Question
(redacted)
May 26, 1989
Patrick Sharpe, Esq.
Premerger Notification Office
Bureau of Competition
Room 303
Federal Trade Commission
Washington, D.C. 20580
Our File 2960-6
Dear Mr. Sharpe:
I am writing to confirm advice which you gave to me in a telephone conversation of this date. I informed you that a corporation ("Company") which is a client of the firm, has two classes of voting shares, Class A and Class B. Prior to the time that Company, together with all entities which is controls, had (Note #1) $25 million or more in total assets or annual net sales, two unrelated corporations (Shareholders "Y" and "Z") acquired the Class B shares, so that Y held 60% of those shares and Z 40% of those shares. Neither Y nor Z hold a majority of the voting shares of Company.
Pursuant to their agreement with the Company, Y and Z may be called on, from time to time, to make additional capital contributions to Company, which are then used by Company for its corporate purposes. However, Y and Z do not, by reason of these contributions, acquires shares of Company in addition to those they already hold.
Based on these facts, I asked you whether, in the view of the Premerger Notification Office, the making of such contributions would be considered an acquisition subject to premerger notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. You informed me that the making of such contributions would not be an acquisition subject to premerger notification, since no additional shares of voting stock were being issued to Y or Z in return for their contributions.
I very much appreciate your assistance in this matter. If I have failed to accurately reflect our conversation in this letter, please advise me at your earliest convenience. If I do not hear from you, I will assume that I have accurately stated your advice.
Sincerely yours,
(redacted)