Question
From: (Redacted)
Sent: Tuesday, June 29, 20108:09 PM
To: Verne, B. Michael
Subject: 7A(c)(10) and 802.30 Issue
Mike,
I am writing to seek your view on theapplicability of the HSR Act to the following transaction:
Company A is a publicly traded specialpurpose acquisition company (SPAC) and its only assets consist only of cash,cash equivalents and US treasuries. Company A is not newly-formed and hasregularly prepared financial statements. It is its own ultimate parent entity(UPE) and Funds X, Y and Z each own approximately 20% of the voting securitiesof Company A.
Company B is a publicly traded companywith substantial operating assets. Funds X, Y and Z own respectively,approximately 51 %, 10% and 4% of the voting securities of Company B.
Funds X, Y and Z plan to contributetheir shares of Company B to Company A in exchange for shares of Company A. Asa result, X, Y and Z will own respectively approximately 70%, 16%> and 8% ofthe voting securities of Company A.
My analysis of the transaction is asfollows:
1. Fund X's acquisition of voting securities of CompanyA is exempt under Rule 802.4 because the assets of Company A, following itsacquisition of more than 50% of the shares of Company B, will consist only ofassets the acquisition of which would be exempt under Rule 801.21 (cash, cashequivalents and treasuries) and Rule 802.30 (assets of Company B which isalready controlled by Fund X).