Question
February 22, 1996
Via Facsimile
Federal Trade Commission
Premerger Notification Office
6th & Pennsylvania Avenue
Room 303
Washington, DC 20580
Dear Mr. Smith:
Enclosed is an outline describing the proposed transaction would like to discuss with you. If it is convenient for you we will give you a call mid-day tomorrow to discuss this transaction further.
Thank you for your attention to this matter.
Sincerely,
[redacted]
Enclosure
[redacted]
cc:
TRANSACTION STEPS
Company 1 is the sole general partner in, and owns a 1% general partner interest in, Partnership 1 and Partnership 2 (both limited partnerships). Company 1 also owns an 85% limited partner interest in Partnership 1 and public holders own the remaining 15% limited partner interest in Partnership 1. Partnership 1 owns a 99% limited partner interest in Partnership 2. (See diagram A.) Company 1 has voting control of both Partnership 1 and Partnership 2.
Partnership 1 has no assets other than its interest in Partnership 2. Partnership 2 has assets in several states. The assets in the Western United States are referred to as the "Western Assets" and all its other assets are referred to as the "Other Assets."
Company 1 is planning a series of transactions as follows:
1. Company 1 and Partnership 2 will form Partnership 3, limited partnership. Company 1 will acquire a 1% general partner interest in Partnership 3 in return for a cash contribution to Partnership 3. Partnership 2 will acquire a 99% limited partner interest in Partnership 3 in return for a contribution of the Other Assets to Partnership 3.
2. Partnership 2 will next distribute (as a dividend) its 99% limited partner interest in Partnership 3 to Partnership 1. At this point, Partnership 2 and 3 will each be subsidiary partnerships of Partnership 1 and controlled by Company 1. (See Diagram B.)
3. Partnership 2 will next purchase for a note approximately $50 million in assets (the "Acquired Assets") from Company 1. The assets will consist primarily of a .
4.Finally, Partnership 2 will sell through certain underwriters approximately $500 million in limited partner interests to the public in an offering registered with the Securities and Exchange Commission. After completion of the public offering, Company 1 will own a 1% general partner interest in Partnership 2 and a 9% limited partner interest in Partnership 2 and the public will own a 90% limited partner interest in Partnership 2. (See Diagram C.) The proceeds of the public offering will be used by Partnership 2 to pay off the approximately $55 million note incurred to buy the Acquired Assets as described in step 3 above and to repay other indebtedness of Partnership 2.
Diagram A (see 9602013[PDF])
Diagram B (see 9602013[PDF])
Diagram C (see 9602013[PDF])