Question
From:
(Redacted)
Sent:
Friday, May 06, 2011 2:57 PM
To:
Verne, B. Michael
Cc:
(Redacted)
Subject: HSR Question re 802.2(h)
Mike, hope all is well with you. (Redacted)and I are working on a transaction and would appreciate your advice.
My client, Company A, is engaged in theunderground gas storage business and is acquiring (redacted) client,Company B (by merger of a newly formed subsidiary of Company A into Company B,with Company B the surviving entity), a company also engaged in the undergroundgas storage business. The purchase price will be in excess of $66.0 million.Company A and B meet the HSR size of person tests.
Company B stores natural gas forindependent third parties through the injection of the customer's gas intodepleted oil and gas reservoirs owned by Company B. B receives monthly paymentsfrom its customers in exchange for providing storage services in itsunderground storage facilities.
Company B does not store gas for itselfother than to maintain a quantity of natural gas (pad gas) in the storagefacility so as to provide sufficient pressure to permit the extraction ofcustomer gas. Company B does not engage in trading activities with respect tothe stored gas, nor does it permit third parties to borrow excess pad gas,although it has the right to do so.
HSR Analysis
In our view, this transaction is withinthe scope of FTC informal staff opinion letter 0805001 and would be exempt froman HSR filing on the basis of the warehouse exemption in 16 C.F.R. 802.2(h).Could you please advise if you agree with this interpretation?