Question
From: (redacted)
Sent: Thursday, January 12, 2006 7:26 PM
To: Ovuka, Nancy M.
Subject:New Facilities Exemption
As a follow up to ourconversation, this is fact pattern. Please assume the size of the parties testis met by the UPE's of all parties.
(Redacted)("Seller") owns 100% of the membership interests of (redacted)limited liability company (the "Company").
The Company is a specialpurpose entity formed for the sole purpose of developing a 63 MW wind powerplant (the "Facility") for sale to a third party. At this point theCompany's sole assets consist of leases, permits, contracts and developmentrights. Construction of the Facility has not yet begun. The Company has norevenues.
Seller intends to enter intoa Membership Interest Purchase Agreement with a buyer ("Buyer")pursuant to which Buyer will acquire 100% of the Membership Interests of theCompany for a purchase price of $6 million. Simultaneously at the Closing inwhich Buyer will take ownership of the Company, the Company will enter intocontracts for the construction of the Facility with an aggregate contract priceof approximately $80 million.
If Seller had constructedthe Facility and sold it to Buyer after it was completed but before it begangenerating revenues (other than test revenues), the sale should qualify for theNew Facilities exemption.
Assuming that the $53.1million filing threshold has been met (which it may not under this factpattern), it seems that the proposed sale should similarly qualify for the NewFacilities exemption since all of the requirements have been met but instead ofselling a completed facility the Company is being sold with the constructioncontracts to complete the facility.