AS FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION
ON JUNE 20, 2003
PRELIMINARY CONSENT SOLICITATION STATEMENT
FILED ON SCHEDULE 14A
CONSENT SOLICITATION STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ENSTAR INCOME PROGRAM 1984-1, L.P.
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PRELIMINARY COPY
THE TRANSACTION DESCRIBED IN THE ATTACHED CONSENT SOLICITATION STATEMENT HAS NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION") OR ANY STATE SECURITIES COMMISSION OR AGENCY, NOR HAS THE
COMMISSION OR ANY SUCH STATE COMMISSION OR AGENCY PASSED UPON THE FAIRNESS OR
MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
ENSTAR INCOME PROGRAM 1984-1, L.P.
C/O ENSTAR COMMUNICATIONS CORPORATION
12405 POWERSCOURT DRIVE
ST. LOUIS, MISSOURI 63131
___________, 2003
Dear Limited Partner:
As a holder of limited partnership units ("units") of Enstar Income
Program 1984-1, L.P. ("Enstar 1984"), you are being asked to vote upon a plan of
liquidation (the "Liquidation Plan") for Enstar 1984. Enstar 1984 owns and
operates cable television systems in and around the communities of Bolivar,
Brownsville and Covington, Tennessee and Snow Hill, North Carolina
(collectively, the "system"). Enstar Communications Corporation is the general
partner of Enstar 1984 ("general partner"). All holders of units in Enstar 1984
(the "unitholders") are being asked to consent to the sale of all of the cable
television systems of Enstar 1984 and to the subsequent liquidation and
dissolution of Enstar 1984, which will result in each unitholder receiving
approximately $70 per unit in liquidating distributions.
The units were originally issued at a price of $250. Since the initial
issuance of units, unitholders have received aggregate cash distributions of
approximately $345 per unit. We estimate that Enstar 1984 will incur
approximately $140,200 in fees, charges and other costs in connection with the
Liquidation Plan. In addition, we and our affiliates expect to receive
approximately $430,800 in repayment of deferred management fees and
approximately $568,600 in repayment of other obligations owed by Enstar 1984.
The Liquidation Plan will not be implemented unless each proposal in
the Liquidation Plan is approved by unitholders holding a majority of the units.
Please complete and return your consent card as soon as possible. If
you fail to send in your consent card, it will have the same effect as a vote to
"DISAPPROVE" the Liquidation Plan.
We urge you to read carefully the attached consent solicitation
statement in its entirety before voting. The consent solicitation statement sets
forth our reasons for believing that the Liquidation Plan is the best
alternative available to the unaffiliated unitholders and the basis for our
recommendation. The consent solicitation statement also describes the
Liquidation Plan in detail. If you have any questions, or need assistance in
completing and returning your consent card, please feel free to contact Enstar
1984's soliciting agent, D.F. King & Co., Inc., at (800) 207-2014.
You may also contact us at our principal executive offices at
12405 Powerscourt Drive, St. Louis, Missouri 63131, Attention: Partnership
Relations; telephone: (314) 543-2389.
Very truly yours,
Enstar Communications Corporation
General Partner
ENSTAR INCOME PROGRAM 1984-1, L.P.
C/O ENSTAR COMMUNICATIONS CORPORATION
12405 POWERSCOURT DRIVE
ST. LOUIS, MISSOURI 63131
NOTICE OF CONSENT SOLICITATION
____________, 2003
To the Limited Partners of Enstar Income Program 1984-1, L.P.:
NOTICE IS HEREBY GIVEN to the holders (the "unitholders") of the
limited partnership units (the "units") of Enstar Income Program 1984-1, L.P., a
Georgia limited partnership ("Enstar 1984"), that Enstar Communications
Corporation, a Georgia corporation and the general partner of Enstar 1984
("general partner"), is soliciting written consents on behalf of Enstar 1984 to
approve a plan of liquidation (the "Liquidation Plan").
Enstar 1984 currently owns and operates cable television systems in and
around the communities of Bolivar, Brownsville and Covington, Tennessee and Snow
Hill, North Carolina (collectively, the "system"). Under the Liquidation Plan,
Enstar 1984 is proposing to sell its cable television system assets to
Telecommunications Management, LLC, a Missouri limited liability company
("Telecommunications"), and Enstar 1984 will subsequently dissolve and terminate
its operations.
The Liquidation Plan proposes:
o Enstar 1984 to sell the system to Telecommunications under an asset
purchase agreement for a sale price of approximately $3,505,453 in
cash, subject to closing sale price adjustments, an escrow for
indemnity claims and customary closing conditions (the
"Telecommunications Sale"); and
o the subsequent dissolution, termination and liquidation of Enstar 1984
through one or more liquidating distributions to the general partner
and the unitholders and authorization for the general partner to send
notices to the limited partners of the dissolution, in accordance with
Enstar 1984's partnership agreement (the "Liquidation").
We are providing unitholders with an opportunity to separately vote
upon each proposal. However, the Liquidation Plan will not be completed unless
unitholders approve both proposals.
The Telecommunications Sale and Liquidation are more fully described in
the attached consent solicitation statement under "Liquidation Plan Summary" on
pages 3-6, "Questions and Answers About the Liquidation Plan" on pages 7-8 and
"Special Factors" on pages 12-42.
Enstar 1984 is seeking to obtain approval of the Liquidation Plan from
its unitholders through the solicitation of written consents. No meeting of the
unitholders will be held. The consent of unitholders holding a majority of the
outstanding units on the record date specified below as to each proposal is
required in order to adopt the Liquidation Plan, and will bind all of the
unitholders. As of May 20, 2003, there were approximately 736 unitholders
of Enstar 1984 holding a total of 29,940 units.
The close of business on _________, 2003 is the record date for
determining the limited partners entitled to receive notice of the solicitation
of consents and to consent to the Liquidation Plan. Consents of the limited
partners will be solicited during the period (the "Solicitation Period"), which
begins on __________, 2003 and will end at 5:00 p.m., New York City time, on the
earlier of (1) the date on which
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the consents of limited partners holding a majority of the units entitled to
consent and approving each proposal of the Liquidation Plan are received by the
general partner and/or the soliciting agent; or (2) ________, 2003 (or, if the
Solicitation Period is extended by the general partner, at 5:00 p.m., New York
City time, on the expiration date of the extended Solicitation Period).
Please indicate your approval, disapproval or abstention with respect
to the Liquidation Plan by marking and signing the enclosed consent card and
returning it in the enclosed self-addressed envelope to D.F. King & Co., Inc.,
the soliciting agent, at 77 Water Street, New York, New York 10005. If you sign
and send in the enclosed consent card but do not indicate how you want to vote
as to the Liquidation Plan, your consent card will be treated as voting to
APPROVE each proposal of the Liquidation Plan. If you fail to send in your
consent card, it will have the same effect as a vote to DISAPPROVE the
Liquidation Plan.
You may change your vote at any time before the expiration of the
Solicitation Period. You can do this by sending a written notice dated later
than your consent card stating that you would like to revoke or change your
vote, or by completing and submitting a new consent card dated later than your
original consent card. If you choose either of these two methods, you must
submit your notice of revocation or new consent card to the soliciting agent,
D.F. King & Co., Inc. If you instructed a broker to vote your units, you must
follow your broker's directions for changing those instructions. To be
effective, your notice of revocation or new consent card must be received by
D.F. King & Co., Inc. before the end of the original Solicitation Period or
extended Solicitation Period, as the case may be.
For more information, you may contact Enstar 1984 and the general
partner at their principal executive offices at 12405 Powerscourt Drive,
St. Louis, Missouri 63131, Attention: Partnership Relations; telephone:
(314) 543-2389.
Your approval is important. Please read the consent solicitation
statement and attached exhibits carefully and then complete, sign and date the
enclosed consent card and return it in the self-addressed prepaid envelope or by
sending a facsimile of the front and back of the consent card to D.F. King &
Co., Inc. Your prompt response is appreciated.
ENSTAR COMMUNICATIONS CORPORATION
GENERAL PARTNER
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ENSTAR INCOME PROGRAM 1984-1, L.P.
C/O ENSTAR COMMUNICATIONS CORPORATION
12405 POWERSCOURT DRIVE
ST. LOUIS, MISSOURI 63131
_____________, 2003
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CONSENT SOLICITATION STATEMENT
------------------------------
This consent solicitation statement relates to the solicitation by the
general partner of Enstar Income Program 1984, L.P. of the consent of the
unitholders of Enstar 1984 to a Liquidation Plan. This consent solicitation
statement contains information about the Liquidation Plan that may be important
to your decision.
You should carefully read this entire document before you decide
whether to approve or disapprove the Liquidation Plan.
This consent solicitation statement and the accompanying consent card
are first being mailed to the limited partners on or about _________, 2003.
The soliciting agent, D.F. King & Co., Inc., has been retained to
assist Enstar Communications in soliciting the consents with respect to the
Liquidation Plan for a base fee of approximately $3,750, plus additional fees
and reimbursement of expenses, estimated at approximately $5,000. All costs
associated with the solicitation will be paid by Enstar 1984.
This consent solicitation statement is being furnished to the
unitholders by the following entities, which are collectively called the
"participants:" Enstar 1984; the general partner of Enstar 1984; Charter
Communications Holding Company, LLC ("Holdco"); and their ultimate parent,
Charter Communications, Inc. ("Charter, Inc.").
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This consent solicitation statement includes certain
forward-looking statements regarding, among other things, future results of
operations, regulatory requirements, competition, capital needs, general
business conditions applicable to Enstar 1984 and the anticipated effect on
unitholders of the proposed Liquidation Plan. Such forward-looking
statements involve risks and uncertainties including, without limitation,
the uncertainty of legislative and regulatory changes, the rapid
developments in the competitive environment facing cable television
operators such as Enstar 1984, and the completion of the Telecommunications
Sale and Liquidation Plan in accordance with their respective terms. In
addition to the information provided herein, reference is made to the
accompanying copy of Enstar 1984's Annual Report on Form 10-K for the year
ended December 31, 2002 and Quarterly Report on Form 10-Q for the quarter
ended March 31, 2003 for additional information regarding such matters and
the effect thereof on Enstar 1984's business.
The date of this consent solicitation statement is ____________, 2003.
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TABLE OF CONTENTS
ENSTAR INCOME PROGRAM 1984-1, L.P.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING
STATEMENTS .......................................................... 1
LIQUIDATION PLAN SUMMARY................................................. 3
QUESTIONS AND ANSWERS ABOUT THE LIQUIDATION PLAN......................... 7
WHO CAN HELP ANSWER YOUR QUESTIONS....................................... 9
OWNERSHIP STRUCTURE CHART................................................ 10
SELECTED FINANCIAL INFORMATION........................................... 11
SPECIAL FACTORS.......................................................... 12
General............................................................... 12
Purpose and Reasons for the Telecommunications Sale................... 12
Alternatives to Liquidation Plan Not Prudent.......................... 16
Ability to Sell Units................................................. 17
Effects of the Transaction............................................ 17
Best Available Transaction............................................ 18
Recommendation of the General Partner and Other Participants.......... 27
Related Party Transactions............................................ 30
Conflicts of Interest................................................. 31
The Telecommunications Purchase Agreement............................. 31
Description of Assets................................................. 36
Use of Proceeds and Cash Distributions................................ 36
Disadvantages of the Liquidation Plan................................. 38
Consequences of Failure to Approve the Liquidation Plan............... 37
Effect of Termination of the Telecommunications Sale.................. 38
Effect of Partial Closing Under the Telecommunications Sale........... 39
Liquidation of Enstar 1984............................................ 39
Federal Income Tax Consequences of the Liquidation Plan............... 40
State Tax Consequences................................................ 42
No Appraisal Rights................................................... 42
NO ESTABLISHED MARKET PRICES FOR PARTNERSHIP UNITS....................... 43
DISTRIBUTIONS TO UNITHOLDERS............................................. 43
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF.......................... 43
IDENTITY AND BACKGROUND OF CERTAIN PERSONS............................... 44
Enstar Communications Corporation..................................... 44
Charter Communications, Inc........................................... 46
Charter Communications Holding Company, LLC........................... 47
VOTING PROCEDURES........................................................ 48
AVAILABLE INFORMATION.................................................... 49
INFORMATION INCORPORATED BY REFERENCE.................................... 49
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LIQUIDATION PLAN SUMMARY
The following summary highlights very important information contained
elsewhere in this consent solicitation statement, but does not contain all of
the information in this consent solicitation statement that may be important to
your decision. You should carefully read this entire document, including the
exhibits, before you decide whether to approve or disapprove the Plan of
Liquidation.
o BACKGROUND. Enstar 1984 was formed in 1984 to invest in cable
television system assets. After its formation, Enstar 1984 acquired cable
televisions systems in North Carolina and Tennessee.
In 1999, the general partner commenced a process of seeking purchasers
for all of the cable television systems of Enstar 1984, as well as other cable
systems operated by 13 affiliated partnership cable operators ("Enstar
partnerships"). This effort was undertaken primarily because, based on its
experience in the cable television industry, the general partner concluded that
generally applicable market conditions and competitive factors would
increasingly make it extremely difficult for smaller operators of rural cable
systems, such as Enstar 1984, to effectively compete and be financially
successful. Specifically, the system continues to face significant competition
from direct broadcast satellite ("DBS") operators. The general partner believes
that the system must be upgraded in order for the system to maintain its
subscriber base and to be competitive with DBS. Upgrading the system would cost
an estimated $12.2 million to $14.6 million in order to offer services
comparable to DBS operators. The general partner believes that this investment
cannot be viably supported by Enstar 1984's potential revenues and operating
income. For more information, please see "Special Factors--Purpose and Reasons
for the Telecommunications Sale" on pages 12-16.
o MARKETING THE SYSTEM. The bidding process for the system was
conducted by Daniels & Associates, L.P. ("Daniels"), a prominent business broker
with extensive expertise in the cable and telecommunications industry. Daniels
marketed Enstar 1984's cable television systems, as well as the cable systems of
the other affiliated Enstar partnerships, to third parties whom Daniels
identified as being likely to have an interest in acquiring the systems.
Ultimately, this process, which took over two years, resulted in the general
partner's conclusion that Telecommunications offered the best available
transaction for the sale of the system. For more information, please see
"Special Factors--Best Available Transaction" on pages 18-27.
o THE TELECOMMUNICATIONS SALE. The terms and conditions of the
Telecommunications Sale are summarized below. The Telecommunications Sale
will be accounted for using the purchase method of accounting. For more
information, please see "Special Factors--Best Available Transaction--Sale
Process" on pages 18-25 and "Best Available Transaction--The
Telecommunications Purchase Agreement" on pages 31-36.
THE SALE PRICE. Telecommunications has agreed to acquire
the cable television assets of ten partnerships managed by the
general partner, of which Enstar 1984's system is a part, under an
asset purchase agreement. The parties amended the asset purchase
agreement on June 6, 2003 to reduce the sale price for all of the
selling partnerships (the "sellers"), including the sale price for
Enstar 1984's system. As amended, the sale price will be
approximately $14.5 million for all of the cable television assets
of the sellers, subject to closing sale price adjustments, an
escrow for indemnity claims and customary closing conditions.
Telecommunications allocated the total purchase price among each of
the systems being sold, with approximately $3.5 million to be paid
to Enstar 1984 for its system. The contract price is based on a
price of $583 per subscriber for that
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portion of Enstar 1984's system in Tennessee and $550 per
subscriber for that portion of the system in North Carolina.
SALE PRICE ADJUSTMENTS. The sale price to be paid to Enstar
1984 is subject to customary working capital closing adjustments. In
addition, Telecommunications assigned a prescribed target number of
subscribers at closing for the system. This target number was 4,722 for
that portion of the system in Tennessee and 1,365 for that portion of
the system in North Carolina, and any shortfall in that target number
for the system will result in the sale price being reduced by $583 per
Tennessee subscriber and $550 per North Carolina subscriber. At May
31, 2003, that portion of the system located in Tennessee had
approximately 4,206 basic subscribers and that portion of the system
located in North Carolina had approximately 1,315. This results in a
shortfall of 516 subscribers in Tennessee and 50 subscribers in North
Carolina, which, if the closing were held at that date would have
reduced the purchase price by $328,300.
INDEMNIFICATION. Telecommunications will deposit $500,000 of
the sale price in an escrow to provide funds for the payment of any
indemnification to which Telecommunications may be entitled arising
after the closing when total claims against the sellers exceed
$100,000. Of the $500,000 deposited by Telecommunications in escrow,
$181,425 is allocated as Enstar 1984's portion of the purchase price
placed in escrow. Total indemnification claims by Telecommunications
may not exceed an aggregate of $1.6 million for all the sellers.
Accordingly, Enstar 1984 will not receive the full purchase price at
closing. Amounts placed in escrow will remain in escrow for a period of
13 months after closing.
CLOSING CONDITIONS. The Telecommunications Sale is subject to
several customary closing conditions, any or all of which may be
waived. These conditions include a requirement that Enstar 1984 shall
have obtained certain material and required consents, including
necessary general and limited partner consents, and there shall have
been no material adverse change in the business, financial condition or
prospects of the system prior to closing. These conditions apply to all
of the sellers and the failure of one seller to satisfy these
conditions can prevent the other sellers from closing their
transactions with Telecommunications. However, the purchase agreement
with Telecommunications does allow for closing of the sale of some, but
not all, of the systems if all of the conditions of the purchase
agreement have been satisfied or waived with respect to certain primary
cable television systems, which includes portions of Enstar 1984's
system. At a partial closing, only the assets of those systems for
which conditions have been satisfied or waived will be sold to
Telecommunications.
o DISSOLUTION AND LIQUIDATION OF ENSTAR 1984. Under the Liquidation
Plan, Enstar 1984 will dissolve and, as part of the winding-up process of the
general partner of Enstar 1984 will sell or otherwise dispose of any remaining
assets of Enstar 1984, and pay off Enstar 1984's remaining debts and
obligations, including paying or providing for the payment of the expenses of
the Telecommunications Sale and Enstar 1984's obligations to the general partner
and its affiliates described under "Special Factors--Conflicts of Interest" on
page 31. The general partner will then make one or more liquidating
distributions to itself and the unitholders of Enstar 1984's remaining assets,
in accordance with the partnership agreement. The general partner currently
estimates that pre-tax liquidating distributions to the unitholders in respect
of the Telecommunications Sale will total approximately $70 per unit, after
estimated closing adjustments, taxes and closing and liquidation expenses. The
general partner will receive an estimated liquidating distribution of
approximately $21,100 in the aggregate in respect of the Telecommunications
Sale. In addition, the general partner and its affiliates will receive
approximately $430,800 in repayment of deferred management fees, and
approximately $568,600 in repayment of deferred, unpaid expenses owed to the
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general partner and its affiliates by Enstar 1984. The general partner estimates
that Enstar 1984 will incur approximately $140,200 in fees, charges and other
costs in connection with the Liquidation Plan.
The general partner presently expects that the Telecommunications Sale
will close on or before September 30, 2003. Enstar 1984 will not be terminated
until after the Telecommunications Sale. The general partner anticipates that
initial liquidating distributions will be made approximately 90 days after the
closing of the Telecommunications Sale. The general partner also expects that
after required closing adjustments are completed and escrow proceeds are
released, final liquidating distributions will be made of any remaining funds.
