UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Solicitation/Recommendation Statement Under Section 14(d)(4)
of the Securities Exchange Act of 1934

JCM PARTNERS, LLC

JCM PARTNERS, LLC
(Name of Person(s) Filing Statement)

Class 1 (Non-Put) and Class 2 Units
(Title of Class of Securities)

None
(CUSIP Number of Class of Securities)

Gayle M. Ing
JCM Partners, LLC
2151 Salvio Street, Suite 325
Concord, California 94520
(925) 676-1966
For mail:
P.O. Box 3000
Concord, California 94522-3000

Copy to:		Copy to:
Julie Green, Esq.		Richard Baltz, Esq.
Salem & Green,		Arnold & Porter LLP
A Professional Corporation		555 Twelfth St. NW
1610 Arden Way, Suite 295		Washington, D.C. 20004-1202
Sacramento, California 95815		(202) 942-5000
(916) 563-1818

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

 

 

SCHEDULE 14D-9

This Schedule 14D-9 relates to a tender offer by MPF-NY 2007, LLC, MPF Badger Acquisition Co., LLC, Sutter Opportunity Fund 4, LLC, MPF Senior Note Program I, LP, MPF ePlanning Opportunity Fund, LP, MPF DeWaay Fund 4, LLC, MPF Flagship Fund 12, LLC, MPF Special Fund 9, LLC, MPF Blue Ridge Fund I, LLC, MPF Blue Ridge Fund II, LLC, MPF Special Fund 8, LLC, MPF Income Fund 22, LLC, MPF Income Fund 23, LLC, MPF DeWaay Fund 5, LLC, MPF Flagship Fund 11, LLC (collectively, the “Purchasers”), to purchase up to 2,750,469 Class 1 (non-Put) and Class 2 Units of JCM Partners, LLC, at a price of $1.40 per Unit in cash, less the amount of any distributions declared or made with respect to the Units during the tender offer. The offer to purchase the Class 1 (non-Put) and Class 2 Units is being made pursuant to an Offer to Purchase (the “Offer to Purchase”) and a related Letter of Transmittal, copies of which were filed by the Purchasers with the Securities and Exchange Commission (the “SEC”) on March 30, 2007.

ITEM 1. SUBJECT COMPANY INFORMATION.

	(a)		The name of the subject company is JCM Partners, LLC, a Delaware limited liability company. The address of the principal executive offices of the Company is 2151 Salvio Street, Suite 325, Concord, California 94520 (mailing address of P.O. Box 3000, Concord, California 94522-3000) and its business telephone number is (925) 676-1966.
	(b)		The title of the class of equity securities to which this Schedule 14D-9 relates are the Class 1 (non-Put) Units and Class 2 Units of the Company. The Company believes that the Class 1, 2 and 3 Units may be deemed one legal class of Units. As of April 1, 2007, the Company had the following Class 1, 2 and 3 Units outstanding:

		Owned by				Owned by				Total
Class of Units		Members				Subsidiary				Outstanding
Class 1*			12,801,130				6,251,698				19,052,828
Class 2			14,875,401				7,270,143				22,145,544
Class 3			32,663,679				15,978,261				48,641,940
Total Units			60,340,210				29,500,102				89,840,312

*		Includes 9,533,020 Class 1 Units subject to redemption by June 30, 2007 under the Class 1 Put Rights.

ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.

	(a)		This Schedule 14D-9 is being filed by the Company, the subject company. The Company’s business address and telephone number are set forth in Item 1 above.
	(d)		This Schedule 14D-9 relates to a tender offer by the Purchasers to purchase Class 1 (non-Put) and Class 2 Units of the Company in cash, at a price of $1.40 per Unit, less the amount of any distributions declared or

made during the tender offer. The offer to purchase the Class 1 (non-Put) and Class 2 Units of the Company is being made pursuant to the Offer to Purchase and a related Letter of Transmittal. The tender offer is described in a Tender Offer Statement on Schedule TO (as amended and supplemented from time to time, the “Schedule TO”), which was filed with the SEC on March 30, 2007. As set forth in the Offer to Purchase, the principal business address of each of the Purchasers is 1640 School Street, Moraga, California 94556.

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

(d)

The Company does not believe that there are any material agreements, arrangements or understandings or any actual or potential conflicts of interest between it and its executive officers, members of its Board of Managers, affiliates or the Purchasers and its executive officers, directors and affiliates, other than as described in this Item 3. Ms. Ing serves as our Chief Executive Officer, President, Secretary and Tax Matters Partner pursuant to an agreement with Computer Management Corporation (“CMC”). CMC is owned by Michael W. Vanni, our Chairman of the Board, and Ms. Ing, Mr. Vanni’s wife, has a community property interest in CMC. Pursuant to the agreement with CMC, which is scheduled to terminate on June 30, 2007, we pay CMC a fee of $31,250 a month for Ms. Ing’s services. In addition, we are required to maintain at least $10,000,000 of managers’ and officers’ insurance coverage and $10,000,000 of liability insurance, naming CMC and Ms. Ing as additional insured parties. The agreement is subject to termination upon 90 days’ written notice by either party, and will automatically terminate upon the death or permanent disability of Ms. Ing. On July 26, 2006, we entered into a new Management Services Agreement with CMC, effective July 1, 2007, which is scheduled to terminate on July 31, 2010, on substantially the same terms as our current agreement with CMC, except that we will pay CMC a fee of $35,000 per month for Ms. Ing’s services.

