Question
July 14, 1993
BY HAND
Richard B. Smith, Esquire
Premerger Notification Office
Bureau of Competition, Room 303
Federal Trade Commission
Sixth St. and Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Dear Dick:
As discussed, this letter will memorialize the additional views you expressed this morning over the telephone concerning my letters to you of July 6 and 13.
You stated that my July 13 letter accurately described the informal interpretations which you related to me over the telephone on July 12. However, you also stated that, on further analysis, you had determined that one such interpretation was erroneous.
On July 12 you advised that under 801.40(c), the assets of the limited liability company, C, in its formation transaction would not include the contributions of D, a person receiving only nonvoting, nonconvertible securities of X. This morning you stated that this advice was incorrect. Instead, after further research and discussion, and review of murky Interpretation 211 from the Premerger Notification and Practice Manual (1991), you indicated that D's contribution to X should be counted toward X's size under 801.40(c).
Thus, you advised that the size of X in the formation transaction must be based upon the contributions of A, B, and C (persons receiving voting securities), and D. You reaffirmed, however, that neither D nor X would have any filing obligation with respect to the contribution of assets by D to X and the issuance of the nonvoting securities by X to D. Moreover, in all other respects, you confirmed that my July 13 letter accurately describes the positions of the FTC Premerger Office.
Thank you again for your time and assistance.
Very truly yours,
(redacted)