership during the past 60
days other than as stated in this Offer to Purchase; (iii) the Purchaser does
not have and, to the best knowledge of the Purchaser, none of the persons listed
in Schedule I hereto has, any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Partnership, including, but not limited to, the transfer or voting thereof,
joint ventures, loan arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies, consents or
authorizations; (iv) since February 28, 2001, there have been no transactions
which would require reporting under the rules and regulations of the Commission
between the Partnership or any of its affiliates and the Purchaser or any of its
subsidiaries or, to the best knowledge of the Purchaser, any of its executive
officers, directors or affiliates; and (v) since February 28, 2001 except as
otherwise stated in this Offer to Purchase, there have been no contacts,
negotiations or transactions between the Purchaser, or any of its subsidiaries
or, to the best knowledge of the Purchaser, any of the persons listed in
Schedule I hereto, on the one hand, and the Partnership or its affiliates, on
the other hand, concerning a merger, consolidation or acquisition, tender offer
10
or other acquisition of securities, an election of directors, or a sale or other
transfer of a material amount of assets of the Partnership.
Prior Acquisitions of Units and Prior Contacts. The Purchaser does not own
units of the Partnership. Affiliates of the Purchaser own Units, none of which
were acquired in the last 60 days: Everest Management, LLC owns 31 Units (3.8%),
and Millenium Management, LLC owns 66 Units (8.3%).
In May 2003, EPII, the Purchaser's manager, contacted the General Partner
to discuss the contents of the preliminary Consent Solicitation filed with the
SEC. EPII requested further explanation of the potential distribution amounts
that were described therein. The General Partner stated that its estimates
assumed about $2 Million of costs associated with a transaction to sell the
Partnership's property; that capital improvements budgeted at $1,100,000 had
already been commenced; and that it expected the potential purchasers to reduce
their offers by about $500,000 after completing due diligence.
On July 14, 2003, Everest Financial, Inc., an affiliate of Purchaser, made
a non-binding proposal to the General Partner to acquire all of the general and
limited partnership interests in the Partnership pursuant to a merger. The
proposal offered $13,500 per Unit in cash, and a cash amount for the general
partner interest equal to the amount that would result from a property
liquidation yielding a $13,500 per Unit liquidating distribution to Unit
Holders. The proposal was made before the Partnership distributed $1,325 per
Unit of cash to Unit Holders, so the proposed merger consideration contemplated
that such cash would remain in the Partnership, which has not been the case. No
substantive response to the proposal was received, although the General Partner
advised EPII in August 2003 that the General Partner intended to establish a
90-day period for interested parties to conduct due diligence and determine
what, if any, firm proposal to make to the Partnership.
In January 2004, a representative of a member of the Purchaser toured the
Partnership's properties with a real estate agent believed to be representing
the Partnership.
Except as set forth above, neither the Purchaser nor its affiliates are
party to any past, present or proposed material contracts, arrangements,
understandings, relationships, or negotiations with the Partnership or with the
General Partner concerning the Partnership.
Source of Funds. Based on the Offer price of $13,000 per Unit, the
Purchaser estimates that the total amount of funds necessary to purchase all
Units sought by this Offer and to pay related fees and expenses, will be
approximately $4.2 Million. The Purchaser expects to obtain these funds by means
of equity capital contributions from its members at the time the Units tendered
pursuant to the Offer are accepted for payment. Such members will fund their
capital contributions through existing cash and other financial assets which in
the aggregate are sufficient to provide the funds required in connection with
the Offer without any borrowings. Such members have irrevocably agreed and are
obligated to make such capital contributions available to the Purchaser on
demand.
