Question
From:
(Redacted)
Sent:
Tuesday, December 14, 2010 11:28 AM
To:
Verne, B. Michael
Subject:
HSR Question
Hi Mike,
I've got a somewhat complicated deal Iwanted to run by you to make sure I'm handling the HSR correctly.
PE Fund A (its own UPE) filed for theacquisition of -23% of the voting securities of ZCorp for -$415 million; thistransaction recently closed. Several other PE funds (the"Investors"), all separate persons, also acquired smaller percentagesof ZCorp; their acquisitions were exempt because either the size-of transactionor size-of persons threshold was not met. In the aggregate, Fund A and theInvestors acquired 43% of ZCorp for $760 million.
Fund A and the Investors have nowdecided to restructure their holdings to "pool" their shareholdingswithin a single holding company. They will form a HoldcoLP to which Fund A andeach of the Investors will contribute their shares of ZCorp in exchange for LPinterests in HoldcoLP. As a result, Fund A will hold 55% of HoldcoLP, whichwill hold 43% of ZCorp.
As I see the HSR analysis:
--The formation of HoldcoLP is a JV formation.Fund A's acquisition of 55% of HoldcoLP in connection with that JV formation isexempt under 802.4 because HoldcoLP's only assets will be a non-controllinginterest in ZCorp.
--Each individual Investor'sacquisition of LP interests in HoldcoLP is not reportable because it will notacquire control of HoldcoLP.
--Fund A's acquisition of controlof HoldcoLP, however, results in a secondary acquisition of 43% of ZCorp valuedat $760 million. Since Fund A previously filed HSR to cross the $126.9 millionthreshold, it will need to file HSR again for this restructuring because itintends to cross the $634.4 million threshold.
In Item 2(b) of Fund A's HSR filing, Ithink I've got five (!) boxes to check: (1) formation of unincorporated JVunder 801.50, (2) acquisition subject to 801.30 (type = secondary acquisition),(3) acquisition of voting securities, (4) secondary acquisition, and (5)acquisition of non-corporate interests.
In response to Item 4(c), I would notinclude all the documents submitted by Fund A in the first HSR filing, sincethose relate to Fund A's initial acquisition of the shares of ZCorp, not to therestructuring transaction/JV formation/secondary acquisition. Indeed I expectthere probably will be no 4(c) documents relating to the restructuringtransaction.
Do you agree with all of the above?