This is expected to occur approximately 13 months after the closing of the
Telecommunications Sale. For more information, please see "Special Factors --
Use of Proceeds and Cash Distributions" on pages 36-37, and "--Liquidation of
Enstar 1984" on page 39.
o DETERMINATION OF THE SALE PRICE. During the more than two-year
period during which the general partner sought purchasers for the system,
the general partner ultimately concluded that Telecommunications offered the
best available transaction to sell the system. The offer from
Telecommunications was obtained through a broadly based solicitation
process, in which an experienced cable television industry broker marketed
the system and the cable television systems of the other affiliated limited
partnerships to what the general partner and the other participants believe
was fairly representative of the universe of possible purchasers. The
process was confidential: neither the broker, Telecommunications nor any
other bidder knew the prices or other terms of the other bidders' offers,
and the general partner of Enstar 1984 did not know the contents of any bid,
until all the bids were received and the deadline for the submission of bids
had passed. The general partner and the other participants believe that this
process acted as a "market check" that enabled the general partner to
objectively determine from a representative universe of potential buyers the
present range of market values for the system and obtain what the general
partner and the other participants believe to be the best transaction
currently available in the market. The reduction in the sale price in the
June 2003 amendment to the asset purchase agreement reflected the continuing
effect of adverse business fundamentals, including loss of subscribers and a
recently enacted law that permits overbuilding in the system's service area,
experienced by the system. Based upon the previous responses to
solicitations of interest from prospective purchasers, and the general
partner's knowledge and experience in the industry, the general partner
continues to believe that the proposed sale to Telecommunications represents
the best available transaction for sale of the system.
Based on the foregoing, the general partner and the other participants
have concluded that approval of the Liquidation Plan is in the best interests of
Enstar 1984 and the unitholders. For more information, please see "Special
Factors--Purpose and Reasons for the Telecommunications Sale" on pages 12-16,
"-- Best Available Transaction" on pages 18-27 and "--Recommendation of the
General Partner and other Participants" on pages 27-30.
o DISADVANTAGES OF THE LIQUIDATION PLAN. The primary disadvantage to
Enstar 1984, the unitholders and the general partner is that they will not
benefit from possible improvements in economic and market conditions, if any,
which might produce increased revenues and operating income for Enstar 1984 and
possibly increase the sale price of the system in the future. This risk exists
regardless of whether the system is sold to Telecommunications or to another
party. For more information, please see "Special Factors -- Disadvantages of the
Liquidation Plan" on page 38.
o FAILURE TO APPROVE THE LIQUIDATION PLAN. If the Liquidation Plan
is not completed, Enstar 1984 will continue to own and operate the system for an
indefinite period of time. The general partner cannot assure you that Enstar
1984 ever will be in a position to make any further distributions to the
unitholders. Further, if the Liquidation Plan is not approved, the general
partner believes the system will continue to face significant competition, and
will lose subscribers at an accelerated rate. The general
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partner also cannot assure you that a future sale of the system would be on
terms equal to or more favorable than those offered by Telecommunications.
For more information, please see "Special Factors--Consequences of Failure
to Approve the Liquidation Plan" on page 38.
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QUESTIONS AND ANSWERS ABOUT THE LIQUIDATION PLAN
Q: WHAT WILL I RECEIVE AS A RESULT OF THE LIQUIDATION PLAN?
A: You will receive one or more distributions of your share of the net sale
proceeds of the Telecommunications Sale, which the general partner presently
estimates will total approximately $70 per unit, after estimated adjustments
and expenses. The units were initially issued at a price of $250 per unit and,
since such initial issuance, Enstar 1984 has made aggregate cash distributions
to the unitholders of $345 per unit. No quarterly distributions have been made
to unitholders since 1990. For more information, please see "Special
Factors--Use of Proceeds and Cash Distributions" on pages 36-37.
Q: WHAT WILL MY TOTAL DISTRIBUTIONS BE IF THE LIQUIDATION PLAN IS NOT
COMPLETED?
A: If the Liquidation Plan is not completed, Enstar 1984 will re-examine its
ability to pay distributions on a quarterly basis. The general partner cannot
assure you that future distributions will be made, or if made, when or in what
amounts. Apart from the general requirement that cash distributions be made from
available cash flow, after expenses, there are no restrictions on Enstar 1984's
current or future ability to make distributions. No quarterly distributions have
been made since 1990. For more information, please see "Special Factors --
Consequences of Failure to Approve the Liquidation Plan" on page 38 and
"-- Effects of the Transaction -- On the Unitholders" on page 17.
Q: WHEN DO YOU EXPECT THE LIQUIDATION PLAN TO BE COMPLETED?
A: The general partner is working towards completing the Telecommunications
Sale and the other components of the Liquidation Plan as quickly as
possible. The general partner hopes to complete the Telecommunications Sale
and the Liquidation Plan on or before September 30, 2003. The general
partner anticipates making initial liquidating distributions approximately
90 days after the closing of the Telecommunications Sale. Final liquidating
distributions would be made of remaining funds after required closing
adjustments are completed and escrow proceeds are released, which is
expected to occur approximately 13 months after the closing of the
Telecommunications Sale. For more information, please see "Special Factors
- -- The Telecommunications Purchase Agreement" on pages 31-36.
Q: WILL I OWE ANY FEDERAL INCOME TAXES AS A RESULT OF THE LIQUIDATION PLAN?
A: In general, you will recognize a gain or loss for federal income tax
purposes as a result of the Liquidation Plan. TAX MATTERS ARE VERY COMPLICATED
AND THE TAX CONSEQUENCES TO YOU OF THE LIQUIDATION PLAN MAY DEPEND ON THE FACTS
OF YOUR SITUATION. YOU SHOULD CONSULT YOUR TAX ADVISOR TO UNDERSTAND FULLY BOTH
THE FEDERAL AND STATE TAX CONSEQUENCES TO YOU OF THE LIQUIDATION PLAN. For more
information, please see "Special Factors -- Federal Income Tax Consequences of
the Liquidation Plan" on pages 40-42.
Q: WHAT DO I DO TO VOTE MY ENSTAR 1984 UNITS?
A: In order to vote your units either to approve, disapprove or abstain from
the Liquidation Plan, you must mark the appropriate box on the enclosed consent
card, sign and date the consent card and return it in the enclosed
self-addressed envelope to the soliciting agent, D.F. King & Co., Inc., 77 Water
Street, New York, New York 10005. If you sign and send the consent card, but do
not indicate your vote as to the proposals that comprise the Liquidation Plan,
your consent card will be treated as voting to APPROVE each of the proposals
that comprise the Liquidation Plan. If you vote to ABSTAIN as to the Liquidation
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Plan, the effect will be the same as if you voted to DISAPPROVE the proposals
that comprise the Liquidation Plan. If you fail to send in your consent card,
the effect will be the same as if you voted to DISAPPROVE the Liquidation Plan.
The Liquidation Plan will not be completed unless unitholders approve all
proposals that comprise the Liquidation Plan. As such, if you vote to DISAPPROVE
of any one proposal that makes up the Liquidation Plan, the effect will be the
same as if you voted to DISAPPROVE the entire Liquidation Plan. Your consent
card must be received by the soliciting agent before 5:00 p.m., New York City
time, on the earlier of (1) the date on which the consents of the holders of a
majority of the units entitled to consent and approving each proposal of the
Liquidation Plan are received by the general partner or the soliciting agent; or
(2) _________, 2003 (or, if the Solicitation Period is extended, at any time
before 5:00 p.m., New York City time, on the expiration date of the extended
Solicitation Period).
Q: MAY I CHANGE MY VOTE AFTER I MAIL MY UNITHOLDER CONSENT CARD?
A: Yes. You may change your vote at any time before 5:00 p.m., New York City
time, on the earlier of (1) the date on which the consents of the holders of a
majority of the units entitled to consent and approving each proposal of the
Liquidation Plan are received by the general partner or the soliciting agent; or
(2) __________, 2003 (or, if the Solicitation Period is extended by the general
partner, at any time before 5:00 p.m., New York City time, on the expiration
date of the extended Solicitation Period). You can change your vote in one of
two ways. First, you can send a written notice dated later than your consent
card stating that you would like to revoke or change your vote. Second, you can
complete and submit a new consent card dated later than your original consent
card. If you choose either of these two methods, you must submit your notice of
revocation or new consent card to the soliciting agent, D.F. King & Co., Inc.,
77 Water Street, New York, New York 10005. If you instructed a broker to vote
your units, you must follow your broker's directions for changing those
instructions. TO BE EFFECTIVE, YOUR NOTICE OF REVOCATION OR NEW CONSENT CARD
MUST BE RECEIVED BEFORE THE END OF THE SOLICITATION PERIOD OR EXTENDED
SOLICITATION PERIOD, AS THE CASE MAY BE.
Q: DO UNITHOLDERS HAVE APPRAISAL OR OTHER SIMILAR RIGHTS?
A: Under the partnership agreement and applicable state law, unitholders are
not entitled to dissenters' appraisal or other similar rights that, if they were
available, would allow unitholders who dissent from the Liquidation Plan to
receive payments of the appraised value of their units in lieu of the
liquidating distributions. The general partner presently estimates that
liquidating distributions will aggregate approximately $70 per unit in respect
of the Telecommunications Sale after estimated closing adjustments and expenses,
taxes and liquidation expenses. For more information, please see "Special
Factors -- No Appraisal Rights" on page 42.
- 8 -
WHO CAN HELP ANSWER YOUR QUESTIONS
If you have more questions about the Liquidation Plan, you should
contact:
Enstar Income Program 1984-1, L.P.
c/o Enstar Communications Corporation
12405 Powerscourt Drive
St. Louis, Missouri 63131
Attention: Partnership Relations
Telephone: (314) 543-2389
If you would like additional copies of this consent solicitation
statement, or a copy of the asset purchase agreement with Telecommunications, or
if you have questions about how to complete and return your consent card, you
should contact:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll-Free: (800) 207-2014
- 9 -
OWNERSHIP STRUCTURE CHART
The following diagram illustrates the ownership structure of Enstar
1984, Enstar Communications and the other participants. For more information,
please see "Identity and Background of Certain Persons" on pages 44-47.
------------------------------
Charter Communications, Inc.
------------------------------
|
|
|
|
|
|
|
|
------------------------------
Charter Communications Holding
Company, LLC
------------------------------
|
|
|
|
|
|
|
|
------------------------------ ---------------------
Enstar Communications Limited Partners of
Corporation Enstar 1984
------------------------------ ---------------------
\ /
\ /
1% \ / 99%
General \ / Limited
Partner \ / Partner
Interest* \ / Interest*
\ /
\ /
------------------------
Enstar Income Program
1984-1, L.P.
------------------------
<FN>
- -------------
* Earnings and losses have been allocated 99% to the limited partners and 1% to
the general partner of Enstar 1984. The general partner of Enstar 1984 does
not own units of partnership interests in Enstar 1984, but rather hold a
profits interest in the income, losses and distributions of Enstar 1984.
- 10 -
SELECTED FINANCIAL INFORMATION
The following table presents selected financial information for
Enstar 1984 at the dates and for the periods indicated. The financial
information as of December 31, 1998, 1999, 2000, 2001 and 2002 and for the
years then ended was derived from the audited financial statements of Enstar
1984. The unaudited selected financial information of Enstar 1984 as of
March 31, 2002 and 2003 and for the three months then ended reflects all
adjustments which are, in the opinion of management, necessary for a fair
presentation and of a normal recurring nature. Results for the three months
ended March 31, 2003 do not necessarily indicate results to be expected for
the entire year. You should read this financial information in conjunction
with the financial statements of Enstar 1984, and the related notes, and
"Management's Discussion and Analysis or Plan of Operation," included in
Enstar 1984's Annual Report on Form 10-K for the year ended December 31,
2001 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2003,
filed with the Securities and Exchange Commission.
Three Months Ended
March 31, Year Ended December 31,
-------------------------- --------------------------------------------------------------------------
2003 2002 2002 2001 2000 1999 1998
----------- ----------- ----------- ----------- ----------- ----------- -----------
OPERATIONS STATEMENT
DATA:
Revenues $ 704,500 $ 907,900 $ 3,241,300 $ 3,722,000 $ 4,642,500 $ 5,090,800 $ 5,221,100
Operating expenses 663,800 642,100 2,820,100 2,792,500 3,226,700 3,280,700 3,184,700
Depreciation and
amortization 257,700 244,400 956,900 824,700 852,400 854,500 747,600
Asset impairment charge -- -- 1,856,800 -- -- -- --
Operating income (loss) (217,000) 21,400 (2,392,500) 104,800 563,400 955,600 1,288,800
Interest income 2,500 4,700 18,700 67,800 173,600 61,900 25,700
Interest expense -- -- -- 17,900 32,200 92,400 103,900
Gain on sale of cable
assets -- -- -- -- 4,349,800 -- --
Casualty gain (loss) -- -- -- -- 79,800 (113,300) (271,000)
Other income (expense) (11,900) 2,100 3,100 (248,200) (94,000) (18,800) --
Net income (loss) (226,400) 28,200 (2,370,700) (93,500) 5,040,400 793,000 939,600
Distributions paid to
partners -- -- -- -- 4,988,500 -- --
Per unit of
limited partnership
interest:
Net income (loss) (7.48) 0.93 78.39 (3.09) 166.67 26.22 31.07
Distributions -- -- -- -- 164.95 -- --
CASH FLOW STATEMENT
DATA:
Net cash from operating
activities $(305,500) $ (68,700) $ 1,115,000 $ 1,271,800 $ 1,308,600 $ 1,655,200 $ 2,084,800
Net cash from (used in)
investing activities (9,800) (248,800) $(2,162,400) (1,416,500) 4,092,200 (1,050,500) (1,398,400)
Net cash from (used in)
financing activities -- -- 10,900 -- (4,997,500) 322,800 (113,300)
Capital expenditures (9,800) (248,800) 2,162,400 1,407,100 1,124,500 1,050,500 1,389,800
- 11 -
As of March 31, As of December 31,
-------------------------- --------------------------------------------------------------------------
2003 2002 2002 2001 2000 1999 1998
----------- ----------- ----------- ----------- ----------- ----------- -----------
BALANCE SHEET DATA:
Total assets $4,165,900 $6,183,200 $ 4,744,800 $ 6,498,700 $ 6,430,200 $ 6,537,900 $ 5,417,400
Total debt -- -- -- -- -- -- --
General Partners'
deficit (50,200) (23,900) (47,900) (24,200) (23,300) (23,800) (31,700)
Limited Partners'
capital 2,317,100 4,905,200 2,541,200 4,877,300 4,969,900 4,918,500 4,133,400
SPECIAL FACTORS
GENERAL
Enstar 1984 was formed December 12, 1984 to acquire, construct,
improve, develop and operate cable television systems in various rural locations
in the United States. Enstar 1984 publicly offered units of limited partners
interests beginning in February 1984, with an initial closing in May 1984.
Limited partnership units were sold at a price of $250 per unit. Enstar 1984
continued to raise capital until $7.5 million, the offering maximum, was raised
in September 1984. After its formation, Enstar 1984 acquired cable television
systems in North Carolina and Tennessee.
In November 1999, Charter Communications, Inc. acquired the general
partner. As a result, the general partner became an indirect controlled
subsidiary of Charter Communications, Inc., the nation's third largest cable
operator, serving approximately 6.6 million customer relationships. The
general partner is responsible for the day-to-day management of Enstar 1984
and its operations.
Enstar 1984 completed a sale in November 2000 of its cable systems
serving Kershaw, South Carolina to an unrelated purchaser for $5.3 million,
subject to closing adjustments. Enstar 1984 distributed approximately
$4,938,600, or approximately $165 per unit, as proceeds from the sale.
Enstar 1984 is currently engaged in the ownership and operation of
cable television systems in and around the communities of Brownsville,
Tennessee and Snow Hill, North Carolina which served an aggregate of
approximately 5,521 basic subscribers at May 31, 2003.
PURPOSE AND REASONS FOR THE TELECOMMUNICATIONS SALE
PURPOSE
Enstar 1984's and the general partner's purpose in proposing the
Liquidation Plan is to avoid: (1) the likelihood that unless substantial and
highly costly technological improvements and upgrades are made to the system's
plant, Enstar 1984 will be unable to compete effectively in its market and will
continue to lose subscribers to its direct broadcast satellite, or DBS,
competitors; (2) the likelihood that if Enstar 1984 were to make the significant
expenditures needed to compete effectively with DBS providers, its future
revenues would not be sufficient to allow Enstar 1984 to continue to operate
profitably; and (3) the risk that Enstar 1984 might not have sufficient
subscriber loyalty to retain, let alone expand, its subscriber base in the face
of the existing and expected future competition -- in particular DBS.
- 12 -
REASONS
The general partner believes that the capital expenditures for
upgrades to the system's plant that would be necessary to enable Enstar 1984
to retain subscribers and offer services comparable or superior to those now
offered by its competitors would prevent Enstar 1984 -- as a small, rural,
"stand-alone," cable system -- from operating profitably, under its
franchise that covers the largest numbers of subscribers, which is Enstar
1984's Brownsville, Tennessee franchise.
Enstar 1984's system faces significant competition from DBS
operators. In the geographic areas served by the system, these competing DBS
operators currently offer, on an all-digital basis, more programming
channels, features and services than does Enstar 1984's system. As noted
from the table below, the system has steadily lost subscribers over the past
several years. The general partner believes the decline largely has been
attributable to competition from DBS. The general partner's belief that lost
customers have migrated to DBS systems is based on DBS's aggressive
marketing for new subscribers, the offering by DBS of expanded services,
channels and content and DBS's low cost pricing of its services, both in the
system's franchise area and industry-wide. The following table sets forth
the number of basic subscribers of the system since 1995:
As of December 31, No. of Subscribers
------------------ ------------------
2002 5,732
2001 7,635
2000 8,333*
1999 10,385
1998 10,804
1997 11,178
1996 11,860
1995 11,946
<FN>
- ---------
* In November 2000, Enstar 1984 sold systems in Kershaw, South Carolina,
which reduced the number of subscribers.
As the general partner has experienced, and as is widely recognized in
the cable and telecommunications industry, customers increasingly are purchasing
high quality video programming, high-speed Internet access and, in some markets,
telephone service as bundled services from a single provider. This trend is
being driven by rapid advances in so-called "broadband" technology, which
generally refers to the capacity of the cable infrastructure to deliver video,
voice and high-speed data transmission. These recent advances in broadband
technology enable traditional cable television providers, as well as DBS
operators, telephone and other utilities, and emerging wireline and wireless
competitors, to provide a single source of digital and interactive video
programming on hundreds of channels, Internet access and telephone service.
DBS operators, which often can provide over 200 digital programming
channels and are now acquiring two-way capability, are in the general partner's
view the most formidable competitors to traditional cable operators, and in
particular, to Enstar 1984. For video services, DBS has existed as an
alternative to cable television for many years and, unlike providers of certain
other emerging technologies, has become a viable and successful competitor to
cable nationwide. The National Cable and Telecommunications Association reported
that in March 2001, approximately 23% of multichannel video subscribers obtained
service from a source other than a traditional cable operator, and that nearly
18% of those subscribers obtained service from DBS operators.
