Question
December 10, 2009
VIA EMAIL (mverne@ftc.gov) AND
OVERNIGHTCOURIERB. Michael Verne
Federal Trade Commission
Premerger Notification Office
Bureau of Competition, Room 303
6th Street and Pennsylvania Avenue, N.W.
Washington, D.C. 20508
Re: Exemption under 16 C.F.R. 802.5
Dear Mr. Verne:
I write to confirn1 the telephone conversation that (redacted)and I had with you on December 8, 2009, regarding the following proposedtransaction:
Company A is the sponsor of variousinvestment funds whose ordinary business is to buy, sell and lease assets andequipment for investment purposes.
Company B owns the beneficial interestsof a trust (the "Trust"). The Trust, in turn, owns a 1.36% undividedinterest in a nuclear power generating station (the "Property") thatoperates at a fixed location. Company B is a subsidiary of a bank.
Company C is in the business ofgenerating and selling electric power. For twenty years, Company C has leasedthe Property from the Trust and operated it to generate electric power. NeitherCompany B nor the Trust operates, maintains or otherwise manages the Property.Through its ownership of the Trust, Company B receives a portion of the leasepayments (after payment of debt service) from the leasing of the Property to CompanyC.
Company B intends to transfer itsinterest in the Property by selling the beneficial interests in the Trust toCompany A. Company A is acquiring the beneficial interest in the Property forinvestment purposes. After the transaction, Company C will continue to leaseand operate the Property.
Company A, Company B and theirrespective affiliates do not share any common ownership interests with CompanyC.
For purposes of this analysis, we have assumed that the "Size of theParties" and "Size of the Transaction" tests are satisfied.
We discussed whether the Premerger NotificationOffice ("PNO") would consider tills transaction to be an acquisitionof investment rental property pursuant to 16 C.F.R. 802.5 and therefore exemptfrom the HSR premerger notification requirements. You informed us that due tothe fact that (i) the Property is leased to Company C and (ii) Company A andCompany B do not have any common ownership interests with Company C, the PNOtakes the position that this transaction would qualify under the exemption setforth in 16 C.F.R. 802.5. Furthermore, the fact that the ownership interest inthe Properly is held through the Trust does not disqualify the availability ofthis exemption.
Please confirm that you agree with the analysisdescribed above. Thank you for your time and assistance. If you have anyadditional questions or comments, do not hesitate to contact me.