OFFER TO PURCHASE FOR CASH
80 Units of
Limited Partnership Interests in
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
by
MILLENIUM MANAGEMENT, LLC
at a Cash Purchase Price of
$9,200 per Unit
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 5:00 P.M., LOS
ANGELES TIME, ON WEDNESDAY, JULY 2, 2003, UNLESS THE OFFER IS EXTENDED.
Millenium Management, LLC ("Millenium" or the "Purchaser"), a California
limited liability company, is offering to purchase up to 80 Units of Wilder
Richman Historic Properties II, L.P. (the "Partnership"), at a cash purchase
price of $9,200 per Unit, without interest, less the amount of the Distributions
(as defined below) per Unit, if any, made to the Unit Holders by the Partnership
after the date of this Offer. Transfer fees, if any, will be paid by the
Purchaser and will not be deducted from your proceeds. The Offer (as defined
below) is subject to certain terms and conditions set forth in this Offer to
Purchase, as it may be supplemented from time to time (the "Offer to Purchase")
and in the related Agreement of Transfer and Letter of Transmittal, as it may be
supplemented or amended from time to time (the "Letter of Transmittal," which
together with the Offer to Purchase, constitutes the "Offer"). This Offer is not
subject to brokerage commissions and is not conditioned upon financing.
The enclosed Letter of Transmittal may be used to tender Units for the
Offer. Please read all Offer materials completely before completing and
returning the Letter of Transmittal (blue form).
------------------
For More Information or for Further Assistance,
Please Call or Contact the Purchaser at:
Everest Properties II, LLC
(Manager)
155 North Lake Avenue
Suite 1000
Pasadena, California 91101
(626) 585-5920
(800) 611-4613 (toll free)
June 3, 2003
TABLE OF CONTENTS
Page
INTRODUCTION........................ .........................................1
SUMMARY OF THE OFFER...........................................................1
DETAILS OF THE OFFER...........................................................2
1. Terms of the Offer; Expiration Date; Proration.....................2
2. Acceptance for Payment and Payment of Purchase Price...............3
3. Procedure to Accept the Offer......................................3
4. Determination of Validity; Rejection of Units;
Waiver of Defects; No Obligation to Give Notice of
Defects............................................................4
5. Withdrawal Rights..................................................5
6. Extension of Tender Period; Termination; Amendment.................5
7. Conditions of the Offer............................................6
8. Backup Federal Income Tax Withholding..............................7
9. FIRPTA Withholding.................................................7
CERTAIN INFORMATION CONCERNING THE PARTNERSHIP.................................7
General.................................................................7
Outstanding Units.......................................................7
Trading History of the Units............................................7
Selected Financial and Property Related Data............................8
DETERMINATION OF OFFER PRICE...................................................9
CERTAIN INFORMATION CONCERNING THE PURCHASER...................................9
The Purchaser...........................................................9
General.................................................................9
Prior Acquisitions of Units and Prior Contacts.........................10
Source of Funds........................................................10
FUTURE PLANS OF THE PURCHASER.................................................11
CERTAIN FEDERAL INCOME TAX MATTERS............................................11
CERTAIN LEGAL MATTERS.........................................................13
General................................................................13
State Takeover Statutes................................................13
Fees and Expenses......................................................13
Miscellaneous..........................................................13
INTRODUCTION
The Purchaser hereby offers to purchase up to 80 Units of limited
partnership interests in the Partnership at a cash purchase price of $9,200 per
Unit, without interest, less the amount of Distributions (defined below) per
Unit, if any, made to Unit Holders by the Partnership after the date of this
Offer. Transfer fees, if any, will be paid by the Purchaser and will not be
deducted from your proceeds.
SUMMARY OF THE OFFER.
The purpose of the Offer is for the Purchaser to acquire a substantial
equity interest in the Partnership for investment purposes.
In considering the Offer, Unit Holders are urged to consider the
following:
o The General Partner filed on May 2, 2003, a preliminary consent
solicitation statement with the Securities and Exchange Commission
("Preliminary Solicitation") asking limited partners to authorize the
sale of the Partnership's properties for any amount that results in a
distribution of cash to the limited partners of at least $9,000 per
Unit. The consent solicitation has not yet been finalized, so it is
uncertain if or when limited partners will be asked to vote on it. See
"Certain Information Concerning the Partnership - Selected Financial
and Property Related Data."
o The price offered for the Units is $9,200 in CASH, less any
Distributions made after the date of this Offer. See "Details of the
Offer - Acceptance for Payment and Payment of Purchase Price."
o Our Offer gives you the opportunity to receive $9,200 per Unit in CASH
without waiting for a limited partner vote, if solicited, and without
waiting for a possible transaction which may or may not occur, and
even if it did occur, would be likely to take many months in the
Purchaser's opinion.
o $9,200 per Unit is $200 per Unit more than the Minimum Price amount
that we believe would be distributed if the proposal described in the
Preliminary Solicitation were approved by the limited partners. The
General Partner has indicated that the operating General Partner may
exercise an option it would have to acquire all Units for $9,000 per
Unit (the "Minimum Price") if the proposal were approved, therefore,
we believe there is a reasonable likelihood that Unit Holders will
never receive more than $9,000 per Unit if the General Partner
proceeds with the proposal set forth in the Preliminary Solicitation
and it is approved by the limited partners. See "Determination of
Offer Price."
o The Partnership has received two non-binding offers to purchase the
Partnership's properties. The General Partner estimates that,
depending on the outcome of due diligence to be performed by the
prospective purchasers, a sale of the properties pursuant to one of
such offers would result in a distribution of from $9,200 to $11,300
per Unit. See "Certain Information Concerning the Partnership -
Selected Financial and Property Related Data."
o The Offer price is over THREE TIMES THE HIGHEST PRIOR OFFER for Units
of which Purchaser is aware, made at $3,000 per Unit in April 2003,
based on the offers that Purchaser's affiliate has received as an
existing limited partner in the Partnership and a review of public SEC
filings.
o The Units are illiquid. Partnership Spectrum, an independent third
party publication that reports on trading activity for partnership
interests, shows no trading activity for the Partnership's Units for
over a year. The Offer allows Unit Holders to dispose of their Units
without incurring the sales commissions (typically up to 8% with a
minimum of $150-$200) associated with sales arranged through brokers
or other intermediaries. See "Certain Information Concerning the
Partnership - Trading History of the Units."
o The Purchaser is not affiliated with the Partnership or its sole
general partner, Wilder Richman Historic Corporation (the "General
Partner"). The General Partner may be expected to communicate its
position on the Offer in the next two weeks.
o The Purchaser is making the Offer with a view to making a profit for
itself. Accordingly, the desire of the Purchaser to purchase Units at
a low price conflicts with the desire of the Unit Holders to sell
their Units at a high price.
o The Offer is an immediate opportunity for Unit Holders to liquidate
their investment in the Partnership, subject to proration, but Unit
Holders who tender their Units will be giving up the opportunity to
participate in any potential future benefits from ownership of Units,
including distributions resulting from any future sale of the
Partnership's properties. Unit Holders may have a more immediate need
to use the cash now tied up in the Units, and may consider the Offer
more certain to achieve a prompt liquidation of their investment in
the Units. Unit Holders who sell all of their Units will also
eliminate the need to file Form K-1 information for the Partnership
with their federal tax returns for years after 2003. See "Details of
the Offer - Acceptance for Payment and Payment of Purchase Price."
o The Purchaser may accept only a portion of the Units tendered by a
Unit Holder if more than 80 Units are tendered. See "Details of the
Offer - Terms of the Offer; Expiration Date; Proration" and "-
Acceptance for Payment and Payment of Purchase Price."
