Question
From:
(redacted)
Sent:
Wednesday, May 14,20084:57 PM
To:
Verne, B. Michael
Cc:
(redacted)
Subject: HSRInquiry
Mike:
I hope you arewell. (redacted) and I are analyzing a transaction, a description ofwhich is set forth below. We are writing to seek your views to confirm thatonly "B" needs to make an HSR filing in connection with thetransaction described below.
We look forward tohearing from you.
(redacted)
Transaction OutlineThis transactioninvolves the formation of two LLCs. For purposes of discussion, assume that thesize of transaction and size of person tests are met.
A and B will formtwo LLCs: Parent LLC and Sub LLC. Sub LLC will be wholly-owned by Parent LLC.
In connection withthe formation of the two LLCs:
A will contribute assets to SubLLC in exchange for membership interests in Parent LLC; and
B will contribute cash andcertain notes to Parent LLC in exchange for membership interests in Parent LLC.
At this interiminstant in time, based on the amount of cash that B will contribute to ParentLLC, A will own between 47.8% and 49.3% of the membership interests of ParentLLC and B will own between 52.2% and 50.7% of the membership interests ofParent LLC.
Immediatelythereafter, B will cause Parent LLC to borrow money and distribute the fundsraised in such borrowing to A.
After givingeffect to all of the foregoing, A will own approximately 3% of the membershipinterests of Parent LLC and B will own approximately 97% of the membershipinterests in Parent LLC. None of the steps in this transaction will occurunless and until the money to be borrowed and thereafter distributed asdiscussed above is certain.
It appears that 16C.F.R. Section 801.50 appears to apply to this transaction. Accordingly, only B(and not A or Parent LLC) should be required to file a premerger notificationand report form since B will solely "control" Parent LLC.