Question
April 22, 1993
By Telecopy to (redacted)
Thomas F. Hancock
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
6th & Pennsylvania Avenue, NW
Room 303
Washington, D.C. 20580
Dear Mr. Hancock:
I am writing this letter to memorialize our conversation of this morning concerning the applicability to the following transactions of the hart-Scott-Rodino Antitrust Improvements Act of 1976 and the FTC implementing regulations (collectively, Hart-Scott).
1. Person A is a (redacted) that controls the (redacted) generated by R, a retailer, R has an option under the agreement with A to purchase the (redacted) R. desires to switch its future credit relationship and existing accounts receivable to B, another (redacted) Accordingly, R will assign its purchase option to B, and B will then acquire the existing (redacted) form A. A will remain in the (redacted) B will consolidate the acquired (redacted) with new (redacted) generated by R, and this transaction would be in the ordinary course of business of both A and B. All applicable size-of-person and size-of-transaction tests would be met.
You indicated that the transaction described above would constitute the acquisition (redacted O in the ordinary course of a creditors business, in a bona fide transaction, and thus would be exempt from filing requirements under 16 C.F.R. 802.63. If this does not accurately reflect the advice you provided, please call me immediately.
2. I also asked whether the transaction would remain exempt if it were structured in the following manner: Instead of assigning its purchase option to B, R would acquire title to the (redacted) from A and immediately and simultaneously convey the (redacted) to B. Pursuant to agreement between R and B, B - - and not R - - would bear the risk of any defaults, and the right to receive any payments, on the accounts during the moment that R held record title. The substance of the transaction - - an ordinary course of business (redacted0 between creditors - - would remain the same as the first transaction described above. While R would hold record title for an instant, at that instant it would also have the unconditional obligation to convey the (redacted) to B.
I expressed the view that under this second form of transaction, R would appear never to possess (redacted) ownership, rendering the transaction exempt under 802.63. You indicated that you wanted to consider the issue further before providing advice and requested that I draft this letter presenting the relevant facts.
Please give me a call when you have formulated your advice as to the Hart-Scott implications of the second form of transaction described above.
Thank you very mush for your time and helpful assistance.
Very truly yours,
(Redacted)