Each Unit Holder must make his own decision, based on the Unit Holder's
particular circumstances, whether to tender Units. Unit Holders should consult
with their respective advisors about the financial, tax, legal and other
implications of accepting the Offer.
The above statements are intended only as a brief overview of the principal
terms and considerations regarding the Offer. The entire Offer to Purchase,
which follows, provides substantially greater detail about the Offer, and all of
the statements above are qualified by the entire Offer to Purchase. You should
read it completely and carefully before deciding whether or not to tender your
Units. The Offer is subject to certain terms and conditions set forth in this
Offer to Purchase, and in the related Agreement of Transfer and Letter of
Transmittal, that are not summarized above.
DETAILS OF THE OFFER
1. Terms of the Offer; Expiration Date; Proration. On the terms and
subject to the conditions of the Offer, the Purchaser will accept and purchase
up to 80 validly tendered, and not withdrawn, Units in accordance with the
procedures set forth in this Offer to Purchase ("Properly Tendered"). For
purposes of the Offer, the term "Expiration Date" means 5:00 p.m., Los Angeles
time, on Wednesday, July 2, 2003, unless the Purchaser extends the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date to which the Offer is extended by the
Purchaser.
If, prior to the Expiration Date, the Purchaser increases the price offered
to the Unit Holders pursuant to the Offer, the increased price will be paid for
all Units accepted for payment pursuant to the Offer, whether or not the Units
were tendered prior to the increase in consideration.
If more than 80 Units are Properly Tendered the Purchaser will, upon the
terms and subject to the conditions of the Offer, accept for payment and pay for
an aggregate of 80 Units, pro rata, according to the number of Units that are
Properly Tendered by each Unit Holder, with appropriate adjustments to avoid
purchases of fractional Units. If the number of Units that are Properly Tendered
is less than or equal to 80 Units, the Purchaser will purchase all Units that
are Properly Tendered, upon the terms and subject to the conditions of the
Offer.
If proration of tendered Units is required, the Purchaser may not be able
to announce the final results of the proration until at least seven business
days after the Expiration Date because of the difficulty of determining the
proration results. Subject to its obligation to pay for Units promptly after the
Expiration Date, the Purchaser intends to pay for any Units accepted for payment
pursuant to the Offer after determining the final proration or other
adjustments.
If prior to the Expiration Date any or all of the conditions of the Offer
have not been satisfied, or waived by the Purchaser, the Purchaser reserves the
right to: (i) decline to purchase any of the Units tendered, terminate the Offer
and return all tendered Units, (ii) waive the unsatisfied conditions and,
subject to complying with applicable rules and regulations of the Securities and
Exchange Commission (the "Commission"), purchase all Units that are Properly
Tendered, (iii) extend the Offer and, subject to the right of Unit Holders to
withdraw Units until the Expiration Date, retain previously tendered Units for
the period or periods for which the Offer is extended, and (iv) amend the Offer.
2. Acceptance for Payment and Payment of Purchase Price. On the terms
and subject to the conditions of the Offer, the Purchaser will purchase and will
pay for up to 80 Properly Tendered Units, promptly following the Expiration
Date. In all cases, payment for Units purchased pursuant to the Offer will be
made only after timely receipt by the Purchaser of: (i) a properly completed and
duly executed and acknowledged Letter of Transmittal, (ii) any other documents
required in accordance with the Letter of Transmittal, and (iii) written
confirmation from the Partnership of the transfer of the Units to the Purchaser.
Any Distributions made or declared on or after the date of this Offer
would, by the terms of the Offer and as set forth in the Letter of Transmittal,
be assigned by tendering Unit Holders to the Purchaser and deducted from your
proceeds. UNDER NO CIRCUMSTANCE WILL INTEREST ON THE PURCHASE PRICE BE PAID,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Units are not purchased for any reason (other than
proration adjustments), the Purchaser may destroy the original Letter of
Transmittal with respect to the Units. If for any reason acceptance for payment
of, or payment for, any Units tendered pursuant to the Offer is delayed or the
Purchaser is unable to accept for payment, purchase or pay for Units tendered,
then, without prejudice to the Purchaser's rights under Section 4 herein, the
Purchaser may, nevertheless, retain documents concerning tendered Units, and
those Units may not be withdrawn except to the extent that the tendering Unit
Holders are otherwise entitled to withdrawal rights as described in Section 5
herein, subject, however, to the Purchaser's obligation under Rule 14e-1(c)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to
pay Unit Holders the purchase price in respect of Units tendered or return
documents, if any, representing those Units promptly after termination or
withdrawal of the Offer.
3. Procedure to Accept the Offer. For the tender of any Units to be
valid, the Purchaser must receive, at the address listed on the back page of
this Offer to Purchase on or prior to the Expiration Date, a properly completed
and duly executed Letter of Transmittal, the original partnership certificate
(if available) and all documents required by the Letter of Transmittal.
The method of delivery of the Letter of Transmittal and all other required
documents is at the option and risk of the tendering Unit Holder, and delivery
will be deemed made only when actually received by the Purchaser. If delivery is
by mail, registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to assure timely
delivery.
By executing and delivering a Letter of Transmittal, a tendering Unit
Holder irrevocably appoints the Purchaser and its officers and any other
designee of the Purchaser, and each of them, the attorneys-in-fact and proxies
of the Unit Holder, in the manner set forth in the Letter of Transmittal, each
with full power of substitution, to the full extent of the Unit Holder's rights
with respect to the Units tendered by the Unit Holder and accepted for payment
by the Purchaser (and with respect to any and all distributions, other Units,
rights or other securities issued or issuable in respect thereof (collectively,
"Distributions")), including without limitation the right to direct any IRA
custodian, trustee or other record owner to execute and deliver the Letter of
Transmittal, the right to accomplish a withdrawal of any previous tender of the
Unit Holder's Units and the right to complete the transfer contemplated thereby.
All such proxies will be considered coupled with an interest in the tendered
Units, are irrevocable and are granted in consideration of, and are effective
upon, the acceptance for payment of the Units by the Purchaser in accordance
with the terms of the Offer. Upon acceptance for payment, all prior powers of
attorney and proxies given by the Unit Holder with respect to the Units and
Distributions will, without further action, be revoked, and no subsequent powers
of attorney or proxies may be given (and, if given, will be without force or
effect). The officers and designees of the Purchaser will, with respect to the
Units for which the appointment is effective, be empowered to exercise all
voting and other rights of the Unit Holder as they in their discretion may deem
proper at any meeting of the Partnership or any adjournment or postponement
thereof. In order for Units to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of the Units, the Purchaser or its designee
must be able to exercise full voting rights with respect to the Units, including
voting at any meeting of the Partnership's Limited Partners.
