lib14d9.htm

The name of the subject company is Liberty Tax Credit Plus II L.P., a Delaware limited partnership (the "Partnership"), which has its principal executive offices at 625 Madison Avenue, New York, New York 10022. The general partners of the Partnership are Related Credit Properties II, L.P. ("RCP"), a Delaware limited partnership, Liberty Associates II L.P. ("Liberty II"), a Delaware limited partnership, and Liberty GP II Inc., a Delaware corporation (“Liberty GP” and together with RCP and Liberty II, the “General Partners”). The principal executive office for each of these entities is located at 625 Madison Avenue, New York, New York 10022 and the telephone number is (212) 317-5700. The title of the class of equity securities to which this statement relates is the Partnership's Beneficial Assignment Certificates ("BACs" or “Units”) representing assignments of limited partnership interests in the Partnership. The Partnership currently has 115,917.5 Units outstanding.

This Statement relates to the offer by MPF-NY 2007, LLC, MPF Badger Acquisition Co., LLC, SCM Special Fund, LLC and MPF Senior Note Program, LP (collectively the “Purchasers”) to purchase up to 23,183.5 Units in the Partnership. The Purchasers have offered to pay $30 per Unit, less the amount of any distributions declared or made with respect to the Units between June 27, 2007 (the “Offer Date”) and August 3, 2007 or such other date to which this Offer may be extended (the “Expiration Date”), upon the terms and subject to the conditions set forth in its Offer to Purchase dated June 27, 2007 (the “Offer to Purchase”) and the related Letter of Transmittal. Any distributions made or declared after the Expiration Date, by the terms of the Offer and as set forth in the Letter of Transmittal (which together with the Offer to Purchase and any amendments or supplements thereto collectively constitute the “Offer”), would be assigned by tendering Unit holders to the Purchasers. The Purchasers filed a Tender Offer Statement on Schedule TO (the “Schedule TO”) with the Securities and Exchange Commission (“SEC”) on June 27, 2007.

With respect to all information described herein as contained in the Offer to Purchase and the Schedule TO, including information concerning the Purchasers or their affiliates, officers or directors or actions or events with respect to any of them, neither the General Partners nor the Partnership take any responsibility for the accuracy or completeness of such information or for any failure by the Purchasers to disclose events or circumstances that may have occurred and may affect the significance, completeness or accuracy of any such information.

(1) The Partnership is a limited partnership which was formed under the laws of the State of Delaware. As noted above, the general partners of the Partnership are RCP, Liberty II and Liberty GP. The general partner of RCP is Related Credit Properties II Inc., a Delaware corporation. The general partners of Liberty II are Related Credit Properties II Inc., and Liberty GP. Liberty II is also the special limited partner of the Partnership. The ultimate parent of the General Partners is Centerline Holding Company (formerly known as CharterMac).

The Partnership was formed to invest, as a limited partner, in other limited partnerships (referred to herein as "Local Partnerships") each of which owns one or more leveraged low-income and moderate-income multifamily residential complexes ("Apartment Complexes") that are eligible for the low-income housing tax credit ("Tax Credit") enacted in the Tax Reform Act of 1986, and to a lesser extent in Local Partnerships owning properties ("Rehabilitation Projects", and together with the Apartment Complexes, the "Properties") that are eligible for the historic rehabilitation tax credit (the "Historic Rehabilitation Tax Credit"). Some of the Apartment

The Partnership is currently in the process of disposing of its investments. It is anticipated that this process will take a number of years. During the year ended March 31, 2007, the properties and the related assets and liabilities of eight Local Partnerships and the limited partnership interest in two Local Partnerships were sold. Through the year ended March 31, 2007, the properties and the related assets and liabilities of thirteen Local Partnerships and the limited partnership interest in six Local Partnerships were sold. In addition, as of March 31, 2007, two Local Partnerships have entered into agreements to sell their property and the related assets and liabilities. Subsequently, on April 20, 2007, the property and the related assets and liabilities of one Local Partnership were sold.

Liberty II is the special limited partner in each of the remaining Local Partnerships, as well as a general partner of the Partnership. Liberty II has certain rights and obligations in its role as special limited partner which permit it to exercise control over the management and policies of the Local Partnerships.

The Partnership does not have any employees, directors or officers. All decisions with respect to the management of the Partnership and its affairs are made only with the consent of the General Partners. Except as described below, there are no material contracts, agreements, arrangements or understandings or any actual or potential conflicts of interest between the General Partners or their affiliates and the Partnership and its affiliates.

