Question
May 18, 2005
Mr. Michael Verne
Pre-Merger Notification Office
Bureau of Competition
Room 303
6th and Pennsylvania Avenue N.W.
Washington, D.C. 20580
Re: Section 802.2(e) Exemption
Dear Mr. Verne:
This confirms our conversation earliertoday relating to HSR Rules Section 802.2(e) as applied to anacquisition our client intends to make of a hotel which includes a casino,which casino is to be operated by an unaffiliated third party.
I explained that Entity A presentlyowns a hotel in which is located a casino, also presently operated by A. A hasagreed to sell the hotel to our client, B, and to sell all of the gaming assets(i.e., those used in the operation of the casino) (the "GamingAssets") to C, which is unaffiliated with our client, B. B and C arenot within the same person for HSR purposes,and neither B nor any of its shareholders is a shareholder of C, and neither Cnor any of its shareholders is a shareholder in B. C will lease space in thehotel in which the casino will be operated from B and will pay B a fixed rent,except that if the casino's results are worse than certain designated numbers,C's rent will be reduced. B has also agreed to lend C about $2 million toacquire the Gaming Assets and will also extend it a line of credit foroperating capital purposes not to exceed $3 million. The rate of interest onthese loans floats at 4% over the prime rate as specified in the Wall StreetJournal from time to time.
Based on the foregoing facts andsubject to the assumption that the loan is bona fide, you confirmed that thetransaction described above would qualify for the Rules Section 802.2(e)exemption and would not be disqualified therefrom because of Section802.2(e)(2).
I wouldappreciate it if you would please call or email me immediately if this letterdoes not accurately reflect our conversation or if you have any furtherquestions or concerns.