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Date
Rule
801.2, 801.12
Staff
Michael Verne
Response/Comments
The size of person test would be applied to the trust. However, continuum only applies if the ultimate transaction is reportable. If trust fails the size of person test, the LLC X acquisition must be analyzed for reportability.

Question

From: (redacted)
Sent: Tuesday, February 03, 2004 3:37 PM
To: Verne,B. Michael
Cc: (redacted)
Subject: FW: Saleof Credit Card Receivables

Hi Mike - We are investigating whether the parties will meet the size oftransaction test in connection with this acquisition. You had mentioned thatthere would be one filing required (on the, continuum theory) and I wanted toconfirm that we should look at the size of the trust for purposes ofdetermining size of parties. I look forward to hearing from you. Thanks.


_---Original Message -----
From: (redacted)
Sent: Tuesday, February 03, 2004 10:08 AM
To: 'rnverne@ftc.gov'
Cc: (redacted)
Subject: Sale ofCredit Card Receivables


Hi Mike - I am hoping that you can confirm that the following is exempt under ordinarycourse .

FACTS:
1) Bank X intends to sell credit card receivables and related assets to LLC Xin the amount of
approximately $600 million.
2) After the transaction, Bank X will have in excess of $200 million in cashand will continue to operate a debit card business although it will no longeroperate a credit card business.
3) Simultaneously with the closing, LLC X will transfer the credit cardreceivables it purchased from Bank X to Trust Y for consideration equal to thepurchase price of the receivables. In order to fund the purchase of thereceivables, Trust Y will sell notes and certificates to investors. Trust Ywill be governed by an indenture, as is typical for these kinds oftransactions.


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