- 13 -
DBS's market share is attributable to a number of factors. For
example, because satellite transmission is digital, DBS always has offered
digital programming, with picture and sound quality superior to analog cable
service, and far more channels than cable. Traditional cable operators, in
contrast, typically have needed to upgrade or rebuild their systems, often
at substantial cost, in order to add the bandwidth necessary to carry
digital and interactive programming. Also, according to the Federal
Communications Commission, former drawbacks to DBS are being remedied. For
example, DBS operators now transmit local broadcast stations, which in the
past were not available through DBS. Additionally, in an effort to compete
with cable, DBS operators have generally decreased their once high equipment
and installation charges, and monthly DBS subscription rates are typically
lower than cable rates.
Enstar 1984 faces additional competition in its Covington,
Tennessee franchise area from the City of Covington. Enstar 1984's franchise
with the city expired in 1994. By agreement with the city, Enstar 1984 has
continued to operate the cable system in Covington and pay franchise fees to
the city on a month-to-month basis until a new franchise agreement is
reached. In March 2000, the general partner submitted a renewal proposal to
the city on behalf of Enstar 1984. In November 2000, the city sold municipal
bonds to finance construction of a municipally-owned cable system. The city
completed the construction project in the first quarter of 2002 and is
actively competing with Enstar 1984's system. In July 2002, Enstar 1984
received a letter from the City Attorney advising Enstar 1984 that it may
not operate within the city limits and demanding that Enstar 1984
discontinue service within 30 days.
The general partner has filed a lawsuit on behalf of Enstar 1984
against the city and other defendants alleging, among other things, that the
city is unlawfully attempting to shut down Enstar 1984's cable television
system in Covington, in order to eliminate competition to the new city-owned
cable system. Enstar 1984 also is alleging that the city failed to follow
federal statutory processes governing the renewal of cable television
franchises and is now attempting to shut down Enstar 1984's system, without
having complied with those procedures or formally having denied the numerous
renewal proposals, in contravention of federal law. Enstar 1984 also is
seeking a preliminary injunction against the city and the other defendants.
The city has agreed to take no action against Enstar 1984's provision of
services in Covington until the court has ruled on the motion for
preliminary injunction. If Enstar 1984 is unsuccessful in the lawsuit,
Enstar 1984 may have to terminate its operations in Covington. The loss of
Enstar 1984's franchise and the related loss of customers would have a
significant adverse impact on Enstar 1984's financial condition and
operating results.
In addition, the City of Covington is exploring the possibility of
extending its cable system into the surrounding County of Tipton, another of
Enstar 1984's franchise areas. A new law recently enacted in Tennessee in
April 2003 allows the City of Covington to overbuild outside of its city
limits, allowing expansion of a city-owned cable system into the surrounding
county. The general partner believes that if the City of Covington extends
its plant into the county the loss of customers would have an adverse effect
on Enstar 1984's financial condition and result of operations.
Enstar 1984 also may face competition in the future from a city-owned
cable system in Bolivar, Tennessee. In January 2000, the franchise authority in
Bolivar, Tennessee authorized its municipal utility to construct and operate a
competing cable system in that franchise area. Enstar 1984 has continued to
operate the cable system in Bolivar and pay franchise fees to the franchise
authority. Although the municipal utility has not obtained funds to build a
cable system, the general partner believes that if a competing system were
built, the loss of customers would have an adverse impact on the financial
condition and results of operations of Enstar 1984.
- 14 -
The general partner continues to evaluate alternative, cost-
effective solutions to increase channel capacity, pay-per-view services, and
digital services which would enhance the value of Enstar 1984's system and
be economically prudent. In order to compete with the city-owned cable
system in Covington and the potential competition in Bolivar, Enstar 1984
completed a limited upgrade of the system in those areas through use of
small system digital ("SSD") technology that allows for additional cable
channels to be offered through the system's existing cable system
architecture. Enstar 1984 also completed an SSD upgrade of the system in the
Snow Hill, North Carolina franchise area. The SSD upgrade, however, does not
enable two-way service or allow for other interactive services currently
offered by DBS or by the city-owned cable system.
For these reasons, and particularly the fact that DBS operators
offer more services than does Enstar 1984's system and the overbuild of the
system in the Covington franchise area, the general partner expects that the
system will continue to face significant competition from DBS, and likely
will continue to lose customers. Moreover, the general partner does not
expect Enstar 1984's competitive position to improve, particularly since the
general partner estimates the cost of upgrading the system to two-way
capability in order to be able to offer high-speed Internet service or video
services comparable to those available from DBS would be approximately $12.2
million, for an upgrade to 550 megahertz (MHz) capacity, to $14.6 million,
for an upgrade to 870 MHz capacity. Upgrade costs are calculated based on a
formula dependent on costs for plant modification, headend equipment,
installation and the number of homes per mile.
The general partner's belief that Enstar 1984's revenues would not
be sufficient to justify upgrades costing up to $14.6 million is based on
the fact that the low population density in Enstar 1984's rural system,
which spreads subscribers over a large service area, combined with the
increasing competition from DBS and competition from the City of Covington's
proposed municipal system, limits the system's potential subscriber base,
even with a substantial upgrade providing expanded services and two-way
transmission capability. Potential revenues generated from the system's
approximately 5,500 basic subscribers generating average monthly revenue per
subscriber of $42.70 as of March 31, 2003 do not justify an investment in
the system of $12.2 million to $14.6 million, even with modest subscriber
growth rates which might occur after the upgrade. Based on these factors,
the general partner does not believe that Enstar 1984 would recoup these
upgrade costs by future revenue and subscriber growth and continue to
operate profitably.
The general partner began evaluating strategies for liquidating Enstar
1984 in 1998, along with the cable television systems of 13 other affiliated
Enstar partnerships, due to changes in the industry that had occurred from the
early and mid-1980s when the partnerships were syndicated. The strategies
evaluated by the general partner included the potential sale of all or
substantially all of the cable television assets and the subsequent liquidation
of these partnerships. These partnerships operated rural cable systems in
Illinois, Missouri, Kentucky, North Carolina, South Carolina, Tennessee, Alabama
and Arkansas. These partnerships were facing the same increased competition from
local DBS operators offering more services and channels, along with the need to
perform costly upgrades.
In May 1999, Charter, Inc. and its affiliates entered into an agreement
to acquire the cable television systems operated by affiliates of Falcon Holding
Group, L.P. and related entities (collectively, "Falcon"), including the Enstar
limited partnerships, for approximately $3.5 billion. Falcon had acquired the
general partner from Robert T. Graff in 1993. Falcon requested that Charter
acquire the general partner in view of the fact that Falcon was divesting all of
its cable television system operations in the transaction. Charter, Inc. agreed
to acquire the general partner from Falcon even though it represented an
insignificant part of Falcon's overall cable business and did not fit with
Charter's business strategy of operating cable systems in more densely populated
areas. Charter completed the acquisition of the cable television businesses of
Falcon, including the purchase of Falcon's interest in the general partner, in
November 1999.
- 15 -
After the agreement for the Falcon acquisition was executed, Charter,
Inc. and Falcon's management decided to continue to pursue the strategy for
liquidating the cable television assets of Enstar 1984, along with the cable
television assets of the other affiliated partnership cable operators. This
strategy included the engagement of an experienced broker to market the cable
systems of the Enstar partnerships and the subsequent sale of their cable system
assets. Charter, Inc. and its affiliates, which had substantial experience in
the cable industry, evaluated the ability of the Enstar cable systems to
continue to profitably operate and determined that after its acquisition of the
general partner, it would be in the best interests of the Enstar partnerships'
and their respective unitholders to continue this liquidation strategy.
In August 1999, the general partner entered into a fee agreement
with a broker, Waller Capital Corporation ("Waller"), that provided for
Waller to market the cable systems of certain of the Enstar partnerships. At
approximately that same time, the general partner also engaged Daniels &
Associates, L.P. ("Daniels") to market the cable systems of the remaining
Enstar partnerships. However, Waller and the general partner ultimately
could not agree upon the terms of Waller's engagement and the parties
mutually agreed to terminate the arrangement in December 1999. The general
partner then expanded the engagement of Daniels, a prominent business broker
with extensive expertise in the cable and telecommunications industry, to
market all of the Enstar partnerships' cable systems.
ALTERNATIVES TO LIQUIDATION PLAN NOT PRUDENT
In addition to the Liquidation Plan, the general partner considered the
following alternatives when reaching its conclusion that the Liquidation Plan
would be in the unitholders' best interest:
CONTINUATION OF THE OWNERSHIP AND OPERATION OF ENSTAR 1984 AND OF THE
SYSTEM. This alternative is being made available to the unitholders through this
consent solicitation statement. If the unitholders desire to continue Enstar
1984's ownership and the general partner's operation of the system they may vote
to "disapprove" the Liquidation Plan, or merely fail to vote to "approve" the
Liquidation Plan. The continued rationale for ownership and operation of the
system could be on either of two bases: (a) the continued operation of the
system in its present condition, in which case, for the reasons discussed above,
the general partner does not believe Enstar 1984 would be able to compete with
DBS and other more technologically advanced providers and, accordingly, would
continue to lose subscribers; or (b) an investment estimated by the general
partner to be of between approximately $12.2 million to $14.6 million for the
system upgrades necessary for Enstar 1984 to offer services comparable to those
of its DBS and other significant competitors. However, as noted above, based on
the general partner's projections, and even after taking into account the
additional services the system could offer as a result of undertaking those
upgrades and thereby obtaining two-way transmission capability, such as
interactive programming and high-speed Internet access, Enstar 1984 would not
generate sufficient revenues to both make these additional investments and
continue to operate profitably. This largely is due to Enstar 1984's relatively
small and declining customer base and the lack of population density in its
service area, which increases the cost of a system upgrade and limits the
potential for customer growth even if enhanced services are offered. In short,
the general partner does not believe that Enstar 1984 would recoup these costs
within the lives of its key franchises, which Enstar 1984 could lose as
franchise agreements expire and communities explore new alternatives to provide
their residents with advanced services. The general partner cannot guarantee you
that any of Enstar 1984's existing franchises will be renewed. If Enstar 1984
were to make these substantial investments, which the general partner does not
believe could be financed by operating revenues or by third party sources on a
basis favorable to Enstar 1984 and its partners, Enstar 1984 would likely cease
to operate at a profit.
- 16 -
SALE OF THE SYSTEM TO ANOTHER THIRD PARTY. Based on the other bids
received in the most recent phase of the "auction" for the system described
below, the general partner has concluded that the proposed sale to
Telecommunications represents the best transaction obtainable presently and, in
all likelihood, for the foreseeable future. For this reason, the general partner
believes that a sale of the system to another third party likely would be at a
lower total price than offered by Telecommunications and, therefore, in light of
the offer by Telecommunications, less financially advantageous to the
unitholders. See "--Best Available Transaction--Sale Process" on pages 18-27.
Accordingly, in view of the sale price offered by Telecommunications
and the liquidating distributions that the general partner expects to result
from the Liquidation Plan, the general partner believes that the alternatives to
the Liquidation Plan are not prudent, and that consenting to the Liquidation
Plan would be more favorable to the unitholders than would be investing in
substantial upgrades to the system, continuing to operate the system in its
present condition or selling the system to another third party.
ABILITY TO SELL UNITS
The units are not listed on any national securities exchange, nor
are they quoted on any inter-dealer quotation system, and there is no
established trading market for them. Because of this, the liquidity of a
unitholder's investment in Enstar 1984 is severely limited. Approving the
Liquidation Plan will permit Enstar 1984 to make distributions to the
unitholders that the general partner believes could not otherwise be made.
If the Liquidation Plan is approved, the general partner expects that the
liquidating distributions will aggregate approximately $70 per unit in
respect of the Telecommunications Sale, after estimated closing adjustments,
taxes and closing and liquidation expenses.
EFFECTS OF THE TRANSACTION
ON ENSTAR 1984
The completion of the Liquidation Plan will, after repayment of
Enstar 1984's debts and obligations, result in the distribution of Enstar
1984's remaining net assets to the unitholders and the general partner
ratably in proportion to their respective percentage interests in Enstar
1984, and, thereafter, the winding-up and legal dissolution of Enstar 1984.
Consequently, the unitholders' equity interest in Enstar 1984 will have been
extinguished in exchange for the liquidating distributions, and Enstar 1984
will thereafter no longer be a reporting company under the Securities
Exchange Act of 1934, as amended. This means, among other things, that
Enstar 1984 will no longer file, and the unitholders will no longer receive
annual reports on Form 10-K, quarterly reports on Form 10-Q or current
reports on Form 8-K. As shown in the following table, these filings have
cost Enstar 1984 an average of approximately $51,000 per year for the last
three years.
2000 2001 2002 TOTAL
---- ---- ---- -----
Audit Fees....................... $ 45,000 $ 50,900 $ 38,600 $ 134,500
Filing Fees...................... 6,200 6,200 6,200 18,600
--------- --------- --------- ---------
Total............................ $ 51,200 $ 57,100 $ 44,800 $ 153,100
Average over 3 years............. $ 51,000
- 17 -
ON THE UNITHOLDERS
The effects on the unitholders of completing the Liquidation Plan will
be the receipt, upon completion of the Liquidation Plan, of liquidating
distributions which the general partner estimates will total approximately $70
per unit in respect of the Telecommunications Sale, before applicable taxes.
Completion of the Liquidation Plan will, therefore, extinguish the unitholders'
interest in Enstar 1984 and the system. Depending upon their individual
circumstances, unitholders may owe federal and/or state income taxes in respect
of those distributions. For more information on the effect of the Liquidation
Plan, please see "-- Federal Income Tax Consequences of the Liquidation Plan" on
pages 40-42, "-- Disadvantages of the Liquidation Plan" on page 38 and "--
Consequences of Failure to Approve the Liquidation Plan" on page 38.
ON THE GENERAL PARTNER
The principal advantages to the general partner of completing the
Telecommunications Sale and the Liquidation Plan are its receipt of an
estimated liquidating distribution of approximately $21,100 in respect of
the Telecommunications Sale. The general partner and its affiliates will
receive approximately $430,800 in repayment of deferred management fees and
approximately $568,600 in repayment of deferred expenses owed to the general
partner and its affiliate by Enstar 1984. The general partner also will
avoid the risks of continued operation of the system and managerial
responsibility for (1) the estimated investment of $12.2 million to $14.6
million for required system upgrades to address competitive disadvantages of
the current system, including the need to obtain the financing that would be
required, (2) coping with the uncertainty of whether such upgrades would
improve the system's competitiveness or operating performance, (3)
responding to increasing competition from technologically advanced
competitors, (4) addressing the uncertain effects of future legislation and
regulations, and (5) responding to continuing rate pressure from DBS
operators.
The principal disadvantages to the general partner of completing the
Telecommunications Sale and the Liquidation Plan are the incurring of the above
risks as well as the disadvantages discussed under "-- Disadvantages of the
Liquidation Plan" on page 38.
BEST AVAILABLE TRANSACTION
SALE PROCESS
The general partner and the other participants believe that the process
through which offers were solicited for the system acted as a "market check"
with respect to the sale price and other terms offered. A "market check" is a
process through which a seller of assets or equity interests canvasses or
otherwise probes the field of prospective purchasers for the purpose of
soliciting and obtaining the best available purchase price and most favorable
terms then obtainable from a willing purchaser.
o INITIAL PHASE OF THE SALE PROCESS. The general partner began
evaluating strategies for liquidating Enstar 1984 and other affiliated
Enstar partnerships in 1998, based on its belief that the market for cable
systems generally had improved and that it was an appropriate time to seek
the sale of the systems given that they were syndicated in the mid-1980s.
The strategies evaluated by the general partner included the potential sale
of substantially all of Enstar 1984's assets to third parties and the
subsequent liquidation of Enstar 1984. In May 1999, Charter, Inc. signed an
agreement to acquire the general partner from Falcon Communications, L.P.,
along with all of the cable television assets of Falcon Communications. In
view of the fact that the rural cable systems did not fit with Charter,
Inc's strategy of operating systems in more densely populated areas, the
general partner and Charter decided to continue to pursue the strategy for
liquidating the cable television assets of Enstar 1984 and the other
affiliated partnership cable operators. Charter acquired ownership of the
general partner in November 1999.
- 18 -
In December 1999, the general partner engaged Daniels & Associates,
L.P. ("Daniels"), a prominent business broker with extensive expertise in the
cable and telecommunications industry, to market Enstar 1984's cable television
systems, as well as the cable systems of 13 other affiliated Enstar
partnerships, to third parties. These partnerships included: Enstar Income
Growth Program Six-A L.P., Enstar Cable of Cumberland Valley, Enstar Income
Program II-1, L.P., Enstar Income Program, II-2 L.P., Enstar Income Program,
IV-3 L.P., Enstar Cable of Macoupin County, Enstar IV/PBD Systems Venture,
Enstar VII, L.P., Enstar VIII, L.P., Enstar IX, L.P., Enstar X, L.P. and Enstar
XI, L.P. These partnerships represent all cable systems of the Enstar affiliated
partnerships. The following table sets forth the partnerships and the states in
which they directly or indirectly owned cable systems as of December 1999:
Cable System Locations
Partnership as of December 1999
----------- ----------------------
Enstar Income Program 1984-1, L.P. . . . . North Carolina, South
Carolina and Tennessee
Enstar Cable of Cumberland Valley. . . . . Kentucky, Tennessee and
Missouri
Enstar Income Program II-1, L.P. . . . . . Illinois
Enstar Income Program II-2, L.P. . . . . . Illinois and Missouri
Enstar Cable of Macoupin County. . . . . . Illinois
Enstar IV/PBD Systems Venture . . . . . . Illinois and Missouri
Enstar Income Program IV-3, L.P. . . . . . Kentucky and Illinois
Enstar Income/Growth Program Six-A, L.P. . Illinois and Tennessee
Enstar VII, L.P. . . . . . . . . . . . . . South Carolina
Enstar VIII, L.P. . . . . . . . . . . . . South Carolina
Enstar IX, L.P. . . . . . . . . . . . . . Alabama
Enstar X, L.P. . . . . . . . . . . . . . . Tennessee
Enstar XI, L.P. . . . . . . . . . . . . . Arkansas
Enstar Income/Growth Program Six-B, L.P. completed the sale of all of
its cable system assets to Falcon Cablevision and Falcon Telecable, two of its
affiliates, on December 31, 1999, for an aggregate purchase price of $12.9
million. This sale was completed under an asset purchase agreement, dated as of
November 6, 1998, and amended as of March 30, 1999.
Over a period of nine months, Daniels solicited offers to purchase
Enstar 1984's cable television systems along with the systems of those other
affiliated partnerships. Based on its knowledge of the telecommunications
industry, cable and telecommunications companies, and its knowledge and
experience of those companies' strategic plans and interests, during this period
Daniels contacted approximately 45 prospective purchasers that it believed
represented virtually all the parties which then would both be potentially
interested in such an acquisition and financially capable of completing it.
Based on the responses to those contacts, Daniels sent written evaluation
materials to 21 of them.
