Question
From:
(redacted)
Sent:
Wednesday, May 20, 2009 9:36 AM
To:
Verne, B. Michael
Cc:
(redacted)
Subject: Confirming HSR Guidance re Rule 801.50Transaction
Dear Mr. Verne:
Thank you for speaking with (redacted) and me on Friday,May 15 regarding a proposed formation of an unincorporated entity governedunder Rule 801.50. The purpose of this correspondence is to summarize the HSRreporting conclusions we discussed.
The proposed transaction that we are assessingrelates to the formation of a new unincorporated entity (Newco) by Company Aand Company B. Company A will contribute minority interests in existing LLCs,and Company B will contribute cash. Company A and Company B will each acquire a50% interest in Newco.
Rule 802.4(a) provides for an exemption from theHSR filing requirements based upon any exemption found within the HSR Act orany of the HSR rules of practice as long as the new unincorporated entity doesnot have non-exempt assets meeting or exceeding the HSR threshold then ineffect.
For Company A, Newco's exempt assets consist ofthe cash contributed by Company B (pursuant to Rule 801.21) and Company A's owncontribution of its existing minority LLC interests (pursuant to Rule802.30(c)). Because all of the assets of Newco are exempt with regards toCompany A, Company A's acquisition of non-corporate interests in Newco isexempt under Rule 802.4.
For Company B, Newco's exempt assets include thecash contributed by Company B (pursuant to Rule 802.30(c), as well as theminority LLC interests being contributed by Company A that will not be includedwithin Newco for HSR purposes, and thus do not count toward the $50 million (asadjusted) limitation for non-exempt assets (pursuant to Rule 802.4(a). Becauseall of the assets of Newco are exempt with regards to Company B, Company B'sacquisition of non-corporate interests in Newco is exempt under Rule 802.4.Furthermore, Company B's acquisition of the minority LLC interests contributedby Company A is not a reportable secondary acquisition governed by Rule 801.4because the LLC interests contributed by Company A are minority interests.
Please let me know if this correspondenceaccurately presents our discussion. Thank you for your time and considerationin this matter.