Question
Apri127, 2004
Michael Verne
Premerger Notification Office
Federal Trade Commission
6th & Pennsylvania Avenue, NW
Washington, DC
Dear Mike:
I am writing to follow up on and confirm the telephoneconversation that (redacted) and I had with you on April 26 regarding the saleof four crude oil tankers.
The facts as we described to you and hereby confirm are asfollows:
1. Four foreign-flagged ultra-large crude oil tankers(the "Vessels") are owned by foreign entities, whose ultimate parententity is foreign.
2. The Vessels are to be sold to a foreign entity,whose ultimate parent entity is also foreign.
3. All of the Vessels are registered under foreign flag,have their home port outside the U.S.and routine maintenance is performed in ports outside the U.S. In fact these ships have neverentered a U.S. port nor can they because oftheir size.
4. The revenue of the Vessels is generated solely bychartering their capacity to carry cargoes of crude oil. More specifically, theVessels are chartered to various companies (the "Charterers") tocarry crude oil, which is not owned by the Vessel owners, from productionsources in the Middle East to variousdestinations outside the Middle East.
5. In 2003, the Vessels called on non-U.S. ports butnever called on a U.S. port. In those instances wherethey approached the U.S., they offloaded their cargoes ata point 20 or more miles off the coast of the U.S. to foreign flag ships in a process known as"lightering." The lightering services, which transport the crude tothe U.S., are arranged by the Charterer ofeach of the Vessels and not by the owners of the Vessels. Each Vessel'sresponsibility for the crude ends when the cargo is discharged to thelightering vessel.
6. The Charterers of the Vessels are generally not U.S. entities (although at least inone case the ultimate parent entity of the charterer is a U.S. corporation).
Based onthe foregoing facts, we understand that you agree with our conclusion that theVessels are foreign assets - they are "assets located outside the UnitedStates.'." They have no physical connection with the U.S.
We alsodiscussed that under the foregoing facts the Vessels would be deemed to have noU.S. revenue. The Vessels rendertheir transportation services solely outside the U.S. - those services begin and end outside the U.S. With rare exception, theCharterers of the vessels are foreign entities (although at least in one casethe ultimate parent entity of the charterer is a U.S. corporation). We understand from our conversation, though, thatthe nationality of the charterer does not change the conclusion thattransportation services rendered outside the United States do not generate U.S.sales for purposes of the Section 802.50(a) exemption.
As theforegoing shows that the contemplated transaction is the sale of exempt foreignassets, our clients do not intend to file under the HSR .Act for thistransaction. Accordingly, we would be grateful if you could let us know whetheryou disagree with any material part of this letter.
Thankyou very much for your assistance.