By executing and delivering a Letter of Transmittal, a tendering Unit
Holder irrevocably assigns to the Purchaser and its assigns all of the right,
title and interest of the Unit Holder in and to any and all Distributions made
by the Partnership, effective upon and after the date of acceptance with respect
to Units accepted for payment and thereby purchased by the Purchaser. Also, by
executing and delivering a Letter of Transmittal, a tendering Unit Holder agrees
to refrain from voting the tendered Units between the time Seller has executed
and delivered the Letter of Transmittal and the time Seller is notified whether
or not the Units have been accepted for payment, if any vote is requested during
such period.
4. Determination of Validity; Rejection of Units; Waiver of Defects;
No Obligation to Give Notice of Defects. All questions about the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Units pursuant to the Offer will be determined by the Purchaser, which
determination will be final and binding. The Purchaser reserves the right to
reject any or all tenders of any particular Units determined by it not to be in
proper form or if the acceptance of or payment for those Units may, in the
opinion of Purchaser's counsel, be unlawful. The Purchaser also reserves the
right to waive or amend any of the conditions of the Offer that it is legally
permitted to waive and to waive any defect in any tender with respect to any
particular Units. The Purchaser's interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal) will be final and binding. No
tender of Units will be deemed to have been validly made until all defects have
been cured or waived. Neither the Purchaser nor any other person will be under
any duty to give notification of any defects in the tender of any Units or will
incur any liability for failure to give any such notification.
A tender of Units pursuant to the procedure described above and the
acceptance for payment of such Units will constitute a binding agreement between
the tendering Unit Holder and the Purchaser on the terms set forth in the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment pursuant to this Offer, and thereby purchased, Properly Tendered
Units if, as and when the Purchaser gives written notice to the Partnership or
its Transfer Agent of the Purchaser's acceptance of those Units for payment
pursuant to the Offer. Upon the terms and subject to the conditions of the
Offer, payment for Units accepted for payment pursuant to the Offer will be made
and transmitted directly to Unit Holders whose Units have been accepted for
payment.
5. Withdrawal Rights. Tenders of Units made pursuant to the Offer are
irrevocable, except that Units tendered pursuant to the Offer may be withdrawn
at any time on or prior to the Expiration Date and, unless already accepted for
payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after August 2, 2003. If purchase of, or payment for, Units is delayed for
any reason, including extension by the Purchaser of the Expiration Date, or if
the Purchaser is unable to purchase or pay for Units for any reason (for
example, because of proration adjustments) then, without prejudice to the
Purchaser's rights under the Offer, tendered Units may be retained by the
Purchaser and may not be withdrawn, except to the extent that tendering Unit
Holders are otherwise entitled to withdrawal rights as set forth in this Section
5; subject, however, to the Purchaser's obligation, pursuant to Rule 14e-1(c)
under the Exchange Act, to pay Unit Holders the purchase price in respect of
Units tendered promptly after termination or withdrawal of the Offer.
For withdrawal to be effective, a written notice of withdrawal must be
timely received by the Purchaser at its address listed on the back cover of this
Offer to Purchase. Any notice of withdrawal must specify the name of the
person(s) who tendered the Units to be withdrawn and must be signed by the
person(s) who signed the Letter of Transmittal in the same manner as the Letter
of Transmittal was signed. Any Units properly withdrawn will be deemed not
validly tendered for purposes of the Offer. Withdrawn Units may be re-tendered,
however, by following the procedures described in Section 3 herein at any time
prior to the Expiration Date.
All questions about the validity and form (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, which determination
shall be final and binding. Neither the Purchaser nor any other person will be
under any duty to give notice of any defects in any notice of withdrawal or
incur any liability for failure to give any such notice.
6. Extension of Tender Period; Termination; Amendment. The Purchaser
expressly reserves the right at any time:
o to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any
Units;
o upon the occurrence of any of the conditions specified in Section 7
herein, to terminate the Offer and not accept for payment any Units
not already accepted for payment, or, if the Purchaser reasonably
anticipates a prompt cure or removal of such condition, to delay for a
reasonable period the acceptance for payment of, or payment for, any
Units not already accepted for payment or paid for; and
o to amend the Offer in any respect (including, without limitation, by
increasing or decreasing the price, increasing or decreasing the
number of Units being sought, or both).
Notice of any such extension, termination or amendment will promptly be
disseminated to Unit Holders in a manner reasonably designed to inform Unit
Holders of such change in compliance with Rule 14d-4(c) under the Exchange Act.
In the case of an extension of the Offer, the extension will be followed by a
press release or public announcement which will be issued no later than 9:00
a.m., New York City time, on the next business day after the scheduled
Expiration Date, in accordance with Rule 14e-1(d) under the Exchange Act. If the
Purchaser makes a material change in the terms of the Offer or the information
concerning the Offer or waives a material condition of the Offer, the Purchaser
will extend the Offer and disseminate additional tender offer materials to the
extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act.
7. Conditions of the Offer. Notwithstanding any other term of the
Offer, the Purchaser will not be required to accept for payment or, subject to
any applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to a bidder's obligation to pay for or return
tendered securities promptly after the termination or withdrawal of such
bidder's offer), to pay for any Units tendered if all authorizations, consents,
orders of, or filings with, or expirations of waiting periods imposed by, any
court, administrative agency or other governmental authority necessary for the
consummation of the transactions contemplated by the Offer shall not have
occurred or been filed, or obtained. Furthermore, notwithstanding any other term
of the Offer, the Purchaser will not be required to accept for payment or,
subject to the aforesaid, pay for any Units, may delay the acceptance for
payment of the Units tendered, or may withdraw the Offer if, at any time on or
after the date of the Offer and on or before the Expiration Date, any of the
following conditions exists:
(a). a preliminary or permanent injunction or other order of any
federal or state court, government or governmental agency shall have been issued
and shall remain in effect which: (i) makes illegal, delays or otherwise
directly or indirectly restrains or prohibits the making of the Offer or the
acceptance for payment, purchase of or payment for any Units by the Purchaser;
(ii) imposes or confirms limitations on the ability of the Purchaser effectively
to exercise full rights of both legal and beneficial ownership of the Units,
including voting rights; (iii) requires divestiture by the Purchaser of any
Units; (iv) might materially adversely affect the business, properties, assets,
liabilities, financial condition, operations, results of operations or prospects
of the Purchaser, or the Partnership; or (v) seeks to impose any material
condition to the Offer unacceptable to the Purchaser;
(b). there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed applicable
to the Offer by any federal or state court, government or governmental authority
or agency which might, directly or indirectly, result in any of the consequences
referred to in paragraph (a) above;
(c). any event shall have occurred or been disclosed, or shall have
been threatened, regarding the business, properties, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Partnership, which event is materially adverse, or which threatened event, if
fulfilled, would be materially adverse, to the Partnership or its business or
properties, or there shall be any material lien not disclosed in the
Partnership's financial statements, or the Purchaser shall have become aware of
any previously undisclosed fact that has or with the passage of time would have
a material adverse effect on the value of the Units or the Partnership's
properties;
(d). the General Partner (as defined herein) of the Partnership shall
have failed or refused to take all other action that the Purchaser deems
necessary, in the Purchaser's reasonable judgment, for the Purchaser to be the
registered owner of the Units tendered and accepted for payment hereunder
simultaneously with the consummation of the Offer or as soon thereafter as is
permitted under the Partnership Agreement, in accordance with the Partnership
Agreement and applicable law;
(e). there shall have been threatened, instituted or pending any action
or proceeding before any court or governmental agency or other regulatory or
administrative agency or commission or by any other person, challenging the
acquisition of any Units pursuant to the Offer or otherwise directly or
indirectly relating to the Offer, or otherwise, in the reasonable judgment of
the Purchaser, adversely affecting the Purchaser, the Partnership or its
properties or the value of the Units;
(f). the Partnership shall have (i) issued, or authorized or proposed
the issuance of, any partnership interests of any class, or any securities
convertible into, or rights, warrants or options to acquire, any such interests
or other convertible securities, (ii) issued or authorized or proposed the
issuance of any other securities, in respect of, in lieu of, or in substitution
for, all or any of the presently outstanding Units, (iii) declared or paid any
Distribution, other than in cash, on any of the Units, or (iv) the Partnership
or the General Partner shall have authorized, proposed or announced its
intention to propose any merger, consolidation or business combination
transaction, acquisition of assets, disposition of assets or material change in
its capitalization, or any comparable event not in the ordinary course of
business; or
(g). the General Partner shall have modified, or taken any step or
steps to modify, in any way, the procedures or regulations applicable to the
registration of Units or transfers of Units on the books and records of the
Partnership or the admission of transferees of Units as registered owners and as
Unit Holders.
