Question
December 15, 2004
BY CERTIFIED MAIL
Pre-merger Notification Office
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Avenue, NW, Room 303
Washington, D.C. 20580
Attention: Nancy Ovuka
Re: AdviceConcerning Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "Act")
Dear Ms. Ovuka
This letter isto confirm the advice you provided during our telephone conversation on December 14, 2004 regarding the position of the FederalTrade Commission with respect to the acquisition of the voting securities of acorporation on terms as described below.
As presentlycontemplated, one of three prospective investment groups (the "Acquirer")will acquire a Corporation ("Target"), whereby Acquirer will payTarget approximately $35 million in cash in exchange for Series A Preferredshares of Target. Contemporaneously, and pursuant to resolutions of Target'spre-transaction board of directors, a third party lender ("Lender")will lend approximately $15 million to Target. Immediately following theclosing, certain of and the current stockholders of Target will convert theirpre-transaction shares into new preferred shares of Target stock. Upon receiptof funds from both Acquirer and Lender, Target will redeem certain sharesbelonging to its pre-transaction shareholders. The resulting capitalization ofTarget will consist of Acquirer holding approximately 65% of the Corporation'svoting securities, management holding approximately 21 % and an option pool ofapproximately 14%.
Target hasrequested guidance as to whether, given the factual circumstances of theproposed acquisition, pre-merger notification pursuant to the Act and theimplementing rules is required. The advice that you provided is that forpurposes of calculating the aggregate value of the securities to be acquiredpursuant to the transaction described above, it is not necessary to aggregatethe value of the securities to be acquired by Acquirer and the value of thedebt to be undertaken by Target. Consequently, the Act's pre-mergernotification filing requirements do not apply to the above described transactionbecause the Acquirer will not acquire voting securities worth in excess of $50million.
Please confirmthis advice in writing at your earliest convenience. Thank you very much foryour continued assistance with this matter.