The sales process was designed by Daniels and the participants to
encourage potential buyers to bid on one or a combination of individual cable
systems in which a potential buyer might be interested, or on a collective basis
for all of the systems. The general partner determined not to market Enstar
1984's system separately from the other Enstar partnerships and their systems,
although any interested buyer of the joint venture's system was permitted to
submit a bid for only that system. It was the general partner's judgment that
marketing the systems as a group would be beneficial to Enstar 1984. Based on
the general partner's experience in the cable television industry, the general
partner believed that a higher sale price for a given system often can be
obtained when cable television systems are marketed as part of a larger,
"bundled"
- 19 -
package than when marketed individually or in smaller units. The general
partner believes this is particularly true where the cable systems serve
small town or rural areas with a relatively small number of subscribers per
headend, as is the case with Enstar 1984's and the other affiliated
partnerships' cable systems. For example, a buyer may be able to achieve
economies of scale by acquiring a larger number of subscribers and,
therefore, larger potential cash flow, by incurring the same fixed costs it
would incur in acquiring fewer subscribers. In addition, a buyer that
operates existing, adjacent systems, can achieve further economies by
integrating newly-acquired subscribers and cable plant into its existing
operations, thus reducing its per-subscriber operating costs.
The marketing process chosen by the general partner allowed
potential purchasers to bid on Enstar 1984's cable systems individually, or
on a collective basis with the cable systems of some or all of the other
partnerships that were offered for sale. As detailed further below, the
general partner in some cases received bids for the individual cable systems
of certain Enstar partnerships. Other bidders submitted bids which covered
multiple cable systems. If Enstar 1984's system was marketed on an
individual basis separately from the other Enstar partnerships, the general
partner would have only solicited bids from third parties willing to
purchase Enstar 1984's individual, rural cable system. For these reasons,
the general partner determined that a marketing strategy which marketed the
systems on a collective basis, but which allowed bids on individual systems,
would produce the best transaction available to Enstar 1984 and its
unitholders. The general partner, however, could not ensure that marketing
the system on a collective basis produced a better price or a better
transaction than marketing the system separate from the cable systems of the
other Enstar partnerships.
Five parties conducted due diligence with respect to the cable
television systems of all Enstar affiliated partnerships. This resulted in a
non-binding proposal from an affiliate of Mediacom Communications Corporation
("Mediacom") in March 2000 to purchase certain of the cable systems of nine of
those affiliated partnerships, which did not include Enstar 1984's system, for
$117.8 million. Mediacom's proposal was for all Enstar cable systems in Alabama,
Arkansas, Illinois, Kentucky and Missouri.
In addition, in March 2000, an affiliate of Gans Multimedia Partnership
("Gans") submitted a bid to acquire all Enstar systems in Tennessee, North
Carolina and South Carolina, including Enstar 1984's system. Gans and certain of
the Enstar partnerships entered into a letter of intent for these systems in
April 2000. Under this proposal, Gans would have paid to Enstar 1984 a sale
price of approximately $1,687 per subscriber with respect to those portions of
Enstar 1984's system in Tennessee, subject to various closing and other
adjustments. The bid was subject to various closing and other adjustments.
Neither Mediacom nor Gans are affiliated with Enstar 1984 or any of the
participants. Small Town Cable also submitted a bid for systems in Tennessee,
North Carolina and South Carolina. Classic Communications and Suncast
Communications submitted bids for all the Enstar systems except Tennessee, North
Carolina and South Carolina. Small Town Cable, Classic Communications and
Suncast Communications could not demonstrate their ability to obtain necessary
financing.
However, in June 2000, after several weeks of negotiations and
additional due diligence, but before a definitive purchase agreement had been
signed, Mediacom orally made a revised offer that substantially reduced its bid
price to $93.0 million. Mediacom lowered its offer after conducting due
diligence on all of the systems, citing higher than expected capital costs,
greater concern for competition in the franchise areas served by the Enstar
partnerships' systems and a general decline in the market for cable industry
sales prices, as reasons for reducing its bid.
In response, Daniels again requested written proposals from all parties
it was aware remained interested in acquiring the systems. Only Mediacom and
Gans submitted written offers in response to that
- 20 -
request. Mediacom's offer of $97.0 million related to the systems operated
by Enstar partnerships in Kentucky, Illinois, Missouri, Arkansas and
Alabama, which did not include Enstar 1984's system. Mediacom's sale price,
though higher than its oral proposal, was substantially lower than its
original proposal for all of the systems in its bid. The Gans affiliate,
however, submitted a written bid of approximately $100.0 million for the
cable systems of the Enstar partnerships in Kentucky, Illinois, Missouri,
Arkansas and Alabama. This bid supplemented Gans' prior bid for the systems
in Tennessee, North Carolina and South Carolina, which allocated $1,687 per
subscriber for Enstar 1984's system. Both Mediacom and Gans communicated
with their offers that their bids were made on all the systems included in
their bid and were not made for individual systems. Following this process,
and particularly as the result of Mediacom's prior actions in lowering its
bid, the general partner believed that Gans had submitted a more reliable
bid and that it was more likely that Gans would follow through to complete
the transaction. No other party bid on the systems at that time, and the
other parties that originally had submitted bids, Small Town Cable, Classic
Communications and Suncast Communications, had by then withdrawn their bids.
In June 2000, Gans and those affiliated sellers with systems in
Tennessee, North Carolina and South Carolina entered into a purchase
agreement for those systems. In late July 2000, after commencing to
negotiate a purchase agreement with Gans, the general partner was notified
that Daniels' New York City office had in the past and currently was
representing Gans Multimedia Partnership, the proposed buyer's parent
company, in certain equity financing and mergers and acquisitions matters.
When the general partner was notified of this potential conflict of
interest, it promptly advised all parties who had submitted bids for those
Enstar systems not located in Tennessee, North Carolina and South Carolina,
allowing them to withdraw or re-bid. Gans re-bid at that time, resubmitting
its original bid. The general partner also received a bid from the City of
Poplar Bluff for the system operated by an affiliated partnership in that
city.
Subsequently, in August and September 2000, Gans and the other
affiliated sellers entered into two additional definitive purchase
agreements for all of the remaining systems operated by the affiliated
partnerships. The total purchase price for all of the Enstar systems was
$128.0 million, under which the portion of the purchase price allocated to
Enstar 1984 for the system was approximately $13.7 million, or approximately
$1,599 per subscriber. Enstar 1984 completed a sale in November 2000 of its
cable systems serving Kershaw, South Carolina to an unrelated purchaser for
$5.3 million, subject to closing adjustments.
In February 2001, the general partner and Gans began negotiating an
amendment to the Gans purchase agreement that the parties believed was necessary
in order for all parties to satisfy their respective closing conditions. This
amendment was necessary in order to amend a condition in the purchase agreement
which provided that grantors of cable franchises covering at least 90% of the
aggregate subscribers of all the sellers must have consented to transfer those
franchises to Gans prior to closing. It had become apparent at that time that
this condition could not be satisfied by the selling partnerships because of the
inability to obtain consent with respect to the franchise in the City of
Covington, Tennessee. In addition, Daniels was advised that Gans could not
obtain adequate financing for the transaction, even if the requisite franchise
consents could have been obtained.
In April 2001, following a series of discussions and meetings,
negotiations between the general partner and Gans reached an impasse, which
caused them to determine that they would not be able to agree on the amendment.
As a result of this, and in view of the general partner's understanding of
Gans's inability to arrange sufficient financing to close the acquisition, the
parties agreed to terminate the purchase agreement without liability to either
party. After the decision was made to terminate the purchase agreement, the
general partner and the participants determined to take the systems off the
market.
- 21 -
o SUBSEQUENT PHASE OF THE SALE PROCESS. Following the decision to take
the systems off the market, potential buyers who were aware of the general
partner's prior interest in selling the systems as a result of the previous
efforts to market the systems, informally communicated their interest in
pursuing the purchase of the systems to Daniels and the general partner.
As a result of these informal inquiries, Daniels then commenced a
second phase of marketing Enstar 1984's and the other affiliated
partnerships' cable systems in May 2001, contacting approximately 23
prospective purchasers based on Daniels's and the general partner's
knowledge of the industry and feedback that previously had been received.
These prospective purchasers included parties who had received marketing
materials during the first phase of marketing. Based on the responses
received, Daniels sent updated evaluation materials to approximately eight
of them. Daniels solicited offers through a bid process. As a result of this
process, none of the bidders knew the contents or amount of any other bid.
Bidders may, however, have been aware of the terms of Gans's prior bid for
the systems through public reports filed with the Securities and Exchange
Commission made by those Enstar affiliated partnerships subject to public
reporting requirements, including Enstar 1984. The general partner believed
that the bidders would not have been aware of the terms of Mediacom's prior
bid, which had not been made public. Bidders were allowed to conduct due
diligence investigations of the systems prior to submitting their bids.
This process produced bids in July 2001 for all of the systems located
in Illinois, which do not include any of Enstar 1984's systems. The bids were
from Charter Communications, Inc. and its affiliates ($63.0 million), Mediacom
($50.4 million), Susquehanna Cable ($50.0 million), Boston Ventures ($37.8
million), Cascade Broadband ($32.0 million) and Sunrise Communications ($42.1
million). None of the bidders were affiliated with Enstar 1984 or the general
partner other than Charter, Inc., and its affiliates.
The general partner determined that the bid from Charter, Inc. and its
affiliates for those portions of the systems located in Illinois, was the best
transaction for the sale of the partnerships' Illinois systems. This
determination was based primarily on the fact that Charter's bid was
substantially higher in price than the other bids. Charter did not submit a bid
for any portion of Enstar 1984's systems. Charter submitted its bid only for the
Illinois systems based on its evaluation of all of the systems and its
determination that the Illinois systems presented the best addition to its
ongoing operations and business strategy. The asset purchase agreement with
Charter, dated as of August 29, 2001, was for $63.0 million and covered the sale
to Charter of cable television systems directly or indirectly owned by six
different limited partnerships managed by the general partner, but did not
include any of Enstar 1984's system. The sale price offered by Charter for the
systems represented $2,258 per subscriber. This transaction closed in two stages
in April and September 2002.
This second phase of marketing also produced a variety of other bids
for other portions of the affiliated partnerships' systems. In July 2001, Time
Warner bid $500 per subscriber for certain of the Tennessee systems, which
included those portions of Enstar 1984's system in Tennessee. The cities of
Poplar Bluff, Dexter/Bloomfield and Malden/Campbell bid $5.5 million, $3.6
million and $2.0 million, respectively, for the systems serving their cities.
Two bids were received in August 2001 for systems located in Dexter, Bloomfield,
Malden and Campbell, Missouri from Galaxy Cablevision and Capital Cable for $7.0
million and $6.3 million, respectively.
In August 2001, Capital Cable submitted a bid for $32.8 million, or
$850 per subscriber, for those systems in Kentucky, Tennessee, Missouri,
Arkansas, South Carolina and North Carolina, which included Enstar 1984's
system. Capital Cable later resubmitted its bid for those systems, increasing
its bid to $1,000 per subscriber. Buford Media submitted a bid in September 2001
for a range of prices from $31.3 million to $39.2 million, or $800 to $1,000 per
subscriber, for systems located in Kentucky, Tennessee, Missouri, South
Carolina, North Carolina and Arkansas, which included Enstar 1984's system. TS
Communications
- 22 -
submitted a bid in September 2001 for $4.3 million for systems in Dexter and
Bloomfield, Missouri and $1.7 million for systems in Malden and Campbell,
Missouri. TS Communications later revised its bid in October 2001 to $4.2
million for the Dexter and Bloomfield, Missouri systems and $1.6 million for
the Malden and Campbell, Missouri systems. A bid also was received in
December 2001 from Cable South for $1.1 million, or $750 per subscriber, for
Enstar 1984's system serving Bolivar and Hardeman, Tennessee. Buford Media
bid for all of the systems in Kentucky and Tennessee in January 2002 for a
total price of approximately $17.3 million, or $850 per subscriber, which
included Enstar 1984's system except for Snow Hill, North Carolina. These
bidders submitted their bids in different formats, on a state-wide or
area-wide basis, and not per partnership or per system. The bid prices
apportioned to Enstar 1984's system in the foregoing bids are based on
allocations made by the general partner. None of the bidders were affiliated
with Enstar 1984 or the general partner.
Daniels continued marketing and providing updated information to
all interested parties for the cable television systems of Enstar 1984 and
certain other affiliated partnerships. In January 2002, the general partner
instructed Daniels to discontinue marketing certain of the Enstar systems in
Kentucky, Missouri and Tennessee. In February 2002, Daniels received a bid
valued at $12.6 million from Roy Baker for systems located in Kentucky which
do not include any of Enstar 1984's system. In May 2002, a bid was received
from Roy Baker and Cumberland Cellular Inc. for all of the Kentucky systems
for a price of $10.6 million.
In early June 2002, Daniels sent another request for bids for all
the Enstar systems to interested parties. Buford Media bid $26.2 million for
systems in Kentucky, Tennessee, Missouri, North Carolina, South Carolina and
Arkansas. This bid was $900 per subscriber for Enstar 1984's Tennessee
system, but ascribed no value to the Snow Hill, North Carolina system. Cable
Direct bid $25.2 million for systems in Kentucky, Tennessee and Missouri,
including $583 per subscriber for Enstar 1984's system not including the
Snow Hill, North Carolina system. Capital Cable bid $26.9 million, or $749
per subscriber, for systems in Kentucky, Tennessee, Missouri, North
Carolina, South Carolina and Arkansas, including Enstar 1984's system. A
combined bid was submitted by Roy Baker and Cumberland Cellular for $10.6
million, or $650 per subscriber and $1,400 per subscriber, respectively, for
certain systems in Kentucky and Tennessee. TS Communications submitted a bid
of $6.3 million for systems in Missouri and Arkansas which did not include
any part of Enstar 1984's system. No bidder subscribed any value to Enstar
1984's system in Snow Hill, North Carolina. None of the bidders were
affiliated with Enstar 1984 or the general partner.
This process produced Telecommunications as the party, in the general
partner's view, that offered the best transaction for the sale of Enstar 1984's
system. Although Telecommunications bid of $583 per subscriber was lower in
price than the bid submitted by Buford Media of $900 per subscriber and the bid
submitted by Capital Cable of $749, Telecommunications' bid included closing
conditions that were standard in the industry, with no contingencies for
obtaining financing. Capital Cable and Buford were unable to confirm their
financial ability to consummate the transactions. Overall, the general partner
believed that Telecommunications had a higher likelihood of completing the
transactions. Telecommunications also proposed to raise its bid to $656 per
subscriber in Tennessee and to purchase Enstar 1984's system in Snow Hill, North
Carolina for $600 per subscriber. No other party bid on the Snow Hill, North
Carolina portions of Enstar 1984's system.
The general partner negotiated with Cable Direct, the predecessor
bidder to Telecommunications, for the sale of the system beginning in July 2002
on an arm's-length basis. Cable Direct signed a letter of intent to purchase
Enstar 1984's system in September 2002. Cable Direct later agreed to substitute
a separate entity, Telecommunications, as the bidder in its place. These
negotiations resulted in Enstar 1984's entering into an asset purchase agreement
with Telecommunications. There were no material
- 23 -
changes to the asset purchase agreement from the terms of the final bid
received from Telecommunications.
The asset purchase agreement, dated as of November 8, 2002 with
Telecommunications, covers the sale of cable television systems owned by 10
different limited partnerships managed by the general partner ("sellers"),
including all of Enstar 1984's system. In the original asset purchase
agreement, Telecommunications agreed to purchase the system for a sale price
of $3.9 million, subject to closing sale price adjustments, an escrow for
indemnity claims and transaction costs. This sale price offered by
Telecommunications for the system represented $656 per subscriber in
Tennessee and $600 per subscriber in North Carolina.
In February and April 2003, Telecommunications failed to make
deposits into an escrow account required by the asset purchase agreement. In
each case, the sellers and Telecommunications agreed to amend the asset
purchase agreement to extend the time for Telecommunications to make the
required deposits.
In May 2003, Telecommunications informed the general partner that
it would be unable to obtain bank financing to close its purchase of the
sellers' cable system assets under the then existing terms of the asset
purchase agreement. Telecommunications cited a significant decline in the
number of subscribers for all of the sellers' systems, which in turn
decreased the projected cash flow for these cable system assets, as the
reason for its inability to obtain financing for the proposed transactions
under the asset purchase agreement. Telecommunications also cited other
factors contributing to its inability to obtain financing, including recent
legislation allowing the City of Covington, Tennessee to expand its
city-owned cable system into the surrounding county, thereby increasing the
risk of a competitive cable system in Enstar 1984's system and the potential
for an increasing decline in that system's subscriber base.
As a result, the sellers and Telecommunications entered into an
amendment to the asset purchase agreement on June 6, 2003. The amendment
reduces the purchase price for each of the sellers' cable system assets. As
amended, the sale price for all of the cable television assets of the
sellers is approximately $14.5 million, subject to closing sale price
adjustments, an escrow for indemnity claims and customary closing
conditions. The agreement as amended provides for $3.5 million to be paid to
Enstar 1984 for its system, which is 11.4% lower than the purchase price for
Enstar 1984's system prior to the amendment. This new purchase price
represents a price of $583 per subscriber for that portion of the system in
Tennessee and $550 per subscriber for that portion of the system in North
Carolina. By contrast, the agreement prior to the amendment allocated $656
per subscriber for that portion of the system in Tennessee and $600 per
subscriber for that portion of the system in North Carolina. In addition, as
a result of subscriber shortfalls, adjustments to the purchase price as of
May 31, 2003 would amount to $328,300 if closing had occurred at that time.
The general partner believes that the amendment reducing the
purchase price for Enstar 1984's system to facilitate Telecommunications'
ability to obtain financing for the transaction was in the best interests of
Enstar 1984 and its unitholders. The bidding process previously described
produced Telecommunications as the party, in the general partner's view,
that offered the best transaction for the sale of the system. No other third
party bid on the Snow Hill, North Carolina portions of Enstar 1984's system
during that process. The corporate general partner believes that the reduced
purchase price was justified as a result of the decline in subscribers in
Enstar 1984's system which has occurred since the asset purchase agreement
with Telecommunications was first entered into in November 2002, and as a
result of the increased competition from the cable system operated by the
City of Covington, Tennessee. As such, the general partner does not believe
that a more favorable purchase price or more favorable terms could be
- 24 -
obtained for the sale of Enstar 1984's system and that the amendment to the
purchase agreement was in the best interests of the unitholders.
The general market for cable television systems peaked in 2000, and
has been on a steady decline since that point. This is best evidenced by the
significant decline in the value of publicly traded cable stocks of 21% to
99% from August 2000 to November 2002. This reduction in value was due to a
number of factors, including a decline in the overall stock market,
increased competition from DBS operators and the resulting decrease in the
number of cable subscribers, a tightened market for debt for cable
television acquisitions, the accounting scandal at cable operator Adelphia
Communications Corporation, and poorer than expected operating results from
a number of the public cable companies.
These issues affected all cable television operators and, in
particular, operators of rural cable systems due to increased competition from
DBS, as evidenced by the loss of significant numbers of subscribers, and thus
the loss of revenues and operating cash flow. Two of the largest operators of
rural cable systems, publicly traded Classic Cable and privately held Galaxy
Telecom, filed for Chapter 11 bankruptcy protection in late 2001.
The purchase price offered by Gans in August 2000 was approximately
$9.8 million, or 251.3%, higher than the aggregate purchase price ultimately
offered by Telecommunications for Enstar 1984's system and $10.2, or 291.4%,
higher than the aggregate purchase price agreed to in the June 2003
amendment to the purchase agreement with Telecommunications. However, the
price offered by Gans was received approximately two years prior to the bid
received from Telecommunications and approximately three years prior to the
amendment. This decline in price was consistent with the general decline in
sales prices of cable television systems that has occurred in the industry
since 2000 and the decline in the subscriber bases for the system. As a
result, the general partner does not believe that the price offered by Gans
for Enstar 1984's system is relevant in evaluating the bids submitted for
the system during the second phase of the bidding process.
