Question
From:(redacted)
Sent:Wednesday, May 23, 2007 10:36 AM
To:Verne, B. Michael; Ferkingstad, James H.
Cc:(redacted)
Subject:Exempt acquisition under 802.51(1) and 802.4
Michael:
Asour voicemail indicated, we spoke yesterday with Jim Ferkingstad of your officeabout this issue and he recommended that we speak to you. Here are the relevantfacts:
[Assumethat the Acquiring Party and the Acquired Party meet the size of the persontests; and the acquisition value exceeds the reporting threshold]
A UK Corporation ("Acquiring Party") withno assets in the U.S. or sales into the U.S. is seeking to acquire 100%of the stock in a U.S. Corporation ("Acquired Party"). The AcquiredParty (a holding company) has no sales or operations in the U.S., andits only assets are its holdings in the several foreign issuers.
802.4exempts from reporting "an acquisition of voting securities of an issuer... whose assets together with those of all entities it controls consist orwill consist of assets whose acquisition is exempt from the requirements of theAct ... is exempt from the reporting requirements if the acquired issuer ...and all entities it controls do no not hold non-exempt assets with an aggregatefair market value of more than $50 million (as adjusted).
802.51(1)exempts from reporting "the acquisition of voting securities of a foreignissuer by a foreign person ... unless the acquisition will confer control ofthe issuer and the issuer either: holds assets located in the U.S.... having anaggregate value of over $50 million (as adjusted); or made aggregate sales inor into the U.S. of over $50 million (as adjusted) in its most recent fiscalyear.
Inour deal, if the Acquiring Party were simply purchasing the shares of theforeign issuers, the deal would not be reportable pursuant to 802.51.Therefore, we propose that because a direct purchase of the foreign issuerswould be exempt, and the only assets of the Acquired Party are the otherwise"exempt" shares in the foreign issuer, pursuant to 802.4, theacquisition of the Acquired Party by the Acquiring Party is also exempt fromfiling.