We agree that the sale of the loan portfolio you describe qualifies as a sale of exempt assets under 7Ac1. All nonexempt assets of Project Finance Business X that are being sold should be valued to determine whether their value exceeds the HSR threshold.
Question
From: Whitehead, Nora
Sent: Monday, August 13, 2018 2:53:37 PM (UTC-05:00) Eastern Time (US & Canada)
To: [Redacted]
Cc: [Redacted]
Subject: RE: 15 USC 18a(c)(1) / 7A(c)(1) Exemption for sale of loan portfolio
We agree that the sale of the loan portfolio you describe qualifies as a sale of exempt assets under 7Ac1. All nonexempt assets of Project Finance Business X that are being sold should be valued to determine whether their value exceeds the HSR threshold.
From: [Redacted]
Sent: Friday, August 10, 2018 3:00:43 PM (UTC-05:00) Eastern Time (US & Canada)
To: [Redacted]
Cc: [Redacted]
Subject: 15 USC 18a(c)(1) / 7A(c)(1) Exemption for sale of loan portfolio
All,
Hope everyone is doing well. We have a transaction that we believe is exempt, but wanted to confirm the analysis. The facts of the transaction are below.
Company A (the UPE) has Project Finance Business X that provides project finance loans in a particular industry segment. Company A plans to sell to Company B, in an asset deal, the entire portfolio of loans of Project Finance Business X. As part of the transaction, the employees who support servicing the loans of Project Finance Business X will likely transfer to work for Company B. Post-transaction Company A still will retain numerous other assets and will continue to operate (with no plans to sell) Commercial Financing Business Y that originates loans for purchase of large capital equipment secured by such equipment as well as an equipment leasing business. Company A also will continue to engage in the provision of credit, including secured debt and mezzanine debt.
We have reviewed Informal Staff Interpretations including Nos. 1104004, 0701012 and 0110006 as well as Interpretation Nos. 99 and 101 of ABA Premerger Notification Practice Manual (5th Edition, 2015). We understand the Staff's position is that, where a buyer is acquiring a portfolio of loans from a seller, including all the credit assets of an operating unit of the seller, that transaction will be exempt as a transaction in the ordinary course under section 7A(c)(1) of the Act, provided that the seller continues to have one or more other portfolios of loans or continues to be in the business of providing other forms of credit. We understand that this exemption applies whether or not the buyer will also be acquiring staff and/or facilities servicing the portfolio of loans (although any assets other than those for servicing of the portfolio must be separately analyzed for potential reportability under the Act). You may assume that in this instance any assets not relating to the servicing of the portfolio of loans are worth far less than $84.4 million.
We believe that Company A’s sale of Project Finance Business X to Company B fits within the statutory ordinary course exemption of section 7A(c)(1) of the Act because Company A will retain and continue to operate Commercial Financing Business Y and will continue to engage in its other credit businesses (including secured debt and mezzanine debt). The exemption applies even though the employees supporting Project Finance Business X are expected to transfer to Company B.
Please confirm that you agree with our analysis.