Question
From (redacted)
Sent: Friday, July 06, 2007 12:07 PM
To: Catt,Malcolm L; Verne, B. Michael
Subject: UPE,loan guarantees, and reportability
Mike/Malcom
Good morning.
I had a couple of quick questionsregarding reportability and disclosure and I was hoping I could get yourthoughts.
Our client is a privately-heldforeign bank (Bank). The Bank is establishing an equity fund for the purposesof making an acquisition of assets and noncorporate interests here in the US. The fund will be a foreign partnership, will havean affiliate who acts a GP who will manage the day to day operations, and therewill be 3 limited partners who will invest in the fund. No limited partner willhave the right to 50% or more of the profits or assets upon dissolution. 1limited partner will be an unrelated entity "A", the 2nd will be theBank "B", and the 3rd will be a foreign trust ("C"), thatwould be set up to meet the requirements to be considered as its own UPE (Int.44).
1.Becauseno one will have 50% or more, my thought is that the Fund would be its own UPEfor HSR reporting purposes. Please confirm.
2.Doesthe presence of a fair market value loan (LIBOR + 25 basis points) guarantee byB to either C or C's subsidiary change the analysis, conferring some kind ofcontrol, such that this could require reporting by the Bank itself (or theBank's UPE) instead of the Fund or infer control of the Fund?
3.TheFund will have a balance sheet at the time of the acquisition well below thesmaller size-of-person threshold. It will raise equity by drawing downcommitted capital (cash) from the limited partners who will subscribeadditional shares in the Fund. Would the contribution of cash in the form ofadditional share subscriptions (which would certainly drive it up to meet sizeof person) be counted? Does it have to be reflected on the balance sheet? I amtrying to reconcile Int. 127, 140, although they deal with loans--not surewhether they would be treated similarly.
Thank you. If you need anyadditional information or would like me to call, please let me know. I can bereached at (redacted) if you have any questions or need any additionalinformation.