Question
(redacted)
July 1, 1983
VIA FEDERAL EXPRESS
Mr. Wayne Kaplan
Room 301
Federal Trade Commission
Washington, D.C. 20580
Re:(redacted)
Antitrust Improvements Act
Dear Mr. Kaplan:
In accordance with your request during our telephone
conversation this morning, this letter will supplement my letter
to you of June 29, 1983, concerning the applicability of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the Act)
to the planned acquisition of forty parcel of improve real
property by our clients, ( redacted ) ( redacted )
( redacted ) and/or their nominees, Capitalized terms used
in this letter are as defined in my letter of July 29th.
You requested additional facts relating to the possi-
bility that the Phase II transaction might trigger the Acts
reporting requirements. As we understand it, regardless of the
value of the purchasers total assets, the exercise of the options
in this transaction would not be reportable because the threshold
requirement is Section 7A(a)(2) of the Act would not be met:
none of the Partnerships selling Phase II Properties has total
assets greater than $10,000,000. (The two Partnerships that
own several project whose aggregate value is greater than $10,000,000,
indicated on Exhibit C to my previous letter, are selling those
Properties in Phase I.)
However, if a person with total assets of more than
$100,000,000 exercised all the options and then transferred the
Phase II Properties to another entity with assets greater than
$10,000,000, the subsequent transfer might have to be reported.
It would satisfy the requirements of Sections 7A(a)(2)(C) and
(a)(3), and we have already acknowledged that (a)(1) would be
met in any case. This theoretical possibility, which was not
discussed in my letter of July 29th, would not arise in this
transaction nor the reasons given below.
1) PSP II might acquire all of PSIs rights under
the options and then purchase all of the Phase II Properties.
This is the most likely scenario for the transaction.
Since, as stated above, the exercise of the option
alone would not be reportable, a Notification would
not have to be filed if the transaction took this form.
2) PSI might exercise the option itself and then
sell the Phase II Properties to PSP II. This is th
possibility that concerned you, but it is extremely
unlikely that the transaction would be structured in
this way. Even if it were, neither ( redacted )
(redacted) Ultimate Parent Entity (???????) total assets of
$100,000,000 or more, (???????????) from (redacted)
(redacted) would fail to meet (????) requirements in
Section 7A(a)(2)(C). (?????????????)previous letter,
we are assuming that (redacted)(?????) will be worth
less than $100,000,000.)
3) (redacted) might purchase the Phase II
Properties jointly and then transfer them to another
entity. This scenario is possible, but again, unlikely.
If the transaction did occur in this way, it would
be structured just like the Phase I acquisitions -
the Phase II Properties would be purchased for cash,
(redacted) Notes, and assumption of debt, and the Properties
would then be contributed immediately to a newly formed
general partnership owned by ( redacted ). There
is a possibility that, after the exercise of the options,
(redacted) total assets might be valued at more than $100,000,000.
However, the formation of this non-corporate joint
venture would not be reportable under the Act. In
addition, the transfer of the Phase II Properties to
the non-corporate joint venture would not be report-
able because it would have no assets prior to the trans-
fer. Therefore, Section 7A(a)(2)s requirements would
not be met.
In conclusion, based upon the description of the Phase
II transactions set forth above, the purchase of the Phase II
Properties will not be a reportable event under the Act. We
are therefore assuming, in accordance with your advice, that
no Notification must be filed with the FTC or Justice in connection
with transactions described therein and in my letter of June
29, 1983. Consequently, unless we hear from you to the contrary
by July 8, 1983, no Notification will be filed in connection
with these acquisitions.
Thank you very much for your attention to this matter.
Please do not hesitate to call be or (redacted) of this
office if you have any additional questions.
Very truly yours,
(Redacted)
(Redacted)