ITEM 4. THE SOLICITATION OR RECOMMENDATION.

	(a)-(b)		The information set forth in the Letter to the Members of the Company, dated April 13, 2007, a copy of which is attached hereto as Exhibit (a)(1), is incorporated herein by reference.
	(c)		After reasonable inquiry, the Company believes that none of its executive officers, Managers or affiliates intends to tender any Units held by them that are subject to the tender offer.

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

(a)

Not applicable.

ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.

(b)

There have been no transactions by the Company, any executive officer, Manager, affiliate or majority-owned subsidiary of the Company in the Class 1, Class 2 or Class 3 Units during the 60 days prior to the filing of this Schedule 14D-9, other than the following:

Repurchases of Class 1, 2 and 3 Units:

		Number of		Average
Date of		Class 1, 2 or 3		Price Per
Transaction		Units		Unit		Where and How Effected
March 1, 2007		42,840		$1.86		Pursuant to the Company’s repurchase program
April 1, 2007		27,681		$1.87		Pursuant to the Company’s repurchase program

Issuances of Class 3 Units to Employees Under the Company’s 2006 Long-Term Incentive Unit Award Plan (the “LTI Plan”):

On April 1, 2007, the Compensation Committee of the Board of Managers of the Company, as administrator of the Company’s LTI Plan awarded 97,200 Class 3 Units to eligible employees under the terms of the LTI Plan. Under the LTI Plan, the employee-recipients were issued 19,440 of those Class 3 Units. Under the LTI Plan, the employee-recipients will receive the balance of the awards in four annual installments, subject to meeting the terms for future issuance under their applicable award agreement under the LTI Plan.

ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.

(d)

Not applicable

ITEM 8. ADDITIONAL INFORMATION.

(b)

The information set forth in the Letter to the Members, dated April 13, 2007, a copy of which is filed as Exhibit (a)(1) hereto, is incorporated herein by reference.

ITEM 9. EXHIBITS.

	(a)(1)		Letter to the Members of the Company, dated April 13, 2007.
	(e)(1)		Executive Management Services Agreement dated as of May 1, 2004, between JCM Partners, LLC and Computer Management Corporation

			(incorporated by reference to Exhibit number 10.8 to our Form 10-Q filed on May 17, 2004 with the SEC).
	(e)(2)		Executive Management Services Agreement dated as of July 1, 2007, between JCM Partners, LLC and Computer Management Corporation (incorporated by reference to Exhibit number 10.9 to our Current Report on Form 8-K, filed on August 1, 2006 with the SEC).
	(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.

April 13, 2007		JCM Partners, LLC 2151 Salvio Street Suite 325 Concord, California 94520 Mailing Address: P.O. Box 3000 Concord, CA 94522-3000 Tel: 925,676,1966 Fax: 925,676,1744 www.rent-one.com www.jcmpartners.com

Dear JCM Member:

Many of our Members have received from MacKenzie Patterson Fuller, LP (MPF) an unsolicited offer to purchase up to 2,750,469 Class 1 and Class 2 Units of JCM Partners, LLC.

SEC regulations require JCM to communicate to you its position regarding this offer. Your Board of Managers met to consider the merits of the MPF offer and decided unanimously to recommend that you reject the offer and not tender either your Class 1 or Class 2 Units at this time. Accompanying this letter is a detailed explanation of the reasoning behind your Board’s recommendation. In summary, we concluded:

	1.		The offering price of $1.40 per Unit is much too low. MPF’s offer is substantially below the price JCM historically has paid to repurchase Units from Members.
	2.		Holders of Class 1 or 2 Units have the right to redeem their Units based on a 2010 appraisal of all of our properties. The Class 1 Units that will be redeemed this June had an Exercise Price of $2.78 per Unit established in 2005, which also was based on an appraisal of all of our properties.
	3.		Members who sell Units to MPF instead of JCM will pay higher taxes on the sale because of the manner in which the IRS treats Section 1250 gain.

This is the fifth time our Members or we have been approached in the past six years with an offer that is far below what the Company believes our Units are worth. All previous overtures were rejected. We recommend you do the same this time.

If you have questions you would like to discuss in detail, please feel free to call me or any other board manager at any time. My cell phone number is 415-608-7000.

