High River Limited Partnership
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
July 8, 1999
Via Facsimile
XxXxxx Partners X.X.
XxXxxx Real Estate Management, Inc.
Xxxxxx X. XxXxxx
c/oWilliam Xxxxx, Esq.
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The purpose of this letter is to inform you that, on or before
the fifth day following the satisfaction of the Commencement Condition described
in the third paragraph hereof, High River Limited Partnership ("High River") and
certain of its affiliates (collectively, the "High River Parties") will commence
tender offers (the "Offers") for the units of limited partnership interest (the
"Units") of the limited partnerships (the "Partnerships") set forth in the table
below at the prices per Unit set forth in the table, net to the Limited Partners
in cash. The High River Parties will offer to purchase any and all such Units
tendered to them by Limited Partners of each Partnership, provided that, after
giving effect to such purchases, the High River Parties will own more than 50%
of all outstanding limited partnership units of that Partnership (including any
Units they already own).
The aggregate payment to Limited Partners being offered by the
High River Parties for all of the Units is $15,000,000 higher than the estimated
aggregate payment to Limited Partners in the proposed transaction with an
affiliate of Whitehall Real Estate Limited Partnership XI (the "Whitehall
Transaction"), as disclosed in your June 25, 1999 press release. The High River
Parties are able to offer Limited Partners a higher payout because, unlike the
Whitehall Transaction, we are not offering to purchase McRemi (which we believe
has no value) or Fairfax Associates II, Ltd. or XxXxxx Summerhill I, L.P. (which
we believe were improperly included in the Whitehall Transaction because they
are not part of the pending class action litigation). It is likely that the High
River Parties would have offered even higher prices for Units, but for the deal
you made with Whitehall which burdens the Partnerships with an
unnecessary and wasteful $18,000,000 "break up" fee (plus up to an additional
$1,500,000 to cover Whitehall's expenses). As our counsel informed you in a
December 1, 1998 letter (a copy of which is attached), the High River Parties
believe that it is inappropriate to impose any such fees on Limited Partners and
would not have attempted to impose a "break up" fee had we been permitted to
participate in the bidding process for the Partnerships.
The sole condition (the "Commencement Condition") to the
commencement of the Offers by the High River Parties is that the court enter an
order rejecting in its entirety the proposed settlement of the pending class
action litigation and directing further that any new settlement not be approved
without due notice to, and an opportunity to object by, Limited Partners. In
addition to the Offers giving Limited Partners the benefit of higher and faster
per Unit payouts than the Whitehall Transaction, this condition to the
commencement of the Offers will preserve all existing claims against the general
partner of the Partnerships and its affiliates. As soon as the Commencement
Condition is satisfied, the High River Parties will place in escrow the sum of
$307,724,439, which represents the full purchase price for all Units in the
Partnerships not already owned by the High River Parties.
The following table compares the per Unit prices being offered
for each Partnership by the High River Parties to the estimated per Unit payout
from the Whitehall Transaction:
WHITEHALL PAYOUT HIGH RIVER
PER UNIT OFFERING PRICE
PARTNERSHIP (Estimated) PER UNIT(1)
XXXXXX IX $424.00 $444.99
XXXXXX X $234.00 $246.33
XXXXXX XI $221.00 $232.48
XXXXXX XIV $214.00 $225.21
XXXXXX XV $160.00 $168.75
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(1) Of course, any distributions made with respect to the Units after June 25,
1999 would be netted against the per Unit prices offered by the High River
Parties.
WHITEHALL PAYOUT HIGH RIVER
PER UNIT OFFERING PRICE
Partnership (Estimated) PER UNIT1
XXXXXX XX $92.00 $94.82
XXXXXX XXIV $347.00 $357.61
XXXXXX XXV $0.50 $0.52
XXXXXX XXVI $0.27 $0.28
XXXXXX XXVII $10.54 $10.76
XXXXXX XII $77.00 $83.62
XXXXXX XXI* $99.00 $125.46
XXXXXX XXII* $0.25 $0.26
XXXXXX XXIII* $0.28 $0.31
HEARTH HOLLOW $40,115.00 $42,713.43
XXXXXX MIDWEST $25,840.00 $29,117.01
REGENCY NORTH $75,916.00 $79,841.75
*Current Income Units Only
Very truly yours,
HIGH RIVER LIMITED PARTNERSHIP
By: Riverdale LLC, its general partner
By:
Xxxx X. Icahn, Member
