Question
From:(REDACTED)
Sent: Wednesday, June 27, 2007 9:47 AM
To:Verne, B. Michael
Subject: HSR Questions
Mr. Verne,
I would like to confirmour analysis on two unrelated transactions.
Transaction 1
Limited Partnership A("A") is acquiring 100% of the voting stock of Target Corporation ("Company")through: (i) the acquisition of 15% of the voting stock of Company directlyfrom management individuals; and (ii) the acquisition of 100% of the membershipinterest of Limited Liability Company B ("B") which in turn directlyholds 85% of the voting stock of Company. B does not hold any other assetsother than its interest in Company. Assume the size-of-person thresholds aremet. For H5R purposes, the UPE of Company is a natural person who holds 100% ofthe membership interest of B.
A is paying a total of$33 million cash for the securities to be acquired in this acquisition ofCompany. A is also paying off $100 million of Company's debt.
Question: Do we include the$100 million debt payoff in calculating the size of transaction?
Although we are directlyacquiring both voting stock of Company and B's LLC membership interest, sinceB's only asset is Company, can we look through B directly to Company and treatthis as an acquisition of voting stock in which case we do not includethe debt?
Transaction 2
Adult siblings A, B, Cand D each directly own: (i) 25% of Corporation X ("X"); 25% ofCorporation Y ("Y"); and 25% of Corporation Z ("Z").Therefore X, Y and Z are each their own UPEs for H5R purposes.
Newco LLC("Newco") is being formed by X, Y, and Z each contributing all oftheir assets in exchange for membership interest in Newco. As a result, Z willhold 70% of the membership interest of Newco (based on the greater value of theassets it contributed) and X and Y will hold the remaining 30%. X, Y, and Z arestill each held 25% by A, B, C and D.
Newco was formed for thepurpose of forming a JV with another entity. The formation of the JV isH5R reportable and H5R notifications will be submitted for the JV formation.
Question: Is the formation ofNewco exempt under 7a(c)(10) and/or 802.30?
Although Z acquired acontrolling interest in Newco, this is really just a re-organization andconsolidation of the assets of X, Y and Z, which remain held in the someproportions by A, B, C and D, for ease of entering into the JV.
Please let me know ifyou need additional information on either of these transactions. Yourassistance is appreciated.
(REDACTED)