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Date
Rule
7A(c)(1)
Staff
R. Smith
Response/Comments
4/29/92 called (redacted). On the basis that the finance leases and the installment sales contracts to be purchased by A from B represent lease financing transactions which B presently holds (and they appear to be such to me, based on his 4/28 supplemental letter)- - and on the basis of the other five points made in (redacted)'s 4/27/92 letter - - then the transfer of these lease financing transactions from B to A would be viewed by the Premerger Office as a transfer in the ordinary course of business and exempt from HSR reporting under 7A(c)(1) of the HSRAct. RBSmith

Question

April 28, 1992

 

VIA TELECOPY

Premerger Notification Office
Bureau of Competition
Room 303
Federal Trade Commission
Washington, D.C. 20580

Attn: Richard Smith

Dear Mr. Smith:

As you requested, this letter is to supplement my letter to you dated April 27, 1992. I have discussed the meanings of the terms finance lease and installment sale obligation with my client. In the lease financing business, the difference is essentially form over substance.

A finance lease is a lease which calls for monthly rent payments to be made to the lessor. Generally, there would then be an addendum which would provide an option for the lessee to purchase the underlying asset for a nominal amount at the end of the lease term. On the other hand, the installment sale contracts which give rise to the installment sale obligations would have sale and conveyance language in the main document and would credit monthly payments towards the purchase price (including interest).

While the two terms are often used interchangeably within the lease financing industry, the standard form of transaction for the industry is the finance lease. My client does not originate installment sale contracts, but has acquired a few as part of lease portfolios. The installment sale obligations generally become part of a lease portfolio when a lease financing company purchases the obligations from the supplier or manufacturer of the assets as part of a financing transaction. Almost all of the transactions covered by the portfolio which is the subject of the proposed acquisition are finance leases.

If you have any further questions or require any additional information, please give me a call.

Thank you again for your assistance.

Very truly yours,

(redacted)

Enclosure

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

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