Question
August 10, 2006
Mr.B. MichaelVerne
FederalTrade Commission
Premerger NotificationOffice
Room 303
600 Pennsylvania Avenue, NW
Washington, DC 20580
Re: Sale of GasContracts and Ordinary Course of Business Exemption Dear Mike:
Thisletter confirms our telephone conversation on July 26, 2006, regarding theproposed sale of a portfolio of gas trading, storage, and transportationcontracts as well as the sale of a quantify of stored gas. Based on thehypothetical fact pattern that I described to you, and described below, youconcluded that the sale of certain gas contracts would be exempt under theordinary course of business exemption. Based on our discussion and the analysisbelow, the parties intend to complete the transaction without filing aNotification and Report Form under the Hart-Scott-Rodino Antitrust ImprovementsAct of 1976, as amended ("HSR Act").
Selleris an integrated energy company. Among Seller's diverse energy businesses arecompanies that manage a portfolio of merchant generation power plants,including gas, nuclear, and coal fired power plants. Seller also has tradingbusinesses that market power derivatives contracts based on those assets, includingsupply, storage, and transportation contracts with both commercial andindividual customers.
Sellerplans to sell a package of contracts associated with the gas plants as well asa quantity of stored gas from two of its entities. From one entity, Sellerplans to sell all of that entity's retail gas contracts but will retain otherretail power sales contracts within that same entity. From a different entity,Seller will sell all of its gas storage, transportation, and purchasecontracts, while retaining other contracts for the sale of wholesale powerwithin that entity.
Buyerhas an existing gas trading business and regularly acquires contracts likethose being sold. In addition to the contracts, Buyer may hire some of Seller'scurrent employees. Buyer will not acquire any other assets from Seller.
AlthoughSeller will be selling off its gas-related contracts from these two entities,Seller will remain in the energy-related commodity trading business followingthe transaction, continue its business of the wholesale delivery of energybased on its other energy assets, and continue to trade around those assets.
Basedon the facts described above, you agreed that the transaction would qualify asexempt from filing under the HSR Act pursuant to 802.1 of the HSR Regulations, 16 C.F.R. 802.1, Acquisitions of Goods and Realty in the OrdinaryCourse of Business.
Thankyou very much for your time in discussing these issues. I would greatlyappreciate your confirmation of this analysis. If you have any questions,please call me at (redacted)