The General Partners and their affiliates have received or will receive certain types of compensation, fees or other distributions in connection with the operations of the Partnership. The arrangements for payment of compensation and fees, as set forth in the Partnership's Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement"), the Partnership's prospectus and other publicly filed documents, were not determined in arm's-length negotiations with the Partnership.

Pursuant to the Partnership Agreement, the General Partners are entitled to a fee (the "Partnership Management Fee") for their services in connection with the administration of the affairs of the Partnership (including, without limitation, coordination of communications between the Partnership and BACs holders and with the partnerships in which the Partnership has acquired a partnership interest (the "Local Partnerships")). The Partnership Management Fee is payable annually and is determined by the General Partners based on their review of the Partnership's investments, up to a maximum of 0.5% of the Partnership's Invested Assets (as defined below). "Invested Assets" means the sum of (i) any capital contributions made by the Partnership to the Local Partnerships, (ii) the amounts represented by promissory notes given by the Partnership to the sellers of interests of Local Partnerships as part of the Partnership's purchase price, and (iii) the amount of all liens and mortgages on properties when the Partnership acquired interests in Local Partnerships. For the year ended March 31, 2007, the General Partners earned aggregate Partnership Management Fees of $1,016,511. Partnership Management Fees owed to the General Partners amounting to approximately $2,023,000 were accrued and unpaid as of March 31, 2007.

According to the Partnership Agreement, the General Partners are also entitled to receive a disposition fee (the "Disposition Fee") for services rendered in connection with the sale of a property or the sale of the Partnership's interest in a Local Partnership. Payment of such fee is subordinated to the return of Limited Partners and BACs holders of their capital contribution and their 10% priority return. Each Disposition Fee is equal to the lesser of one-half the competitive real estate commission or 3% of the sale price in respect of any such sale (including the principal amount of any mortgage loans and any related seller financing with respect to a property to which such sale is subject). In no event, however, shall the Disposition Fee and all other fees payable to the General Partners and any of their affiliates and any unrelated parties arising out of any given sale exceed in the aggregate the lesser of the competitive rate or 6% of the gross proceeds from such sale. To date, the General Partners have not earned any Disposition Fees.

Liberty II is entitled to receive up to $2,500 per year as an annual fee (the "Annual Local Administrative Fee") from each Local Partnership of which it is a special limited partner. The sum of the Annual Local Administrative Fee and the Partnership Management Fee will not exceed 0.5% of the Partnership’s Invested Assets. Liberty II, as special limited partner of the Local Partnerships, earned an aggregate Annual Local Administrative

Generally, the General Partners and their affiliates are also entitled to reimbursement of expenditures made on behalf of the Partnership. Another affiliate of the General Partners performs asset monitoring services for the Partnership. These services include site visits and evaluations of the Local Partnerships' performance. For the fiscal year ended March 31, 2007, the Partnership incurred liabilities of $168,130, in the aggregate, to the General Partners and their affiliates as reimbursement of expenditures and asset monitoring performed by their affiliate on behalf of the Partnership. Expense reimbursements and asset monitoring fees owed to affiliates of the General Partners amounting to approximately $33,000 were accrued and unpaid as of March 31, 2007.

(2) Except as disclosed below, there are no material contracts, agreements, arrangements or understandings or any actual or potential conflicts of interest between the General Partners or their affiliates and the Purchasers, their executive officers, directors or affiliates. Certain of the Purchasers and their affiliates have previously provided the Partnership and the General Partners with legal opinions and have entered into Indemnification Agreements in connection with prior tender offers for the Partnership’s Units made by those persons.

The Partnership is in the process of disposing of its portfolio of investments in the Local Partnerships. It is uncertain at this time how much money, if any, will be realized by the Partnership and its Unit holders from the liquidation of its investments. The Partnership has not prepared for itself or received from any third party any valuations of its investments. Accordingly, it takes no position on whether or not the Offer and its purchase price are attractive or unattractive to Unit holders from an economic point of view.

The Schedule TO does not identify all recent sales of properties owned by Local Partnerships. On April 20, 2007, the Partnership sold the property and the related assets and liabilities of Whittier Plaza Associates, L.P. to an unaffiliated third party purchaser for a sales price of $1,444,500, resulting in a gain of approximately $934,000.

