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Date
Rule
802.63
Staff
Michael Verne
Response/Comments
Agree.

Question

From:

(redacted)

Sent:

Friday, May 15, 2009 5:02 PM

To:

Verne, B. Michael

Cc:

(redacted)

Subject: 802.63

Mike,

Thank you for taking the time to speak to (redacted)and me yesterday. The following is to confirm that you agree with ouranalysis that the proposed acquisitions of equity by existing note holders inconnection with a proposed restructuring under Chapter 11 qualifies forexemption under Rule 802.63 as a bona fide debt workout.

We wanted to confirm that when you said thetransaction is exempt if the shares were acquired out of bankruptcy, you meanas a result of the bankruptcy process as opposed to outside the bankruptcyprocess.

The relevant facts are as follows:

1.The proposed restructuringwill be funded in part with the proceeds of an equity offering for which theissuer has received a back-stop commitment from certain note holders. Under theequity offering, the issuer will offer to the holders of notes of one of itssubsidiaries the right to purchase voting securities to be issued upon theissuer's emergence from bankruptcy, in exchange for a cash payment related tothe equity value of the issuer upon emergence of the issuer from bankruptcy.

  • The proposed restructuring also contemplates that upon emergence of the issuer from bankruptcy the note holders of the same such subsidiary will receive voting securities of the issuer upon cancellation of their notes.
  • With respect to certain note holders, the entityacquiring the voting securities in the offering and upon cancellation of thenotes, will be part of the same private equity group as the note holder butwill be a different "person" for purposes of the HSR Act and Rules.All private equity funds and investment companies acquiring the equity purchasedebt in the ordinary course of business and purchased the debt in thistransaction in the ordinary course.

    For purposes of this analysis, you can assume thatthe note holders acquired their notes before public announcement of theissuer's bankruptcy filing.

    Please confirm that you agree that the proposedacquisitions described above are exempt from HSR Act requirements under Rule802.63.

    About Informal Interpretations

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