FUTURE PLANS OF THE PURCHASER
The Purchaser is seeking to acquire Units pursuant to the Offer to obtain a
substantial equity interest in the Partnership, for investment purposes. The
Purchaser is also seeking to hold enough Units to prevent any sale of the
Partnership's assets at a price or on terms of which the Purchaser and its
affiliates do not approve. Following the completion of the Offer, the Purchaser
and persons related to or affiliated with the Purchaser may acquire additional
Units. Any such acquisition may be made through private purchases, through one
11
or more future tender or exchange offers or by any other means deemed advisable
by the Purchaser. Any such acquisition may be at a price higher or lower than
the price to be paid for the Units purchased pursuant to the Offer, and may be
for cash or other consideration. However, the Purchaser currently has no plan to
make additional tender offers for the Units. The Purchaser also may consider
selling some or all of the Units it acquires pursuant to the Offer, either
directly or by a sale of one or more interests in the Purchaser itself,
depending upon liquidity, strategic, tax and other considerations.
If the Partnership establishes a due diligence or other process by which
interested parties can make a proposal to acquire the Partnership or its
properties, the Purchaser expects that it or an affiliate will participate in
such process with the expectation of making a proposal. Such a proposal may be
to renew the merger proposal previously made by Purchaser's affiliate, at the
same or a different price, or may be a completely different proposal. The
Purchaser and its affiliates will vote their Units in order to disapprove any
transaction proposed by the Partnership that the Purchaser and its affiliates do
not believe is adequate. Also, if the Purchaser and its affiliates are not
satisfied with the General Partner's efforts or results in marketing the
Partnership's properties after this Offer is concluded, the Purchaser and its
affiliates may seek to remove the General Partner; however, the Purchaser and
its affiliates do not have a plan or current intention to remove the General
Partner.
Other than as set forth above, the Purchaser currently does not intend to
change current management, indebtedness, capitalization, corporate structure or
business operations of the Partnership and does not currently have plans for any
extraordinary transaction such as a merger, reorganization, liquidation or sale
or transfer of assets involving the Partnership. However, these plans could
change at any time in the future. If any transaction is effected by the
Partnership and financial benefits accrue to the Unit Holders, the Purchaser and
its affiliates will participate in those benefits to the extent of their
ownership of the Units.
EFFECTS OF THE OFFER
Future Benefits of Unit Ownership. Tendering Unit Holders shall receive
cash in exchange for their Units purchased by the Purchaser and will forego all
future distributions and income and loss allocations from the Partnership with
respect to such Units.
Limitations on Resales. The Partnership Agreement provides that the General
Partner may refuse to recognize a transfer of Units if the transfer would result
in 50% or more of the Units being transferred in a 12 month period (a "Tax
Termination"). This provision may limit sales of Units on the secondary market
and in private transactions following completion of the Offer. Accordingly, the
Partnership may not recognize any requests for recognition of a transferee Unit
Holder upon a transfer of Units if the transfer would result in a Tax
Termination. For the same reasons, it is theoretically possible that the number
of Units tendered for purchase by the Purchaser taken together with the number
of Units that have transferred prior to the Offer could result in a Tax
Termination; in which case the Minimum Tender Condition could not be satisfied.
In such event, Purchaser may elect to waive the Minimum Tender Condition and
purchase the maximum number of Units it may purchase without causing a Tax
Termination, as informed by the General Partner. It is not possible for
Purchaser to determine how many Units may be purchased because only the General
Partner will know the number of Units that have been transferred in all other
transactions prior to the expiration of the Offer. See "Details of the Offer -
Terms of the Offer; Expiration Date; Proration."
Control Over Future Voting Decisions. Under the Partnership Agreement,
limited partners are entitled to vote on a variety of matters, including removal
of the General Partner, dissolution and termination of the Partnership, and
12
amendments to the Partnership Agreement. If the Purchaser purchases the 317
Units it is seeking pursuant to the Offer, the Purchaser and its affiliates will
hold enough Units of the Partnership to control the outcome of any such votes.
The Purchaser would also hold enough Units to remove and replace the
Partnership's general partner. The Purchaser will vote Units in its own
interest, which may conflict with the interests or preferences of the other Unit
Holders.
