Question
From:(redacted)]
Sent:Tuesday, May 23, 2006 2:28 PM
To:Ferkingstad, James H.
Subject: HSR question: investment by existinginvestor in LLC pursuant to capital
not deemed to be an event for which filing is required
Subject:
VIA ELECTRONIC MAIL
Mr. James Ferkingstad
PremergerNotification Office
Bureauof Competition -
FederalTrade Commission
600Pennsylvania Ave., NW
Washington,D.C. 20580
Dear Mr. Ferkingstad:
This message confirmsour telephone conversation this afternoon (Tuesday, May 23, 2006) in which you advisedthat it was the view of the premerger notification staff that the hypotheticaltransaction described below would not be a transaction with respect to which anHSR filing would be required to be filed.
The hypotheticaltransaction is described below. Assume that there exists a limited liabilitycompany, the LLC membership interest of which is held by several investors(each, a "Member"). No Member is deemed to "control" theLLC within the meaning of 16 CFR 801.1(b)because each Member holds less than 50% of the voting power of the LLC and eachMember's proportional right to receive distributions upon the dissolution ofthe LLC is less than 50%.
The LLC and several ofthe Members each have annual net sales or total assets in excess of the minimumamounts to satisfy the statutory "size of person" test.
The hypotheticaltransaction is a "capital call" or similar transaction whereby theMembers would make additional capital contributions to the LLC, roughly inproportion to their existing holdings of membership interest. In this capitalcall, the additional capital contributions by certain Members would be indollar amounts in excess of the minimum amount to satisfy the statutory"size of transaction" test. It is possible that some Members mightinvest slightly more or slightly less than their proportionate share, with theresult that the proportional share of total membership interest held by allMembers would be adjusted as a result of the capital call; however, in no eventwould the capital call result in any Member holding 50% or more of the votingpower of the LLC or of the proportional right to receive distributions upondissolution.
Thank you very much forthe assistance and guidance that you have provided in this matter. I woulddeeply appreciate it if you would telephone me at (redacted) or contact me byemail at (redacted) to confirm that this message and the conclusions set forthherein correctly stated your advice.