SC 13E3 1 pro13e3.txt PROMETHEUS INCOME PARTNERS SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Schedule 13E-3 RULE 13e-3 TRANSACTION STATEMENT Under Section 13(e) of the Securities Exchange Act of 1934 Prometheus Income Partners, a California limited partnership (Name of Issuer) Prometheus Income Partners Prometheus Development Co., Inc. PIP Partners-General, LLC PromHill, Inc. The DNS Trust Helen P. Diller Sanford N. Diller (Name of Person(s) Filing Statement) Limited Partnership Interests (Title of Class of Securities) 742941107 (CUSIP Number of Class of Securities) Craig S. Seligman, Esq. Paul, Hastings, Janofsky & Walker LLP 555 So. Flower Street, Twenty-Third Floor Los Angeles, California 90071 (213) 683-6000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Person(s) Filing Statement) This Statement is filed in connection with (check the appropriate box): a. [X] The filing of solicitation materials or an information statement subject to Regulation 14A (Sections 240.14a-1 through 240.14b-2), Regulation 14C (Sections 240.14c-1 through 240.14c-101) or Rule 13e-3(c) (Section 240.13e-3(c)) under the Securities Exchange Act of 1934 (the "Act"). b. [ ] The filing of a registration statement under the Securities Act of 1933. c. [ ] A tender offer. d. [ ] None of the above. Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: [ X ] Calculation of Filing Fee Transaction Valuation Amount of filing fee $1,714/Unit * 15,544 Units = $22,461,080 * 0.0002 + $26,642,416 4,181,336 * 0.000092 = $4,878 [X] Check box if any part of the fee is offset as provided by Section 240.0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or schedule and the date of its filing. Amount Previously Paid: $4,878 Form or Registration No: Schedule 14A Filing Party: Prometheus Development Company Date Filed: June 27, 2000 (as amended through April 25, 2002) Introduction This Rule 13E-3 Transaction Statement (the "Statement") relates to the proposed merger of PIP Acquisition, LLC into Prometheus Income Partners, a California limited partnership. The general partner of the partnership is Prometheus Development Co., Inc., all of the equity of which is held by The DNS Trust. Sanford N. Diller and Helen P. Diller are co-trustees and co-beneficiaries of the DNS Trust. The holder of 100% of the member interests of PIP Acquisition is PIP Partners - General, LLC, 99% of the member interests of which are held by The DNS Trust, and 1% of the member interests of which are held by Jaclyn B. Safier. PromHill, Inc. is the manager of PIP General. All of the equity of PromHill is held by The DNS Trust. Sanford N. Diller is the sole director and the President and Chief Financial Officer of PromHill. Vicki Mullins is a Vice President and Assistant Secretary of PromHill, and John Murphy is a Vice President and Assistant Secretary of PromHill. The following Cross Reference Sheet is supplied pursuant to General Instruction F to Schedule 13E-3 and shows the location in the Proxy Solicitation Statement filed on April 25, 2002 by PIP General of the information required to be included in response to the items of this Statement. The information in the Proxy Solicitation Statement is hereby expressly incorporated by reference in answer to the items in this Statement, and the Cross Reference Sheet set forth below shows the location in the Proxy Solicitation Statement to the information required to be included in response to the items of this Statement, as are the Appendices thereto. The Proxy Solicitation Statement will be completed and, if appropriate, amended, prior to the time it is first sent or given to limited partners of the Partnership. This Statement will be amended to reflect such completion or amendment of the Proxy Solicitation Statement. Cross Reference Sheet Item of Schedule 13E-3 Location in Proxy Solicitation Statement pursuant to Schedule 14A Item 1. Summary Term Sheet Questions and Answers About the Transaction Item 2. Subject Company Information (a) Summary - Parties to the Transaction - Prometheus Income Partners (b) Summary - The Meeting - Record Date; Voting Power; The Meeting - Record Date; Voting Power; Additional Information Concerning Units (c) Summary - Parties to the Transaction - Prometheus Income Partners; Background - Fairness of the Transaction - Negative Factors Considered; Background - Alternatives to the Transaction - Continued Ownership of Prometheus Income Partners; Additional Information Concerning Units (d) Questions and Answers About the Transaction; Summary - Parties to the Transaction - Prometheus Income Partners; Background - Reasons for the Merger; Background - Fairness of the Transaction - Positive Factors Considered; Background - Fairness of the Transaction - Negative Factors Considered; Background - Alternatives to the Transaction - Liquidation; Background - Alternatives to the Transaction - Continued Ownership of the Partnership; The Parties - Prometheus Income Partners - Construction Defects; The Parties - Prometheus Income Partners - Distributions; Additional Information Concerning Units - Plans or Proposals (e) Inapplicable (f) The Parties - Prometheus Income Partners - Recent Transactions; Additional Information Concerning Units Item 3. Identity and Background of Filing Person (a)-(c) Summary - Parties to the Transaction - PIP Partners - General; Summary - Parties to the Transaction - PIP Acquisition; The Parties - Prometheus Income Partners - Background; The Parties - PIP Partners - General; The Parties - PIP Acquisition Item 4. Terms of the Transaction (a)-(c) Questions and Answers About the Transaction; Summary - Structure of the Transaction; Summary - The Meeting - Quorum; Vote Required; Summary - Conditions to the Transaction; Summary - Consideration and Financing; Summary - Accounting Treatment; Summary - Federal Income Tax Consequences; Background-Reasons for the