The foregoing conditions are for the sole benefit of the Purchaser and may
be (but need not be) asserted by the Purchaser regardless of the circumstances
giving rise to such conditions or may be waived by the Purchaser in whole or in
part at any time on or prior to the Expiration Date, subject to the requirement
to disseminate to Unit Holders, in a manner reasonably designed to inform them
of, any material change in the information previously provided. Any
determination by the Purchaser, in its reasonable judgment, concerning the
events described above will be final and binding upon all parties.
8. Backup Federal Income Tax Withholding. To prevent the possible
application of backup federal income tax withholding with respect to payment of
the purchase price, a tendering Unit Holder must provide the Purchaser with the
Unit Holder's correct taxpayer identification number in the space provided in
the Letter of Transmittal.
9. FIRPTA Withholding. To prevent the withholding of federal income
tax in an amount equal to ten percent of the amount of the purchase price plus
Partnership liabilities allocable to each Unit purchased, the Letter of
Transmittal includes FIRPTA representations certifying the Unit Holder's
taxpayer identification number and address and that the Unit Holder is not a
foreign person.
CERTAIN INFORMATION CONCERNING THE PARTNERSHIP
The Partnership is subject to the information reporting requirements of the
Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial results and other matters. Such
reports and other documents may be examined and copies may be obtained from the
offices of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, or
electronically at http://www.sec.gov. Copies should be available by mail upon
payment of the Commission's customary charges by writing to the Commission's
principal offices at 450 Fifth Street, N.W., Washington, D.C. 20549.
General. Attached as Part I of Appendix A to this Offer to Purchase are
excerpts from the last Annual Report on Form 10-K filed by the Partnership with
the Commission (the "Form 10-K"), which excerpts describe the business and
operations of the Partnership.
Outstanding Units. According to the Form 10-K, there were 800 Units issued
and outstanding, held by approximately 736 Unit Holders, as of February 28,
2002.
Trading History of the Units. There is no established trading market for
the Units other than limited and sporadic trading through matching services or
privately negotiated sales. At present, privately negotiated sales and sales
through intermediaries (such as through the American Partnership Board) are the
only means available to a Unit Holder to liquidate an investment in Units (other
than this Offer or other occasional offers by other partnership investors, if
any) because the Units are not listed or traded on any exchange or quoted on any
NASDAQ list or system.
Partnership Spectrum, a n independent third party publication that reports
on trading activity for partnership interests, shows no trading activity for the
Partnership's Units for over a year. Sales may be conducted which are not
reported to the Partnership Spectrum. The Purchaser does not know whether the
information provided by or to the Partnership Spectrum is accurate or complete.
Selected Financial and Property Related Data. Attached as Part II of
Appendix A is a summary of certain financial and statistical information with
respect to the Partnership and its properties, all of which has been taken from
the Form 10-K and the Quarterly Report on Form 10-Q for the period ended
November 30, 2002 (the "Form 10-Q"). More comprehensive financial and other
information is included in such reports and other documents filed by the
Partnership with the Commission. Part II of Appendix A is qualified in its
entirety by reference to such publicly filed reports and documents, including,
without limitation, all the financial information and related notes contained
therein. Unit Holders should also refer to any other Quarterly Reports on Form
10-Q or Current Reports on Form 8-K filed with the Commission after the Form
10-K or after the date of this Offer for more recent information relating to the
business and operations of the Partnership.
The General Partner filed on May 2, 2003, a preliminary consent
solicitation statement with the Commission ("Preliminary Solicitation") asking
limited partners to authorize the sale of the Partnership's properties for any
amount that results in a distribution of cash to the limited partners of at
least $9,000 per Unit. The following information is summarized from the
Preliminary Solicitation. The Partnership hired a broker to approach privately
about 30 potentially interested parties to solicit offers to purchase the
Partnership property. This resulted in two non-binding offers, which are subject
to due diligence, for $32.9 million and $33 million. Because of the age of the
property's historic shell and the recent deterioration of the local rental
market, the Operating General Partner (see "Appendix A" for definition) believes
it is likely the offers would be reduced after due diligence investigations. In
addition, because the rental market in Jersey City, New Jersey has declined
since the solicitations were made, the broker has advised that a contingency
should be made to allow for a likely reduction of the offering prices, and has
suggested allowing for a reduction of approximately $1 million. The General
Partner estimates that a sale of the property for $33 million, after payment of
all debt and brokerage fees, and including distribution of the Partnership's
cash on hand, would result in net proceeds to the Unit Holders of approximately
$11,300 per Unit. If the offer were to be reduced following due diligence to $32
million, the General Partner estimates such distribution would be approximately
$9,200 per Unit. The Partnership has announced that a cash distribution in the
amount of approximately $1,325 per Unit is anticipated to be paid in 2003. The
funds for such distribution are included in the above estimates, accordingly, if
such distribution were paid prior to a sale of the Property, the sales proceeds
estimated above would be reduced by such amount. The actual amounts that may be
available for distribution could vary substantially as there are many factors
that are subject to change.
Under the partnership agreement of the Partnership, a sale of its property
would require the consent of a majority in interest of the Unit Holders. Based
on the Preliminary Solicitation, the General Partner is planning to ask Unit
Holders to vote as to whether or not to authorize the Operating General Partner
to sell the property for a price that would result in cash to the Unit Holders
of at least $9,000 per unit (the "Minimum Price"), less any cash distributions
that may be paid in 2003 prior to a sale, and not including any potential tax
benefits. The General Partner plans to make no recommendation as to whether or
not Unit Holders should approve a sale at the Minimum Price. The terms of the
operating partnership agreements provide that if a majority in interest of the
Unit Holders vote to sell the property, the Operating General Partner would have
the right to purchase all Units of the Partnership from the Unit Holders for the
amount that would have been distributable to the Unit Holders as a result of
such sale. The Operating General Partner and the General Partner have indicated
that they do not want to sell the property at this time for the price currently
offered; and therefore, if Unit Holders representing a majority of the
Partnership interest were to vote in favor of selling the property for the
Minimum Price, the Operating General Partner, possibly with the participation of
the General Partner, may exercise its right to purchase all of the Units of the
Unit Holders for the Minimum Price of $9,000.
