Question
From: (redacted)
Sent: Wednesday, July 11, 2007 7:44 PM
To: Verne, B. Michael
Cc: Johnson, Deidre J.
Subject: Question
Hi, Mike -
I'm hoping to get your thoughts on this situation.
Our clientwill acquire voting securities of an issuer in the form of convertiblepreferred stock. This acquisition does not require an HSR notification becausethe value of the shares is less than $59.8 million. Thereafter, two thingscould happen that might require an HSR filing:
1.Theclient, as a holder of convertible preferred stock, may have increases in itsconversion rights as a result of terms of the preferred stock (i.e., the numberof shares of common it will receive upon conversion may increase from time totime) at a time when the value of the securities held has increased beyond the$59.8 million threshold. It seems that the addition of these rights would nottrigger an HSR filing requirement because there would be no acquisition ofadditional shares. Please confirm.
2.Atthe time of conversion from preferred voting shares to common voting shares thevalue of the shares to be held may have crossed the $59.8 million threshold andthe client's percentage share of the outstanding voting securities of theissuer may have increased from the percentage the client held at the time ofits initial investment. However, there would be no change in the client'spercentage share of the outstanding voting securities of the issuer as a resultof the conversion. In these circumstances, would an HSR filing and observationof the waiting period be required before the shares could be converted?