Merger (d) Questions & Answers About the Transaction (e) Other Matters (f) Inapplicable Item 5. Past Contacts, Transactions, Negotiations and Agreements (a) - (c) Background - Reasons for the Merger; The Parties - Prometheus Income Partners - Recent Tender Offers; The Parties - Prometheus Income Partners - Recent Transactions; Additional Information Concerning Units; Additional Information Concerning Units - Principal Holders of Units; Additional Information Concerning Units - Contracts, Arrangements and Understandings (e) Inapplicable Item 6. Purposes of the Transaction and Plans or Proposals (b) Inapplicable (c) Summary - Consideration and Financing; The Merger - Effects of the Merger on Prometheus Income Partners; Additional Information Concerning Units - Plans or Proposals Item 7. Purposes, Alternatives, Reasons and Effects (a), (c) Questions and Answers About the Transaction; Background - Reasons for the Merger; Background - Fairness of the Transaction - Positive Factors Considered (b) Background - Alternatives to the Transaction Considered (d) Summary - Structure of the Transaction; Summary - Federal Income Tax Consequences; Merger - Effects of the Merger on Prometheus Income Partners; The Merger - Federal Income Tax Consequences; Item 8. Fairness of the Transaction (a), (b) Questions and Answers About the Transaction; Summary - Fairness of the Merger; Background - Fairness of the Transaction (c) Questions and Answers About the Transaction; Summary - The Meeting - Quorum; Vote Required; Background - Fairness of the Transaction - Positive Factors Considered; Background - Fairness of the Transaction - Negative Factors Considered; The Meeting - Vote Required (d) Questions and Answers About the Transaction (e), (f) Inapplicable Item 9. Reports, Opinions, Appraisals and Negotiations (a) Questions and Answers About the Transaction; Background - Fairness of the Transaction; The December 2000 Appraisal; The September 2001 Appraisal; Opinion of Financial Advisor (b) The December 2000 Appraisal; The September 2001 Appraisal; Opinion of Financial Advisor; Appendix C-1; Appendix C-2; Appendix D; Appendix E; Appendix F (c) Appendix C-1; Appendix C-2; Appendix D; Appendix E; Appendix F Item 10. Source and Amounts of Funds or Other Consideration (a), (d) Summary - Consideration and Financing (b) Questions and Answers About the Transaction; Summary - Conditions to the Transaction; Summary - Consideration and Financing (c) Summary - Consideration and Financing; The Merger Agreement - Expenses Item 11. Interest in Securities of the Subject Company (a) Questions and Answers About the Transaction; Summary - Parties to the Transaction - Prometheus Income Partners; Summary - Parties to the Transaction - PIP Partners - General; Summary - Parties to the Transaction - PIP Acquisition; Summary - Structure of the Transaction; The Parties - Prometheus Income Partners - Principal Unitholders; Additional Information Concerning Units - Principal Holders of Units (b) The Parties - Prometheus Income Partners - Recent Transactions; Background - Reasons for the Merger; Additional Information Concerning Units Item 12. The Solicitation or Recommendation (d) Questions and Answers About the Transaction; Summary - The Meeting - Quorum; Vote Required; Background - Fairness of the Transaction - Positive Factors Considered; Background - Fairness of the Transaction - Negative Factors Considered; The Meeting - Vote Required; The Meeting - Recommendations of the General Partner (e) Questions and Answers About the Transaction; The Meeting - Recommendations of the General Partner Item 13. Financial Statements (a) Summary Selected Financial Data of the Partnership; Incorporation of Certain Documents by Reference (b) Inapplicable Item 14. Persons/Assets, Retained, Employed, Compensated or Used (a), (b) Summary - Proxy Solicitation; The Meeting - Solicitation of Proxies Item 15. Additional Information. (b) Proxy Statement in Its Entirety Item 16. Exhibits (a) Letter to Limited Partners filed with the Commission on June 29, 2000; Letter to Limited Partners filed with the Commission on November 27, 2000; Letter to Limited Partners filed with the Commission on March 12, 2001; Letter to Limited Partners filed with the Commission on October 18, 2001; Letter to Limited Partners filed with the Commission on March 15, 2002; Letter to Limited Partners Transmitting Proxy Statement; Notice of Meeting of Limited Partners; Proxy Statement in Its Entirety; Appendices to the Proxy Statement (b) Not Applicable (d) Appendix C-1; Appendix C-2; Appendix E (f),(g) Not Applicable Signature. After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. PROMETHEUS INCOME PARTNERS, a California limited partnership By: PROMETHEUS DEVELOPMENT CO., INC., a California corporation, Its General Partner By: ________________________________ Name: _________________________ Title: _________________________ PROMETHEUS DEVELOPMENT CO., INC., a California corporation By: _____________________________________ Name: ______________________________ Title: _____________________________ PIP PARTNERS - GENERAL, LLC, a California limited liability company By: PROMHILL, INC., a California corporation, Its Manager By: ___________________________________ Name: ____________________________ Title: ____________________________ PROMHILL, INC., a California corporation By: _____________________________________ Name: ______________________________ Title: _____________________________ SANFORD N. DILLER AND HELEN P. DILLER AS TRUSTEES OF THE DNS TRUST By: ______________________________________ Name: Helen P. Diller Title: Trustee By: _______________________________________ Name: Sanford N. Diller Title: Trustee SANFORD N. DILLER By: ______________________________________ Name: Sanford N. Diller HELEN P. DILLER By: ______________________________________ Name: Helen P. Diller