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Date
Rule
7A(a)(2)
Staff
Wayne Kaplan
Response/Comments
The attached letters were reviewed by Wayne Kaplan and Dana Abrahamsen prior to July 8,1983 and as modified in the second letter there does not appear to be a reportabletransaction or transactions required.

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)

 

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