Question
(redacted)
January 2, 1996
VIA FAX - 202/326-2624
Mr. Dick Smith
Senior Attorney
Premerger Notification Office
Federal Trade Commission
Bureau of Competition
Washington, D.C. 20580
Re: Rule 801.40 - Joint Venture
Premerger Notification Requirements
Dear Mr. Smith:
Thank you for the opportunity to visit by telephone last Wednesday concerning the Premerger Notification Requirements Under the Heart-Scott-Rodino (sic) Antitrust Improvement Acts of 1976 (Act) with respect to the proposed joint venture between our client, (redacted), a non-profit corporation (redacted), and (redacted). In my letter dated December 26, 1995, I outlined certain facts surrounding the formation of a joint venture between the (redacted) for the operation of a hospital in (redacted). The parties were discussing whether to structure the transaction as a limited partnership or limited liability company and the impact of such decision on whether a filing would be required under the Act. In our conversation you raised questions about the representatives serving as Class A Governors and the Class B Board of Governors described in paragraph 3 or my earlier letter. The (redacted) would appoint the Class A Governors and they would consist solely of directors, officers and/or employees of the (redacted). (Redacted) would appoint the Class B Governors and not less than three of five of those Class B Governors would be officers, employees, or directors of (redacted). The remaining two positions on the Class B Board of Governors would be filled by a physician on staff with the Hospital and a representative from the community the Hospital serves. Depending on whether you view the physician as an insider, not less than sixty percent and possibly eighty percent of the Class B Governors would be insiders. As indicated in the earlier letter, the Class A Board of Governors and the Class B Board of Governors each initially hold 50% of the voting power of the joint venture.
Based on our conversation last Wednesday, it would appear to me that the (redacted) Class A Board of Governors consists totally of insiders and no filing would be required. However with the slight variation of the make-up of (redacted) Class B Board of Directors, we are again requesting an informal statement of the FTCs position on this matter. Because more than a majority (at least 60%) will consist of insiders to (redacted) it would be our feeling that a joint venture structured as an LLC would not be subject to the filing requirements.
I would ask that you contact me at your earliest convenience to discuss this matter. As we are anxious to move forward with structuring the transaction, I would ask that if at all possible you contact me on Wednesday since we are attempting to make a decision on structure no later than Friday. I would also like to conference (redacted) or one of his representatives from (redacted) on the call so that we can clarify and properly address any questions that you may have. Your assistance and cooperation in responding to this inquiry are greatly appreciated.
I look forward to hearing from you.
Cordially yours,
(redacted)
(redacted)