SC 14D9 1 v036696_sc14d9.htm
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

SCHEDULE 14D-9

SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION 14(d)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934


BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV, A
LIMITED PARTNERSHIP
(Name of Subject Company)
 

BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV, A
LIMITED PARTNERSHIP
(Name of Person(s) Filing Statement)
 

UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
 

100650209
(CUSIP Number of Class of Securities)


Susan F. Donahue, Esq.
c/o MMA Financial, Inc.
101 Arch Street
Boston, Massachusetts 02110-1106
(617) 439-3911
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)


o Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.
 


SCHEDULE 14D-9

 
ITEM 1. SUBJECT COMPANY INFORMATION.

The name of the subject company is Boston Financial Qualified Housing Tax Credits L.P. IV, A Limited Partnership, a Massachusetts limited partnership (the “Partnership”). The address of the principal executive offices of the Partnership is 101 Arch Street, Boston, Massachusetts 02110-1106, and its telephone number is (617) 439-3911. The General Partners of the Partnership are Arch Street VIII, Inc., which serves as the Managing General Partner, and Arch Street IV Limited Partnership.

The title of the class of equity securities to which this Schedule 14D-9 relates is the Partnership’s units of limited partnership interest (“Units”). As of February 28, 2006, 68,043 Units were held of record by approximately 3,087 Limited Partners.

ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.

This Schedule 14D-9 is being filed by the Partnership, the subject company. The General Partners of the Partnership are Arch Street VIII, Inc., which serves as the Managing General Partner, and Arch Street IV Limited Partnership. The business address of the Partnership and of the General Partners is 101 Arch Street, Boston, Massachusetts 02110-1106.

This Schedule 14D-9 relates to a tender offer by Anise, L.L.C. (the “Offeror”) to purchase up to 9,500 Units of the Partnership, in cash, at a price of $172.00 per Unit, without interest, less the amount of any distributions per Unit made by the Partnership to the Unit holders after the date of the offer (the “Anise Offer”). The Anise Offer to purchase the Units is being made pursuant to an Offer to Purchase and a related Agreement of Transfer and Letter of Transmittal. The tender offer is described in a Tender Offer Statement on Schedule TO, which was filed with the SEC on February 21, 2006. The Offer to Purchase, incorporated by reference into the Schedule TO (the “Offer to Purchase”), reports that the principal business address of the Offeror is 1001 Walnut, Kansas City, Missouri 64106.

ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.

To the knowledge of the Partnership, there are no material agreements, arrangements or understandings or any potential conflicts of interest between the Partnership, its executive officers, directors or affiliates and the Offeror, its executive officers, directors or affiliates.

ITEM 4. THE SOLICITATION OR RECOMMENDATION.

Based on the factors listed below, the Managing General Partner is recommending against tendering Units with respect to the Anise Offer. The Managing General Partner believes that Limited Partners should carefully consider, with the assistance of their financial advisors, the following factors in making their own decision about whether to accept or reject the Anise Offer:
 

-  
Now that the primary purpose of the Partnership in obtaining tax credits has been achieved, the Managing General Partner has filed with the Securities and Exchange Commission preliminary consent solicitation materials seeking Limited Partner approval to liquidate and dissolve the Partnership and pay the Limited Partners their final cash distribution, which is estimated to be between $172.25 and $402.20 per Unit. The Anise Offer is for less than the low end of this estimated range.

-  
Anise evidently believes that there is an upside potential above the low end of the estimated liquidation value range, and is seeking to profit by offering what Anise knows to be, and acknowledges in its offer materials is, the lowest end of the estimated liquidation value range. If the liquidation proceeds exceed the lowest end of the estimated liquidation value range, Anise will capture that extra value for itself.

