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June 24, 1997
Dear Limited Partner:
As has been described to you in our previous reports, the partnership
agreement for Falcon Classic Cable Income Properties, L.P. (the "Partnership")
includes a provision permitting the general partner or its affiliates to acquire
the Partnership's cable systems for an appraised value to be determined pursuant
to an "appraisal process." The appraisal process contemplates appraisals by
three nationally recognized appraisers, one selected by the independent members
of our Advisory Committee, one selected by the general partner and one selected
by those two appraisers. Accordingly, Xxxxxx Xxxxxxxx LLP, Xxxx Xxxxx
Associates, Inc. and Communications Equity Associates, Inc. were retained to
conduct independent appraisals of the Partnership's cable television systems.
The partnership agreement provides that "appraised value" shall be the median of
the three appraisals.
The results of the appraisals established a median value of $82,000,000
for the Partnership's assets. The full text of these appraisals were all
provided as exhibits to our 1996 Annual Report on Form 10-K as filed with the
Securities and Exchange Commission.
The purpose of our letter is to advise you of the decision of the
general partner and its affiliates to exercise their purchase rights to acquire
the Partnership's cable systems pursuant to the terms of the partnership
agreement. Consistent with the appraisal process, the purchase price will be
$82,000,000 in cash. The Partnership and the acquiring entities today entered
into an Asset Purchase Agreement and have commenced the process of obtaining the
necessary regulatory and other related approvals to complete the transaction.
Closing of the transaction is subject to the receipt of required consents and
approvals, satisfactory financing arrangements and similar matters and,
accordingly, there can be no assurance that the sale will take place unless and
until those conditions are satisfied.
Assuming the closing takes place, the partnership agreement requires
that the Partnership will be dissolved. The partnership agreement also provides
that upon the dissolution of the Partnership, the general partner will take such
actions as are necessary for the winding up of the affairs of the Partnership
and the distribution of its assets to the partners pursuant to the provisions of
the Partnership Agreement after providing for all outstanding debt and other
liabilities. Accordingly, following the consummation of the contemplated sale,
the general partner will wind-up the affairs of the Partnership in accordance
with the terms of the Partnership Agreement, and pay a liquidating distribution
of the remaining funds to the unitholders in termination of their partnership
interests.
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Limited Partners
Re: Falcon Classic
June 24, 1997
Page 2 of 2
Based on the appraised value of $82,000,000, and assuming a
hypothetical liquidation of the Partnership had taken place on March 31, 1997,
the estimated cash distribution to unitholders would have been approximately
$867 per unit (the "Hypothetical Estimated Per Unit Distribution") (based upon
71,879 Units outstanding). The Hypothetical Estimated Per Unit Distribution was
calculated assuming net liabilities on the balance sheet of the Partnership,
excluding property, plant and equipment and intangible assets ("Net
Liabilities") of approximately $19,000,000 (as of March 31, 1997), represented
the only payments, other than certain reserved expenses, that would have been
required to be made by the Partnership prior to the distribution of cash to
unitholders. The Hypothetical Estimated Per Unit Distribution is presented for
illustrative purposes only and does not necessarily represent amounts the
Partnership could have distributed to unitholders on March 31, 1997 or any date
thereafter. The actual distribution will vary depending on, among other things,
the date of the actual dissolution and related distribution to the unitholders.
While we recognize that the estimated distribution is slightly less
than the original issue price of the Units of $1,000 each, every partner who
acquired Units in the original offering will realize a profit on their
investment after considering distributions paid (which vary from $328 to $412
per Unit, depending on the date of purchase).
We are optimistic that this sale can be completed during 1997, subject
to any unforeseen regulatory delays. As the process develops, we will keep you
apprised of its status. Further, should you desire additional information, we
urge you to review our Annual Report on Form 10-K for the year ended December
31, 1996 and our Current Reports on Form 8-K dated August 27, 1996, October 17,
1996, February 6, 1997 and June 24, 1997. To obtain a copy or should you have
any questions, please contact our investor relations department at (800)
433-4287.
Thank you for your continued support.
cc: Account Representatives
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