CERTAIN FEDERAL INCOME TAX MATTERS
The following summary is a general discussion of certain of the federal
income tax consequences of a sale of Units pursuant to the Offer. The summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), applicable
Treasury regulations thereunder, administrative rulings, and judicial authority,
all as of the date of the Offer. All of the foregoing is subject to change, and
any such change could affect the continuing accuracy of this summary. This
summary does not discuss all aspects of federal income taxation that may be
relevant to a particular Unit Holder in light of such Unit Holder's specific
circumstances, nor does it describe any aspect of state, local, foreign or other
tax laws. Sales of Units pursuant to the Offer may be taxable transactions under
applicable state, local, foreign and other tax laws. UNIT HOLDERS SHOULD CONSULT
THEIR RESPECTIVE TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THE UNIT
HOLDER OF SELLING UNITS PURSUANT TO THE OFFER.
In general, a Unit Holder will recognize gain or loss on a sale of Units
pursuant to the Offer equal to the difference between (i) the Unit Holder's
"amount realized" on the sale and (ii) the Unit Holder's adjusted tax basis in
the Units sold. The amount of a Unit Holder's adjusted tax basis in a Unit will
vary depending upon the Unit Holder's particular circumstances, and it will
include the amount of the Partnership's liabilities allocable to the Unit (as
determined under Code Section 752). The "amount realized" with respect to a Unit
will be a sum equal to the amount of cash received by the Unit Holder for the
Unit pursuant to the Offer (that is, the purchase price), plus the amount of the
Partnership's liabilities allocable to the Unit (as determined under Code
Section 752).
The gain or loss recognized by a Unit Holder on a sale of a Unit pursuant
to the Offer generally will be treated as a capital gain or loss if the Unit was
held by the Unit Holder as a capital asset. Gain with respect to Units held for
more than one year will be taxed, for federal income tax purposes, at a maximum
long-term capital gain rate of 15 percent. Gain with respect to Units held one
year or less will be taxed at ordinary income rates. It should also be noted
that the Taxpayer Relief Act of 1997 imposed depreciation recapture of
previously deducted straight-line depreciation with respect to real property at
a rate of 25 percent (assuming eligibility for long-term capital gain
treatment). A portion of the gain realized by a Unit Holder with respect to a
disposition of the Units may be subjected to this 25 percent rate to the extent
that the gain is attributable to depreciation recapture inherent in the
properties of the Partnership.
If any portion of the amount realized by a Unit Holder is attributable to
such Unit Holder's share of "unrealized receivables" or "substantially
appreciated inventory items" as defined in Code Section 751, a corresponding
portion of such Unit Holder's gain or loss will be treated as ordinary gain or
loss. It is possible that the basis allocation rules of Code Section 751 may
result in a Unit Holder's recognizing ordinary income with respect to the
portion of the Unit Holder's amount realized on the sale of a Unit that is
attributable to such items while recognizing a capital loss with respect to the
remainder of the Unit.
Capital losses are deductible only to the extent of capital gains, except
that taxpayers who are natural persons may deduct up to $3,000 per year of
capital losses in excess of the amount of their capital gains against ordinary
income. Excess capital losses generally can be carried forward to succeeding
13
years (a "C" corporation's carry-forward period is five years and an individual
taxpayer can carry forward such losses indefinitely).
Under Code Section 469, individuals, S corporations and certain
closely-held corporations generally are able to deduct "passive activity losses"
in any year only to the extent of the person's passive activity income for that
year. Substantially all post-1986 losses of Unit Holders from the Partnership
are passive activity losses. Unit Holders may have "suspended" passive activity
losses from the Partnership (i.e., post-1986 net taxable losses in excess of
statutorily permitted "phase-in" amounts and which have not been used to offset
income from other passive activities).
If a Unit Holder sells less than all of its interest in the Partnership
pursuant to the Offer, a passive loss recognized by that Unit Holder can be
currently deducted (subject to the other applicable limitations) to the extent
of the Unit Holder's passive income from the Partnership for that year plus any
other net passive activity income for that year, and any gain recognized by a
Unit Holder upon the sale of Units can be offset by the Unit Holder's current or
"suspended" passive activity losses (if any) from the Partnership and other
sources. If, on the other hand, a Unit Holder sells 100 percent of its interest
in the Partnership pursuant to the Offer, any "suspended" passive activity
losses from the Partnership and any passive activity losses recognized upon the
sale of the Units will be offset first against any net passive activity income
from the Unit Holder's other passive activity investments, and the balance of
any net passive activity losses attributable to the Partnership will no longer
be subject to the passive activity loss limitation and, therefore, will be
deductible by such Unit Holder from its other "ordinary" income (subject to any
other applicable limitations). If more than 317 Units are Properly Tendered,
some tendering Unit Holders may not be able to sell 100 percent of their Units
pursuant to the Offer because of proration of the number of Units to be
purchased by the Purchaser, unless the Purchaser amends the Offer to increase
the number of Units to be purchased.
