Question
From:
(redacted)
Sent:
Thursday, June 12,2008 5:00 PM
To:
Verne, B. Michael
Cc:
(redacted)
Subject:
Confirmation of Call
Mike,
We are working on areorganization pursuant to which Holder A will transfer 50 percent of itspreferred shares (together with accrued dividends) of the target Partnership(the "Preferred Shares") to Holder B and the remaining 50 percent ofits Preferred Shares (together with accrued dividends) to Holder C in exchangefor an aggregate amount of US$113.6 million debentures originally issued by thePartnership to Holder B and Holder C. Each of Holder B and Holder C willcontinue to hold US$56.8 million of Debentures. We are trying to confirmwhether any entity will control the Partnership as a result of thereorganization.
Based on ourtelephone conversation this afternoon, could you confirm the following:
(1) Testsof profits and assets upon dissolution in respect of the control of apartnership are considered variable when the aggregate amount of profit andassets remaining upon dissolution, both of which are required to determine whatpercentage of each is allocated to the holders of partnership interests, canonly be determined as of a particular date. This is true even when thepartnership agreement in question provides a fixed method of allocating profitsand assets on dissolution.
(2) In determiningthe assets upon dissolution, parties can rely on the most recent regularlyprepared balance sheet available at the time of closing rather than preparing anew balance sheet as of the date of closing.
(3) Ifthe test of assets upon dissolution results in there being no assets (ornegative assets) that this means that no one controls the partnership for HSRpurposes.
(4)Parties cannot deduct acquisition goodwill from total assets for the purposesof conducting the control test in Section 801.1(b).
As always, thanksfor your help and best regards,