The general partner and the other participants believe that the entire
"auction" process conducted by Daniels and described above constituted an active
"market check" with respect to the sale price and other terms of the sale of
Enstar 1984's system. Daniels contacted the parties that it believed constituted
a representative sample of virtually all prospective purchasers of those cable
systems and required all interested parties to submit bids, without knowing the
identities of the other bidders or the terms of the other bids. This process
enabled Daniels to canvass a representative universe consisting of a large
number of actual, prospective buyers and to objectively determine the range of
current market values of the systems, as given by willing purchasers. In fact,
the general partner and the other participants believe that the "auction"
process conducted by the broker is the most effective and accurate means for
ensuring that the agreement with Telecommunications is the best price and
represents the best transaction currently available in the market from a willing
buyer.
CONSENT PROCEDURES AND PROCEDURAL SAFEGUARDS
The Liquidation Plan can take place only if it is consented to by a
majority-in-interest of the unitholders, none of whom is an affiliate of Enstar
1984, the general partner, Telecommunications or any of the other participants.
If a majority-in-interest of the unitholders vote to disapprove any proposal
included in the Liquidation Plan, either affirmatively by failing to vote, or by
voting to "abstain," the Liquidation Plan will not be consummated.
The general partner did not retain an unaffiliated representative to
act on behalf of the unitholders in negotiating the purchase agreement with
Telecommunications. However, the purchase agreement was
- 25 -
negotiated by the general partner on an arm's-length basis with
Telecommunications, an unaffiliated prospective purchaser.
DETERMINATION OF THE SALE PRICE
o GENERAL. The valuation of a cable television system for purposes
of a sale is a highly subjective process, but the sale price will ultimately
reflect the future value the purchaser expects to receive from operating the
system, offset by future expenditures expected to be required for the
systems to remain technologically current and to satisfy franchising
authorities. Numerous factors affect this valuation, the most important
among them being the physical condition and technical capability of the
system; the presence or absence of competitors; the density of households
and growth potential of the customer base; and the length of the remaining
terms of local franchises and the likelihood that, upon expiration, the
franchises will be renewed or extended. Based on the general partner's
business experience in the cable television industry, the general partner
and the other participants believe that when Enstar 1984's system is
measured against these factors, the sale price offered by Telecommunications
is commercially reasonable for small systems with demographics and
technological capabilities comparable to Enstar 1984's system.
o CURRENT MARKET PRICES AND UNSOLICITED OFFERS FOR UNITS. Neither the
general partner nor the other participants based their conclusion that the sale
price offered by Telecommunications for the system is the best transaction
available to the unaffiliated unitholders on a comparison of either the sale
price or the anticipated liquidating distributions to historical or current
market prices for units, or to recent unsolicited offers for units. This is
principally because neither the general partner nor any of the other
participants believe that the available, published data on secondary market
sales of units, or most recent unsolicited, third-party offers for units,
provide a reliable or appropriate basis for valuing the system.
First, there is not and has not been an established market for the
units, either on a national securities exchange, an inter-dealer quotation
system, over-the-counter or otherwise. Trades in the units have been limited to
sporadic transactions in an unregulated, informal secondary market. It is not
known whether these trades have been on a fully arm's-length basis, whether the
buyers and sellers have each had access to all material information regarding
Enstar 1984, its financial condition, the value of its assets and its prospects
for the future, or whether such trades have fairly reflected the then-current
market value of Enstar 1984's assets.
Second, recent unsolicited offers to purchase units have been made only
by a few institutional holders whose intention is believed by the general
partner and the other participants to be to purchase units at a significant
discount to their actual value with a view toward selling them (or their asset
equivalent) at a substantially higher price in a subsequent sale or liquidation
of Enstar 1984. In light of this, neither the general partner nor any of the
other participants are of the view that the prices offered by these potential
buyers of units are fairly indicative of any accurate valuation of the system or
appropriate to any evaluation of the sale prices offered for the Enstar system.
o APPRAISALS AND OPINIONS. The general partner did not obtain any
appraisals, reports or opinions regarding the procedural or substantive fairness
to the unitholders of the sale price offered by Telecommunications for the
system or the other terms of the Telecommunications Sale. The general partner
and the other participants believe that the process through which offers were
solicited for the system, together with the facts that the purchase agreement
was negotiated on an arm's-length basis with an unaffiliated prospective
purchaser and the bid offered by Telecommunications was the best bid received
for the system during the most recent bidding process, provide a sufficient
basis for the general partner's and the other Filings Persons' belief that the
Telecommunications Sale is the best transaction available to the unitholders.
- 26 -
o DISCOUNTED CASH FLOW VALUE; GOING CONCERN VALUE. Neither the
general partner nor any of the other participants evaluated either the sale
price offered by Telecommunications, or the anticipated liquidating
distributions, on a discounted cash flow or "going concern" basis. The
general partner does not believe that basis is relevant because current
market conditions, including the competition faced by Enstar 1984 and trends
in the telecommunications industry generally, are likely to have a
substantial adverse effect on Enstar 1984's ability to maintain its current
revenue levels and profitability for the foreseeable future. For this
reason, the general partner and the other participants concluded that
valuations that assume a continued, longer term viability or cash flow
stream would not reliably predict the value of Enstar 1984.
o OTHER FACTORS. In addition to being, in the general partner's
opinion, the buyer making the best offer and the best resulting transaction for
the sale of the system, the terms proposed by Telecommunications were, in the
general partner's and the other participants' opinion, favorable, overall, to
the unitholders. Specifically, as set forth in the purchase agreement with
Telecommunications:
o there is no financing contingency that would make
Telecommunications' obligations contingent upon obtaining
adequate financing to complete the purchase; and
o Telecommunications' obligation to close is not contingent upon
Enstar 1984 obtaining at its own expense a Phase I
environmental assessment report confirming that the owned or
leased real property included in the assets to be sold to
Telecommunications is free of hazardous materials and
contaminants.
Given the current competitive environment in which the system operates,
the fact that costly upgrades are required in order for Enstar 1984 to be able
to compete with DBS operators, which currently offer more services than does
Enstar 1984 and to which Enstar 1984 historically has lost significant numbers
of customers, and the financial risks involved in making the substantial capital
investments the general partner believes will be necessary to address those
challenges, the general partner and the other participants concluded that the
Liquidation Plan, and the estimated aggregate liquidating distribution of $70
per unit in respect of the Telecommunications Sale, is in the best interests of
Enstar 1984 and the unitholders.
RECOMMENDATION OF THE GENERAL PARTNER AND OTHER PARTICIPANTS
The general partner and the other participants each believe that the
advantages exceed any disadvantages of consummating the Liquidation Plan at this
time. Accordingly, the general partner and the other participants each
recommends that the unitholders approve the Liquidation Plan.
In making this recommendation, the participants considered the
following material factors:
o If the Liquidation Plan is approved, Enstar 1984 will be
able to consummate the Telecommunications Sale for an
amount that the general partner and the other participants
believe represents the best available transaction for sale
of the assets of Enstar 1984 and upon terms that the
general partner and the other participants believe will
entail favorable transaction costs and permit an efficient
consummation of the sale. The original sales price offered
by Telecommunications of $3.9 million for the system
ultimately represents the best proposal for the system
resulting from the offering process. The general partner
believes that the amendment to the purchase agreement in
June 2003 reducing the purchase price to $3.5 million is
justified as a result of the decline in subscribers in
Enstar 1984's system which has occurred since the asset
purchase agreement with Telecommunications was first
entered into in November 2002, and as a result of the
increased competition from the cable
- 27 -
system operated by the City of Covington, Tennessee. The
Telecommunications Sale will be subject to escrows
aggregating $181,425 for indemnity claims and closing
adjustments.
o The sale price was determined through an "auction" process
conducted by an independent broker and effected a "market
check," which supports the general partner's and the other
participants' belief that the price offered by
Telecommunications represents the best available
transaction for Enstar 1984's system. The broker, which
specializes in the cable television industry, contacted a
broad sample of known prospective buyers of Enstar 1984's
system. None of the bidders knew the sale prices or other
terms of the other bids until all of the bids were
received and opened. Although the sales price offered by
Telecommunications, which was received in the second phase
of bidding, and the reduced sales price agreed to in the
amended asset purchase agreement, are significantly lower
than the sales prices originally offered for the system by
Gans and Mediacom in the first phase of bidding, this
decline was consistent with the general decline in sales
prices of cable television systems that has occurred in
the industry since 2000.
o The purchase agreement with Telecommunications contains
closing conditions that are standard in the industry and
were negotiated on an arm's-length basis. These conditions
apply to all of the sellers and the failure of one seller
to satisfy these conditions can prevent the other sellers
from closing their transactions with Telecommunications.
However, the purchase agreement with Telecommunications
does allow for a partial closing if all of the conditions
of the purchase agreement have been satisfied or waived
with respect to certain primary cable television systems
that include all of Enstar 1984's system except for that
portion of the system located in Snow Hill, North
Carolina. At a partial closing, only the assets of those
systems for which conditions have been satisfied or waived
will be sold to Telecommunications.
o By selling its system now, Enstar 1984 would significantly
reduce the risks inherent in the ownership of cable
television systems, particularly small cable systems,
including, among other things: the increasing number of
entities that provide high quality video programming,
Internet and telephony services, particularly DBS
operators; the uncertainty of the future effects of
legislative and regulatory changes; the rapid
technological developments in the cable television and
telecommunications industry, which are pressuring cable
operators to upgrade their systems and increase their
service offerings; the financial difficulties inherent in
small cable television systems acquiring the technological
infrastructure needed to compete with "broadband"
providers of multiple television, Internet and telephony
services; increasing costs of obtaining quality
programming; and the competitive pressure to maintain
rates at a level competitive with DBS operators.
o Because there is no established trading market for the units,
the unitholders' ability to sell their units has been and for
the foreseeable future will be limited to sporadic sales
within an informal secondary market.
o In order for the Liquidation Plan to be authorized and
completed, the holders of a majority of the units must first
approve both proposals of the Liquidation Plan. None of the
unitholders are affiliates of Enstar 1984, the general partner
of Enstar 1984 or any of the other participants.
o There exists the risk that by selling the system now, Enstar
1984 and the unitholders would not benefit from any increased
revenues that might result from an upgrade of the system, or
- 28 -
from possible further improvements in economic and market
conditions that might increase the sale price of the system.
However, neither the general partner nor any of the other
participants believe that a sufficient increase in revenues is
likely to result from upgrades, or that in its present
condition, the system's sale value is likely to increase.
Accordingly, in the view of the general partner and the other
participants' views, these potential risks are outweighed by
the potential benefits to be realized from the Liquidation
Plan.
o The general partner did not retain an unaffiliated
representative to act on behalf of the unitholders in
negotiating the purchase agreement with
Telecommunications. The general partner did not obtain any
appraisals, reports or opinions regarding the procedural
or substantive fairness to the unitholders of the sale
price offered Telecommunications for the system or the
other terms of the Telecommunications Sale. The general
partner and the other participants believe that the
process through which offers were solicited for the
system, together with the facts that the purchase
agreement was negotiated on an arm's-length basis with an
unaffiliated prospective purchaser, provide a sufficient
basis for the general partner's and the other
participants' belief that the Telecommunications Sale is
the best transaction available to the unitholders.
o Charter, Inc. agreed in May 1999 to acquire the general
partner as part of a larger sale in which Charter, Inc.
acquired all of the cable businesses of Falcon. The general
partner already had been evaluating strategies for
liquidating Enstar 1984 and the other Enstar partnerships
since 1998. Before the transaction closed, Charter, Inc. and
Falcon's management decided to continue the liquidating
strategy because the Enstar cable systems did not fit with
Charter, Inc.'s business strategies. The general partner
entered into agreements with two brokers, one of which was
Daniels, to market the cable systems of the Enstar
partnerships. The general partner ultimately expanded
Daniels' engagement to market all of the Enstar
partnerships' cable systems.
o The sales process used to market the cable systems of the
Enstar partnerships was designed to encourage potential
buyers to bid on one or a combination of individual cable
systems, or on a collective basis for all of the systems.
The general partner and the other participants determined
that marketing Enstar 1984's system as part of a larger
group was in the best interests of Enstar 1984's
unitholders. Based on their experience in the cable
television industry, the general partner and the other
participants believe that a higher sale price for a given
system often can be obtained when cable television systems
are marketed as part of a larger, "bundled" package than
when marketed individually or in smaller units. The general
partner, however, could not ensure that marketing Enstar
1984's system on a collective basis produced a better price
or a better transaction than marketing the system separate
from the cable systems of the other Enstar partnerships.
Charter, Inc., one of the participants, and Charter, Inc.'s
affiliates, participated in the bidding for certain of the
Enstar cable systems and purchased portions of those systems
located in Illinois. Charter, Inc. did not a submit a bid
for any portion of Enstar 1984's systems, which are located
in Tennessee and North Carolina. Charter, Inc. only bid on
systems in Illinois, which it believed presented the best
addition to its ongoing operations and business strategy. As
such, the general partner and the participants did not
consider Charter, Inc.'s participation in the bidding to be
a relevant factor in the marketing of Enstar 1984's system
or in their determination that the Telecommunications Sale
is the best transaction available to the unitholders.
After considering the factors discussed in this section, the general
partner and the other participants have determined that the Telecommunications
Sale and the Liquidation Plan are the best transactions
- 29 -
available to the unitholders, and have determined that approval of the
Liquidation Plan would serve the best interests of the unitholders by
maximizing the proceeds from a disposition of the system and, consequently,
the per-unit liquidating distributions to Enstar 1984's unitholders.
The information and factors discussed above were considered
collectively by the general partner and the other participants in connection
with their review of the Telecommunications Sale and the Liquidation Plan.
Although they did not find it practicable to, and did not, quantify or
otherwise assign relative weights to the specific factors considered in
reaching the above determination, added weight was accorded to the following
factors: the fact that Telecommunications' offer resulted from an "auction"
process, which the general partner believes acted as a "market check" to
ensure that the best available price was obtained; the fact that
Telecommunications is a third party buyer unaffiliated with Enstar 1984 or
any partners, allowing the parties to negotiate on an arm's-length basis;
and the fact that the purchase agreement contains closing conditions and
seller's representations and warranties that are standard in the industry
and were negotiated on an arm's-length basis with an unaffiliated buyer,
including the fact that the obligations of Telecommunications under the
purchase agreement are not contingent upon obtaining adequate financing.
To the knowledge of the general partner, no executive officer, director
or affiliate of Enstar 1984, the general partner or any other participant, and
no executive officer, director or affiliate of any of them, holds or
beneficially owns any units, and none of such persons has made a recommendation
either in support of or opposed to the Telecommunications Sale or the
Liquidation Plan, other than as set forth in this consent solicitation
statement. The general partner's board of directors consists of only one member,
Steven A. Schumm, who approved the Liquidation Plan and is recommending the
Liquidation Plan to the unitholders.
RELATED PARTY TRANSACTIONS
Enstar 1984 has a management and service agreement (the "Management
Agreement") with Enstar Cable Corporation ("Enstar Cable"), a wholly-owned
subsidiary of the general partner. This Management Agreement provides for a
monthly management fee of 5% of gross revenues from the operations of Enstar
1984 excluding revenues from the sale of systems or franchises. Enstar
1984's management fee expense approximated $35,200 and $45,400 for the three
months ended March 31, 2003 and 2002, respectively. This amounts to $1.18
and $1.52 per unit in management fee expenses for the three months ended
March 31, 2003 and 2002, respectively.
In addition to the monthly management fee, Enstar 1984 reimburses
Enstar Cable for direct expenses incurred on behalf of Enstar 1984, and for
Enstar 1984's allocable share of operational costs associated with services
provided by Enstar Cable. Additionally, Charter, Inc. and its affiliates
provide other management and operational services for Enstar 1984. These
expenses are charged to the properties served based primarily on Enstar
1984's allocable share of operational costs associated with the services
provided. Enstar 1984 reimburses the affiliates for Enstar 1984's allocable
share of the affiliates' costs. The total amount charged to Enstar 1984 for
these services and expenses was $37,400 and $59,600 for the three months
ended March 31, 2003 and 2002, respectively. This amounts to $1.25 and $1.99
per unit in operational costs for the three months ended March 31, 2003 and
2002, respectively.
Substantially all programming services are purchased through
Charter, Inc. Charter, Inc. charges Enstar 1984 for these costs based on an
allocation of its costs. Enstar 1984 incurred programming fee expense of
$139,200 and $211,400 for the three months ended March 31, 2003 and 2002,
respectively. This amounts to $4.65 and $7.06 per unit in programming fee
expenses for the three months ended March
- 30 -
31, 2003 and 2002, respectively. Programming fees are included in service
costs in the accompanying condensed statements of operations.
Certain accrued and unpaid management fees and other deferred fees and
expenses will be paid by Enstar 1984 to affiliates of the general partner, as
described under "--Conflicts of Interest" below. All amounts owed to the general
partner and affiliates are non-interest bearing.
CONFLICTS OF INTEREST
Upon completing the Telecommunications Sale, accrued deferred
management fees (which were $430,800 as of March 31, 2003) will be paid
to the general partner by Enstar 1984. In addition, the general partner will
receive approximately $568,600 in repayment of deferred expenses owed to it
by Enstar 1984. However, for the reasons discussed under "Best Available
Transaction--Consent Procedures and Procedural Safeguards" on page 24,
Enstar Communications and the other participants believe that the terms of
the Telecommunications Sale and the Liquidation Plan are the best
transactions available to the unitholders.
Following the closing of the Telecommunications Sale, Charter or one of
Charter's affiliates may provide advertising sales services to the extent
requested by Telecommunications pursuant to an advertising sales agreement.
THE TELECOMMUNICATIONS PURCHASE AGREEMENT
Enstar 1984 and nine other general and limited partnerships managed
by the general partner have entered into an Asset Purchase Agreement with
Telecommunications (the "Telecommunications Purchase Agreement"). For
purposes of this summary of the Telecommunications Purchase Agreement,
Enstar 1984 and the other partnerships managed by the general partner will
sometimes collectively be referred to as the "Sellers." The
Telecommunications Purchase Agreement covers the sale to Telecommunications
of certain of the assets used by the Sellers in connection with the
operation of multiple cable television systems located in or around 14
communities in Kentucky, Tennessee, Missouri, Arkansas and North Carolina
(the "Assets"), including Enstar 1984's system. Telecommunications' address
is 110 North Main, Sikeston, MO 63801, Telephone: 573-472-9500.
