Question
From:(redacted)
Sent: Wednesday, October 12, 2005 7:30 PM
To:Verne, B. Michael
Subject: Fair MarketValuations
Mike,
We have a client that is acquiring all of the issued and outstanding votingsecurities of a corporation. The purchase price in the letter of intent isstated as an amount equal to $90,000,000 minus the indebtedness of the companythat is outstanding as of the closing date. It is our understanding that atthis time the parties are unable to reasonably estimate the value of theindebtedness and therefore we believe that the acquisition price isundetermined.
If the buyer's board of directors or its delegee makes a good faithdetermination (within 60 days of closing) that the fair market value of thevoting securities is less then $53.1 million, then my understanding is that theparties are allowed to rely on that determination, and no HSR filing is required. Can you confirm this understanding? Is no HSR filing required even if the indebtedness is such that, atclosing, the buyer is required to pay actual consideration that is greater than$53.1 million?
Can you also confirm the following: (i) to rely on a fair market valuedetermination, the buyer's board of directors would need to make thedetermination in good faith and within 60 days of closing; (ii) thedetermination could be documented with resolutions by the buyer's board ofdirectors or its delegee; and (iii) in the event the parties are not able toclose the transaction within 60 days of such determination, the buyer's boardof directors or its delegee would need to make a similar determination in asimilar fashion to be able to rely on a fair market value determination?