Question
From: (redacted)
Sent: Tuesday, September 27, 2005 11:52 AM
To: Verne, B. Michael
Subject: 802.30/801.90with respect to an LLC
Hi Mike,
I am writing toyou to request your guidance with respect to a redemption transaction. Ourclient (Company A) is one of five members in an LLC. The LLC (pursuant toredemption agreements between the LLC and three exiting members) is redeemingthe membership interests of three of the five members of the LLC. Company A andone other member will remain as members of the LLC.
My understandingis that the LLC's acquisition of its own membership interests from three of thefive members of the LLC is exempt under 802.30 assuming that the transactionhas a legitimate business reason for being structured as a redemption. I wantto confirm that, provided that the two members remaining after the redemptionare not instrumental in causing the redemption, the transaction would not beconsidered an 801.90 avoidance scheme.
If, after theredemption, Company A has a controlling interest in the LLC then I don'tbelieve that Company A would have any filing requirements under the HSR Act for future purchases of membership interests in the LLC asCompany A will already hold a controlling interest in the LLC. However, if,after the redemption, Company A has a minority interest in the LLC, then 1believe that Company A would have a filing obligation under the HSR Act in the event that Company A purchases a controlling interestin the LLC that otherwise meets the size of transaction and person thresholds.Could you confirm that my understandings are correct.