DETERMINATION OF OFFER PRICE
In establishing the Offer price, the Purchaser reviewed certain publicly
available information including among other things: (i) the Partnership's
limited partnership agreement (the "Partnership Agreement"), (ii) Annual Reports
on Form 10-K, (iii) Quarterly Reports on Form 10-Q, and (iv) other reports filed
with the Commission. The Purchaser determined the Offer price pursuant to its
independent evaluation of the Partnership and its properties. The Purchaser did
not obtain current independent valuations or appraisals of the assets.
Purchaser determined it was willing to offer $9,200 per Unit after
reviewing the Preliminary Solicitation and concluding that Purchaser would be
willing to offer $9,200 per Unit now because Purchaser believes the facts
described in the Preliminary Solicitation, principally the range of potential
distributions ($9,200 to $11,300 per Unit) and the Minimum Price ($9,000) for
which approval may be sought, make it very likely that Purchaser would at least
get back substantially all of its investment, and give Purchaser a reasonable
chance of ultimately receiving distributions in excess of the offer price.
Purchaser has assumed that the calculations of potential distributions provided
in the Preliminary Solicitation were accurate and has relied thereon. Purchaser
also set the offer price to provide a premium to the Minimum Price for which
approval may be sought in order to make the Offer more attractive than the
possibility that the Operating General Partner would exercise its option
described in the Preliminary Solicitation, which Purchaser believes is very
likely if such proposal is made and approved. Purchaser is making a speculative
offer based on the unique circumstances of the Partnership.
CERTAIN INFORMATION CONCERNING THE PURCHASER
The Purchaser. The Purchaser is a California limited liability company that
was formed on October 23, 1998. The principal office of the Purchaser is 155
North Lake Avenue, Suite 1000, Pasadena, CA 91101. The Manager of the Purchaser
is Everest Properties II, LLC ("EPII") and it is the person that manages the
Purchaser's affairs. For certain information concerning the directors and
executive officers of EPII, see Schedule I to this Offer to Purchase.
The Purchaser and EPII and their affiliates invest in limited partnerships
such as the Partnership, and in other forms of real estate oriented investments,
and conduct activities incident thereto. For certain selected unaudited
financial information available with respect to the Purchaser, see Appendix B to
this Offer to Purchase. The inclusion of this information is for informational
purposes only and is not intended to imply that such information is material to
a decision whether to sell, tender or hold the Units.
General. Except as set forth elsewhere in this Offer to Purchase: (i) the
Purchaser does not beneficially own or have a right to acquire, and, to the best
knowledge of the Purchaser, no associate or majority-owned subsidiary of
Purchaser or the persons listed in Schedule I hereto, beneficially owns or has a
right to acquire any Units or any other equity securities of the Partnership;
(ii) the Purchaser has not, and to the best knowledge of the Purchaser, none of
the persons and entities referred to in clause (i) above or any of their
executive officers, directors or subsidiaries has, effected any transaction in
the Units or any other equity securities of the Partnership during the past 60
days other than as stated in this Offer to Purchase; (iii) the Purchaser does
not have and, to the best knowledge of the Purchaser, none of the persons listed
in Schedule I hereto has, any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Partnership, including, but not limited to, the transfer or voting thereof,
joint ventures, loan arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies, consents or
authorizations; (iv) since February 28, 2000, there have been no transactions
which would require reporting under the rules and regulations of the Commission
between the Partnership or any of its affiliates and the Purchaser or any of its
subsidiaries or, to the best knowledge of the Purchaser, any of its executive
officers, directors or affiliates; and (v) since February 28, 2000 except as
otherwise stated in this Offer to Purchase, there have been no contacts,
negotiations or transactions between the Purchaser, or any of its subsidiaries
or, to the best knowledge of the Purchaser, any of the persons listed in
Schedule I hereto, on the one hand, and the Partnership or its affiliates, on
the other hand, concerning a merger, consolidation or acquisition, tender offer
or other acquisition of securities, an election of directors, or a sale or other
transfer of a material amount of assets of the Partnership.
Prior Acquisitions of Units and Prior Contacts. The Purchaser does not own
units of the Partnership. An affiliate, Everest Management, LLC owns 31 Units
(3.8%), none of which were acquired in the last 60 days.
In May 2003, a representative of the Purchaser contacted a representative
of the General Partner to discuss the contents of the Preliminary Solicitation.
Through their representatives, the Purchaser requested further explanation of
the potential distribution amounts that were described in the Preliminary
Solicitation. The General Partner did not indicate it had revised any of its
estimates provided in the Preliminary Solicitation; and the General Partner
indicated that it continues to engage in discussions with the potential
purchasers of the Partnership's property and the Operating General Partner. The
General Partner stated that its estimates assumed about $2 Million of costs
associated with a transaction to sell the Partnership's property; that capital
improvements budgeted at $1,100,000 had already been commenced; and that it
expected the potential purchasers to reduce their offers by about $500,000 after
completing due diligence. The General Partner also indicated that it does not
plan to make the proposal set forth in the Preliminary Solicitation immediately.
On June 2, 2003, a representative of the Purchaser contacted a
representative of the General Partner to inquire whether or not the Unit price
offered in the Offer would be a price that the General Partner would recommend
that limit partners accept. The General Partner did not respond.
Except as set forth above, neither the Purchaser nor its affiliates are
party to any past, present or proposed material contracts, arrangements,
understandings, relationships, or negotiations with the Partnership or with the
General Partner concerning the Partnership.
Source of Funds. Based on the Offer price of $9,200 per Unit, the Purchaser
estimates that the total amount of funds necessary to purchase all Units sought
by this Offer and to pay related fees and expenses, will be approximately
$750,000. The Purchaser expects to obtain these funds by means of equity capital
contributions from its members at the time the Units tendered pursuant to the
Offer are accepted for payment. Such members will fund their capital
contributions through existing cash and other financial assets which in the
aggregate are sufficient to provide the funds required in connection with the
Offer without any borrowings. Such members have irrevocably agreed and are
obligated to make such capital contributions available to the Purchaser on
demand.
FUTURE PLANS OF THE PURCHASER
The Purchaser is seeking to acquire Units pursuant to the Offer to obtain a
substantial equity interest in the Partnership, for investment purposes.
Following the completion of the Offer, the Purchaser and persons related to or
affiliated with the Purchaser may acquire additional Units. Any such acquisition
may be made through private purchases, through one or more future tender or
exchange offers or by any other means deemed advisable by the Purchaser. Any
such acquisition may be at a price higher or lower than the price to be paid for
the Units purchased pursuant to the Offer, and may be for cash or other
consideration. However, the Purchaser currently has no plan to make additional
tender offers for the Units. The Purchaser also may consider selling some or all
of the Units it acquires pursuant to the Offer, either directly or by a sale of
one or more interests in the Purchaser itself, depending upon liquidity,
strategic, tax and other considerations.