The Offer raises certain questions about its potential impact on the Partnership’s tax status for federal income tax purposes. The Partnership is currently treated, and has since its inception been treated, as a partnership and a pass-through entity for federal income tax purposes -- a tax status that is desirable and beneficial to the Partnership and its investors. That beneficial tax status might be lost, and the Partnership might be taxed as a corporation, if it were deemed to be a “publicly traded partnership” within the meaning of the Internal Revenue Code and certain regulations promulgated by the Internal Revenue Service. It is uncertain whether or not the Offer, if consummated, might cause the Partnership to be deemed a “publicly traded partnership.” Accordingly, the Partnership will only permit Units to be transferred pursuant to the Offer if the

General Partners determine, in their sole discretion, either that the cumulative total number of transfers in any tax year (including transfers prior to the Offer, transfers pursuant to the Offer and any amount reserved for future transfers outside of the Offer) fall within the safe harbor or that the Purchasers have provided sufficient assurances and protection to the Partnership, its partners and Unit holders to allow the transfers even though the aggregate annual transfers of the Partnership Units may exceed the two percent safe harbor limitation. Such sufficient assurances and protection by the Purchasers would include providing the Partnership with (i) an opinion of counsel that the Offer will not result in the Partnership being deemed to be a “publicly traded partnership” for federal income tax purposes and (ii) an agreement to indemnify the Partnership, its partners and its Unit holders for any loss or liability relating to any adverse tax consequences arising from the Offer. This legal opinion and indemnity must be in a form and content satisfactory to the Partnership and its counsel. Certain of the Purchasers and their affiliates have previously provided the Partnership and its General Partners with legal opinions and have entered into Indemnification Agreements in connection with prior tender offers for the Partnership’s Units made by those persons.

No transfers will be implemented unless and until they are approved by the General Partners in accordance with the provisions of the Partnership Agreement and the Partnership's established practices and policies concerning the transfers of Units. Transferring Unit holders and the Offerors must complete the Partnership's standard transfer documentation and the $50 per selling Unit holder transfer fee must be paid. The Partnership does not accept powers of attorney. Accordingly, the required transfer application must be originally signed by the transferring Unit holder, with appropriate Medallion Signature Guarantees.

To the knowledge of the General Partners, neither it nor the Partnership nor any person acting on its behalf has employed, retained or compensated, or intends to employ, retain or compensate, any person or class of person to make solicitations or recommendations to Unit holders on its behalf concerning the Offer.

Except as otherwise described herein, no negotiation is being undertaken and no discussions are under way by the Partnership or the General Partners in response to the Offer which relates to: (1) a tender offer or other acquisition of the Partnership’s Units; or (2)(a) any extraordinary transaction, such as a merger, reorganization or liquidation, involving the Partnership or any subsidiary of the Partnership; (b) a purchase, sale or transfer of a material amount of assets by the Partnership or any subsidiary of the Partnership; or (3) any material change in the present dividend rate or policy, or indebtedness or capitalization of the Partnership. In addition, there are no transactions, board resolutions, agreements in principle or signed contracts in response to the Offer which relate to or would result in one or more of the items referred to above.

The statements included or incorporated by reference in this document relating to matters that are not historical facts may be deemed to be “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements may be characterized by terminology such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expected,” “estimated,” and “projects” and similar expressions. These statements are based on assumptions and assessments made by the Partnership or the General Partners in light of their experience and perception of historical trends, current conditions, expected future developments and other factors its believes to be appropriate and involve risks and uncertainties relating to the occurrence of future events.

Any such forward-looking statements are not guarantees of future performance and actual results, developments and business decisions may differ materially from those envisaged by such forward-looking statements. Although the Partnership and the General Partners believe that the expectations reflected in such forward-looking statements are reasonable, it cannot give any assurances that these expectations will ultimately prove to be correct. Other risks and uncertainties concerning the Partnership’s performance are set forth in reports and documents filed by the Partnership with the SEC.

