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Date
Rule
802.1
Staff
Patrick Sharpe
Response/Comments
MV concurs

Question

May 28, 2003

Re: Application of 16 C.F.R. 802.1

DearMr. Sharpe: ,V a

Thisletter serves to follow-up and confirm a recent conversation you and I had regardingthe application of 16 C.F.R. 802.1 to the following transaction.

Ourfirm represents a company ("Company A") with sales and assets inexcess of $100 million dollars. Company A is a leasing company which, amongother things, owns various portfolios of loans, leases and conditional salesagreements.

CompanyA is in negotiations with Company B for the purchase from Company B of certainassets valued at approximately $79 million dollars. Company B is also a leasingcompany with sales and assets in excess of $100 million. The assets to beacquired by Company A from Company B consist of a portion (approximately 11 %)of a large portfolio of loans, leases and conditional sales agreements owned byCompany B. 'The assets covered by the loans, leases and conditional salesagreements consist of an assortment of capital equipment (including cars,trucks, tractors, trailers, construction equipment, vessels and railcars).Managerial control over the capital equipment subject to the leases, loans andconditional sales agreements resides with parties unaffiliated with Company A.

Youshould recall that during our conversation we also discussed the fact thatCompany B is seeking to exit the leasing business. Although this present salerepresents a small percentage of Company B's total portfolio, and Company Bwill remain in this line of business after the sale of these assets to Company A,Company B may be actively seeking additional purchasers for the remainingportion of its portfolio.

Duringour conversation, you agreed with me that the sale described in this letter isexempt from the Hart- Scott-Rodino reporting requirements pursuant to 16 C.F.R. 802.1 as the purchase of assets in the ordinary course of business. Youalso confirmed for me that despite Company B's intention of exiting thebusiness, because this transaction represents the purchase of only a smallportion of Company B's existing portfolio, it does not amount to the sale of an"operating unit" as defined under section 802.1.

Theparties would like to complete this transaction as quickly as possible and Iwould greatly appreciate a call from you confirming the content of this letterat your earliest possible convenience.

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