Question
March 24, 2005
Mr. Michael Verne
Premerger Notification Office
H-303
Federal Trade Commission
Washington, DC 20580
Re: Section 802.2(e) Exemption
Dear Mr. Verne:
Thisletter is intended to confirm today's earlier conversation among you, me andMr. (redacted) regarding the exemption from reporting requirements contained inSection 802.2(e) of the Rules interpreting the Hart-Scott-Rodino AntitrustImprovements Act of 1976, as amended ("Section 802.2(e) Exemption")for the acquisition of a hotel and certain ancillary properties.
Aswe discussed, the Acquired Person, an owner/operator of hotel and casinoproperties, currently is in bankruptcy and intends to divest certain of itsassets located in (redacted)i to the Acquiring Persons in a transaction thathas already been approved by the United States Bankruptcy Court, (redacted)(the "Court") and is scheduled to close April 15, 2005. Pursuant to the relevant Court order and approved purchase andsale documents, the Acquiring Persons would acquire a hotel and related golfcourse, parking facilities, marina and casino and associated assets (the"Complete Assets"). The casino itself is a barge facility and isphysically separate from the hotel and golf course complex. While under theexisting Court order and approved documents, the Acquiring Persons wouldacquire the Complete Assets, including the casino and related gaming equipment("Casino Assets"), the Acquiring Persons would not acquire permits orlicenses necessary to operate the Casino Assets.
Itis the Acquiring Persons' intent not to operate the Casino Assets. The AcquiredPersons have negotiated with a third party that is totally unrelated to theAcquired Persons (the "Third-Party Purchaser") that is willing topurchase the relevant Casino Assets. For a variety of reasons, the partiesdesire that the Casino Assets be sold directly from the Acquired Person to theThird-Party Purchaser, and to that end, the parties will attempt to seek Courtapproval, if required, for the direct sale of the Casino Assets to theThird-Party Purchaser. This form of the proposed transaction I will refer to asScenario No. 1. If such court approval is obtained, the parties believe theScenario No. 1 transaction among the Acquired Persons and Acquiring Personsclearly would fall within the Section 802.2(e) Exemption, and you confirmedthis during our telephone conversation.
Inthe event that the Court does not approve the modified transaction structure ofScenario No. 1 to allow the Third-Party Purchaser to acquire the Casino Assetsdirectly, it is the intent of the Acquiring Persons to sell the Casino Assetsto the Third-Party Purchaser as simultaneously as possible with the proposedtransaction among the Acquiring and Acquired Persons. The Acquiring Personswould not operate the Casino Assets as a casino during any interim time and, infact, would condition its purchase on the Acquired Person terminating thecasino operations prior to the consummation of the transaction so that therecould be no argument that the Acquiring Persons operated the Casino Assetswithout a license for even a moment of time. I will refer to this form of theproposed transaction as Scenario No. 2.
Basedon our discussion, you confirmed that in either Scenario No. 1 or Scenario No.2 the acquisition by the Acquiring Person would qualify for the Section802.2(e) Exemption.
Pleasecall me as soon as possible if this letter does not accurately reflect ourconversation with (redacted). I appreciate your prompt assistance in thismatter.