A tendering Unit Holder will be allocated the Unit Holder's pro rata share
of the annual taxable income and losses from the Partnership with respect to the
Units sold for the period through the date of sale, even though such Unit Holder
will assign to the Purchaser its rights to receive certain cash distributions
with respect to such Units. Such allocations and any Partnership distributions
for such period would affect a Unit Holder's adjusted tax basis in the tendered
Units and, therefore, the amount of gain or loss recognized by the Unit Holder
on the sale of the Units.
Unit Holders (other than tax-exempt persons, corporations and certain
foreign individuals) who tender Units may be subject to 28 percent backup
withholding unless those Unit Holders provide a taxpayer identification number
("TIN") and are certain that the TIN is correct or properly certify that they
are awaiting a TIN. A Unit Holder may avoid backup withholding by properly
completing and signing the Letter of Transmittal. If a Unit Holder who is
subject to backup withholding does not include its TIN, the Purchaser will
withhold 28 percent from payments to such Unit Holder.
CERTAIN LEGAL MATTERS
General. Except as set forth herein, the Purchaser is not aware of any
filings, approvals or other actions by any domestic or foreign governmental or
administrative agency that would be required prior to the acquisition of Units
by the Purchaser pursuant to the Offer. The Purchaser's obligation to purchase
and pay for Units is subject to certain conditions, including conditions related
to the legal matters discussed herein.
State Takeover Statutes. The Partnership was formed under the laws of the
State of Delaware, which currently does not have any takeover statute applicable
to limited partnerships. However, it is a condition to the Offer that no state
14
or federal statute impose a material limitation on the Purchaser's right to vote
the Units purchased pursuant to the Offer. If this condition is not met,
Purchaser may terminate or amend the Offer.
If any person seeks to apply any state takeover statute, the Purchaser will
take such action as then appears desirable, which action may include challenging
the validity or applicability of any such statute in appropriate court
proceedings. If there is a claim that one or more takeover statutes apply to the
Offer, and it is not determined by an appropriate court that such statutes do
not apply or are invalid as applied to the Offer, the Purchaser might be
required to file certain information with, or receive approvals from, the
relevant state authorities. This could prevent the Purchaser from purchasing or
paying for Units tendered pursuant to the Offer, or cause delay in continuing or
consummating the Offer. In such case, the Purchaser may not be obligated to
accept for payment or pay for Units tendered.
Fees and Expenses. Purchaser will not pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of Units pursuant to the
Offer. Employees of the Purchaser's manager, EPII, may solicit tenders of Units
without any additional compensation. The Purchaser will pay all costs and
expenses of printing and mailing the Offer and its legal fees and expenses.
Miscellaneous. The Offer is not made to (nor will tenders be accepted on
behalf of) Unit Holders residing in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities
or other laws of such jurisdiction. However, the Purchaser may take such action
as it deems necessary to make the Offer in any jurisdiction and extend the Offer
to Unit Holders in such jurisdiction.
In any jurisdiction where the securities or other laws require the Offer to
be made by a licensed broker or dealer, the Offer will be deemed to be made on
behalf of the Purchaser by one or more registered brokers or dealers that are
licensed under the laws of such jurisdiction.
The Purchaser has filed with the Commission a Tender Offer Statement on
Schedule TO pursuant to Rule 14d-3 under the Exchange Act, furnishing certain
additional information with respect to the Offer, and may file amendments
thereto. The Schedule TO and any amendments thereto, including exhibits, may be
inspected and copies may be obtained at the same places and in the same manner
as set forth under the caption "Certain Information Concerning The Partnership
- -- General."