THE FOLLOWING IS A SUMMARY OF THE TELECOMMUNICATIONS PURCHASE
AGREEMENT. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
TELECOMMUNICATIONS PURCHASE AGREEMENT. A COPY OF THE TELECOMMUNICATIONS
PURCHASE AGREEMENT WAS FILED ON NOVEMBER 13, 2002 AS EXHIBIT 2.1 TO THE
QUARTERLY REPORT ON FORM 10-Q OF ENSTAR INCOME PROGRAM II-2, L.P., AN
AFFILIATED ENSTAR PARTNERSHIP. AMENDMENTS TO THE TELECOMMUNICATIONS PURCHASE
AGREEMENT WERE FILED AS EXHIBITS TO THE CURRENT REPORTS ON FORM 8-K FILED ON
FEBRUARY 14, 2003, APRIL 25, 2003 AND JUNE 9, 2003 BY ENSTAR INCOME/GROWTH
PROGRAM FIVE-A, L.P.'S, ANOTHER AFFILIATED ENSTAR PARTNERSHIP. COPIES OF THE
TELECOMMUNICATIONS PURCHASE AGREEMENT ARE AVAILABLE, WITHOUT CHARGE, UPON
REQUEST FROM THE SOLICITING AGENT, D.F. KING & CO., INC., AT (800) 207-2014.
PURCHASE PRICE AND ADJUSTMENTS
Under the Telecommunications Purchase Agreement, Telecommunications
originally agreed to acquire the Assets from the Sellers for a total
purchase price of approximately $15.3 million, subject to closing sale price
adjustments, an escrow for indemnity claims and customary closing
conditions. Approximately $3.9 million of this amount was to be paid by
Telecommunications to Enstar 1984 for its system. This allocation of the
aggregate purchase price to Enstar 1984's system was determined from the
- 31 -
bid received from Telecommunications for the system, based on $656 per
subscriber located in that portion of the system in Bolivar, Brownsville and
Covington, Tennessee and $600 per subscriber located in that portion of the
system in Snow Hill, North Carolina.
On June 6, 2003, Telecommunications and the Sellers agreed to amend
the Telecommunications Purchase Agreement as a result of Telecommunication's
inability to obtain financing for the transaction. This amendment reduced
the total purchase price to the Sellers for the Assets to $14.5 million,
subject to closing sale price adjustments, an escrow for indemnity claims
and customary closing conditions. Approximately $3.5 million of this amount
is to be paid by Telecommunications to Enstar 1984 for its system. Of the
$3.5 million to be paid to Enstar 1984 for the system, approximately $2.8
million was allocated to those portions of the system located in Bolivar,
Brownsville and Covington, Tennessee and $750,750 was allocated to that
portion of the system located in Snow Hill, North Carolina. The allocation
of the aggregate purchase price to partnership's system was determined from
the bid received from Telecommunications for the system, based on $583 per
subscriber located in that portion of the system in Bolivar, Brownsville and
Covington, Tennessee and $550 per subscriber located in that portion of the
system in Snow Hill, North Carolina.
The purchase price will be subject to adjustments that can reduce or
increase the purchase price at closing and following the closing. These
adjustments will be made to reflect or take account of, among other things:
o allocating to the Sellers all revenues, refunds, costs, expenses and
liabilities attributable to the operation of their cable systems prior
to the closing date,
o allocating to Telecommunications all revenues, refunds, costs,
expenses and liabilities attributable to the operation of the cable
system after the closing date, and
o a number of subscribers below a prescribed target for each of the
Seller's systems. The prescribed target number for Enstar 1984's
system is 4,722 subscribers for that portion of the system located
in Bolivar, Brownsville and Covington, Tennessee and 1,365
subscribers for that portion of the system located in Snow Hill,
North Carolina. As of May 31, 2003, that portion of the system
located in Bolivar, Brownsville and Covington, Tennessee had 4,206
subscribers and that portion of the system located in Snow Hill,
North Carolina had 1,315 subscribers. If the closing had occurred
on May 31, 2003, these shortfalls in subscribers would have
reduced the purchase price by $328,300.
The Sellers and Telecommunications executed an escrow agreement
whereby Telecommunications will deposit $500,000 (the "Telecommunications
Deposit Amount") with an escrow agent to secure Telecommunications'
performance and obligations under the Telecommunications Purchase Agreement
prior to closing. As originally agreed to by the parties, the
Telecommunications Purchase Agreement provided that the Telecommunications
Deposit Amount was to be deposited as follows: $100,000 at the time of the
completion of final schedules and applicable exhibits to the
Telecommunications Purchase Agreement; $100,000 90 days after execution of
the Telecommunications Purchase Agreement; $150,000 upon approval of
franchise transfers of certain primary systems; and $150,000 upon obtaining
partner approval of the transfer of the primary systems. Telecommunications
has made the first deposit of $100,000 with the escrow agent.
On February 6, 2003, the Sellers and Telecommunications entered into an
amendment to extend the time which Telecommunications has to make its next
deposit of $100,000 into escrow, which was due on February 6, 2003. The due date
for the deposit was extended until April 7, 2003. This amendment also extended
the outside closing date until August 29, 2003.
- 32 -
Telecommunications failed to make the $100,000 escrow deposit
required on April 7, 2003. The parties to the Telecommunications Purchase
Agreement entered into a subsequent amendment dated April 24, 2003 to extend
the time which Telecommunications has to make the next deposit into escrow.
The next due date for a deposit was extended until May 15, 2003, at which
time Telecommunications was obligated to deposit $250,000. The amendment
also extended the outside closing date from August 29, 2003 to September 30,
2003.
Telecommunications failed to make the $250,000 deposit on May 15,
2003. The parties agreed to amend the Telecommunications Purchase Agreement
on June 6, 2003. In addition to reducing the purchase price for the Assets,
this amendment provided that the additional amount required to be deposited
by Telecommunications as part of the Telecommunications Deposit Amount would
be deposited as follows: $250,000 upon execution of the amendment; and
$150,000 upon obtaining partner approval of the transfer of the primary
systems. At closing, the Sellers and Telecommunications will cause the
escrow agent to deliver to the Sellers the Telecommunications Deposit Amount
and all interest and earnings accrued thereon, which amount shall be
credited against the purchase price. As of the date hereof,
Telecommunications has deposited $350,000 into escrow.
In addition, at closing, Sellers will deposit $750,000 of the
purchase price in escrow pursuant to an indemnity escrow agreement
("Indemnity Escrow Agreement") for a period of 13 months after closing to
provide funds for the payment of any indemnification to which
Telecommunications may be entitled under the Telecommunications Purchase
Agreement. Of this amount, $181,425 will be Enstar 1984's portion of the
purchase price placed in escrow. Of the $181,425 to be deposited in escrow
for the system, $142,575 was allocated to that portion of the system located
in Bolivar, Brownsville and Covington, Tennessee and $38,850 was allocated
to that portion of the system located in Snow Hill, North Carolina. The
Telecommunications Purchase Agreement provides that the Indemnity Escrow
Agreement will limit payments out of escrow to Telecommunications for
indemnification from Enstar 1984 to the $181,425 deposited by Enstar 1984
into escrow. Telecommunications' rights for indemnification from Enstar
1984, however, are not limited to the amount held in escrow. Indemnification
claims by Telecommunications may not exceed $1.6 million for all of the
Sellers, except that this limitation does not apply to claims arising out of
representations and warranties relating to title to assets, taxes and
authority.
REPRESENTATIONS AND WARRANTIES
The Telecommunications Purchase Agreement contains representations
and warranties of Enstar 1984 that are customary in the industry. As a
condition to closing, these representations must be true and correct as of
the closing date. These include representations that Enstar 1984 has the
capacity to enter into the Telecommunications Purchase Agreement, the
Telecommunications Purchase Agreement has been properly authorized and all
necessary consents and approvals have been obtained, Enstar 1984 has good
title to its assets, Enstar 1984 is in full compliance with certain laws
applicable to the cable industry and environmental laws and other customary
representations. In addition, Telecommunications made certain
representations and warranties to Enstar 1984 comparable to certain of those
made by Enstar 1984.
CONDITIONS PRECEDENT
Under the Telecommunications Purchase Agreement,
Telecommunications' obligations to acquire the Assets are subject to certain
customary conditions precedent. These conditions, if not satisfied or
waived, can prevent the Telecommunications Sale from occurring. Any or all
of these conditions may be waived by Telecommunications. These conditions
include a requirement that Enstar 1984's representation and warranties are
correct as of closing, Enstar 1984 has obtained all material and required
consents, no
- 33 -
judgment or order prohibits the closing, there has been no material adverse
changes in the condition or prospects of the Assets or the cable system
since the date of the Telecommunications Purchase Agreement and Enstar 1984
shall have obtained all necessary partner consents. In addition, affiliates
of Enstar 1984's must enter into an advertising services agreement to
provide certain advertising services after the closing. Enstar 1984
obligations to sell the Assets are subject to conditions precedent
comparable to those of Telecommunications, any or all of which may be waived
by Enstar 1984.
INDEMNIFICATION
Telecommunications has agreed that following the closing it will
indemnify the Sellers for claims that arise out of:
o its breach of any representations or warranties in the
Telecommunications Purchase Agreement;
o its failure to perform covenants or obligations in the
Telecommunications Purchase Agreement;
o any person or governmental authority asserting any claim against
Enstar 1984 arising out of the operation of the Assets after the
closing date; and
o any of the liabilities assumed by Telecommunications.
Enstar 1984 has agreed on its own behalf, but not jointly with the
other Sellers, that following the closing it will indemnify Telecommunications
for claims that arise out of:
o its breach of any representations or warranties in the
Telecommunications Purchase Agreement;
o its failure to perform covenants or obligations in the
Telecommunications Purchase Agreement; or
o liabilities accruing on or prior to the closing date, except those
assumed by Telecommunications.
In order to provide funds for the payment of any indemnification to
which Telecommunications may be entitled, Telecommunications will deposit
$750,000 of the total purchase price in escrow, of which $181,425 will be
Enstar 1984's portion of the purchase price placed in escrow. The
Telecommunications Purchase Agreement provides that the Indemnity Escrow
Agreement will limit payments out of escrow to Telecommunications for
indemnification from Enstar 1984 to the $181,425 deposited into escrow.
However, Telecommunications' rights with respect to indemnification are not
limited to the dollar amount held in escrow.
Certain limitations apply to indemnification claims, including:
o subject to certain exceptions, the representations and warranties made
by the parties will survive the closing for a period of 13 months;
o Sellers are not required to indemnify Telecommunications for claims
arising from the breach of any representation or warranty until the
aggregate amount of all such claims exceeds $100,000, in which case the
Sellers responsible for the claims will be liable for the total amount
of all such claims starting from the first dollar of loss or damage;
- 34 -
o subject to certain exceptions, the Sellers' joint aggregate liability
to Telecommunications for indemnification claims arising from the
breach of any of the Sellers' representations and warranties are
limited to losses or damages of $1.6 million; and
o Telecommunications is not required to indemnify a Seller for claims
arising from the breach of any representation or warranty until the
aggregate amount of all such claims against Telecommunications for all
Sellers exceeds $100,000, in which case Telecommunications will be
liable for the total amount of all such claims starting from the first
dollar of loss or damage.
TERMINATION AND REIMBURSEMENT
The Telecommunications Purchase Agreement may be terminated prior to
the closing only in accordance with the following situations:
o at any time by mutual consent of the Sellers and Telecommunications;
o by either the Sellers or Telecommunications if the closing has not
taken place by September 30, 2003, other than by reason of a breach or
default of any of the covenants or agreements contained in the
Telecommunications Purchase Agreement by the party seeking to
terminate; provided that, the parties may mutually agree to extend the
date if as of that date the conditions to closing have not been
satisfied;
o by either the Sellers or Telecommunications if the other party is in
material breach of the Telecommunications Purchase Agreement and does
not cure the breach within 30 days;
o by either the Sellers or Telecommunications if the representations and
warranties of the other party are not true and correct in all respects
and such failure is not cured by the closing date; or
o by the Sellers if the requisite partners' approval of the Sellers has
not been obtained.
SOURCE OF FUNDS
Telecommunications has represented and warranted that it has the
financial capability, including to obtain financing, necessary to consummate the
purchase of the Assets.
CLOSING
The closing will take place at 9:00 a.m. on the last business day
of the calendar month after the satisfaction or waiver of all conditions
precedent to closing, as set forth in the Telecommunications Purchase
Agreement, but no later than September 30, 2003. The Telecommunications
Purchase Agreement also allows for a partial closing if all of the
conditions of the Telecommunications Purchase Agreement have been satisfied
or waived with respect to certain primary cable television systems, which do
not include that portion of the system located in Snow Hill, North Carolina.
At a partial closing, only the assets of those systems for which conditions
have been satisfied or waived will be sold to Telecommunications, including
Enstar 1984's system if the conditions relating to that system have been
satisfied or waived. The general partner presently expects closing for the
system will occur on or before September 30, 2003. The closing will occur at
the offices of Charter Communications, Inc.
- 35 -
DESCRIPTION OF ASSETS
The table below sets forth operating statistics for the Enstar 1984
system as of March 31, 2003:
AVERAGE
PREMIUM MONTHLY
HOMES BASIC BASIC SERVICE PREMIUM REVENUE PER
SYSTEM PASSED(a) SUBSCRIBERS PENETRATION(b) UNITS(c) PENETRATION(d) SUBSCRIBER(e)
Brownsville, Tennessee........... 16,500 4,200 25.5% 1,400 33.3% $ 41.88
Snowhill, North Carolina......... 5,300 1,300 24.5 1,300 100.0 45.33
-------- --------- --------
Total............................ 21,800 5,500 25.2 2,700 49.1 42.70
======== ========= ========
<FN>
- ------------------
(a) Homes passed refers to estimates by Enstar 1984 of the approximate
number of dwelling units in a particular community that can be
connected to the cable systems without any further extension of
principal transmission lines. The estimates are based upon a variety of
sources, including billing records, house counts, city directories and
other local sources.
(b) Basic subscribers as a percentage of homes passed by cable.
(c) Premium service units include only single channel services offered for
a monthly fee per channel and do not include tiers of channels offered
as a package for a single monthly fee.
(d) Premium penetration represents premium service units as a percentage of
homes subscribing to cable service. A customer may purchase more than
one premium service, each of which is counted as a separate premium
service unit. This ratio may be greater than 100% if the average
customer subscribes for more than one premium service.
(e) Average monthly revenue per basic subscriber has been computed based on
revenue for the three months ended March 31, 2003, divided by three
months, divided by the actual number of basic subscribers at March
31, 2002.
USE OF PROCEEDS AND CASH DISTRIBUTIONS
The following table sets forth the anticipated application of the net
proceeds from the Telecommunications Sale. The amount available for distribution
to the unitholders shown below assumes that all of Enstar 1984's system is sold
to Telecommunications for the price, and subject to the other terms and
conditions, contained in the purchase agreement, including estimated closing
adjustments.
As promptly as practicable following the Telecommunications Sale,
and calculation of all required sale price adjustments, the general partner
will seek to discharge all of the liabilities of Enstar 1984 and distribute
its remaining assets to itself and the unitholders in accordance with the
limited partnership agreement of Enstar 1984. The general partner presently
estimates that the liquidating distributions to the unitholders from the
proceeds of the Telecommunications Sale would total approximately $70 per
unit, after estimated closing adjustments, taxes and expenses and
liquidation expenses. This estimate is based on the assumed expenses shown
below, and also assumes a closing of the Telecommunications Sale on or
before September 30, 2003. HOWEVER, THE GENERAL PARTNER CANNOT ASSURE YOU OF
THE ACTUAL AMOUNTS DISTRIBUTED, OR AS TO THE AMOUNTS SET FORTH BELOW. ACTUAL
AMOUNTS MAY VARY MATERIALLY FROM THESE ESTIMATES.
- 36 -
USE OF PROCEEDS AND DISTRIBUTIONS OF ENSTAR 1984
Sale proceeds(1).......................................... $ 3,505,500
Less: subscriber shortfall (2)............................ (328,300)
Less: Tennessee excise tax................................ (5,000)
Less: closing expenses(3)................................. (140,200)
Less: working capital adjustment(4)....................... (73,700)
Less: due to affiliates(5)................................ (999,400)
-----------
Net distribution amount................................... 2,106,300
Less: distribution to general partner(6)................. 21,100
Distributions to unitholders.............................. 2,085,200
Estimated distributions to unitholders per unit........... $ 70
<FN>
(1) Approximate. Actual amount is $3,505,453.
(2) Reflects decreases in sales price due to shortfall
in subscribers.
(3) Enstar 1984's expected expenses in connection with the
Liquidation Plan will be as follows:
Broker's fees.................................... $ 40,700
Legal fees....................................... 36,500
Accounting fees.................................. 23,800
Solicitation expenses............................ 2,800
Printing and mailing............................. 23,800
Filing fees and other miscellaneous expenses..... 12,600
-----------
$ 140,200
(4) Working capital adjustments are made as part of the liquidating process
in order to calculate the cash which will be distributed to unitholders
upon liquidation of Enstar 1984. These adjustments show the current
assets of Enstar 1984, such as cash and accounts receivable, reduced by
the liabilities of Enstar 1984 which must be paid in the liquidation
process. This amount is calculated as follows:
Cash............................................. $ 870,300
Accounts receivable.............................. 52,000
Prepaids and other............................... 51,000
-----------
Current assets................................... 973,300
Accounts payable................................. $ 39,000
Accruals......................................... 426,500
Due to affiliates................................ 434,100
-----------
Current liabilities.............................. 899,600
Current assets................................... $ 973,300
Current liabilities.............................. (899,600)
-----------
Working capital adjustment....................... 73,700
The sale price is subject to adjustment pursuant to the purchase
agreement with Telecommunications. This adjustment is only an estimate
and the adjustment actually made at closing may be more or less than
this amount.
(5) Represents deferred management fees and deferred expenses due to the
general partner and its affiliates.
(6) The general partner of Enstar 1984 has a 1% interest in partnership
distributions until the amounts specified in the partnership agreement
(generally the limited partners' subscription amount plus a specified
return) are received by the limited partners, after which the general
partner has a 20% interest in partnership distributions. Under the
partnership agreement, the general partner of Enstar 1984 will receive
approximately $21,100 of the estimated net distribution amount.
- 37 -
DISADVANTAGES OF THE LIQUIDATION PLAN
The principal disadvantages that would result to the unitholders and
the general partner of Enstar 1984 from completing the Liquidation Plan are that
by selling the system now, Enstar 1984 would not benefit from any increased
revenues that might result from an upgrade of the system, or from possible
further improvements in economic and market conditions that might increase the
sale price of the system and, thereby, increase the system's liquidation or
going-concern value to the unitholders and the general partner of Enstar 1984.
However, the general partner does not believe that significant increases in
revenues are likely to result from an upgrade, or that in its present condition,
the system's sale value is likely to increase. Accordingly, in the view of the
general partner, these potential risks are outweighed by the potential benefits
to be realized from the Liquidation Plan.
CONSEQUENCES OF FAILURE TO APPROVE THE LIQUIDATION PLAN
If the Telecommunications Sale and the Liquidation Plan are not
completed, Enstar 1984 will continue to operate the system for an indefinite
period of time. If the Liquidation Plan is not approved, the general partner
believes Enstar 1984 will continue to face significant competition from, and
continue to lose subscribers to, DBS operators. In the view of the general
partner, unless Enstar 1984 upgrades the system to have two-way transmission
capability, it will not be able to offer internet and other interactive services
comparable to those offered by the DBS operators that currently compete with
Enstar 1984 for video subscribers. Even if Enstar 1984 was to undertake such
upgrades, the general partner believes that their cost would prevent Enstar 1984
from operating profitably for at least the duration of its franchise that covers
the largest number of subscribers, which includes its Brownsville, Tennessee
franchise. Last, if the Telecommunications Sale is not approved, the general
partner expects to continue to seek buyers for the System from time to time
when, in the general partner's judgment, market conditions are favorable. The
general partner believes that any such sale likely would be on terms less
favorable than the terms of the Telecommunications Sale. Failure by the
unitholders to approve the Liquidation Plan will not affect their rights under
the partnership agreement of Enstar 1984.
