Question
From:(redacted)
Sent:Tuesday, January 09, 2007 4:53 PM
To:Verne, B. Michael
Subject:HSR Question re Redemption of Shares
Dear Mike,
Ihave a question regarding a transaction involving a S40 million purchase ofsecurities combined with a $20 million redemption of shares by the target,which redemption amount should be exempt pursuant to 802.30. I am aware ofFormal Interpretation No. 190, which indicates that such structures can beconsidered transactions or devices for avoidance where the buyer is"instrumental" in causing the redemption. I also have reviewedseveral informal interpretations (including 0404012, 0403003, and 0503014) andhave concluded that (1) there are legitimate reasons for the structure(including the desire to finance by debt rather than equity), and (2) as in0404012 the target itself will take out the loan pursuant to the mergeragreement.
Anadditional fact here is that the buyer will be the lender to the target for the$20 million used to redeem the shares. But the buyer still is not paying anyadditional consideration here. Does this additional fact change the outcome of0404012 such that the PNO would "look through" the transaction andconclude that the value of this transaction is in fact $60 million as opposedto the $40 million purchase price?