Question
August 11. 1994
Re: Applicability of Exemption in 15 U.S.C. 18A(c)(1) to Sale of Assets Subject to Leveraged Leases
Richard Smith, Esq
Premerger Notification Office
Bureau of Competition
Room 303
Federal Trade Commission
Washington, D.C. 20580
Dear Mr. Smith:
I am writing to set forth my understanding of the advice which you gave me in the course of our telephone conversation on August 9.
Our client (the "Seller") is a (redacted) engaged in a variety of activities, including the (redacted) of assets through leveraged lease arrangements. The Seller has recently concluded an agreement pursuant to which it would transfer certain assets subject to such leveraged lease arrangements to a (redacted) (the "Purchaser"). The assets to be sold represent (1) significantly less than 1 percent of the Seller's total assets; (2) approximately 7 percent (on a net receivable basis) of the Seller's total (redacted) of assets subject to leveraged lease arrangements; and (3) approximately 95 percent (on a net receivable basis) of the (redacted) assets. The (redacted) in (redacted) assets are not managed separately (redacted).
In the course of our telephone conversation, I understood you to say that the Seller was engaged in the (redacted) through leveraged lease arrangements, not in the business of (redacted) through leveraged lease arrangements, (redacted) the sale would not constitute the sale of all or substantially all of the assets of a division. I also understood you to say that the sale would therefore be exempt from the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), by virtue of 15 U.S.C. 18A(c)(1), if the following conditions were also met:
the assets were subject to bonafide lease (redacted); operational and managerial control of the assets would not change as a result of the sale; the assets were subject to long-term leases or leases renewable at the option of the lessees; the Purchaser was not a competitor of any of the lessees; and the transaction was purely (redacted).
As we discussed and as I have reconfirmed with the Seller and Purchaser, all of these conditions are met. Accordingly, based on my conversation with you, I understand the sale of the assets to be exempt from the requirements of the HSR Act.
Please let me know by close of business on Monday, August 15 if I have misunderstood or mischaracterized the position of the Premerger Notification Office on the above points.
Sincerely,
(redacted)
VIA FACSIMILE