-  
To help decide whether to pursue the liquidation and dissolution plan, the Managing General Partner estimated the potential sales values of the assets of the Partnership and the expected net sales proceeds to the Partnership. The Managing General Partner reviewed the income generating capabilities of these assets and then valued them on the basis of their projected incomes, taking into account appropriate disposition methodologies based upon the various regulatory restrictions associated with each such asset. Factors that affect the value of the Partnership’s assets, such as market conditions, tax legislation, capitalization and interest rates, change over time and the Managing General Partner cannot predict those changes or give assurances that future estimates of value will be the same. As the likely disposition date approaches and a thorough examination of the specific factors that affect each asset is made, the appropriate sales price is established. This is an estimate based only upon an internal analysis of the portfolio. It is not based upon secondary market activity of the limited partnership units nor of the assets of the Partnership and does not reflect or constitute an independent appraisal or valuation study. There can be no assurance that the stated value could or would be obtained in the event of liquidation. However, based upon the Managing General Partner’s experience and familiarity with the markets for conventional multifamily housing and government assisted low income housing, the Managing General Partner is of the view that its estimates of values for the properties reflect a reasonable range of expected sale prices should the assets be marketed and sold.

Based upon the foregoing, the distribution of estimated liquidation proceeds pursuant to the Partnership Agreement is depicted below:

ESTIMATED SOURCES OF FUNDS
 
LOW
  
HIGH
  
Estimated Distributions from Estimated Residual Proceeds from Sales of Properties
 
$
7,868,455
  
$
23,605,364
  
Current Unaudited Cash and Cash Equivalents (through 12/31/05)
  
$
4,318,529
  
$
4,318,529
  
TOTAL ESTIMATED SOURCE OF FUNDS
  
$
12,186,984
  
$
27,923,893
  
               
ESTIMATED USES OF FUNDS
              
Estimated Solicitation/Communication Expenses
  
$
210,000
  
$
235,000
  
Estimated Liquidation and Dissolution Costs
  
$
256,000
  
$
322,000
  
TOTAL ESTIMATED USES OF FUNDS
  
$
466,000
  
$
557,000
  
               
ESTIMATED LIQUIDATION PROCEEDS BEFORE TAXES
  
$
11,720,984
  
$
27,366,893
  
               
ESTIMATED PER INVESTMENT UNIT (Based on total of 68,043 investment units)
  
$
172.25
  
$
402.20
  
 
 
While the Managing General Partner believes the assumptions upon which it has relied are reasonable and provided in good faith based on its experience and knowledge of the assets and their markets, the Managing General Partner cannot and is not providing any assurance that the actual proceeds received for the Partnership assets will be within estimated ranges or that expenses associated with such dispositions will fall within the range estimates provided. Actual sale prices may be lower than estimated by a significant amount.
 
-  
Anise is a member of a group of dissident Limited Partners (the “Park Group”) on whose behalf Park G.P., Inc. recently filed preliminary consent solicitation materials with the Securities and Exchange Commission to attempt to remove the current General Partners of the Partnership and elect a member of the group as general partner. The Managing General Partner strongly believes that the Park Group is trying to take control of the Partnership for its own special agenda and that its agenda is contrary to the best interests of the Limited Partners other than the Park Group. The Park Group may be differently situated from most other Limited Partners, and may have different tax and other considerations that may cause it to act contrary to the interests of the other Limited Partners.

-  
Certain members of the dissident group of which Anise is a member are controlled by an individual named David L. Johnson. In March of 2002, a federal court civil jury found that Mr. Johnson committed fraud and breach of fiduciary duty in his dealings with limited partnerships managed by companies controlled by Mr. Johnson. In addition to an award of compensatory damages, a jury awarded $1.6 million in punitive damages against Mr. Johnson, and several companies that Mr. Johnson controlled were removed as general partners of the limited partnerships. (National Corporate Tax Credit Fund et al. v. Bond Purchase, L.L.C., et al.).1
 
1 The Park Group’s consent solicitation materials note that, after the jury finding and pending appeal, the parties to the litigation settled their disputes and, following the settlement, the court vacated the judgment. However, those subsequent events do not change the fact that the jury that viewed the evidence found that Mr. Johnson committed fraud and that he acted with “malice, oppression or fraud.”
 
