Question
From:
: (REDACTED)
Sent:
Tuesday, July 29, 2008 10:16 AM
To:
Verne, B. Michael
Subject: HSRQuestions
Mike,
Here are my factsand questions.
Facts: (l) An existing minority shareholder("Buyer") of a private corporation is going to make an additional equityinvestment and acquire additional voting securities. (2) At closing, theBuyer's as well as other current shareholders' voting securities of the SellerCorporation will be converted into different classes or types of v/s. Moreprecisely, all of the current v/s (both regular Common and various typesof voting Preferred) will become "Class A Common" with one vote. (3)At closing, in addition, the Buyer will make an additional equity investment toacquire new shares. The Buyer will acquire Class B Common with two votes pershare, and potentially additional Class A shares, for a total consideration ofabout $120 million. (4) However, if Buyer ends up holding more than 50% of theoutstanding v/s at closing or thereafter, its voting power will belimited to 49.9% of the total outstanding voting power by a ShareholdersAgreement.
Questions
1. HSRValuation
For HSR valuationpurposes (and to determine the correct filing fee), the Buyer will need to add(1) agreed upon purchase price of new shares and (2) FMV of the v/s italready holds today.
2. ContractualRestriction under the Shareholder Agreement
Under thecontemplated LOI, it's possible that upon closing, Buyer could actually ownmore than 50% of the outstanding voting shares. But, there will be a ShareholdersAgreement provision that will limit the Buyer to vote only up to 49.9% of thevoting power if its actual holding is more than 50%.
For HSR Item2(d)(ii), do we see treat this acquisition as an acquisition of more than 50%of v/s? Or simply check the $100 million (as adjusted) threshold box?
3. Number ofshares being acquired in response to 3(c)(iii)
In answering Item3(c)(iii), do we list just the number of the "truly new shares" beingacquired?
My understandingis that I do NOT list the number of shares it holds today that will beconverted into new classes of vis. Or do I list those to be convertedshares as well.
But then again,Item 3(c)(vi) does ask how may shares of each of v/s the Buyer UPE will"hold" as a result of the acquisition. Thus, I think this is where Ilist the total number of shares the Buyer will "hold" upon closing.
In other words,because the existing v/s will be converted into new class of v/s, dowe treat that portion as a "new" acquisition as well?
For clarity, afterjust listing "truly new" shares, should I add a footnote in responseto Item 3(c)(iii) that "x" number of the Buyer's existing v/s willbe converted into a "y" number of new class of v/s separatelyfrom the "truly new" shares being acquired?
Thanks.