EFFECT OF TERMINATION OF THE TELECOMMUNICATIONS SALE
Even if the Liquidation Plan is approved by the unitholders, the
Telecommunications Sale may not occur because the asset purchase agreement
may be terminated prior to closing. The asset purchase agreement provides
that the parties may terminate the agreement prior to closing upon certain
events. These events include: (1) the failure of the parties to close the
transactions by the certain outside closing date, which is September 30,
2003, (2) a breach of the agreement by a party which is not cured within 30
days, (3) if the representations and warranties of a party fails to be true
as of the outside closing date, and (4) if a majority-in-interest of
unitholders disapprove the transaction or fail to approve the transaction by
the end of the consent solicitation period. In addition, the
Telecommunications Sale is subject to several customary closing conditions,
any or all of which may be waived. These conditions apply to all of the
sellers and the failure of one seller to satisfy these conditions can
prevent the other sellers from closing their transactions with
Telecommunications and can cause the termination of the purchase agreement.
The purchase agreement with Telecommunications does allow for closing of the
sale of some, but not all, of the systems if all of the conditions of the
purchase agreement have been satisfied or waived with respect to certain
primary cable television systems, as further described below under "Effect
of Partial Closing Under the Telecommunications Sale."
If the Liquidation Plan is approved by a majority-in-interest of the
unitholders, but the asset purchase agreement with Telecommunications is
terminated in accordance with its terms prior to closing, then the general
partner will not complete the Liquidation Plan. Thereafter, Enstar 1984 would
continue to operate the system indefinitely. The general partner would
thereafter continue to seek buyers for the
- 38 -
system. Any future sale might be on terms less favorable than the terms of
the transactions currently proposed.
EFFECT OF PARTIAL CLOSING UNDER THE TELECOMMUNICATIONS SALE
The asset purchase agreement with Telecommunications provides for a
closing for all 10 of the sellers to take place on the last business day of
the calendar month after the satisfaction or waiver of all conditions
precedent to closing, but no later than September 30, 2003. However, the
agreement also allows partial closings where some, but not all, of the
sellers can close the sale of their systems if all of the conditions of the
agreement have been satisfied or waived with respect to certain primary
cable television systems owned by six different sellers. Enstar 1984's
system is considered one of these primary systems, except for that portion
of the system located in Snow Hill, North Carolina. At a partial closing,
only the assets of those systems for which conditions have been satisfied or
waived will be sold to Telecommunications. Therefore, if the conditions to
the sale of those primary systems have been satisfied or waived, then Enstar
1984 can close its sale with Telecommunications, even though some other
sellers with non-primary systems have not satisfied their conditions.
LIQUIDATION OF ENSTAR 1984
Enstar 1984 will sell all of its cable television system as part of the
Telecommunications Sale. Consequently, after the Telecommunications Sale, Enstar
1984 will have no cable television system assets. Enstar 1984 will no longer be
able to fulfill its partnership purpose, which is to own and operate cable
television systems. Therefore, Enstar 1984 will dissolve after completing the
Telecommunications Sale, paying its debts and distributing the balance of the
proceeds to its partners.
The general partner presently expects that the Telecommunications Sale
will close on or before September 30, 2003. This date is based on the outside
closing date agreed to by the parties in the asset purchase agreement with
Telecommunications. As soon as practicable following the closing of the
Telecommunications Sale, the general partner, on behalf of Enstar 1984, will
cause Enstar 1984 to: (a) pay all costs associated with the Liquidation Plan,
including costs associated with the solicitation of consents from the
unitholders; (b) estimate and reserve for all such costs associated with the
Liquidation Plan for which invoices have not yet been received; and (c) provide
a further contingency reserve for all other outstanding expenses and liabilities
of Enstar 1984. The general partner will cause Enstar 1984 to distribute the
balance of the cash from the Liquidation Plan to the unitholders and the general
partner, as provided in the partnership agreement. These administrative actions
require a period of time to properly process and finalize, which the general
partner estimates to be up to 90 days following the closing of the
Telecommunications Sale.
The general partner anticipates making initial distributions to the
unitholders within 90 days after the closing of the Telecommunications Sale.
The remaining assets of Enstar 1984, and any remainder of the contingency
reserve, will be distributed to the unitholders and the general partner as
soon as practicable after the release of any remaining sales proceeds from
escrow. The general partner estimates that this will occur approximately 13
months after the close of the Telecommunications Sale. Enstar 1984 will
terminate and be dissolved upon the disposition of all of its assets.
- 39 -
FEDERAL INCOME TAX CONSEQUENCES OF THE LIQUIDATION PLAN
GENERAL
The following discussion generally summarizes the federal income tax
consequences expected to arise from the consummation of the Liquidation Plan.
Further, it does not summarize state tax consequences of the Liquidation Plan,
which can vary from state to state. The tax information included here was
prepared from tax data compiled by the general partner in its role as Enstar
1984's tax administrator. The tax discussion that follows is merely intended to
inform unitholders of factual information; it should not be considered tax
advice and should not be relied upon as such. This summary also is not intended
to be and should not be considered an opinion respecting the federal, state,
local or foreign tax consequences to a particular limited partner. DUE TO THE
COMPLEXITY OF THE TAX ISSUES INVOLVED, UNITHOLDERS ARE URGED TO CONSULT WITH
THEIR PERSONAL TAX ADVISERS REGARDING THEIR INDIVIDUAL CIRCUMSTANCES AND THE TAX
REPORTING CONSEQUENCES OF THE LIQUIDATION PLAN.
This summary is based upon: the Internal Revenue Code of 1986, as
amended (which is also referred to as the Code); existing Final, temporary and
proposed Treasury regulations thereunder (which are also referred to as the
"Regulations"); published rulings and practices of the Internal Revenue Service
(which is also referred to as the "IRS"); and court decisions, each as currently
in effect. The general partner cannot assure you that the IRS will agree with
the conclusions in this section or that future legislation or administrative
changes or court decisions will not significantly modify the federal income tax
law regarding the matters described herein, potentially with retroactive effect.
This interpretation also is subject to subsequent issuance of Treasury
regulations and procedures for federal income tax reporting.
This summary only addresses those unitholders who hold their units as a
capital asset and does not discuss all the federal income tax aspects of the
Liquidation Plan that may be relevant and material to a particular unitholder in
light of the unitholder's personal circumstances (including the application of
the alternative minimum tax), or to certain types of unitholders who are subject
to special treatment. For example, insurance companies, S corporations,
partnerships, pension and profit sharing plans, tax-exempt organizations,
non-U.S. taxpayers and others may be subject to special rules not discussed
below. This summary also does not address other federal, state, local or foreign
tax consequences of consummation of the Liquidation Plan.
PARTNERSHIP STATUS
Under current law, a "partnership" is not a taxable entity and incurs
no federal income tax liability. Instead, each partner is required to take into
account in computing the partner's income tax liability that partner's allocable
share of Enstar 1984's items of income, gain, loss, deduction and credit. The
distribution of cash attributable to partnership income is generally not a
separate taxable event. This tax treatment, however, depends entirely upon
Enstar 1984's classification as a "partnership" (rather than as an "association
taxable as a corporation") for federal income tax purposes. This summary assumes
that Enstar 1984 has been and will continue to be properly classified as a
"partnership" for federal income tax purposes. No opinion of counsel or of
Enstar 1984's independent accountants or ruling from the IRS is currently being
sought with respect to this partnership status issue.
FEDERAL INCOME TAX CONSEQUENCES
o REALIZATION OF LOSS ON SALE OF ASSETS. Consummation of the
Liquidation Plan will cause Enstar 1984 to recognize loss for federal income
tax purposes. In general, that loss will equal the excess of the adjusted
basis of Enstar 1984's assets over the "amount realized." The general
partner anticipates that some or all of the recognized loss will be treated
as loss subject to section 1231(a) of the Code. The loss recognized by a
limited partner may be increased by the limited partner's prior losses not
deductible because of the "passive activity loss" limitations under section
469 of the Code. For more information please see the subsection entitled
"Passive Activity Losses" below.
- 40 -
As an example, the general partner estimates that the amount of
loss that is allocable to an investor who purchased units for $250 per unit
at the time of the initial offering of such units by the partnership (an
"Original Limited Partner") to be $11 per unit. The aggregate loss per unit
may be increased by the amount of the passive activity loss carry forward,
if any (to the extent previously allocated losses were not previously
utilized by an Original Limited Partner).
For federal income tax purposes, upon consummation of the Liquidation
Plan and the resulting payment of Enstar 1984's indebtedness, each limited
partner will be treated as being released from its allocable share of Enstar
1984's nonrecourse liabilities so satisfied (estimated to be $0 per unit) and as
receiving a deemed distribution equal to that amount. Each limited partner will
have to calculate his or her respective capital gain, if any, realized upon the
receipt of (1) the estimated $70 per unit cash distribution from Enstar 1984
upon consummation of the Liquidation Plan, and (2) the estimated $0 per unit
deemed distribution from Enstar 1984 upon the payment of Enstar 1984's
nonrecourse liabilities. In order to make such determination, a limited partner
must calculate his or her tax basis in the units as of the end of the taxable
year in which the distributions occur.
A limited partner will realize a capital gain equal to the excess, if
any, of (1) the aggregate amount of the cash and deemed distributions received
by any limited partner upon the consummation of the Liquidation Plan and payment
of Enstar 1984's nonrecourse liabilities, respectively, over (2) the limited
partner's tax basis in his or her units. The general partner estimates that
Original Limited Partners should not realize any capital gain as a result of
these distributions.
CERTAIN ASSUMPTIONS UNDERLYING THE ESTIMATED DISTRIBUTIONS PER UNIT AND
RELATING TO THE POTENTIAL FEDERAL TAX CONSEQUENCES OF THE LIQUIDATION PLAN TO AN
ORIGINAL LIMITED PARTNER ARE ILLUSTRATED IN THE FOLLOWING TABLES:
Per
Unit
-----
ESTIMATED TAX BASIS PER UNIT (PRE LIQUIDATION PLAN)
Initial capital contribution...................................... $ 250
Estimated allocable share of partnership nonrecourse liabilities.. -
Cash distributions through December 31, 2002...................... (345)
Estimated net income (loss) through December 31, 2002............. 249
-----
Estimated tax basis per unit prior to Liquidation Plan............ 154
ESTIMATED TAX BASIS PER UNIT (POST LIQUIDATION PLAN)
Estimated tax basis per unit...................................... 154
Estimated section 1245 gain....................................... -
Estimated section 1231 loss....................................... (11)
-----
Estimated tax basis per unit before distributions................. 143
Cash distributions................................................ (70)
Deemed distribution............................................... -
-----
Estimated tax basis per unit after distributions.................. $ 73
=====
o PASSIVE ACTIVITY LOSSES. Under section 469 of the Code, non-corporate
taxpayers, personal service corporations or other closely held corporations
generally can deduct "passive activity losses" in any year only to the extent of
its passive activity income for that year. Substantially all post-1986 losses of
unitholders from Enstar 1984 should be considered passive activity losses. Thus,
unitholders may have "suspended" passive losses from Enstar 1984 (i.e.,
post-1986 net taxable losses in excess of statutorily permitted "phase-in"
amounts which have not been used to offset income from other activities) which
may
- 41 -
be available to shelter gain from the Liquidation Plan. Unitholders should
consult their own tax advisors regarding the effect that the passive activity
loss rules will have upon his or her tax situation.
o UNRELATED BUSINESS INCOME. For most tax-exempt unitholders, a
portion of the gain from the sale of the assets may be treated as an
unrelated business deduction under section 512(b). Under section 514(a) of
the Code, loss from the sale of "debt-financed property" is treated as an
unrelated business deduction generally in an amount equal to a ratio
determined by comparing the property's debt to its cost basis. Additionally,
unrelated business income may result to a tax-exempt unitholder that
borrowed funds to purchase its units. Tax-exempt unitholders should consult
their own tax advisors regarding the unrelated trade or business income that
may result from the sale of Enstar 1984's system.
o COMPLETE LIQUIDATION. In general, upon complete liquidation of
Enstar 1984, gain may be recognized by a unitholder upon receipt of a
liquidating distribution, but only to the extent any money (and certain
other property) received exceeds the adjusted basis of the unitholder's
units. In the case of an Original Limited Partner, the general partner
believes that the Original Limited Partner's basis for his units should
exceed his liquidating distribution. Thus, little or no additional gain
should be recognized as a result of receiving a liquidating distribution.
However, this may not be true for a unitholder that is not an Original
Limited Partner, and some unitholders may recognize gain on the liquidation
of Enstar 1984. Since any decrease in a unitholder's share of partnership
liabilities is deemed to be a distribution of money, the amount of gain on a
liquidation distribution may exceed the actual distribution of money. Loss
will generally be recognized by a unitholder only if he receives no property
other than money, and then only to the extent the adjusted basis of his
units exceed the sum of any money received. However, the deductibility of
capital losses is limited for both corporate and non-corporate unitholders.
UNITHOLDERS ARE URGED TO CONSULT THEIR PERSONAL TAX ADVISORS FOR ADVICE
REGARDING THE FEDERAL INCOME TAX CONSEQUENCES TO THEM WITH RESPECT TO THE
LIQUIDATION PLAN, INCLUDING THE LIQUIDATION AND TERMINATION OF ENSTAR 1984.
STATE TAX CONSEQUENCES
Many states impose income tax withholding requirements on partnerships
that have nonresident partners. These requirements are at the partnership level
and, therefore, do not reflect the actual tax profile of the individual partner.
Nonetheless, the general partner urges the unitholders to consult their personal
tax advisors for advice regarding the application of the information set forth
herein to their individual circumstances, including the state tax consequences
to each of them on the consummation of the Liquidation Plan and related
distributions.
NO APPRAISAL RIGHTS
If the unitholders owning a majority of the units on the Record Date
vote in favor of the Liquidation Plan, that approval will bind all unitholders.
The partnership agreement of Enstar 1984 and the Georgia Revised Uniform Limited
Partnership Act, under which Enstar 1984 is governed, do not give rights of
appraisal or similar rights to unitholders who dissent from the vote of the
majority-in-interest in approving the Liquidation Plan. Accordingly, dissenting
unitholders do not have the right to have their units appraised and to have a
judicial determination of the fair value of their units paid to them because
they disapprove of the Liquidation Plan.
- 42 -
NO ESTABLISHED MARKET PRICES FOR PARTNERSHIP UNITS
No established market for the units of Enstar 1984 was ever expected to
develop, and none has developed. Consequently, transactions in the units have
been limited and sporadic, and it is not known to what extent those transactions
have been on a fully arm's-length basis, as between willing buyers and willing
sellers.
The following table sets forth the high and low sales prices, known to
the general partner, for Enstar 1984's units during the period October 1, 2000
through March 31, 2003:
TOTAL UNITS
PERIOD HIGH LOW NUMBER TRADED
- ------ ------------------ ------------------ ---------------- -----------------
October-December 2000.......... $401 $175 4 84
January-March 2001............. 406 203 43 2,266
April-June 2001................ 334 334 1 8
July-September 2001............ 245 245 2 58
October-December 2001.......... 232 232 1 300
January-March 2002............. 350 200 16 1,379
April-June 2002................ 0 0
June-September 2002............ 210 210 3 600
October-December 2001.......... 0 0
January-March 2003............. 220 100 5 1,494
DISTRIBUTIONS TO UNITHOLDERS
Since the inception of Enstar 1984, Enstar 1984 has made aggregate
cash distributions to its unitholders in the amount of approximately $10.3
million or an aggregate of $345 per unit. These distributions were made from
Enstar 1984's operating cash flow. Enstar 1984 distributed approximately
$4,938,600, or approximately $165 per unit, as proceeds from the sale in
November 2000 of its cable systems serving Kershaw, South Carolina. Prior to
that time, Enstar 1984 had made no distributions to unitholders since 1990.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
On May 20, 2003, there were 29,940 units issued and outstanding
and entitled to vote on matters upon which the unitholders may vote or consent,
which were held by 736 unitholders. None of the affiliates of the general
partner, or any of the executive officers or directors of the general partner or
any of its affiliates, owns any of the units, nor has any of these persons
engaged in any transaction in the units during the 60-day period immediately
preceding the date hereof.
As of May 21, 2003, the following group of unitholders
beneficially owned, in the aggregate, 5% or more of the total outstanding units.
As of the date hereof, there is no other person known by Enstar 1984 to own
beneficially, or that may be deemed to own beneficially, more than 5% of the
units.
- 43 -
BENEFICIAL OWNERSHIP
------------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT PERCENT
- ----------------------------------------- --------------- ---------------
Paul J. Isaac
75 Prospect Avenue
Larchmont, NY 10538...................... 1,510(1) 5.0%
<FN>
- ---------
(1) Amount and percent of beneficial ownership listed are based solely on
information received from Enstar 1984's transfer agent, Gemisys Financial
Services.
The general partner is an indirect, wholly-owned subsidiary of Charter
Communications, Inc. Charter Communications, Inc., is beneficially controlled by
Paul G. Allen.
IDENTITY AND BACKGROUND OF CERTAIN PERSONS
ENSTAR COMMUNICATIONS CORPORATION
Enstar Communications is the general partner of Enstar 1984. Enstar
Communications is a Georgia corporation whose principal business is to
engage in the cable and telecommunications business, both as general partner
of 14 limited partnerships formed to own and operate cable television
systems, and through a wholly-owned operating subsidiary. As of December 31,
2001, Enstar Communications managed cable television systems serving
approximately 74,000 basic subscribers. Enstar Communications has caused
Enstar 1984 to pursue a process of liquidation because of difficulties of
profitably operating a rural system on a long-term basis. The address and
telephone number of Enstar Communications' principal executive offices is
12405 Powerscourt Drive, St. Louis, Missouri 63131; tel. (314) 965-0555.
Set forth below is certain general information about the Director and
the Executive Officers of Enstar Communications. Each of these individuals holds
the same positions as an executive officer of each of the participants, except
for Steven A. Schumm, who also serves as the sole director of Enstar
Communications. Information about the directors of Charter Communications, Inc.,
is set forth under "Identity and Background of Certain Persons -- Charter
Communications, Inc." on pages 46-47.
The business address and telephone number of each of the following
individuals is 12405 Powerscourt Drive, St. Louis, Missouri; tel.: (314)
965-0555.
Name Age Position
- ---- --- --------
Steven A. Schumm........ 50 Director, Executive Vice President, Chief Administrative Officer and
Interim Chief Financial Officer
Carl E. Vogel........... 44 President and Chief Executive Officer
Margaret A. Bellville... 49 Executive Vice President and Chief Operating Officer
Paul Martin............. 41 Senior Vice President - Corporate Controller
Curtis S. Shaw.......... 53 Senior Vice President, General Counsel and Secretary
Steven E. Silva......... 42 Executive Vice President - Corporate Development and Chief Technology
Officer
- 44 -
STEVEN A. SCHUMM, Director, Executive Vice President, Chief
Administrative Officer and Interim Chief Financial Officer. Prior to joining
Charter Investment, Inc. (also called "Charter Investment") (a predecessor
of, and currently an affiliate of, Charter Communications, Inc., which is
also referred to as Charter) in 1998, Mr. Schumm was a partner of Ernst &
Young LLP for 14 years. He joined Ernst & Young in 1974 and served in a
variety of capacities during his years with the firm. At the time he left to
join Charter Investment, he was managing partner of Ernst & Young's St.