	LIBERTY TAX CREDIT PLUS II L.P

		By:	RELATED CREDIT PROPERTIES II L.P., a General Partner

			By:	Related Credit Properties II Inc., its general partner

Date: July 12, 2007
				By:	/s/ Robert L. Levy
					Robert L. Levy
					Chief Financial Officer
					(Principal Financial Officer)

				and

		By:	LIBERTY GP II, INC., a General Partner

Date: July 12, 2007
				By:	/s/ Robert L. Levy
					Robert L. Levy
					Chief Financial Officer
					(Principal Financial Officer)

				and

		By:	LIBERTY ASSOCIATES II, L.P., a General Partner

			By:	Related Credit Properties II, Inc. a General Partner

Date: July 12, 2007
				By:	/s/ Robert L. Levy
					Robert L. Levy
					Chief Financial Officer
					(Principal Financial Officer)

New York, New York, July 12, 2007 -- Liberty Tax Credit Plus II L.P. (“Liberty”) responded to an unsolicited tender offer (the “Offer”) by MPF-NY 2007, LLC, MPF Badger Acquisition Co., LLC, SCM Special Fund, LLC and MPF Senior Note Program, LP (collectively, the “Purchasers”) to purchase up to 23,183.5 Beneficial Assignment Certificates (“Units”) representing assignments of limited partnership interests in Liberty at a price of $30 per Unit, less the amount of any distributions declared or made with respect to the Units between June 27, 2007 and August 3, 2007 or such other date to which the Offer may be extended.

Following receipt of the terms of the Offer, Liberty and its General Partners reviewed and considered the Offer. On July 12, 2007, Liberty and the General Partners filed a Solicitation/Recommendation Statement on Schedule 14D-9 (the “Schedule 14D-9”) with the SEC as required under Section 14(d)(4) of the Securities Exchange Act of 1934. As disclosed in the Schedule 14D-9, Liberty and the General Partners are expressing no opinion and are remaining neutral with respect to the Offer.

Although the General Partners are not making a recommendation with respect to the Offer, as set forth in the Schedule 14D-9, the General Partners believe that Unit holders should carefully consider the following information in making their own decisions of whether to accept or reject the Offer:

Liberty is in the process of disposing of its portfolio of investments in its local partnerships. It is uncertain at this time how much money, if any, will be realized by Liberty and its Unit holders from the liquidation of its investments. Liberty has not prepared for itself or received from any third party any valuations of its investments. Accordingly, it takes no position on whether or not the Offer and its purchase price are attractive or unattractive to Unit holders from an economic point of view.

The Schedule TO does not identify all recent sales of properties owned by Local Partnerships. On April 20, 2007, Liberty sold the property and the related assets and liabilities of Whittier Plaza Associates, L.P. to an unaffiliated third party purchaser for a sales price of $1,444,500, resulting in a gain of approximately $934,000.

The Offer raises certain questions about its potential impact on the Liberty’s tax status for federal income tax purposes. Liberty is currently treated, and has since its inception been treated, as a partnership and a pass-through entity for federal income tax purposes -- a tax status that is desirable and beneficial to Liberty and its investors. That beneficial tax status might be lost, and Liberty might be taxed as a corporation, if it were deemed to be a “publicly traded partnership” within the meaning of the Internal Revenue Code and certain regulations promulgated by the Internal Revenue Service. It is uncertain whether or not the Offer, if consummated, might cause Liberty to be deemed a “publicly traded partnership.” Accordingly, Liberty will only permit Units to be transferred pursuant to the Offer if the General Partners determine, in their sole discretion, either that the cumulative total number of transfers in any tax year (including transfers prior to the Offer, transfers pursuant to the Offer and any amount reserved for future transfers outside of the

Offer) fall within the safe harbor or that the Purchasers have provided sufficient assurances and protection to Liberty, its partners and Unit holders to allow the transfers even though the aggregate annual transfers of Liberty Units may exceed the two percent safe harbor limitation. Such sufficient assurances and protection by the Purchasers would include providing Liberty with (i) an opinion of counsel that the Offer will not result in Liberty being deemed to be a “publicly traded partnership” for federal income tax purposes and (ii) an agreement to indemnify Liberty, its partners and its Unit holders for any loss or liability relating to any adverse tax consequences arising from the Offer. This legal opinion and indemnity must be in a form and content satisfactory to Liberty and its counsel. Certain of the Purchasers and their affiliates have previously provided Liberty and the General Partners with legal opinions and have entered into Indemnification Agreements in connection with prior tender offers for the Units made by those persons.

No transfers will be implemented unless and until they are approved by the General Partners in accordance with the provisions of the Partnership Agreement and Liberty's established practices and policies concerning the transfers of Units. Transferring Unit holders and the Offerors must complete Liberty's standard transfer documentation and the $50 per selling Unit holder transfer fee must be paid. Liberty does not accept powers of attorney. Accordingly, the required transfer application must be originally signed by the transferring Unit holder, with appropriate Medallion Signature Guarantees.