 
-  
In April 1998, the Court of Appeals of Missouri ruled that a company owned by Mr. Johnson and his wife had attempted to “play fast and loose with the court” in that company’s maneuvers to increase its voting control over a publicly traded real estate partnership. The court also ruled that Mr. Johnson’s company’s actions “epitomize a lack of good faith in the subject matter of the suit” and that his company “is also barred [from obtaining the requested relief] by its unclean hands.” (State of Missouri ex. Rel. Kelcor, Inc. v. The Nooney Realty Trust, Inc.)

-  
The Anise Offer is a partial tender offer. If the Anise Offer is oversubscribed, Anise will accept tendered Units on a pro rata basis, which means that Limited Partners who tender all of the Units they own may still remain as Limited Partners of the Partnership. If Limited Partners tender their Units, the Park Group may own more than 44% of the Units and may seek to control the Partnership.

-  
Indeed, Anise acknowledges that one of the reasons it is making the tender offer is to acquire additional Units to try to remove the General Partners and elect a new general partner who is a member of the Park Group. The Managing General Partner believes that the Park Group has its own agenda that is not in the best interests of the other Limited Partners.
 
-  
Anise’s statement that the General Partners’ affiliate will receive an “undisclosed fee” in connection with Leawood Manor is inaccurate and misleading. The fees Anise refers to will not be paid unless the property is sold for an amount that exceeds the sum of the debts and liabilities of the Leawood local limited partnership plus the amount of the adjusted capital contributions of the partners of the Leawood local limited partnership. The Managing General Partner believes it is unlikely that the sales price will exceed that amount.

-  
The Partnership Agreement gives the Managing General Partner the right, on behalf of the Partnership, to impose restrictions or refuse to permit the transfer of Units without an opinion of counsel that the transfer will not result in material adverse tax consequences to the Partners. The Managing General Partner, on behalf of the Partnership, therefore may require Anise to provide such an opinion of counsel in a form satisfactory to the Managing General Partner before permitting the transfer of Units pursuant to the Anise Offer.

-  
Unit holders who tender their Units will lose the right to receive any future distributions from the Partnership, including distributions from any sale of the Partnership’s properties.

-  
Unit holders who tender their Units will forego the benefit of any future income and loss allocations from the Partnership with respect to such Units.

-  
Neither the Partnership nor, to the Managing General Partner’s knowledge, the Offeror has retained a third party to perform an evaluation or an appraisal to determine whether the price offered in the Anise Offer is fair.
 
 
 
-  
Certain Unit holders who tender their Units could recognize a taxable gain upon sale of their Units.

Although we recommend against tendering Units in the Anise Offer, Unit holders should consult their advisors regarding their individual financial, tax, legal and other consequences of the Anise Offer.

Neither the Partnership nor the General Partners of the Partnership currently intends to tender or sell any Units that are held of record or beneficially owned by them pursuant to the Anise Offer.

Given that Anise is a member of the Park Group and that the Park is seeking to remove the Managing General Partner, the Managing General Partner has an interest in making its recommendation that Limited Partners reject the Anise Offer. However, the Managing General Partner has a fiduciary obligation to act in the best interest of the Partnership, and believes that it is doing so by recommending that Limited Partners reject the Anise Offer.

ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.

Neither the Partnership nor any person acting on its behalf has employed, retained or compensated, or intends to employ, retain or compensate, any person to make solicitations or recommendations to the Unit holders on its behalf concerning the Anise Offer.

ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.

Neither the Partnership nor the General Partner or any of their executive officers, directors, affiliates or subsidiaries have affected any transactions in the Units during the past 60 days.
 
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.

None.

ITEM 8. ADDITIONAL INFORMATION.

None.

ITEM 9. EXHIBITS.

(a)(1) Letter to the Limited Partners, dated February 28, 2006.
 

 
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.

 
     
 
BOSTON FINANCIAL QUALIFIED HOUSING
TAX CREDITS L.P. IV, A LIMITED PARTNERSHIP
(Registrant)
 
 		  
 		  
 
  By:   Arch Street VIII, Inc., its Managing
General Partner
     
 
 		  
 		  
 
Date: February 28, 2006
          By:  /s/ Michael H. Gladstone
 
Michael H. Gladstone
 
Vice President and Clerk
     
 
 		  
 		  
 
           By:  /s/ Jenny Netzer
 
Jenny Netzer
 
President