Question
From: (redacted)
Sent: Monday, March 07, 2005 3:15 PM
To: Verne, B. Michael
Subject: HSR Query
Mike,two short questions based on the following facts. A US company (which happens to be a US limited partnership)("Seller") is selling one of its portfolio companies (Seller is aninvestment fund) to another US company ("Buyer") in a 100%share deal. Buyer's worldwide sales/assets are in excess of $10.7 million butbelow $106.2 million. As Seller is a limited partnership and is not taxed, itdoes not have a financial showing last year's revenues of its portfoliocompanies. That is kept at the portfolio company level and the Seller is merelya flow through entity. If you add the worldwide sales of the three portfoliocompanies of Seller in the last year, they are about $120 million.
TheSeller is in the process of liquidating its investments in the three portfoliocompanies. The first of the three dispositions is not a reportable transactionbecause the size of the transaction is below $53.1 million. My question iswhether I deduct the sales of this sold entity when determining the size ofperson test for the second disposition? The size of transaction of the seconddisposition will be above $53.1 million. However, if I deduct the worldwidesales in the last year of the first portfolio company from the UPE's worldwidesales (because it now no longer owns the first company), I am below the $100million threshold of the size of person test.
Mysecond question concerns calculation of the size of transaction amount. Assumethe transaction price is $55 million, but with a post -closing purchase priceadjustment clause which is tied into sales revenues up to the closing. TheSeller informs me that sales have been terribly slow, and the post-closingadjustment will probably bring the purchase price below $50 million. Do I takeinto account the post-closing adjustment when determining whether the $53.1million threshold for the size of transaction is exceeded?
Asalways, thanks for your help. If you need more details, just let me know.