Sincerely,

Michael W. Vanni
Chairman

Board of Managers: Henry Conversano, Kenneth Dawson, Frank Deppe, Henry Doorn, Jr., Marvin Helder (Vice-Chairman), Kenneth Horjus, Gayle Ing (CEO), Deborah Jansen, Michael Vanni (Chairman)

EXPLANATORY INFORMATION

Explanation of Reasons

Reason 1:		The $1.40 per Unit (less distributions paid during the tender offer) offer price is too low
1.1		The offer price is significantly below the prices we have paid to repurchase Units during the last two years, as disclosed in our filings with the SEC
1.2		The offer price is substantially below the $2.78 exercise price (less certain distributions) for the Class 1 Unit Put Right that was determined in 2005
1.3		The offer price to be paid to you by MPF will be reduced by distributions JCM pays you during the tender offer
		For example, if the tender offer was extended until June 30, 2007, a seller of Class 1 Units would only receive $1.38 per Unit from MPF, since JCM would have paid that seller a mandatory monthly distribution and a voluntary monthly distribution equal to $0.0067 per Class 1 Unit a month, or $0.02 per Class 1 Unit over the three-month period (April, May and June 2007 distributions).
		MPF has the ability to extend the tender offer. As the tender offer is extended, the offer price paid to you will decrease by the amount of distributions you receive during the tender offer.
Reason 2:		Selling your Units to MPF means you would give up your Class 2 Unit Put Right, which is the right to require the Company to buy back your Class 2 Units
		Similar to the Class 1 Units, the Class 2 Units have a Put Right that can be exercised in September 2010 for redemption by June 2012. In 2010, the Company is required to determine the exercise price for the Class 2 Units in the same manner used in determining the Class 1 Put Right exercise price, including having all of the Company’s properties appraised with current appraisals. This Class 2 Put Right is according to the terms of the Certificate of Designations of the Class 2 Units (“Class 2 COD”).
		Although the Company cannot predict whether the Class 2 Put Right exercise price will be greater or lesser than the Class 1 Put Right exercise price, the Company is hopeful that the Class 2 Put Right exercise price will be at least equal to or greater than the Class 1 Put Right exercise price of $2.78 per Unit.

Reason 3:		Any Member who sells to MPF, rather than to the Company, will pay MORE taxes on the sale
		Members who sell their Units to MPF will be subject to “unrecaptured gain,” which is currently at the 25% federal tax rate rather than the current federal long-term capital gain rate of 15% for most taxpayers. As previously disclosed in our SEC filings, there is a separate federal capital gains tax rate applied to “unrecaptured gain” as described in Section 1250 of the Code. This class of gain includes real property that is subject to an allowance for depreciation. Members are subject to paying this 25% federal tax rate applied to “unrecaptured gain” upon the sale or exchange of a Member’s Units to a third party.
		This means that Members whose Units are redeemed or repurchased by the Company are not subject to this 25% tax rate currently.
		Members who are interested in the tax issues related to a sale of their Units are encouraged to consult their tax advisors and review JCM Partners’ Form 10-K for the year ended December 31, 2006, a copy of which is on file with the SEC under “Part I - Item 1. Business - Possible Tax Consequences for Members.”
Reason 4:		MPF may be able to veto any action that requires a class vote of the Class 1 Unit holders if it acquires enough Class 1 Units
		MPF would control 84% of the voting power of the Class 1 Units held by our Members after the Class 1 Put Units are redeemed in June 2007 if all of the 2,750,469 Units acquired by MPF were Class 1 Units. If this were to happen or MPF acquires a significant block of Class 1 Units, MPF may be able to control the vote of the Class 1 Units on any matter submitted to a vote for approval by the Members requiring a separate class vote of the Class 1 Units.
		The Company views this as a negative factor for all Members, since no individual Member or group of Members currently has the ability to influence the outcome of any separate class vote of the Units.

Additional Considerations

•		Member Circumstances
		The Company recognizes that the individual financial circumstances of each Member may be different, and there may be Members who desire to liquidate their investment in the Company and receive cash for their Units at this time. These holders should carefully review the offer, including the risk factors described therein, consult with their financial, tax and other advisors and consider the information set forth herein in deciding whether to accept the offer.
		In addition, the Company encourages any holders who are considering accepting the offer to contact the Company at the number below to verify information regarding their capital accounts.
•		MPF has misstated the Company’s Obligations with respect to Distributions
		MPF’s tender offer materials state “there can be no assurance as to the timing or amount of any future Company distributions.” This statement is misleading. Under the terms of the Class 1 COD and Class 2 COD, the Company is required to make mandatory monthly distributions to the holders of Class 1 and 2 Units.
		The mandatory distributions required to be paid to the holders of Class 1 and 2 Units are $0.0775 and $0.08 per year per Unit, respectively, paid on a monthly basis. If the Company fails, for any reason, to pay these distributions in a timely manner, it must begin liquidating its assets as quickly as commercially reasonable and must pay the Class 1 and 2 Unit holders interest on any overdue mandatory monthly distributions at the rate of 10% per year.
		Accordingly, holders who sell their Class 1 or 2 Units to MPF will lose their right to receive these mandatory monthly distributions. At the offer price of $1.40 per Unit, these distributions equal an annual distribution rate of 5.5% and 5.7% per Class 1 and 2 Unit, respectively.

If you are considering tendering your Units or need further information about your capital account, please contact our Investor Relations Department at 888-880-1966.