Question
April 30, 2007
Mr. B. Michael Verne ViaE-mail & Regular Mail
Federal Trade Commission
Premerger Notification Office
Room 303
600 Pennsylvania Avenue, NW
Washington, DC 20580
Re: Availability of802.2(b) Exemption for Lease Buyout Dear Mike:
Thank you for speaking with me todayconcerning the application of the Hart-Scott-Rodino Antitrust Improvements Actof 1976 (the "HSR Act") to my client's plan to buy out a lease fromits current lessor. I am writing to summarize the facts I presented to you andto confine your conclusion that no Premerger Notification and Report Form isrequired under the HSR Act.
As I described this morning, ourclient, Company A, filed for approval under the HSR Act to purchase a number ofexisting power plants in 1999. The HSR waiting period expired without action.Immediately before closing, Company A transferred the right to obtain legaltitle to two of the plants to Company B, an entity engaged in the business ofentering into lease financing arrangements. Company A has therefore been thesole lessee of those plants since 1999. In addition, Company A has consistentlyand exclusively operated and possessed the two plants and has made allnecessary regulatory filings on behalf of those plants.
Company B is now inbankruptcy. Accordingly, Company A, as the lessee, plans to buy out the leasefrom Company B. Prior to 1999, the facility was owned and operated by a partyother than Company A or Company B.
This morning wediscussed the applicability of 16 C.F.R. 802.2(b) (certain acquisitions of realproperty assets; used facilities) to the proposed transaction. In particular,we discussed whether the exemption was available to the transaction I describedeven though Company A, the current lessee, was not the operator of the facilitywhen it originally went into service but has been the operator of the facilitycontinuously since 1999.
Based on the facts described above,you agreed that the transaction would qualify as exempt from PremergerNotification and Report filing under the HSR Act because the proposedtransaction was in the spirit of the exemption provided under 802.2(b) of theHSR Regulations, 16 C.F.R. 802.2(b).
Thank you very much for your time, and please let me know at yourearliest convenience if I have summarized our conversation incorrectly or ifyou have any concerns regarding the applicability of the HSR Act to thistransaction. I can be reached at (redacted).