Skip to main content
Date
Rule
802.1(d) 802.63
Staff
Michael Verne
Response/Comments
After further conversations, counsel indicated that the fact pattern was not as stated. The acquiring person will take beneficial ownership of the assets and will enter into a long-term agreement to supply manufactured components to the seller that support the utilities operated by the seller. This arrangement is not a sale-leaseback arrangement that would be exempt under 802.63. It is also not exempt under 802.1(d)(4) since that exemption applies only to assets which have provided management or administrative services to the seller; not manufacturing services.

Question

From: (redacted)

Sent: Friday, January 09, 2004 4:13 PM
To: Ovuka Nancy
Subject: LLC Transaction

Hi Nancy,

I am writing to you on behalf of aclient that is currently suffering from sticker shock.

The client is forming a wholly-ownedLLC ("New LLC"). New LLC plans to acquire 100% of the membershipinterests of a LLC ("Purchased LLC") from seller the principal assetsof which are utility assets that will in turn be leased buck to theseller. The value of the transaction is greater than $200m but less than $500m.Prior to closing the client is planning to bring in one additional investorthat will own 50% of the membership interests in New LLC and will have theright to 50% of the profits of New LLC. The client intends to bring in thisinvestor prior to closing the acquisition of Purchased LLC.

Our reading of applicablestatutes, regulations and interpretations indicates that New LLC will have twoultimate parents at closing, each of which are required to file an HSR Notification and paya $125,000 filing fee in connection with the acquisition of Purchased LLC.However, there appear to be certain similar situations that would require onlyone HSRNotification and filing fee.

First,for business reasons, were our client were to bring in the 50% investor afterclosing the acquisition of Purchased LLC (i.e. with New LLC remainingwholly-owned by our client at closing), then the investor would not have tofile an HSRNotification as it would be acquiring less than 100% of New LLC and only one HSR Notification wouldhave to be filed in connection with the acquisition of Purchased LLC.

Second,for business reasons, were our client to bring in the investor prior to closingand structure the LLC with one member being entitled to 49.9% of the profitsand the other to 50:1 %, then only one HSR Notification would need to be filed by the 50.1% member inconnection with the acquisition of Purchased LLC.

I am writing to confirm that yourunderstanding is (apart from the two scenarios described above) that both 50%members of New LLC as described above are required to file an HSR Notification inconnection with the acquisition of Purchased LLC and that you are not aware ofany other interpretations that would suggest that only one HSR Notification and one$125,000 filing fee would be required for such transaction.

Please let me know if you have anyquestions or concerns or if you need additional facts or information.

Thanks for your assistance Try tostay warm this weekend.

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.

Learn more about Informal Interpretations.

Return to top