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser not contained herein or in the Letter
of Transmittal and, if given or made, such information or representation must
not be relied upon as having been authorized.
EVEREST INVESTORS 14, LLC
January 22, 2004
15
SCHEDULE I
EXECUTIVE OFFICERS
The business address of each executive officer and director of Everest
Properties II, LLC is 155 North Lake Avenue, Suite 1000, Pasadena, California
91101. Each executive officer and director is a United States citizen. The name
and principal occupation or employment of each executive officer and director of
Everest Properties II, LLC ("EPII"), are set forth below.
Present Principal Occupation or Employment
Name Position and Five-Year Employment History
W. Robert Kohorst President of EPII from 1996 - present. President
and Director of Everest Properties, Inc. from
1994 - present. President and Director of KH
Financial, Inc. from 1994 - present.
David I. Lesser Executive Vice President and Secretary of EPII
from 1996 - present. Executive Vice President of
Everest Properties, Inc. from 1995 - present.
Christopher K. Davis Vice President and the General Counsel of EPII
since 1998. Senior Staff Counsel and then
Director of Corporate Legal of Pinkerton's, Inc.
from 1995 - 1998.
Peter J. Wilkinson Vice President and the Chief Financial Officer
of EPII since 1996. Chief Financial Officer and
Director of Everest Properties, Inc. since 1996.
APPENDIX A
The following information has been copied from the Partnership's Annual
Report on Form 10-K for the year ended February 28, 2003 (the "Form 10-K") and
Quarterly Report on Form 10-Q for the period ended November 30, 2003 (the "Form
10-Q"). Although the Purchaser has no information that any statements contained
in this Appendix A are untrue, the Purchaser has not independently investigated
the accuracy of statements, and takes no responsibility for the accuracy,
inaccuracy, completeness or incompleteness of any of the information contained
in the Form 10-K or Form 10-Q or for the failure by the Partnership to disclose
events which may have occurred and may affect the significance or accuracy of
any such information.
PART I
Item 1. Business
General Development of Business
Registrant (also referred to as the "Partnership") is a limited partnership
which was formed under the Delaware Revised Uniform Limited Partnership Act on
October 15, 1987. The general partner of the Partnership is Wilder Richman
Historic Corporation, a Delaware corporation (the "General Partner" or "WRHC").
Registrant was organized to acquire all of the limited partnership
interests in Dixon Mill Associates I (Phase One), Limited Partnership, Dixon
Mill Associates II (Phase Two), Limited Partnership, and Dixon Mill Associates
III (Phase Three), Limited Partnership, each of which is a New Jersey limited
partnership (individually "Dixon Mill I," "Dixon Mill II" and "Dixon Mill III,"
respectively, and collectively the "Operating Partnerships"). Each Operating
Partnership owns one phase ("Phase") of an aggregate 433-unit residential
apartment complex (the "Complex") located in Jersey City, New Jersey, that
consists of buildings designated as certified historic structures by the U.S.
Department of the Interior. The Operating Partnerships have constructed,
substantially rehabilitated and are operating the Complex. The rehabilitation of
the Complex qualified for a rehabilitation tax credit in 1988, 1989 and 1990.
The general partner of the Operating Partnerships is Dixon Venture Corp. (the
"Operating General Partner"), which is not an affiliate of the Partnership or
WRHC.
Pursuant to the Partnership's prospectus dated May 13, 1988, (the
"Prospectus"), the Partnership offered $19,280,000 of units of limited
partnership interest in the Partnership (the "Units") at an offering price of
$24,100 per Unit. The Units were registered under the Securities Act of 1933
pursuant to a Registration Statement on Form S-11 (Registration No. 33-19646).
The closing of the offering of Units (the "Offering") occurred on July 15,
1988. At such closing, 800 Units were sold, representing $19,280,000 in gross
proceeds. After payment of $674,800 of organization and offering expenses,
$674,800 in an origination fee and $1,349,600 of selling commissions, the net
proceeds available for investment were $16,580,800. Of such net proceeds,
$16,388,000 was allocated to the investment in the Operating Partnerships, which
included investments in guaranteed investment contracts. The remainder of
$192,800 was designated as working capital to be used for operating expenses of
the Partnership.
