Question
October 28, 2004
ViaFacsimile
Mr.B. Michael Verne
Premerger Notification Office
Bureau of Competition, Room 303
Federal Trade Commission
6th Street and Pennsylvania Avenue, N. W.
Washington, D C 205$0
Re: HSR Analysis of ForcedConversions
DearMike:
Iam writing to confirm my understanding of the Hart-Scott-Rodino analysis wediscussed during our September 30, 2004 telephone conversation concerning a "forcedconversion." Following is a description of the facts we discussed, with afew additional "new" facts that I learned since our September 30telephone conversation.
IssuerX is a publicly traded corporation. Stockholder A holds certain shares ofIssuer X voting securities constituting less than 50% of X's outstanding votingsecurities. A also holds convertible notes issued by X. Under the terms of theconvertible note agreement, X has the right to convert such notes intosecurities after December 31, 2004, if the closing price for X voting securities is at least$32.12/share for 30 consecutive trading days (the "Trigger Window").(If' X decides to convert the notes, under the convertible note agreement, itmust notify Stockholder A within two days following the Trigger Window. Suchconversion would be automatic upon notice. The convertible note agreementfurther specifies that if an HSR notification is required in connection with theconversion, the notes shall convert into non-voting securities and suchnon-voting securities would not convert into voting securities until any applicableHSR waitingperiod has expired or been terminated.
Basedon our September 30 telephone conversation, I understand that should X opt toconvert A's notes into X securities, even if HSR threshold tests would be satisfied with respect to theconversion, such notes could convert automatically into voting securities axedno HSR filingwould be required. Please let me know if my understanding is incorrect in anyway.
Asalways, thank you for your help.