Question
January 11, 2006
Mr. Michael B. Verne
Premerger NotificationOffice
Federal Trade Commission
600 Pennsylvania Avenue. N.W.
Washington, D.C. 20580
Re.HSR Compliance Issues
Dear Mike:
Thisis to confirm our conversations on January and January 5, 2006. regarding theapplication of certain of the Hart-Scott-Rodino rules in determining whether atiling is required in connection with the acquisition of voting securities. Theissues we discussed were as follows:
(1)You confirmed the staffs interpretation that a senior's retained annuitypayment under a grantor retained annuity trust (GRAY') does not constitute a"reversionary interest" for put poses of Rule 801.1(c)(3). and thatthe settlor would not be deemed to "hold" the assets of the BRAT byreason of the, retained annuity payment.
(2)Based on the following facts, you confirmed that the below-describedpartnership would be considered its own ultimate parent entity for HSRpurposes:
(a)The partnership has two classes of partners preferred" and "common.
(b)The preferred partners are entitled to an 8% non-cumulative preferred redreturn on their capital accounts prior to distributions to the common partners.A husband and wife own in excess of 50% of the preferred partnership interests.
(c)The common partners are entitled to all of the distributions of the partnershipin excess of the preferred return amounts. No common partner is entitled to 50%or more of such distributions.
(d)Currently, all partnership profits have been applied to pay the annualpreferred returns.
(e)No partner is entitled to 50% or more of the assets on liquidation.
(3)In a contemplated merger, thepartnership will acquire less than 10% of the voting securities of an issuer ina transaction that meets the size of person and size of transaction tests. Itis anticipated that the general partner of the partnership (in fact. but notsolely as a result of being the general partner of the partnership) will havethe right to designate a nominee to the board of directors of the issuer. Youadvised that if the general partner has such right, then the voting securitieswill not be considered as being acquired "solely for the purpose ofinvestment." and the exemption under Rule 802.9 will not be available.
Pleaseconfirm your agreement with my understandings set forth above. As always, thankyou for your assistance on these issues.