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Date
Rule
801.90
Staff
Michael Verne
Response/Comments
07/10/2007 1. Unless there is some legitimate reason for organizing the transaction in this manner, it could invoke Section 801.90. 2. The repayment of the loan to A shareholders in C voting stock could be reportable for the shareholders if any one or more are individually acquiring securities valued in excess of $59.8 MM and otherwise meet the jurisdictional requirements of the Act.

Question

From: (redacted)

Sent: Tuesday, July 10, 2007 1:30 PM

To: Verne, B. Michael Subject: HSR question

Hi Mike

I write to get your interpretation of the following fact pattern:

Closely-held Company A intends to purchase Company B. The shareholders of closely-held Company A organize a new corporation, Company C, which has no balance sheet, and is its own UPE. Company A will use Company C to effect the transaction, and loans Company C enough cash to purchase Company B. Because Company C does not have a balance sheet, and its only assets are the cash used to effect the transaction, Company C's size of person is $0. Accordingly, no HSR filing is required. Subsequent to Company C's acquisition of Company B, Company C repays Company As shareholders in Company C stock.

1) Is there an HSR rule that precludes such a transaction?

2) Is the repayment of the loan a reportable event?

Thanks for any guidance.

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

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