A-1
PART II
Item 2. Properties
The Complex consists of approximately 34 historic mill buildings built
between 1847 and 1932, all of which are certified historic structures that have
been converted and substantially rehabilitated into a 433 unit luxury apartment
complex that has received financing exempt from Federal income taxation under
Internal Revenue Code Section 103(b)(4)(A). As a consequence of this tax exempt
financing, the Operating Partnerships are required to rent at least 15% of the
dwelling units ("D.U.'s") in the Complex to individuals or families of low or
moderate income as determined under such Code Section, currently based on their
income not exceeding 80% of the median income for the area as determined by the
United States Department of Housing and Urban Development ("HUD"). These income
limits are subject to increases pursuant to HUD guidelines. In the Complex, 68
studio and efficiency D.U.'s and 17 one-bedroom D.U.'s are set aside for rental
to low or moderate income persons. There are no rent ceilings on those D.U.'s
set aside for low or moderate income persons. Because such tax exempt financing
consists of bonds sold in 1985, the 80% of median income limit is not required
to be adjusted based on family size as would be required under the Tax Reform
Act of 1986.
The Complex is located on a 4-acre site in Jersey City, New Jersey. In
addition, one new five-story building, approximately 20 feet by 50 feet, was
built on the site. The Complex is located in the Dixon Crucible Redevelopment
Area, an area so designated pursuant to a redevelopment plan adopted in
September 1983 by ordinance of the City of Jersey City. The actual development
entails three Phases with each Phase owned by a separate New Jersey limited
partnership, respectively Dixon Mill I, Dixon Mill II and Dixon Mill III. Phase
I consists of seven industrial buildings which have been rehabilitated to
provide 134 D.U.'s, 55 underground and 77 surface parking spaces and
approximately 1,550 square feet of commercial space. Phase II consists of 11
industrial buildings which have been rehabilitated to provide 191 D.U.'s and 62
underground and 124 surface parking spaces. Phase III consists of four
industrial buildings which have been rehabilitated to provide 108 D.U.'s, 35
underground and 73 surface parking spaces and approximately 2,230 square feet of
commercial space.
The Complex features gardens, elevated walkways and brick paved walkways.
The Complex also has its own electronic security system and a free shuttle
service to the Grove Street PATH station is being provided. In addition, the
residents of the Complex have access to a private fitness facility. The
Complex's commercial space is designated for retail stores and/or professional
offices.
As of December 31, 2001 and 2000, the occupancy and rental rates were as
follows:
December 31, 2002 December 31, 2001
Occupancy Rate 98% 98%
Monthly Rental Rates:
Studio $ 609 - $1,095 $ 628 - $1,117
One-Bedroom $ 730 - $1,752 $ 730 - $1,807
Two-Bedroom $1,213 - $2,284 $1,365 - $2,284
Three-Bedroom $1,870 - $2,073 $1,928 - $2,647
The rental rates reflect significant ranges because the apartments vary as
to size and floor plans (i.e., square footage, duplex, triplex, penthouse) and
due to the low-moderate tenant income restrictions for 15% to 20% of the D.U.'s
resulting from the tax-exempt financing described above.
A-2
Selected Financial Data
The following selected financial data has been copied or derived from the Form
10-K and Form 10-Q and should be read in conjunction with the financial
statements and the related notes set forth in such reports:
Partnership
Year End Nine Months Ended
---------------------------------- ----------------------
February February February November November
28, 2003 28, 2002 29, 2001 30, 2003 30, 2002
----------- ----------- ----------- ---------- ----------
(restated) (restated) (restated)
Total revenues
(Interest income) $ 2,115 $ 4,674 $ 11,890 $853 $ 1,762
Equity in income (loss)
of investment in
Operating
Partnerships $851,780 $ 386,617 $ 36,081(b) $322,502 $ 965,134
Net income (loss) $695,620 $ 342,738 $ 9,371 $196,467 $ 932,204
Net income (loss) per
unit of limited
partnership interest $ 861 $ 424 $ 12 $ 243.10 $ 1,153.49
At year end:
Total assets $2,571,508 $1,753,515 $1,404,776
- ------------------
<FN>
(b) Includes extraordinary loss of $115,942 in connection with refinancing of
mortgages of Operating Partnerships. See Item 7 - Management's Discussion
and Analysis of Financial Condition and Results of Operations.
