Question
From: (redacted)
Sent: Thursday, April 08, 2004 8:43 PM
To: Verne, Michael
Cc: (redacted)
Subject: Confirmation Email
Mr. Verne
This email is to confirm ourtelephone conversation earlier today. The transaction that we discussed was asfollows:
Our client, Company A, and CompanyB are the sole members of a limited liability company ("LLC X").Company A and Company B's interests in LLC X are 60% and 40%, respectively. Theparties are contemplating a transaction pursuant to which Company A will acquireall of Company B's interest in LLC X. It is anticipated that the purchase pricefor such acquisition will be in excess of $50 million and that both Company Aand Company B satisfy the size of person test. As a result, Company A will havea filing obligation pursuant to Formal Interpretation 15, as it is purchasing100I of the membership interests of LLC X. The transaction will bereportable as the acquisition of all of the assets of LLC X.
The sole asset of LLC X is anarena. LLC X generates revenues from this property by leasing the arena forlarge scale events (professional sporting events, concerts, trade shows, etc.),through advertising and sponsorship arrangements and through concessions salesby third-party vendors., Of the revenues generated by the property in fiscalyear 2003, less than 10% were paid to LLC X by entities included within CompanyA.
Based on the foregoing facts, Iunderstood your position to be that, in connection with the sale of themembership interests of LLC X from Company B to Company A, the transactionvalue would be the fair market value of the entire auditorium, less the portionof the fair market value of the arena exempt from the Hart-Scott-RodinoAntitrust Improvements Act of 1976 (the "Act") as "investmentrental property assets" pursuant to Section 802.5. For purposes ofdetermining the portion of the fair market value of the arena that would beexempt from the requirements of the Act, I understood you to indicate that itwould be permissible for Company A to treat as exempt an amount equal to thefair market value of the entire arena reduced by the value attributable toentities included within Company A.
I respectfully request that youcontact me by email or at (redacted) to confirm that the foregoing accuratelysummarizes our conversation and your views on the matters discussed herein.Thank you for your attention to this matter.