Question
February 25, 2008
BY E-MAIL
Michael B. Verne, Esq.
Federal Trade Commission
Premerger Notification Office
Bureau of Competition
600 Pennsylvania Avenue, N.W.
Washington, DC 20580
Re: Ordinary Course Exemptionunder 15 USC 18(a)(c)(1) - 7A(c)(1)
Dear Mike:
This letter summarizes our discussion earlier todayregarding the reporting requirements under the Hart-Scott-Rodino AntitrustImprovements Act of 1976, as amended, ("HSR Act") applicable to thetransaction described below.
A company ("Seller") has operations in thefollowing three businesses: (1) corporate payment services (including corporatecredit cards, charge cards, and purchasing cards); (2) consumer credit cards;and (3) private label (i.e., merchant-specific) credit cards. Our client (`Buyer') intends to purchase from Seller essentially all ofthe assets of the business division conducting Seller's corporate paymentservices operations (the "Acquired Portfolio"). We understand thatSeller would retain the consumer credit card and private label credit cardbusinesses. In addition to the customer contracts and outstanding debt andreceivables in the "Acquired Portfolio," Seller will transfer toBuyer certain employees, equipment, and software included in the divisionholding the Acquired Portfolio.
You confirmed to us that based on the facts describedabove, Buyer's acquisition of the Acquired Portfolio, including all assets usedby Seller to service the customers whose accounts are part of the AcquiredPortfolio, will be exempt from the reporting requirements of the HSR Act as an"ordinary course" transaction under 15 USC 18(a)(c)(1). You also confirmed that thisconclusion is not affected by whether, in connection with its sale of theAcquired Portfolio, Seller agrees not to compete with Buyer in the corporatepayment services business for a period of time following the transaction.
We further explained that Buyer will acquire rights toprepaid rebate amounts in connection with its acquisition of the AcquiredPortfolio. These are rights to receive cash payments in the future if customersin the Acquired Portfolio fail to reach certain transaction volume targets. Youconfirmed to us that these amounts should be treated as cash equivalents forpurposes of determining reporting requirements under the HSR Act.
We would greatly appreciate if you would confirm that thisletter accurately summarizes our conversation and your views on the issuesdescribed. If you have any questions or would like to discuss the matterfurther, please contact either of us at (redacted). Thank you for yourattention to this matter.