</FN>
November 30, 2003 February 28, 2003
Cash and cash equivalents............. $71,529 $85,169
Investments in operating partnerships
and other assets...................... 1,569,661 2,486,339
--------- ---------
1,641,190 2,571,508
Liabilities........................... 302,450 358,355
Partners' equity (deficit)............ $1,338,740 $2,213,153
A-3
Combined Operating Partnerships
The combined balance sheets of the Operating Partnerships as of September 30,
2003 and December 31, 2002 and the combined statements of earnings of the
Operating Partnerships for the nine months ended September 30, 2003 (unaudited)
and 2002 are as follows:
September 30, December 31,
2003 2002
ASSETS
Land, buildings and equipment,
less accumulated depreciation. $36,734,393 $37,873,624
Cash and cash equivalents........ 6,729,686 7,176,990
Deferred costs, deposits and other
assets........................... 3,873,046 3,321,944
----------- -----------
47,337,125 48,372,558
LIABILITIES
Mortgages payable................ 28,600,000 28,600,000
Other liabilities................ 2,587,743 2,709,756
----------- -----------
31,187,743 31,309,756
Partners' equity (deficit) 16,149,382 17,062,802
---------- ----------
$47,337,125 $48,372,558
9 Months ended Year ended
September 30, December 31,
2003 2002
Revenue
$5,204,564 $7,187,352
Rents......................... - 52,049
---------- ----------
Interest......................
5,204,564 7,239,401
Expenses
Administrative................ 614,878 1,327,299
Operating..................... 2,461,463 2,676,074
Management fees............... 232,292 297,684
Interest...................... 408,665 423,231
Depreciation and amortization. 1,161,506 1,548,674
--------- ---------
4,878,804 6,272,962
--------- ---------
Net income....................... $ 325,760 $ 966,439
========= =========
A-4
APPENDIX B
EVEREST INVESTORS 14, LLC
Balance Sheets
(unaudited)*
November 30, December 31,
2003 2002
------------ -----------
TOTAL ASSETS............................ $473,996 $508,269
======== ========
LIABILITIES & EQUITY
Liabilities....................... - 106,000
Members Capital................... 492,269 440,575
Retained Earnings................. (18,273) (38,306)
-------- --------
TOTAL LIABILITIES & EQUITY.............. $473,996 $508,269
======== ========
Profit and Loss Statements
(unaudited)*
Eleven Months Ended Year Ended
November 30, December 31,
2003 2002
------------ -----------
Ordinary income......................... $ - $ -
Ordinary expense........................ 18,273 34,691
------ ------
(18,273) (34,691)
Net other income (loss)................. - (3,615)
Net income (loss)....................... ($18,273) ($38,306)
-------- --------
<FN>
* The Purchaser's business consists solely of making and holding investments for
its own account in limited partnership interests. Audited financial statements
are not prepared and would not be obtainable without unreasonable cost or
expense.
</FN>
B-1
The Letter of Transmittal, and any other required documents should be sent
or delivered by each Unit Holder or his broker, dealer, commercial bank, trust
company or other nominee to the Purchaser at its address set forth below.
Questions and requests for assistance may be directed to the Purchaser at
its address and telephone number listed below. Additional copies of this Offer
to Purchase, the Letter of Transmittal, and other tender offer materials may be
obtained from the Purchaser as set forth below, and will be furnished promptly
at the Purchaser's expense.
January 22, 2004 EVEREST INVESTORS 14, LLC
Everest Properties II, LLC
(Manager)
155 North Lake Avenue
Suite 1000
Pasadena, California 91101
(800) 611-4613 or (626) 585-5920
Facsimile: (626) 585-5929