Other than as set forth above, the Purchaser currently does not intend to
change current management, indebtedness, capitalization, corporate structure or
business operations of the Partnership and does not currently have plans for any
extraordinary transaction such as a merger, reorganization, liquidation or sale
or transfer of assets involving the Partnership. However, these plans could
change at any time in the future. If any transaction is effected by the
Partnership and financial benefits accrue to the Unit Holders, the Purchaser and
its affiliates will participate in those benefits to the extent of their
ownership of the Units.
CERTAIN FEDERAL INCOME TAX MATTERS
The following summary is a general discussion of certain of the federal
income tax consequences of a sale of Units pursuant to the Offer. The summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), applicable
Treasury regulations thereunder, administrative rulings, and judicial authority,
all as of the date of the Offer. All of the foregoing is subject to change, and
any such change could affect the continuing accuracy of this summary. This
summary does not discuss all aspects of federal income taxation that may be
relevant to a particular Unit Holder in light of such Unit Holder's specific
circumstances, nor does it describe any aspect of state, local, foreign or other
tax laws. Sales of Units pursuant to the Offer may be taxable transactions under
applicable state, local, foreign and other tax laws. UNIT HOLDERS SHOULD CONSULT
THEIR RESPECTIVE TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THE UNIT
HOLDER OF SELLING UNITS PURSUANT TO THE OFFER.
In general, a Unit Holder will recognize gain or loss on a sale of Units
pursuant to the Offer equal to the difference between (i) the Unit Holder's
"amount realized" on the sale and (ii) the Unit Holder's adjusted tax basis in
the Units sold. The amount of a Unit Holder's adjusted tax basis in a Unit will
vary depending upon the Unit Holder's particular circumstances, and it will
include the amount of the Partnership's liabilities allocable to the Unit (as
determined under Code Section 752). The "amount realized" with respect to a Unit
will be a sum equal to the amount of cash received by the Unit Holder for the
Unit pursuant to the Offer (that is, the purchase price), plus the amount of the
Partnership's liabilities allocable to the Unit (as determined under Code
Section 752).
The gain or loss recognized by a Unit Holder on a sale of a Unit pursuant
to the Offer generally will be treated as a capital gain or loss if the Unit was
held by the Unit Holder as a capital asset. Gain with respect to Units held for
more than one year will be taxed, for federal income tax purposes, at a maximum
long-term capital gain rate of 15 percent. Gain with respect to Units held one
year or less will be taxed at ordinary income rates. It should also be noted
that the Taxpayer Relief Act of 1997 imposed depreciation recapture of
previously deducted straight-line depreciation with respect to real property at
a rate of 25 percent (assuming eligibility for long-term capital gain
treatment). A portion of the gain realized by a Unit Holder with respect to a
disposition of the Units may be subjected to this 25 percent rate to the extent
that the gain is attributable to depreciation recapture inherent in the
properties of the Partnership.
If any portion of the amount realized by a Unit Holder is attributable to
such Unit Holder's share of "unrealized receivables" or "substantially
appreciated inventory items" as defined in Code Section 751, a corresponding
portion of such Unit Holder's gain or loss will be treated as ordinary gain or
loss. It is possible that the basis allocation rules of Code Section 751 may
result in a Unit Holder's recognizing ordinary income with respect to the
portion of the Unit Holder's amount realized on the sale of a Unit that is
attributable to such items while recognizing a capital loss with respect to the
remainder of the Unit.
Capital losses are deductible only to the extent of capital gains, except
that taxpayers who are natural persons may deduct up to $3,000 per year of
capital losses in excess of the amount of their capital gains against ordinary
income. Excess capital losses generally can be carried forward to succeeding
years (a "C" corporation's carry-forward period is five years and an individual
taxpayer can carry forward such losses indefinitely).
Under Code Section 469, individuals, S corporations and certain
closely-held corporations generally are able to deduct "passive activity losses"
in any year only to the extent of the person's passive activity income for that
year. Substantially all post-1986 losses of Unit Holders from the Partnership
are passive activity losses. Unit Holders may have "suspended" passive activity
losses from the Partnership (i.e., post-1986 net taxable losses in excess of
statutorily permitted "phase-in" amounts and which have not been used to offset
income from other passive activities).
If a Unit Holder sells less than all of its interest in the Partnership
pursuant to the Offer, a passive loss recognized by that Unit Holder can be
currently deducted (subject to the other applicable limitations) to the extent
of the Unit Holder's passive income from the Partnership for that year plus any
other net passive activity income for that year, and any gain recognized by a
Unit Holder upon the sale of Units can be offset by the Unit Holder's current or
"suspended" passive activity losses (if any) from the Partnership and other
sources. If, on the other hand, a Unit Holder sells 100 percent of its interest
in the Partnership pursuant to the Offer, any "suspended" passive activity
losses from the Partnership and any passive activity losses recognized upon the
sale of the Units will be offset first against any net passive activity income
from the Unit Holder's other passive activity investments, and the balance of
any net passive activity losses attributable to the Partnership will no longer
be subject to the passive activity loss limitation and, therefore, will be
deductible by such Unit Holder from its other "ordinary" income (subject to any
other applicable limitations). If more than 80 Units are Properly Tendered, some
tendering Unit Holders may not be able to sell 100 percent of their Units
pursuant to the Offer because of proration of the number of Units to be
purchased by the Purchaser, unless the Purchaser amends the Offer to increase
the number of Units to be purchased.
A tendering Unit Holder will be allocated the Unit Holder's pro rata share
of the annual taxable income and losses from the Partnership with respect to the
Units sold for the period through the date of sale, even though such Unit Holder
will assign to the Purchaser its rights to receive certain cash distributions
with respect to such Units. Such allocations and any Partnership distributions
for such period would affect a Unit Holder's adjusted tax basis in the tendered
Units and, therefore, the amount of gain or loss recognized by the Unit Holder
on the sale of the Units.
Unit Holders (other than tax-exempt persons, corporations and certain
foreign individuals) who tender Units may be subject to 28 percent backup
withholding unless those Unit Holders provide a taxpayer identification number
("TIN") and are certain that the TIN is correct or properly certify that they
are awaiting a TIN. A Unit Holder may avoid backup withholding by properly
completing and signing the Letter of Transmittal. If a Unit Holder who is
subject to backup withholding does not include its TIN, the Purchaser will
withhold 28 percent from payments to such Unit Holder.
CERTAIN LEGAL MATTERS
General. Except as set forth herein, the Purchaser is not aware of any
filings, approvals or other actions by any domestic or foreign governmental or
administrative agency that would be required prior to the acquisition of Units
by the Purchaser pursuant to the Offer. The Purchaser's obligation to purchase
and pay for Units is subject to certain conditions, including conditions related
to the legal matters discussed herein.
State Takeover Statutes. The Partnership was formed under the laws of the
State of Delaware, which currently does not have any takeover statute applicable
to limited partnerships. However, it is a condition to the Offer that no state
or federal statute impose a material limitation on the Purchaser's right to vote
the Units purchased pursuant to the Offer. If this condition is not met,
Purchaser may terminate or amend the Offer.
