Question
September 4, 1991
Hy Rubenstein
Premerger Notification Office
Federal Trade Commission
6th and Pennsylvania Avenue, NW
Room 303
Washington, D.C. 20580
Re:Hart - Scott - Rodino
AntiTrust Improvement Act of 1976 (the Act) -
Application to Formation of Partnership
Dear Mr. Rubinstein:
Thank you for discussing certain matters with me on Friday, August 30, 1991, in regard to a hypothetical situation involving the formation of a partnership and the application of the Act to such scenario. By way of recap, I proposed the following scenarios:
SCENARIO #1: A partnership was formed by X corporation and Y corporation (both
over the threshold requirements as to size of party) to develop a shopping center. The
partnership was not a publicly-traded partnership at any time. The partnership borrowed
approximately $44,000,000.00 in construction financing and used those funds to construct
a regional shopping mall. X corporation and Y corporation then sought permanent
financing, X corporation and Y corporation approached Pension Plan (also over the
threshold requirements as to size of party) as a possible source of funding for the permanent
loan. Pension Plan did not desire to lend money to the partnership or directly to X
Corporation of Y corporation. In light of that, Pension Plan suggested that it acquire a
50% interest in the partnership. Pension Plan suggested that it contribute approximately
$55,000,000.00 to the partnership and receive a 50% interest as a general partner in the
partnership. Pension Plan was also given significant authority under the amended and
restated partnership agreement. X corporation and Y corporation agreed to the scenario
and allowed Pension Plan to enter the partnership as a 50% general partner. The assets
of the partnership remained intact and as assets of the partnership in its restructured state.
One of the significant reasons for keeping the partnership intact was significant state transfer
taxes which would have occurred on the transfer of the partnerships assets to a new entity.
SCENARIO #2" Facts are the same as in SCENARIO #1 except the parties formed a
new partnership. X corporation and Y corporation contributed the shopping center to
the new partnership and Pension Plan contributed $55,000,000 in cash. X corporation and
Y corporation took back a 25% partners interest each and Pension Plan took back a 50%
partners interest. The parties paid the significant state transfer taxes.
In discussing both scenarios, you determined that neither was subject to reporting under the Act. Specifically, our discussions included the determination that the partnership interests that were being acquired by the Pension Plan in Scenario #1 and by the parties in Scenario #2 were not voting securities as defined in 16 C.F.R. 801.1(f)(1).
After your review of this letter, if the determination above does not meet with your recollection of our conversation or if you are in any disagreement with the previous determination, please contact me as quickly as possible. Thank you for your attention to this matter.
Sincerely yours,
(redacted)
(redacted)