Question
March 8, 1995
Hy Rubenstein Via Fax
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
6th & Pennsylvania Avenue, NW
Room 303
Washington, D.C. 20580
Dear Mr. Rubenstein:
Pursuant to our telephone conversation of today, we would appreciate your advice concerning the necessity for a filing under the Hart-Scott-Rodino Antitrust Improvement Act (HSR) under the following scenario:
Assuming that (i) all tests other than the size of the transaction are satisfied,
(Ii) the transaction is the acquisition of producing oil and gas properties offered
for sale as of a specific date (Effective Date) so that the Buyer would have a
fixed point in time to evaluate the value of the properties, (iii) the transaction will
be pursuant to a letter of intent reflecting a sale price as of the Effective Date of
$16 million, subject to adjustment for oil and gas revenues received less operating
expenses between the Effective Date and the closing date; (iv) at Closing, the
Seller would retain the revenues attributable to the properties accruing between
the Effective Date and the closing date and pay the expenses relevant thereto
during the same period (i.e., Interim Revenue); (v) at Closing the Seller will
credit the Interim Revenue against the Purchase Price; and, (vi) the Purchase
Price as fixed on the Effective Date will be $16 million, the Interim Revenue
will be approximately $4 million and the net purchase price will be approximately
$4 million and the net purchase price will be approximately $12 million, would the
transaction fail to meet the size of the transaction test and the HSR not apply?
It would appear to us that the actual size of the transaction would be $12 million, since the Effective Date is only used to establish a base point for the actual evaluation of the properties at Closing with the Seller retaining the Interim Revenue and the out-of-pocket payment by the Buyer for the Properties is $12 million.
Your usual prompt response would be greatly appreciated.
Respectfully,
(Redacted)
(redacted)