Question
From:(redacted)
Sent: Wednesday, January 24, 2007 3:59 PM
To:Verne, B. Michael
Cc:(redacted)
Subject: FW: HSR Issue
Mike -
Iwas hoping to get your thoughts on the following:
Facts
1)Parent is a corporation which is its ownultimate parent entity.
2)Limited Partnership A is its ownultimate parent entity for HSR purposes; Parent may be a minority investor insuch entity.
3)Parent will form Newco, anunincorporated entity.
4)Limited partners of Limited PartnershipA will, in effect, exchange their interests in such limited partnership toNewco in exchange for the same economic interest in Newco (equal to the limitedpartner's original capital contribution minus any accumulated loss/deficit).For tax and other reasons, it is anticipated that Parent or a wholly-owned subsidiarywill "purchase" the interests from the limited partners of LimitedPartnership A and then sell the limited partners shares in Newco although nomoney will change hands. Limited Partnership A will become a wholly-ownedsubsidiary of Parent;
5)Newco will be its own ultimate parent.
6)Newco will enter into a managementagreement with Limited Partnership A pursuant to which it will providemanagement services to Limited Partnership A in exchange for a certain fee.
7)Assets of Limited Partnership A consistof cash, furnishings, fixtures and equipment and licenses (there is no realestate or intellectual property involved).
Analysis- Acquisition of LP Interests
Assuming the relevant jurisdictional tests are met,Parent will have a filing obligation as an acquiring person gaining control ofLimited Partnership A (with Limited Partnership A filing as an acquiredperson). As provided for in 801.10(d), the value of the non-corporate interestsheld as a result of the acquisition is the sum of the acquisition price of theinterests to be acquired and the fair market value of any of the interests inthe same unincorporated entity held by Parent (or any controlled entity) priorto the acquisition, if any. Assuming Limited Partnership A holds non-exemptassets of less than $59.8 million, the acquisition will be exempt under 802.4.(We're assuming a closing after February 21st.)
Analysis- Formation of Newco
There is no filing obligation in connection with theformation of Newco as no one will control Newco for HSR purposes.