Question
From: (redacted)
Sent: Friday, February 27, 2004 8:.57AM.
To: Verne,B. Michael
Subject: 802.50/802.51question
Dear Mike:
I believe that following my January 22, 2003 email belowyou confirmed that this is the present position of the PNO, and that the sameresult would apply if the various targets involved purchases of votingsecurities rather than assets - as I saw the informal interpretation, you notedthat U.S. sales attributable to U.S. assets or issuers are not includedin determining whether the $50 million limitation in 802.50 and 802.51 isexceeded". (Staff Comment U.S. & foreign issuers onassets being acquired from same UPE Agree)
My current inquiry - which isbasically whether your quoted statement above only clearly applies when the USissuers or US assets are being acquired directly, rather than through a holdingcompany - may seem obvious, but is designed to make sure that I do not giveyour interpretation an overly broad reading. In the direct purchase scenario,exceptions to aggregation rules seem to kick in to give your statement fulleffect. However, in the holding company scenario, I'm assuming we do in facthave to attribute the sales from US issuers or US assets upward to the holdingcompany (except perhaps if Y is a newly-formed entity, and we are talkingcontributions of assets rather than issuers).
I think we can clarify thisthrough the following questions, all involving a purchase by X of Y's votingsecurities: (Staff Comment Y is foreign)
1. Would all these sales counttoward the $50 million "sales in or into the US" threshold in 802.51? (Staff Comment yes)
2. Sameresult (802.51 threshold exceeded, due to attribution upward) if the listedrevenues were attributable to a US subsidiary and two foreign subsidiaries of Y? (Staff Comment yes)3. If Y is a corporate entitybeing newly formed in connection with this deal under 801.40, from our recentdiscussions I believe the outcome would depend on whether assets orsubsidiaries were being contributed if the US plant was contributed asan asset, it would not count, but if it was L held by an existing US subsidiarythe stock of which was contributed, it -would count. Is this correct? (StaffComment yes also if substantially all of the assets of an entity arecontributed)
4. Again, Y is a newly formedentity, but so is a US subsidiary owning the US plant. In other words, Y's parent company puts the US plant into a newlyformed USholding company, which it then contributes to a newly formed Y, the stock ofwhich is then sold to X. It would seem that under the rule covered in #3, thenewly formed US subsidiary would not have "inherited" the plant'ssales for the prior year, and if this is all in connection with the sametransaction, I would hope that subsequent contribution to Y would not result init being suddenly attributed sales it did not inherit one step earlier. Is it,correct that the US plant's sales also would not count here?
(Staff Comment yes)