Question
From: [redacted]
To: FCT.SERIUS("mverne@ftc.gov")
Date: Wed, Sep 13, 2000 11:40 AM
Subject: HSR Filing Obligations
Please confirm the following analysis with respect to HSR filing obligations.
A and B are a natural persons who mange 8 limited liability companies and 7 corporations (together the "X Companies") owned by Corporation Z. A and B intend to create 15 separate corporate entities (together the "C Companies"), each of which A and B will own jointly 50-50%. Z agrees to sell the assets of the X Companies to the C companies, with each individual C Company acquiring the assets of an individual X Company, for an aggregate value of slightly more than $30 million. A and B also intend to create D and E, corporations that A and B will own jointly 50-50%. Z also agrees to transfer 100% of the voting securities of the 7 X Company corporations to D for an aggregate nominal value of one dollar and all real estate owned by the X Companies (property on which their facilities are located) to E for an aggregate value of less than $15 million. A and B each have personal assets slightly in excess of $10 million, and Z has both assets and sales substantially in excess of $100 million.
Question One: A's income is derived fro salary for managing the X Companies and income fro his personal investments, He is not a professional investment manager and does not invest for anyone's account except his own. With respect to Item 5, please: (i) confirm that A does not report salary and (ii) advise on whether A must report interest or gains from personal investments. If the answer to both parts of the question is that A does not report either type of income, pleas confirm that the correct answer to Item 5 is "None."
Question Two: Please confirm that the transaction must be reported as both an asset and a stock deal notwithstanding that the value of the stock portion is only $1 dollar.
Question Three: Please confirm that, under Rule 802.2(d), the value of the portion of the automobile dealerships that constitute parking lots and office space nay be excluded fro the value of the assets to be acquired.
Question Four: Please confirm that the exemption in 802.1 for real property sold in the ordinary course of business does not apply.
Question Five: Please confirm that each of A and B as UPEs of the C Companies reports on the full aggregate value of the transactions not on 50% of it. {i.e., even if the aggregate value of the transaction were between $15 million and $30 million, the transaction would still be reportable because each Acquiring Person's UPE files on the entire value even if the it only owns 50% of the Acquiring Person.}
Thank you in advance.