Question
From:(redacted)
Sent:Monday, October 09, 2006 6:05 PM
To:Verne, B. Michael
Subject:FW: 4(c) question
DearMike,
Iattach below some correspondence we had in March regarding 4(c) searches. I amnow faced with a similar situation, but not certain that the principle belowwould apply here. It seems to me the principle you articulated in March is thatofficers/directors and investment committees of investors who will hold only aminority interest in the acquiring entity need not be searched.
Thecurrent transaction is structured as follows: a newly-formed entity (NewCo)will acquire a target. The size of person and transaction tests are met. NewCohas 3 investors: investor #1 (will hold 45%), investor #2 (will hold 45%) andinvestor #3 (management group of the target, will hold 10%). No oneperson/entity will have the contractual right to appoint 50% of the board ofdirectors. I have a two-step question:
(1)is it still the case that I need notsearch officers/directors and investment committee members of investor #1 andinvestor #2 that will hold 45% each (they are not affiliated with each other)
(2)if no, does the answer hold true if theofficers and directors of NewCo have not yet been appointed -- meaning no onewould be searched?
Thankyou,
(redacted)
-----Original Message-----
From: Verne, B. Michael[mailto:MVERNE@ftc.gov]
Sent: Wednesday, March22, 2006 1:01 PM
To:(redacted)
Subject: RE: 4(c) question
Ifthe Newco has officers and directors, they would definitely be included. Iwould also search the files of the investment committees that in aggregate hold50% or more of Newco and have the same GP.
-----Original Message-----
From:(redacted)
Sent:Wednesday, March 22, 2006 9:28 AM
To:Verne, B. Michael
Subject: 4(c) question
Mike,
I'mtrying to determine exactly who would qualify as an officer or director forpurposes of a 4(c) search. This is a question similar to some you have answeredpreviously (informal staff opinions 0512023 and 0503019).
Irepresent a newly-formed company (NewCo) making a reportable acquisition. Eightdifferent funds invest in NewCo, none holding 50% or more of NewCo's votingsecurities, nor having the contractual right to appoint 50% of the board. Thus,the NewCo is its own UPE.
Eachof the eight investing funds is composed of multiple investors. Four of theinvesting funds have the same GP ("GPI"), two others have the same GP("GP2"), and the final two have the same GP ("GP3").
Fromyour opinion number 0503019, it seems to me that to the extent that the threeGPs have investment committees (or an equivalent type of group), the members ofthose investment committees may be considered officers or directors forpurposes of a 4(c) document search. However, based on opinion number 0512023,perhaps only the investment committee of the GP for the funds constituting amajority of the shares of NewCo should be searched. For example, say that eachinvesting fund holds 12.5% of NewCo. Thus, only the investment committee of GP1would be acting as general partner for investors holding a majority stake(aggregated) in NewCo, and therefore perhaps only that investment committeeshould be searched.
IfNewCo has officers and directors, is it sufficient to search these people, ormust I still search the investment committee (or equivalent) of GP1, andperhaps GP2 and GP3 as well? Are there any others that may need to be searched?
Many thanks, Mike.