SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Filed by a Party other than the Registrant |X|
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|_| Preliminary Proxy Statement |_| Confidential, for Use of the
|_| Definitive Proxy Statement Commission Only (as permitted
|X| Definitive Additional Materials by Rule 14a-6(e)(2))
|_| Soliciting Material Pursuant to Rule
14a-11(c) or Rule 14a-12
PROMETHEUS INCOME PARTNERS, a California limited partnership
(Name of Registrant as Specified in Its Charter)
PROMETHEUS DEVELOPMENT CO., INC., a California corporation
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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PROMETHEUS DEVELOPMENT CO., INC.
350 Bridge Parkway
Redwood City, CA 94065-1517
(650) 596-5393
July 3, 2002
To the Limited Partners:
By now, you should have received our proxy materials relating to a meeting of
Prometheus Income Partners to be held on July 24, 2002 to address a proposed
merger in which all of the outstanding limited partnership units of Prometheus
Income Partners would be acquired by PIP Partners-General, LLC, an affiliate of
your general partner, in an all-cash transaction. You may also have received or
may receive correspondence from two limited partners, Everest Investors 12, LLC
and Everest Properties II, LLC, indicating their intention to solicit proxies in
opposition to the proposed merger and setting forth their reasons therefor.
Before taking any action in response to Everest's anticipated opposition, YOU
SHOULD KNOW THE FACTS.
We have received a non-binding letter of intent from Aspen Square Management,
Inc. to acquire the Partnership's real estate properties. Their letter of intent
is not an offer or contract to buy and contains certain contingencies that
allows them to walk away at any time. Several aspects of this letter of intent,
including the actual purchase price being proposed, are unclear and subject to
interpretation. We have made numerous attempts to contact Aspen to obtain
clarification of their letter of intent pursuant to the last paragraph of their
letter dated June 24, 2002 as follows "... to clarify any aspects of this offer
that you feel need further illumination". To date, Aspen has not responded to
our numerous attempts to contact them. If Aspen chooses to follow up on this
matter, we will apprise you of the status of that process and the economic
details in advance of the meeting so as to enable you to act in an informed
manner.
In any case, you should be aware of the following:
o Aspen's letter of intent is subject to significant and
substantial conditions. First, the letter of intent is subject to
Aspen's completion of due diligence on the properties. Second, the
letter of intent may be subject to Aspen being able to finance the
transaction in part through the assumption of the existing mortgages on
the Partnership's properties. Third, any purchase of the properties
would be subject to the parties' negotiation of definitive
documentation. As such, acceptance of Aspen's letter of intent would do
little more than give Aspen an option to acquire these properties. There
can be no assurance that any sale of the partnership's properties
pursuant to this letter of intent would ever be consummated. As set
forth in our proxy materials, the merger, on the other hand, is subject
to minimal conditions and, as of the date hereof, is fully financed.
o Even if consummated, it is unlikely you would receive the
proposed purchase price in full or in the immediate future. Because the
letter
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of intent is structured as an acquisition of the partnership's
properties, any distribution to you would remain subject to, and be
reduced by, the liabilities and commitments of the partnership,
including any contingent liabilities arising in connection with the
sale of the properties itself. Cash available for distribution to you
would be reduced by these liabilities. Further, distributions would be
subject to reserves to satisfy these actual or contingent liabilities.
As such, your final distributions would be delayed for a substantial
period of time and you would accrue taxable income for which the
corresponding distributions would be deferred. The merger would provide
you with a complete cash pay-out promptly following the meeting.
o A sale of the Partnership's properties would take
significant time to complete. Under the terms of your limited
partnership agreement, a sale of the properties requires the approval of
the limited partners. Accordingly, such approval would require a proxy
solicitation to be commenced, which requires that proxy materials be
submitted for review to the Securities and Exchange Commission, as well
as rescheduling of a meeting to approve any such transaction at a date
significantly later than the meeting scheduled to address the merger. If
the merger is not consummated, you would continue to bear the risk of
loss in respect of the Partnership's properties.
We believe that Everest is acting in what it perceives to be its own best
interests, which may not be consistent with those of the other limited partners.
Everest has made no proposal to us that would benefit the interests of all the
limited partners.
YOUR GENERAL PARTNER AND ITS AFFILIATED PARTIES CONTINUE TO RECOMMEND YOU VOTE
FOR THE MERGER. We refer you to, and suggest you read carefully, our proxy
materials, including the sections under the caption "Liquidation" beginning on
page 35 of our proxy statement which address the pros and cons of a sale of the
Partnership's properties vis-a-vis the merger.
Of course, there is no assurance that the proposed merger will be consummated.
However, barring unforeseen material developments between now and the meeting on
July 24, we believe the merger will be consummated if approved by the limited
partners. We will continue to attempt to engage Aspen with a view to determining
whether Aspen is prepared to present a deal more favorable to the limited
partners than the merger. We will continue to apprise you of any further
developments in this regard.
We have previously advised you of our conclusion that the merger is in your best
interests. To date, there does not appear to be an alternative that is more
favorable to the limited partners. On behalf of your general partner, I thank
you for your reasoned consideration of this matter.
Prometheus Development Co., Inc.,
a California corporation
/s/ John J. Murphy
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By: John J. Murphy
Title: Vice President
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