Louis office and a member of the firm's National Tax Committee. Mr. Schumm
earned a B.S. degree from Saint Louis University.
CARL E. VOGEL, President and Chief Executive Officer. Mr. Vogel has
held this position (and also has served as a director of Charter
Communications, Inc.) since October 2001. Mr. Vogel has more than 20 years
of experience in telecommunications and the subscription television
business. Prior to joining Charter, he was a Senior Vice President of
Liberty Media Corp., from November 1999 to October 2001, and the Chief
Executive Officer of Liberty Satellite and Technology, from April 2000 to
October 2001. Prior to joining Liberty, Mr. Vogel was an Executive Vice
President and the Chief Operating Officer of Field Operations for AT&T
Broadband and Internet Services, with responsibility for managing operations
of all of AT&T's cable broadband properties, from June 1999 to November
1999. From June 1998 until June 1999, Mr. Vogel served as Chief Executive
Officer of Primestar, Inc., a national provider of subscription television
services, and from 1997 to 1998, he served as Chief Executive Officer of
Star Choice Communications. From 1994 through 1997, Mr. Vogel served as the
President and Chief Operating Officer of EchoStar Communications. He began
his career at Jones Intercable in 1983. Mr. Vogel serves as a director and
member of the executive committee of the National Cable Television
Association, CableLabs and Digeo, Inc. and serves as a director of Women in
Cable and Telecommunications. Mr. Vogel earned a B.S. degree in Finance and
accounting from St. Norbert College.
MARGARET A. BELLVILLE, Executive Vice President and Chief Operating
Officer. Before joining Charter in December 2002, Ms. Bellville was
President and CEO of Incanta Inc., a technology-based streaming content
company from 2001 to 2002. Incanta filed for bankruptcy in April 2002. Prior
to that, she worked for six years at Cox Communications, the nation's
fourth-largest cable television company. She joined Cox in 1995 as Vice
President of Operations and advanced to Executive Vice President of
Operations. Ms. Bellville joined Cox from Century Communications, where she
served as a Senior Vice President. Before that, Ms. Bellville served seven
years with GTE Wireless in a variety of management and executive-level
roles. A graduate of the State University of New York in Binghamton, Ms.
Bellville is also a graduate of Harvard Business School's Advanced
Management Program. She currently serves on the CTAM Education Foundation
Board of Directors.
PAUL E. MARTIN, Senior Vice President -- Corporate Controller.
Prior to his promotion to his current position on April 22, 2002, Mr. Martin
was Vice President and Corporate Controller from March 2000 of Charter.
Prior to joining Charter in March 2000, Mr. Martin was Vice President and
Controller for Operations and Logistics for Fort James Corporation, a
manufacturer of paper products. From 1995 to February 1999, Mr. Martin was
Chief Financial Officer of Rawlings Sporting Goods Company, Inc. Mr. Martin
received a B.S. degree in accounting from the University of Missouri -- St.
Louis.
CURTIS S. SHAW, Senior Vice President, General Counsel and
Secretary. Prior to joining Charter Investment in 1997, Mr. Shaw served as
corporate counsel to NYNEX through 1996. Since 1973, Mr. Shaw has practiced
as a corporate lawyer, specializing in mergers and acquisitions, joint
ventures, public offerings, financings, and federal securities and antitrust
law. Mr. Shaw received a B.A. degree from Trinity College and a J.D. degree
from Columbia University School of Law.
- 45 -
STEPHEN E. SILVA, Executive Vice President - Corporate Development
and Technology and Chief of Technology Officer. Mr. Silva joined Charter
Investment in 1995 as director, billing services. Prior to this promotion to
Executive Vice President and Chief Technology Officer in October 2001, he
was Senior Vice President -- Corporate Development and Technology since
September 1999. Mr. Silva previously served in various management positions
at U.S. Computer Services, Inc., a billing service provider specializing in
the cable industry.
The business address and telephone number of each of the sole director
and each of the executive officers listed above are: 12405 Powerscourt Drive,
St. Louis, Missouri 63131, Telephone: (314) 965-0555.
CHARTER COMMUNICATIONS, INC.
Charter Communications, Inc. (also referred to as "Charter, Inc.")
is a publicly-traded Delaware corporation that, operating through its
subsidiaries, is the third largest operator of cable television systems in
the United States. It provides cable television and other telecommunications
services to approximately 6.6 million customers in 40 states. Since 1999,
Charter, Inc., through its subsidiaries, completed 18 cable system
acquisitions, which added approximately 4.7 million customers. Under
management agreements with Charter Communications Holding Company, LLC
("Holdco") and Charter Communications Operating, LLC ("Operating"), Charter,
Inc. is responsible for the management of Holdco, Operating and their
respective subsidiaries (which include all of the other participants) and
controls the affairs of each of them. Paul G. Allen controls approximately
93.5% of the voting power of Charter, Inc.
Listed below are the directors of Charter, Inc. Information about
Charter, Inc.'s executive officers is set forth under the heading "Identity and
Background of Certain Persons - Enstar Communications Corporation" on pages
44-46.
The business address and telephone number of Charter, Inc. and each of
the following individuals is 12405 Powerscourt Drive, St. Louis, Missouri 63131;
tel. (314) 965-0555.
PAUL G. ALLEN, 50, has been Chairman of the Board of Directors of
Charter since July 1999, and chairman of the board of directors of Charter
Investment since December 1998. Mr. Allen, a co-founder of Microsoft
Corporation, has been a private investor for more than 15 years, with
interests in over 50 technology, telecommunications and biotech companies.
Mr. Allen's investments include Vulcan, Inc., Portland Trail Blazers NBA
team, Seattle Seahawks NFL franchise and Vulcan Productions, and he has
investments in TechTV, Inc., DreamWorks LLC and Oxygen Media, LLC. He is a
director of TechTV, Inc. and numerous privately held companies.
CARL E. VOGEL, 44 (See "Identity and Background of Certain Persons
- -- Enstar Communications Corporation" on pages 44-46).
MARC B. NATHANSON, 57, has been a director of Charter since January
2000. Mr. Nathanson is the chairman of Mapleton Investments LLC, an
investment vehicle formed in 1999. He also founded and served as chairman
and chief executive officer of Falcon Holding Group, Inc., a cable operator,
and its predecessors, from 1975 until 1999. He served as chairman and chief
executive officer of Enstar Communications Corporation from 1988 until
November 1999. Prior to 1975, Mr. Nathanson held executive positions with
Teleprompter Corporation, Warner Cable and Cypress Communications
Corporation. In 1995, he was appointed by the President of the United States
to The Broadcasting Board of Governors and from 1998 to 2002 served as its
chairman.
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RONALD L. NELSON, 50, has been a director of Charter since November
1999. Mr. Nelson is a founding member of DreamWorks LLC, an entertainment
production company, where he has served in executive management from 1994 to
January 1, 2003. Prior to that time, during his 15 years at Paramount
Communications Inc., he served in a variety of operating and executive
positions. He currently serves as a member of the board of directors of
Advanced Tissue Sciences, Inc. and Centre Pacific, L.L.C., a registered
investment advisor. Mr. Nelson has a B.S. degree from the University of
California at Berkeley and an M.B.A. degree from the University of
California at Los Angeles.
NANCY B. PERETSMAN, 48, has been a director of Charter since
November 1999. Ms. Peretsman has been a managing director and executive vice
president of Allen & Company LLC, (Formerly Allen & Company, Incorporated),
an investment bank unrelated to Paul G. Allen, since 1995. From 1983 to
1995, she was an investment banker at Salomon Brothers Inc., where she was a
managing director since 1990. She is a director of Priceline.com
Incorporated and several privately held companies. She has a B.A. degree
from Princeton University and an M.B.A. degree from Yale University.
WILLIAM D. SAVOY, 38, has been a director of Charter since July
1999 and a director of Charter Investment since December 1998. Since 1990,
Mr. Savoy has been an officer and a director of many affiliates of Mr.
Allen, including president and a director of Vulcan Ventures Incorporated
and president of Vulcan, Inc., Vulcan Programming, Inc. and Vulcan Cable III
Inc. Mr. Savoy also serves on the advisory board of DreamWorks LLC and as a
director of drugstore.com, RCN Corporation, TechTV, Inc. and Digeo, Inc. Mr.
Savoy holds a B.S. degree in computer science, accounting and finance from
Atlantic Union College.
JOHN H. TORY, 47, has been a director of Charter since December
2001. Mr. Tory is the Chairman and Co-Chief Executive Officer of Rogers
Cable Inc., Canada's largest broadband cable operator, and has been the
Chief Executive Officer at Rogers Cable, Inc. since April 1999. From 1995 to
1999, Mr. Tory was President and Chief Executive Officer of Rogers Media
Inc., a broadcasting and publishing company. Prior to joining Rogers, Mr.
Tory was a managing partner and member of the executive committee at Tory
Tory DesLauriers & Binnington, one of Canada's largest law firms. Mr. Tory
serves on the board of a number of Canadian companies, including Rogers
Cable Inc., Rogers Media Inc., Cara Operations Limited and the Toronto Blue
Jays Baseball Club. Mr. Tory was educated at University of Toronto Schools,
Trinity College (University of Toronto) and Osgoode Hall Law School.
LARRY W. WANGBERG, 60, has been a director of Charter
Communications, Inc. since January 2002. Mr. Wangberg served as Chairman,
Chief Executive Officer of TechTV Inc., a cable television network, from
1997 until July 2002 and has been a director of Tech TV Inc. since 1997.
Prior to joining TechTV, Inc., Mr. Wangberg was chairman and Chief Executive
Officer of StarSight Telecast Inc., an interactive navigation and program
guide company which later merged with Gemstar International, from 1994 to
1997. Mr. Wangberg was chairman and Chief Executive Officer of Times Mirror
Cable Television and senior vice president of its corporate parent, Times
Mirror Co., from 1983 to 1994. He currently serves on the boards of TechTV
Inc., Autodesk Inc., and ADC Telecommunications. Mr. Wangberg holds a
bachelor's degree in mechanical engineering and a master's degree in
industrial engineering, both from the University of Minnesota.
CHARTER COMMUNICATIONS HOLDING COMPANY, LLC
Charter Communications Holding Company, LLC ("Holdco") is a Delaware
limited liability company, and a direct subsidiary of Charter, Inc. Holdco,
through its subsidiaries (which include Enstar Communications Corporation) owns
and operates Charter Inc.'s cable television systems. The business
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address and telephone number of Holdco's principal office is 12405
Powerscourt Drive, St. Louis, Missouri 63131; tel. (314) 965-0555.
VOTING PROCEDURES
Unitholders are provided with an opportunity to independently vote upon
each proposal of the Liquidation Plan, which includes the Telecommunications
Sale and the Liquidation. However, the Liquidation Plan will not be carried out
unless each proposal is approved by a majority-in-interest of the unitholders. A
vote of the holders of a majority of the units on the Record Date to approve
each proposal of the Liquidation Plan will bind all unitholders as to the
Liquidation Plan.
The close of business on ________, 2003, is the Record Date for
determining the unitholders entitled to receive notice of the solicitation of
consents and to consent to the Liquidation Plan. Consents of the unitholders
will be solicited during the period, also referred to as the "Solicitation
Period," which begins on _________ and will end at 5:00 p.m., New York City
time, on the earlier of (1) the date on which the consents of the holders of a
majority of the units entitled to consent and approving each proposal of the
Liquidation Plan are received by the general partner and/or the soliciting
agent; or (2) _______________, 2003 (or, if the general partner extends the
Solicitation Period, then at any time before 5:00 p.m., New York City time, on
the expiration date of such extended Solicitation Period). The enclosed consent
card permits you to approve, disapprove or abstain with respect to the
Liquidation Plan. Please indicate your approval, disapproval or abstention by
marking and signing and dating the enclosed consent card and returning it in
the enclosed self-addressed envelope to D.F. King & Co., Inc., 77 Water
Street, New York, New York 10005, a company Enstar 1984 has engaged to act
as its soliciting agent. An extension of the Solicitation Period will not
impact the validity of consents already received.
If you sign and send in the enclosed consent card and do not indicate
how you want to vote as to the Liquidation Plan, your consent card will be
treated as voting to APPROVE the Liquidation Plan. If you fail to send in your
consent card, it will have the same effect as a vote to DISAPPROVE the
Liquidation Plan. If you ABSTAIN as to the Liquidation Plan, it will have the
same effect as a vote to DISAPPROVE the Liquidation Plan.
You may change your vote at any time before 5:00 p.m., New York City
time, on the earlier of (1) the date on which the consents of the holders of a
majority of the units entitled to consent and approving each proposal of the
Liquidation Plan are received by the general partner and/or the soliciting
agent; or (2) ___________, 2003 (or, if the general partner extends the
Solicitation Period, then at any time before 5:00 p.m., New York City time, on
the expiration date of such extended Solicitation Period). You can do this in
one of two ways. First, you can send a written notice dated later than your
consent card stating that you would like to revoke or change your vote. Second,
you can complete and submit a new consent card dated later than your original
consent card. If you choose either of these two methods, you must submit your
notice of revocation or new consent card to the soliciting agent. If you
instructed a broker to vote your units, you must follow your broker's directions
for changing those instructions. To be effective, your notice of revocation or
new consent card must be received before the end of the original Solicitation
Period, or extended Solicitation Period, as the case may be.
On May 20, 2003, there were 29,940 outstanding units entitled to
vote on the Liquidation Plan, which were held by approximately 736 unitholders,
none of whom are known to the general partner to be an affiliate of Enstar 1984,
the general partner, or of any affiliate of any of the other participants.
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AVAILABLE INFORMATION
This consent solicitation statement does not purport to be a
complete description of all agreements and matters relating to the condition
of Enstar 1984, its assets and the transactions described herein. With
respect to statements contained in this consent solicitation statement as to
the content of any contract or other document filed as an exhibit to Enstar
1984's Annual Report on Form 10-K for the year ended December 31, 2002,
Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 or a
Current Report on Form 8-K, each such statement is qualified in all respects
by reference to such reports and the schedules thereto, which may be
obtained without charge upon written request to Enstar 1984. You also may
obtain copies of the asset purchase agreement with Telecommunications that
is described in this consent solicitation statement, without charge, upon
written request to Enstar 1984. To make such a request, you should write to
Enstar Communications Corporation, 12405 Powerscourt Drive, St. Louis,
Missouri 63131, Attention: Partnership Relations; or call (314) 543-2389.
The mailing address and telephone number of Charter Communications,
Inc. and Enstar Communications Corporation are: 12405 Powerscourt Drive, St.
Louis, Missouri 63131, Telephone: (314) 965-0555.
INFORMATION INCORPORATED BY REFERENCE
The Securities and Exchange Commission permits the general partner to
incorporate by reference the information that Enstar 1984 has filed with it.
This means that important information, not presented in this consent
solicitation statement, may be contained elsewhere. The following documents are
incorporated by reference:
o Enstar 1984's Annual Report on Form 10-K for the year ended
December 31, 2002;
o Enstar 1984's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2003; and
o Enstar 1984's Current Reports on Form 8-K filed on April 25, 2003
and June 9, 2003.
A copy of the Annual Report on Form 10-K for the year ended December 31,
2002 and the Quarterly Report on Form 10-Q for the quarter ended March 31,
2003 have been delivered with this consent solicitation. You may obtain an
additional copy of the Form 10-K or Form 10-Q, without charge, by making a
written request to Enstar Communications Corporation, 12405 Powerscourt
Drive, St. Louis, Missouri 63131, Attention: Partnership Relations or by
calling (314) 543-2389.
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CONSENT SOLICITATION BY THE GENERAL PARTNER OF
ENSTAR INCOME PROGRAM 1984-1, L.P.
CONSENT CARD
The undersigned record owner (the "Unitholder") of limited partnership
units (the "Units") of Enstar Income Program 1984-1, L.P., a Georgia limited
partnership, (the "Partnership"), hereby specifies that all of the Units of the
Partnership that the Unitholder is entitled to vote shall be voted as follows:
AS SET FORTH IN THE CONSENT SOLICITATION STATEMENT, IN EACH CASE
APPROVAL SHALL BE DEEMED TO INCLUDE SUCH NON-MATERIAL MODIFICATIONS AS ENSTAR
COMMUNICATIONS CORPORATION, AS A GENERAL PARTNER OF THE PARTNERSHIP (THE
"GENERAL PARTNER"), MAY IN ITS REASONABLE DISCRETION DETERMINE. IF YOU SIGN AND
SEND THIS CONSENT CARD, BUT DO NOT SPECIFY YOUR VOTE ON THE PROPOSALS, YOUR
CONSENT CARD WILL BE TREATED AS VOTING TO APPROVE EACH OF THE PROPOSALS. IF
YOU FAIL TO SEND IN YOUR CONSENT CARD, THE EFFECT WILL BE THE SAME AS IF YOU
VOTED TO DISAPPROVE THE LIQUIDATION PLAN. IF YOU VOTE TO ABSTAIN OR TO
DISAPPROVE ONE OR MORE PROPOSALS, THE EFFECT WILL BE THE SAME AS IF YOU VOTED TO
DISAPPROVE THE LIQUIDATION PLAN.
The General Partner has recommended the adoption of a plan of
liquidation with respect to the Partnership (the "Liquidation Plan") which would
authorize:
(1) The Partnership to sell its cable television systems to
Telecommunications Management, LLC, a Missouri limited liability company, under
the Asset Purchase Agreement between the Partnership and certain other
partnerships as Sellers, and Telecommunications Management, LLC as Buyer, dated
as of November 8, 2002, as amended (collectively, the "Telecommunications
Sale"); and
APPROVE DISAPPROVE ABSTAIN
[ ] [ ] [ ]
(2) As soon as practicable after the completion of the
Telecommunications Sale, to dissolve, terminate and liquidate the Partnership
through one or more liquidating distributions to the limited partners and
general partner of the Partnership's remaining assets after payment of the
Partnership's debts and obligations and paying or providing for the payment of
the expenses of the Telecommunications Sale, in accordance with the partnership
agreement of the Partnership, with the General Partner, or such party as
designated by the General Partner, notifying the limited partners of such
dissolution and acting as the liquidating trustee (the "Liquidation").
APPROVE DISAPPROVE ABSTAIN
[ ] [ ] [ ]
(please date and sign on the other side)
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The undersigned hereby acknowledges receipt of the consent
solicitation statement.
The undersigned hereby revokes any prior authorization to vote the
Units of the Partnership heretofore given by the undersigned to any person.
Dated______________________, 2003
________________________________(Unitholder's Signature)
________________________________(Unitholder's Signature)
Please date and sign exactly as name appears on this consent card, and
promptly return in the enclosed envelope. When signing as guardian, executor,
administrator, attorney, trustee, custodian, or in any other similar capacity,
please give full title. If a corporation, sign in full corporate name by
president or other authorized officer, giving title and affixing corporate seal.
If a partnership or limited liability company, sign in the partnership/limited
liability company name, as the case may be, by a duly authorized person. In the
case of joint ownership, each joint owner must sign.
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