Question
June 15, 1993
VIA FEDERAL EXPRESS
Hy Rubinstein, Esq.
Federal Trade Commission
Premerger Notification Office
Bureau of Competition
Room 303
Sixth Street and Pennsylvania Avenue, NW
Washington, D.C. 20580
Dear Mr. Rubinstein:
I am writing to confirm our discussion of this morning. I had asked your advice concerning the application of the requirement to make a notice filing pursuant to the Hart-Scott-Rodino Antitrust Improvements Act, as amended (the Act), and the rules promulgated thereunder (the Rules) to a particular transaction.
The circumstances which I described to you were as follows:
Existing company A, whose total assets and annual net sales exceed $100 million, proposes to sell all of the issued and outstanding voting securities of its wholly-owned subsidiary B to C for $34.5 million. C is a newly formed corporation with no assets or sales. [note 1]
*note 1: and no regularly prepared balance sheet.
The shareholders of C are or will be as follows:
(1) C1" is an individual. C1" will own at least 51% of the stock of C. Neither C1"s total assets nor his annual net sales equal or exceed $10 million. C1" does not have regularly prepared financial statements; C1" prepared a balance sheet and an income statement to make this determination.
(2) C2" is an adult son of C1".
(3) C3" is an adult son of C1".
(4) C4" is an irrevocable trust established by C1" in favor of C2". C1" does not retain a reversionary interest in the corpus of C4".
(5) C5" is an irrevocable trust established by C1" in favor of C3". C1" does not retain a reversionary interest in the corpus of C5".
(6) C6" is an unrelated investor group.
C will obtain the purchase price of the stock of B from borrowing and contributions from its shareholders. The shareholders of C will contribute approximately $7 million towards the purchase price. C will borrow the balance of the purchase price. C will not borrow substantially more than this amount in connection with this transaction. [note 2]
**note 2: 801.11 pass through
Based upon the foregoing, you confirmed that no filing is necessary in connection with the acquisition by C of the voting securities of B from A.
Finally, I want to reiterate that the constituency of the shareholders of C was determined, with respect to C1" through C5" , based on the personal and estate issues facing C1" and were not motivated by the potential application of the Act and the Rules on the proposed transaction.
Please call me at (redacted) should you have any questions.
Thank you for your assistance.
Sincerely,
(redacted)
(redacted)