If any person seeks to apply any state takeover statute, the Purchaser will
take such action as then appears desirable, which action may include challenging
the validity or applicability of any such statute in appropriate court
proceedings. If there is a claim that one or more takeover statutes apply to the
Offer, and it is not determined by an appropriate court that such statutes do
not apply or are invalid as applied to the Offer, the Purchaser might be
required to file certain information with, or receive approvals from, the
relevant state authorities. This could prevent the Purchaser from purchasing or
paying for Units tendered pursuant to the Offer, or cause delay in continuing or
consummating the Offer. In such case, the Purchaser may not be obligated to
accept for payment or pay for Units tendered.
Fees and Expenses. Purchaser will not pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of Units pursuant to the
Offer. Employees of EPII may solicit tenders of Units without any additional
compensation. The Purchaser will pay all costs and expenses of printing and
mailing the Offer and its legal fees and expenses. Transfer fees, if any, will
be paid by the Purchaser and will not be deducted from the proceeds paid to Unit
Holders who tender their Units.
Miscellaneous. The Offer is not made to (nor will tenders be accepted on
behalf of) Unit Holders residing in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities
or other laws of such jurisdiction. However, the Purchaser may take such action
as it deems necessary to make the Offer in any jurisdiction and extend the Offer
to Unit Holders in such jurisdiction.
In any jurisdiction where the securities or other laws require the Offer to
be made by a licensed broker or dealer, the Offer will be deemed to be made on
behalf of the Purchaser by one or more registered brokers or dealers that are
licensed under the laws of such jurisdiction.
The Purchaser has filed with the Commission a Tender Offer Statement on
Schedule TO pursuant to Rule 14d-3 under the Exchange Act, furnishing certain
additional information with respect to the Offer, and may file amendments
thereto. The Schedule TO and any amendments thereto, including exhibits, may be
inspected and copies may be obtained at the same places and in the same manner
as set forth under the caption "Certain Information Concerning The Partnership."
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser not contained herein or in the Letter
of Transmittal and, if given or made, such information or representation must
not be relied upon as having been authorized.
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
The business address of each executive officer and director of Everest
Properties II, LLC is 155 North Lake Avenue, Suite 1000, Pasadena, California
91101. Each executive officer and director is a United States citizen. The name
and principal occupation or employment of each executive officer and director of
Everest Properties II, LLC ("EPII"), are set forth below.
Present Principal Occupation or Employment
Name Position and Five-Year Employment History
W. Robert Kohorst President of EPII from 1996 - present. President
and Director of Everest Properties, Inc. from
1994 - present. President and Director of KH
Financial, Inc. from 1994 - present.
David I. Lesser Executive Vice President and Secretary of EPII
from 1996 - present. Executive Vice President of
Everest Properties, Inc. from 1995 - present.
Christopher K. Davis Vice President and the General Counsel of EPII
since 1998. Senior Staff Counsel and then
Director of Corporate Legal of Pinkerton's, Inc.
from 1995 - 1998.
Peter J. Wilkinson Vice President and the Chief Financial Officer
of EPII since 1996. Chief Financial Officer and
Director of Everest Properties, Inc. since 1996.
APPENDIX A
The following information has been copied from the Partnership's Annual
Report on Form 10-K for the year ended February 28, 2002 (the "Form 10-K") and
Quarterly Report on Form 10-Q for the period ended November 30, 2002 (the "Form
10-Q"). Although the Purchaser has no information that any statements contained
in this Appendix A are untrue, the Purchaser has not independently investigated
the accuracy of statements, and takes no responsibility for the accuracy,
inaccuracy, completeness or incompleteness of any of the information contained
in this section or for the failure by the Partnership to disclose events which
may have occurred and may affect the significance or accuracy of any such
information.
PART I
Item 1. Business
General Development of Business
Registrant (also referred to as the "Partnership") is a limited partnership
which was formed under the Delaware Revised Uniform Limited Partnership Act on
October 15, 1987. The general partner of the Partnership is Wilder Richman
Historic Corporation, a Delaware corporation (the "General Partner" or "WRHC").
Registrant was organized to acquire all of the limited partnership
interests in Dixon Mill Associates I (Phase One), Limited Partnership, Dixon
Mill Associates II (Phase Two), Limited Partnership, and Dixon Mill Associates
III (Phase Three), Limited Partnership, each of which is a New Jersey limited
partnership (individually "Dixon Mill I," "Dixon Mill II" and "Dixon Mill III,"
respectively, and collectively the "Operating Partnerships"). Each Operating
Partnership owns one phase ("Phase") of an aggregate 433-unit residential
apartment complex (the "Complex") located in Jersey City, New Jersey, that
consists of buildings designated as certified historic structures by the U.S.
Department of the Interior. The Operating Partnerships have constructed,
substantially rehabilitated and are operating the Complex. The rehabilitation of
the Complex qualified for a rehabilitation tax credit in 1988, 1989 and 1990.
The general partner of the Operating Partnerships is Dixon Venture Corp. (the
"Operating General Partner"), which is not an affiliate of the Partnership or
WRHC.
Pursuant to the Partnership's prospectus dated May 13, 1988, (the
"Prospectus"), the Partnership offered $19,280,000 of units of limited
partnership interest in the Partnership (the "Units") at an offering price of
$24,100 per Unit. The Units were registered under the Securities Act of 1933
pursuant to a Registration Statement on Form S-11 (Registration No. 33-19646).
The Prospectus is incorporated herein by reference.
The closing of the offering of Units (the "Offering") occurred on July 15,
1988. At such closing, 800 Units were sold, representing $19,280,000 in gross
proceeds. After payment of $674,800 of organization and offering expenses,
$674,800 in an origination fee and $1,349,600 of selling commissions, the net
proceeds available for investment were $16,580,800. Of such net proceeds,
$16,388,000 was allocated to the investment in the Operating Partnerships, which
included investments in guaranteed investment contracts. The remainder of
$192,800 was designated as working capital to be used for operating expenses of
the Partnership.
Financial Information About Industry Segments
Registrant is engaged solely in the business of owning a limited
partnership interest in each of the Operating Partnerships. A presentation of
information regarding industry segments is not applicable and would not be
material to an understanding of the Partnership's business taken as a whole. See
Item 8 below for a summary of Registrant's operations.
Working Capital Reserves
As of February 28, 2002, Registrant had working capital reserves of
approximately $119,000, which were substantially invested in interest-bearing
deposits. See Item 7 - "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Competition
Information regarding competition, general risks, tax risks and partnership
risks is set forth under the heading "RISK FACTORS" at pages 37 - 57 of the
Prospectus.
Employees of Registrant
Registrant employs no personnel and incurs no payroll costs. An affiliate
of the General Partner employs individuals who perform accounting, secretarial,
transfer and other services on behalf of Registrant as are necessary in the
ordinary course of business. Such individuals also perform similar services for
other affiliates of the General Partner.
