Question
(redacted)
December 26, 1996
Mr. Richard B. Smith
Premerger Notification Office
H-301
Federal Trade Commission
6th Street & Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Re:Premerger Notification
Dear Mr. Smith:
I am writing to confirm our understanding that a premerger notification and report form filing under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act) need not be made in connection with the transaction discussed below.
Our client (Buyer) is a newly formed Delaware limited liability company that is its own ultimate parent entity. Buyer is owned by several persons and entities, but no person or entity holds 50% or more of its outstanding voting interests and no person or entity has (i) the right to 50% or more of its profits, (ii) the right to 50% or more of its assets in the event of dissolution, or (iii) the contractual power presently to designate 50% or more of its directors or individuals exercising similar functions. At the time of formation, Buyer had no assets and no agreement with any person or entity contributing to its formation regarding the transfer or other obtaining of assets or extending or guaranteeing of credit or any obligation of Buyer. Buyer does not have any regularly prepared balance sheet.
Buyer has entered into an Acquisition Agreement, dated November 26, 1996, pursuant to which it will acquire assets and assume liabilities of a selling corporation that satisfies the $100 million size of person test. The assets to be acquired and the liabilities to be assumed create a total transaction value of approximately $125 million. Prior to closing, Buyer intends to make debt and equity offerings, the entire proceeds of which will be used to pay the purchase price and related expenses. Buyer also intends to enter into a letter of credit agreement with certain lending institutions under which it can borrow to fund the operation of the business following the closing of the transaction.
We believe that no HSR Act filing was required in connection with the formation of Buyer. If Buyer is deemed to be a corporation for HSR Act purposes, the elements of 16 CFR 801.40 are not satisfied because no acquiring person has annual net sales or total assets of $100 million and Buyer does not have total assets of $10 million or more. And, if Buyer is deemed to be a partnership for HSR Act purposes, the formation of a partnership is not a reportable transaction.
Similarly, we believe no HSR filing is required in connection with Buyers acquisition of assets. The only asset Buyer will have at the closing of the transaction will be the funds used to make the purchase of the assets. Accordingly, Buyer does not and will not satisfy the $10 million size of person test.
If you disagree with the conclusions set forth above or have any questions or need additional information about the transaction described, I would appreciate your contacting me at the telephone number set forth above.
Very truly yours,
(redacted)
BY TELECOPIER