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Date
Rule
801.13. 802.30, 801.50, 802.4
Staff
Michael Verne
Response/Comments
09/27/2009 1. Analyze separately 2. This not intraperson for A because 802.30 specifically says it does not apply to formations under 801.50 3. The future commitment to sell $50 MM in assets to N only goes to the size-of-person of N, not the value of the interests being acquired in N by A and B 4. Yes -for purposes of 802.4. A and B still would not have to file for the formation of N because for each of them under 802.4, N only holds $40 MM in non-exempt assets no matter how much cash is contributed Note: Neither A nor B has a filing obligation in either the initial $40 MM acquisition of assets or the formation of N. However, B will have to file within a year of the second sale of assets by A to N because the agreement for A to sell the $50 MM in assets to N (with B as the UPE) has been entered into within 180 days of the agreement for A to sell the $40 MM of assets to B, therefore aggregation is required under 801.13(b )(2). B would file as the acquiring person and A would file as the acquired person for an acquisition of $90 MM in assets. K Walsh concurs.

Question

From: (Redacted)
Sent: Monday, August 24, 20094:09 PM
To: Verne, B. Michael

Subject: HSR Question

Mike,

I have a somewhat unusual potential transaction and I was hoping to get your thoughts/confirmation. The facts are as follows:

Step 1: A sells $40 million worth of assets to B.

Step 2: B and A each contribute $40 million worth of assets to N (a newly created 50/50 JV)

Step 3: A and B also agree that N will purchase an additional $50 million worth of assets from A within 3 years. In the meantime, N will lease the $50 million worth of assets from A.

Questions:

  • Are steps 1 and 2 considered together as the formation of a new JV or should they be analyzed separately?
  • I think either way, A is not required to file because of the intercompany exemption and N is not required to file because of 802.41. B is not required to file because it is only acquiring half of the JV or $40 million and therefore the size of the transaction test is not met.
  • Considering step 3, do I need to add the $50 million into the value of N? If so, am I correct that A and N would still not need to file because of the above reasons and that B would not need to file because its half of N is still valued under $65.2 million?
  • If each party contributes cash at the time N is created, is that cash still treated as an exempt asset?

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