1109023 Informal Interpretation

September30, 2011

ViaEmail

Mr.Michael Verne
Federal Trade Commission
Bureau of Competition
Premerger Notification Office
600 Pennsylvania Avenue, NW Room 303
Washington, DC 20580

Re:Request for Informal Interpretation

DearMr. Verne:

Weare writing to seek confirmation of our conclusion that no HSR filing will berequired with respect to the transactions outlined below because they aredeemed to be exempt pursuant to 802.2(b) of the premerger notificationrules.

Backgroundand the Proposed Transactions.

Buyeris an electric membership cooperative that provides wholesale electric power toits retail electric distribution cooperative members. In the 1980s a coalgeneration plant and related assets (the "Facility") was built underownership and operating agreements with three other utilities, and the Buyerthereby became the owner of a 60% undivided interest in the first two units ofthe Facility and their output. One of the other utilities actually operates theFacility on behalf of the Buyer, itself, and the other two utilities under theoperating agreement.

Buyersubsequently entered into several sale-leaseback transactions with respect toits interest in one of the two units of the Facility. Four separate grantortrusts were established for the benefit of four independent investors, and thetrusts separately acquired the Buyer's undivided interest in this unit invarious proportions and leased back these undivided interests to Buyer. Theseacquisitions were made for financing purposes in the ordinary course of theinvestors' businesses. Some of these trust interests have subsequently beenconveyed to new financial investors.

Pursuantto the original leases, Buyer has the option to purchase the respectiveundivided interest held by each trust at a contractually determined price, andit now contemplates exercising such option with respect to some or all of thetrusts.

Anysuch acquisition should be deemed exempted under 16 C.F.R. 802.2(b).Under this section, the acquisition of a "used facility" is deemedexempt if:

The lessor "has held title to thefacility for financing purposes in the ordinary course of the lessor'sbusiness"; and

The lessee "has had sole andcontinuous possession and use of the facility since it was first built as a newfacility."

Thefirst condition is satisfied because each of the grantor trusts holds itsrespective undivided interest in the Facility solely for financing purposes inthe ordinary course of its business and in the ordinary course of the businessof the beneficiary of the trust.

Thesecond condition is also satisfied because Buyer has had continued possessionand use of its interest in the relevant unit of the Facility that is subject tothe sale/leaseback transaction and to its output since the Facility wasconstructed. The fact that three other utilities own minority positions in thisunit is of no importance because the Buyer had sole possession and use of its60% undivided interest in this unit. See the informal interpretation at http://www.ftc.gov/bc/hsr/informal/opinions/0911007.htm. Moreover, the fact that one of the other utilities actually operates theFacility is of no importance, because it operates the Buyer's interest onbehalf of Buyer pursuant to an operating agreement, and Buyer has been theentity with the right of possession and use of its 60% undivided interest.