Question
From:
(Redacted)
Sent:
Thursday, September 10, 2009 7:21 PM
To:
Verne, B. Michael
Subject: HSRDiscussion re 802.2(c)
Mike,
Thank you fortaking the time to speak with me today regarding whether an HSR filing will berequired in connection with a proposed transaction. Below is a summary of thehypothetical fact pattern we discussed and my request for confirmation of theHSR analysis.
Our client,Company A, would like to acquire the assets that constitute a resort and casinoproject in (redacted) that was never completed. These assets are held byentities that are now in bankruptcy. Alternatively, Company A may seek toacquire the interests in the bankrupt entities that hold the assets thatconstitute the resort and casino project.
Company A wouldprovide the bankrupt entities with debtor-in-possession financing that wouldprovide funds for the administration of the bankruptcy estate and would permitthe bankrupt entities to close up the property, so that the construction worksthat have already been done would be protected from the elements. Company Awould then seek to buy either the assets held by the bankrupt entities or theinterests in the bankrupt entities in a sale pursuant to Section 363 and 365 ofthe
U.S. BankruptcyCode (11 U.S.C. 101 et seq.) or pursuant to a plan of reorganization underthe U.S. Bankruptcy Code. For the purposes of this analysis, we assume that thesize-of-transaction and size-of-person tests will be satisfied.
Eventually,Company A would complete the resort and casino project, but there is currentlyno plan or schedule for completion of the project, the timing of which willlargely depend on the business conditions in (redacted) and the credit markets.Company A estimates that completion of the project will require additionalinvestments of more than $1 billion.
The proposedtransaction would be exempt as an acquisition of "unproductive realproperty." The assets to be acquired (or the assets held by the entitiesto be acquired) are "unproductive real property, including raw land,structures or other improvements, [ ... ] that has not generated total revenuesin excess of $5 million during the thirty-six (36) months preceding theacquisition." As a result, their acquisition is exempt from therequirements of the HSR Act under 16 C.F.R. 802.2(c).
Under 16 C.F.R. 802.4, the proposed acquisition would be exempt even if Company A were toacquire the interests in the bankrupt entities that hold the assets thatconstitute the resort and casino project and whose acquisition is exempt under16 C.F.R. 802.2(c), since these entities do not hold non-exempt assets withan aggregate fair market value of more than $65.2 million.
Please let me knowif this accurately reflects our discussion.