Question
From: (redacted)
Sent: Friday, July 06, 2007 5:40 PM
To: Verne, B. Michael
Cc: (redacted)
Subject: Sales in or into the United States
Mike,
Can you confirm that, in the factpattern described below, the sales of the target company do not constitute salesin or into the United States forpurposes of Rule 802.51?
The proposed transaction is anacquisition of voting securities of a foreign issuer (the "Target").The Target is a mining company whose operations are entirely outside the United States. It owns no assets in the United States. During 2006, Target's revenueswere generated from the sale of copper from its mines in Chile.
Target's sales of copper are made tovarious traders (some of which are headquartered in the United States). The traders, resell the copper tocustomers in various countries including the United States. The sales of copper to US customers during 2006exceeded $59.8 million.
In Target's sales to the traders:
1.Targethas no control over the ultimate destination of the goods sold by the traders.
2.Targethas no control over the pricing of the goods sold by the traders
3.Thegoods ultimately sold to US customers are commodities and are not formulated inany way for the US market.
4.Therisk of loss passes to the buyer when the goods pass over the rail of thevessel at the port of loading (in Chile).
5.Titleto the goods passes in Chileupon presentation of certain documents (bills of lading and insurancedocuments).
Under these facts, and based oninterpretations 214-216 of the ABA Premerger Notification Practice Manual(Fourth Ed.), we are of the view that the sales described above are not"sales in or into the United States" for purposes of Rule 802.51 because(a) the indicia of beneficial ownership to the goods sold pass outside theUnited States and (b) Target has no control over the destination or resalepricing of its products.
Can you please confirm that ouranalysis is correct?
Many thanks,