Tax Reform Act of 1986, Revenue Act of 1987, Technical and Miscellaneous
Revenue Act of 1988, Omnibus Budget Reconciliation Act of 1989, Omnibus Budget
Reconciliation Act of 1990, Tax Extension Act of 1991, Omnibus Budget
Reconciliation Act of 1993, Uruguay Round Agreements Act, Tax and Trade Relief
Extension Act of 1998, Tax and Trade Relief Extension Act of 1999, Community
Renewal Tax Relief Act of 2000, Economic Growth and Tax Relief Reconciliation
Act of 2001 and Job Creation and Worker Assistance Act of 2002 (collectively the
"Tax Acts")
Registrant is organized as a limited partnership and is a pass through tax
entity that does not, itself, pay Federal income tax. However, the partners of
Registrant who are subject to Federal income tax may be affected by the Tax
Acts. Registrant will consider the effect of certain aspects of the Tax Acts on
the partners when making decisions regarding its investment. Registrant does not
anticipate that the Tax Acts will currently have a material adverse impact on
Registrant's business operations, capital resources and plans or liquidity.
PART II
Item 2. Properties
The Complex consists of approximately 34 historic mill buildings built
between 1847 and 1932, all of which are certified historic structures that have
been converted and substantially rehabilitated into a 433 unit luxury apartment
complex that has received financing exempt from Federal income taxation under
Internal Revenue Code Section 103(b)(4)(A). As a consequence of this tax exempt
financing, the Operating Partnerships are required to rent at least 15% of the
dwelling units ("D.U.'s") in the Complex to individuals or families of low or
moderate income as determined under such Code Section, currently based on their
income not exceeding 80% of the median income for the area as determined by the
United States Department of Housing and Urban Development ("HUD"). These income
limits are subject to increases pursuant to HUD guidelines. In the Complex, 68
studio and efficiency D.U.'s and 17 one-bedroom D.U.'s are set aside for rental
to low or moderate income persons. There are no rent ceilings on those D.U.'s
set aside for low or moderate income persons. Because such tax exempt financing
consists of bonds sold in 1985, the 80% of median income limit is not required
to be adjusted based on family size as would be required under the Tax Reform
Act of 1986.
The Complex is located on a 4-acre site in Jersey City, New Jersey. In
addition, one new five-story building, approximately 20 feet by 50 feet, was
built on the site. The Complex is located in the Dixon Crucible Redevelopment
Area, an area so designated pursuant to a redevelopment plan adopted in
September 1983 by ordinance of the City of Jersey City. The actual development
entails three Phases with each Phase owned by a separate New Jersey limited
partnership, respectively Dixon Mill I, Dixon Mill II and Dixon Mill III. Phase
I consists of seven industrial buildings which have been rehabilitated to
provide 134 D.U.'s, 55 underground and 77 surface parking spaces and
approximately 1,550 square feet of commercial space. Phase II consists of 11
industrial buildings which have been rehabilitated to provide 191 D.U.'s and 62
underground and 124 surface parking spaces. Phase III consists of four
industrial buildings which have been rehabilitated to provide 108 D.U.'s, 35
underground and 73 surface parking spaces and approximately 2,230 square feet of
commercial space.
The Complex features gardens, elevated walkways and brick paved walkways.
The Complex also has its own electronic security system and a free shuttle
service to the Grove Street PATH station is being provided. In addition, the
residents of the Complex have access to a private fitness facility. The
Complex's commercial space is designated for retail stores and/or professional
offices.
As of December 31, 2001 and 2000, the occupancy and rental rates were as
follows:
December 31, 2001 December 31, 2000
Occupancy Rate 97% 98%
Monthly Rental Rates:
Studio $ 628 - $1,117 $ 615 - $1,095
One-Bedroom $ 730 - $1,807 $ 779 - $1,771
Two-Bedroom $1,365 - $2,284 $1,365 - $2,239
Three-Bedroom $1,928 - $2,647 $1,890 - $2,595
The rental rates reflect significant ranges because the apartments vary
as to size and floor plans (i.e., square footage, duplex, triplex, penthouse)
and due to the low-moderate tenant income restrictions for 15% to 20% of the
D.U.'s resulting from the tax-exempt financing described above.
Selected Financial Data
The following selected financial data has been copied or derived from the Form
10-K and Form 10-Q and should be read in conjunction with the financial
statements and the related notes set forth in such reports:
Year End Nine Months Ended
---------------------------- -------------------
February February February November November
28, 2002 28, 2001 29, 2000 30, 2002 30, 2001
---------- ---------- ----------- --------
Total revenues
(Interest income) $ 4,674 $ 11,890 $ 54,009 $ 1,762 $ 4,088
Equity in income (loss)
of investment in
Operating
Partnerships $ 701,964 $ 83,937(b) $ 128,830 $ 982,754 $ 495,728
Net income (loss) $ 669,086 $ 66,898 $ 146,652 $ 957,452 $ 471,909
Net income (loss) per
unit of limited
partnership interest $ 828 $ 83 $ 181 $ 1,185 $ 584
At year end:
Total assets $ 2,205,490 $ 1,573,577 $ 1,511,679 $ 3,171,129
- ------------------
<FN>
(b) Includes extraordinary loss of $304,842 in connection with refinancing of
mortgages of Operating Partnerships. See Management's Discussion and
Analysis of Financial Condition and Results of Operations.
</FN>
The combined balance sheets and statements of operations of the Operating
Partnerships as of September 30, 2002 and December 31, 2001 are as follows:
September 30, December 31,
2002 2001
Land, buildings and equipment,
less accumulated depreciation. $37,929,509 $38,837,922
Total assets..................... 48,200,111 47,195,756
Total liabilities................ 30,550,394 30,538,720
Partners' equity (deficit) 17,649,717 16,657,036
9 Months ended Year ended
September 30, December 31,
2002 2001
Revenue
- ------------------------------------- $5,506,930 $7,423,632
Rents......................... 95,850
Interest......................
Total revenue.................... 5,506,930 7,519,482
Expenses
Administrative................ 480,517 1,487,160
Operating..................... 2,203,776 2,581,957
Management fees............... 257,013 280,389
Interest...................... 429,924 723,635
Depreciation and amortization. 1,143,019 1,524,025
Total expenses................... 4,514,249 6,597,166
Net income....................... $ 992,681 $ 922,316(a)
- --------------------
<FN>
(a) Before extraordinary item
</FN>
APPENDIX B
MILLENIUM MANAGEMENT, LLC
Balance Sheet
As of April 30, 2003
(unaudited)*
TOTAL ASSETS................................................. $8,053
======
LIABILITIES & EQUITY
Members Capital....................................... $(13,028)
Retained Earnings...................................... 21,080
------
TOTAL LIABILITIES & EQUITY................................... $8,053
======
* The Purchaser's business consists solely of making and holding investments for
its own account in limited partnership interests. Audited financial statements
are not prepared.
The Letter of Transmittal, and any other required documents should be sent
or delivered by each Unit Holder or his broker, dealer, commercial bank, trust
company or other nominee to the Purchaser at its address set forth below.
Questions and requests for assistance may be directed to the Purchaser at
its address and telephone number listed below. Additional copies of this Offer
to Purchase, the Letter of Transmittal, and other tender offer materials may be
obtained from the Purchaser as set forth below, and will be furnished promptly
at the Purchaser's expense.
June 3, 2003 MILLENIUM MANAGEMENT, LLC
Everest Properties II, LLC
(Manager)
155 North Lake Avenue
Suite 1000
Pasadena, California 91101
(800) 611-4613 or (626) 585-5920
Facsimile: (626) 585-5929