Question
From: (redacted)
Sent: Monday, June 09, 2008 10:23 AM
To: Verne, B. Michael
Cc: (redacted)
Subject: RE: Scheduling a Call
Mike,
We will try to callyou at 11:30 am EDT. If that time does not work for you, let us know, and wecan try to arrange a different time. Thanks,
From: (redacted)
Sent: Friday, June 06, 20084:29 PM
To: mverne@ftc.gov
Cc: (redacted)
Subject: RE: Scheduling a Call
Mike,
As discussed onWednesday, our client intends to acquire the rights held by two trusts in apower generation facility that is currently held in a standard sale/leasebackstructure. The two trusts are common law, grantor trusts formed under New York law. They are not "business trusts" as certain entities are legallyformed under state law (e.g., Massachusetts business trusts). As I understandit, the trusts were formed in 1992 to facilitate a sale/leaseback financingarrangement. As part of the financing transaction, the owner/operatortransferred title to the facility to three trusts, which each took an undividedinterest in the facility and received a right to the lease payments from theformer owner/operator. Thus, the corpus of each trust is an undivided interestin a power generation facility, and each trust is entitled to lease paymentsfrom the lessee/operator of the facility. The beneficial interests of eachtrust entitle the holder to receive distributions from the trust and to havecertain other rights as defined in the trust agreement. Please confirm yourview of whether the acquisition of the beneficial interests in the New York trusts is potentially reportable under the HSR Act.
A second issue is whetherour client's acquisition of the trust interests and/or the underlying assets ofthe trust would be exempt as an acquisition in the ordinary course. It is ourunderstanding that interests in grantor trusts of this type are commonlytransferred between and among investors. In a prior transaction, the PNOapparently stated that the ordinary course exemption would extend to transactionsinvolving the sale of assets subject to financing leases as well as the sale ofbeneficial interests in entities holding interests in such assets if the followingconditions are met:
(1) the assets are subject to a bona fIde finanicallease;
(2) althoughtitle to the assets would pass to the buyer, operational control of the assetswould remain with the lessee;
(3) theassets are subject to a long-term lease or a lease receivable at the lessee'soption;
(4) theacquiring person does not compete with the lessee; and
(5) theseller is not exiting the leasing business but intends to continue its leasingactivities.
We would like todiscuss generally the applicability of the ordinary course exemption to thetransaction described above and the specific application of the criteria listedabove to the facts of the proposed transaction. We would plan to call you onMonday morning after you have had time to review this message.
Regards.
(redacted)
From: (redacted)
Sent: Wednesday, June 04,2008 11:18 AM
To: mverne@ftc.gov
Cc: (redacted)
Subject: Scheduling a Call
Mike,
(redacted) havea transaction we would like to discuss with you as soon as possible. Would yoube available around 11.45 AM today? If not, is there another time that mightwork?
Thanks and bestregards, (redacted)