Question
July 31, 2002
VIA FACSIMILE
Michael Verne., (Redacted)
Premerger Notification Office
Federal Trade Commission
600 Pennsylvania Avenue
Washington. D.C. 20580
Dear Mike:
As I stated I would, I am writing to confirm our telephone conversation-this afternoon in which (Redacted) P.C. also participated. (Redacted) and I described the following situation to you:
The (Redacted) recently obtained a deed in lieu of foreclosure to substantially all of the assets of Hospital A. This deed was obtained in lieu of a foreclosure on a mortgage held by (Redacted). Hospital A continues to operate under its pre-existing management, and the deed is currently held in escrow pending the sale by (Redacted) the assets to an independent party. (Redacted) recently conducted an auction of the assets. Our client, Hospital B, won the auction. Before taking title to the assets, B will be required to obtain approval from a state licensing authority. In the interim, (Redacted) requires that Hospital B execute a management agreement with Hospital A and take over the management of Hospital A. Once state approval is obtained, a closing will be held. Hospital As assets will then be released from escrow to (Redacted) which will then convey them to Hospital B.
Our view, in which you concurred, was that because B's purchase of the assets of A will be from (Redacted) federal agency, the acquisition will be exempt from HSR reporting pursuant to Section 7A(c)(4) of the HSR Act, which exempts "transfers to or from a Federal agency." And because the acquisition will be exempt, there is no impediment to A and B entering the management agreement required by (Redacted).
If we do not hear back from you, we will assume you agree with our analysis.
Thanks and regards.