Question
Assume that the size of person and size of transactiontests are met.
Also assume that (redacted) and (redacted) aretheir own ultimate parent entities.
These transactions are being undertakento simplify a structure that was put in place several years ago (as illustrated in Chart 1) andwhich is no longer required by the parties.
Step 1:
A.With (redacted) 'sand (redacted) 's acquiescence, (redacted) Co. acquires I redeems from(redacted) 100% of the (redacted) Participating Preferred Stock (nonvoting) and 100% of the Voting (redacted) Preferred Stock (voting) in exchangefor - $102 million.
B. This step should not bereportable since it is an intraperson transaction. (redacted) is both theacquiring and acquired person. 16 C.F.R. 802.30 should apply. The structurefollowing this Step 1 is shown in Chart 2.
Step 2:
A.With (redacted) 'sand (redacted)'s acquiescence, (redacted) acquires / redeems from(redacted) 100% of the MB Parent Preferred Stock (voting) in exchange for- $109 million in cash (- $102 million of which was obtained in connection withthe transaction set forth in Step 1).
B. The net effect is that followingStep 2, (redacted) "controls" (redacted). The structure followingStep 2 is shown in Chart 3.
C.However, Step 2should also not be reportable since it too is an intraperson transaction. (redacted)is both the acquiring and acquired person. 16 C.F.R. 802.30 should apply. However, if for somereason the FTC determines that (redacted) was "instrumental" infacilitating this transaction and thereby negating the applicability of 16G.F.R. 802.30 (which we do not believe to be the case), Step 2 should nonethelessnot be reportable pursuant to 16 C.F.R. 802.4. At the time of Step 2,(redacted) 's sole assets would be cash and its interests in LLC. Cash is anexempt asset under 16 C.F.R. 801.21. However, in this case,(redacted) does not "control" LLC whether for HSR purposes or formanagerial purposes. (redacted) already "controls" LLC in theHSR sense by virtue of it having the right to 50% or more of its profits and50% or more of its assets upon dissolution. (redacted) also controls LLCfor managerial purposes since the LLC Agreement for LLC provides (redacted)with full management authority vis-a-vis LLC.) Accordingly, for purposesof 16 C.F.R. 802.4, (redacted) does not holdgreater than $59.8 million of non-exempt assets that would preclude theoperation of 16 C.F.R. 802.4.
Referto image file for diagrams & charts 1, 2, and 3.