Question
From: (redacted)
Sent: Friday, January 16, 2004 9:45 AM
To: Verne Michael
Subject: Look Through question
Mike - I called but got voicemail, and thought I'd send a note instead. My question is whether I would beable to "look through" the Special Purpose Entities in the situationbelow so that the transaction would be deemed intraperson exempt?
X has a subsidiary, X-Sub, that Xcontrols by holding 50%+ of the voting securities.
Y holds shares of X-sub, throughtwo Special Purpose Entities whose only assets are the shares of X-Sub.
X wants to acquire shares of X-Subheld by Y's two Special Purpose Entities. The voting securities of the twoSpecial Purpose Entities are worth over $50 million.
X has another sub, X-LLC. Y's twoSpecial Purpose Entities will be merged into X-LLC, so I think X (the UPE) willbe deemed to have acquired the shares of the two Special Purpose Entities fromY. [Note: Y will acquire shares of the UPE X in this transaction. I know I willneed to analyze Y's acquisition of shares of X]
Thus, the question: the two SPEsonly assets / holdings are the voting securities of X-Sub. X could acquire theshares of X-Sub held by the two SPEs without filing, because that would be802.30 exempt (and also under the Act) as X already holds 50% or more ofX-Sub's voting securities. Logically, it seems like X should be able to"look through" the two SPEs and get intraperson treatment since itcoup directly acquire those shares, so long as the two SPEs are just shellswhose only holdings are the shares of X-Sub, but I'm not sure if logic wouldfit within the rules.
Any thoughts?