May 25, 2005
Via Facsimile: (202) 772-9203
and submitted via EDGAR
Jeffrey B. Werbitt
Office of Mergers and Acquisitions
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0303
Re: Secured Investment Resources Fund, L.P. (the "Partnership")
Schedule TO-I filed April 15, 2005, amended by Schedule TO-T/A filed
May 17, 2005, by Millenium Management, LLC
File No. 005-80666
Dear Mr. Werbitt:
This letter responds to the Staff's comments conveyed in your letter of May
20, 2005. Numbered paragraphs below correspond to the numbered paragraphs in
your letter.
1. This offer is not a step in a series of transactions designed to take
the Partnership private within the meaning of Rule 13e-3. As previously stated,
the Partnership had 1,216 beneficial holders (each of whom is also a record
holder). Starting with unit holders with the smallest positions (which would
result in the elimination of the highest number of unit holders), it would take
908 beneficial holders to tender 8,000 units. Therefore, after the offer, the
Partnership will have 308 or more beneficial holders.
2. The offeror's financial statements are not material to persons
considering the Offer, for the following reasons. The distinction made in the
instruction to Item 10 between full and partial tender offers is meaningless in
all-cash offers. Whether an all-cash offer is for all of the class of securities
or only part of the class does not affect the materiality of the financial
statements to security holders receiving the offer, who in both cases must
choose between selling or continuing to hold.
For persons who would sell, the offer is for cash, so the reasonable
selling investor would only be concerned with the bidder's current source of
funding to pay for the selling investors' units. That information is disclosed
in "Source of Funds," stating "equity capital contributions from its members at
the time the Units tendered pursuant to the Offer are accepted for payment . . .
[funded] 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 . . . [and] [s]uch members have irrevocably agreed and
are obligated to make such capital contributions." Beyond that disclosure, the
financial position of the bidder and its historical operating results are
irrelevant, as the instructions to Item 10 implicitly acknowledge by deeming
such financials immaterial when the offer is for all of the securities of the
class.
In previous discussions with the Staff, I have heard two suggested reasons
that a bidder's financial statements might be relevant to persons who will
continue to hold the security (either because they choose not to tender or they
get prorated). One suggestion has been that the bidder's financial condition
might be relevant to the bidder's potential to effectuate a change of control
some time after the offer is completed. Putting aside the question of how
financial statements might help anybody predict that possibility, the ability to
effect a change of control is not relevant in Millenium's case because Millenium
is already the general partner and controls the Partnership.
The second suggested reason I have heard argued is that the bidder's
financial condition might be relevant to the bidder's likelihood of dumping the
securities on the market later, affecting the market price for those security
holders who did not sell. Such reasoning is speculative and unrealistic.
Firstly, we do not believe a reasonable non-tendering security holder would be
making such a determination - if they do not sell it is because they do not like
the price or they just want to wait and see what happens. Further, the bidder
could make a future decision to sell at any time, as noted in "Future Plans of
the Purchaser." Such a sale could be for a multitude of reasons other than the
bidder's financial status: to capture a profit or stem a loss, to adjust its
portfolio, to free up cash for a new investment, or just to get out of an
investment that becomes disfavored. Financial statements of the bidder would not
really provide security holders with a meaningful ability to "handicap" the risk
that the bidder would subsequently dump the securities any better than they
could without the financial statements.
Furthermore, for unlisted, illiquid registrants like this Partnership,
there is no realistic risk that a holder of a large position might temporarily
influence market price by subsequent selling activities (regardless of their
financial position). There is no real "market price" to adversely affect. A sale
by bidder (like anyone else holding the units) would have to be accomplished by:
(1) a privately negotiated sale, (2) tendering into another party's tender offer
that comes along, and (3) using a matching service to find one or more willing
buyers. In cases (1) and (2), a seller is not influencing market price at all
(true even for listed, readily traded securities). With matching services,
buyers commonly pay a premium for larger positions, so even if a matching
service could be considered some species of market, there is no real risk of a
block sale adversely affecting the "market price."
I have heard no other arguments advanced by the Staff regarding why a
bidder's financials might be material to security holders that will continue
holding the security. The fact that this bidder is the Partnership's general
partner should not affect the analysis, given that the financial statements of
general partners of limited partnership registrants are not required to be filed
as part of the limited partnership registrants' regular financial reporting.
For the foregoing reasons, the financial statements of Millenium are
immaterial to security holders considering the offer, whether they end up
selling or holding the securities.
We are filing an amendment concurrently with this letter to file an update
letter and extend the expiration date of the offer. Please contact the
undersigned if you have any questions regarding our responses to the Staff's
comments and to advise us if the Staff has any further comments.
Very truly yours,
/S/ Christopher K. Davis
------------------------
Christopher K. Davis
Vice President and General Counsel
CKD:ckd
Enclosures with fax copy