Question
From: (redacted)
Sent: Friday, February 03, 2006 9:56 PM
To: Verne, B. Michael
Subject:Question
Hi Mike.
I hope that you are well.I'm hoping you can help me out in determining the appropriate filingconfiguration for a deal that a client is considering.
Company A owns approximately10% of the voting securities of Company B and Company C. Individual D has aproxy to vote Company A's shares in Companies B and C. Company A also ownsconvertible nonvoting securities in a company currently controlled by IndividualD ("D's Corp"). D's Corp owns approximately 44% of the votingsecurities of Companies B and C. D's Corp has no other assets. Company Aintends to convert its nonvoting securities in D's Corp to voting securitiesand thereby acquire control of D's Corp. This would be a simple analysis for meif it weren't for the proxy. If there were no proxy, I would conclude that theprimary acquisition (i.e., the conversion of the nonvoting securities) was notreportable, and that a filing was required for the secondary acquisitions(assuming, of course, that the jurisdictional tests were satisfied). I am a bitperplexed by how the proxy may alter things. Does the proxy to vote 10% of theCompany B and C voting securities coupled with the direct ownership of 44% ofthe voting securities, make Individual C the UPE of Companies B and C such thatthe reportable event is Company A's acquisition of 50% or more of the votingsecurities of D's Corp rather than the secondary acquisition of control ofCompanies B and C?
Thanks,