Question
(redacted)
August 3, 1989
VIA HAND DELIVERY
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
(Attention: Ms. Lynn Guelzow)
6th & Pennsylvania Avenue, NW
Room 303
Washington, D.C. 20580
Re:Request for an Informal Interpretation re Section 16 C.F.R. 801.1
Dear Ms.Guelzow:
We have been asked on behalf of a client to request an informal interpretation of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Pub. L. 94-435, 90 Stat. 1390 (1976) (codified as amended at 15 U.S.C. Sec. 18A) (the HSR Act), with respect tot he determination fo the ultimate parent entity under 16 C.F.R. 801.1 in the following factual situation.
Facts: A company (the Company). Selling is assets for more than $15 million, has five shareholders, as follows:
(1)Shareholders V1, V2, V3, and V4, each of whom holds 25% of the issued, voting shares of the Company; and
(2)Shareholder NV, which holds 100% of the issued non-voting preferred stock of the Company, which shares are freely convertible to voting common shares of the Company and which, if converted, would comprise 60% of the outstanding voting shares of the company.
The Shareholders are unrelated, and no Shareholder has any contractual power to designate members of the Board of Directors. The chart below shows the shareholdings at present and upon conversion of the non-voting shares if that should occur:
Company
_________________________________________________
Shareholders: V1 V2 V3 V4 NV
Current Holdings:
Voting Common 25% 25% 25% 25% 0
Non-Voting
Preferred 0 0 0 0 100%
Upon Conversion
Of Preferred:
Voting Common 10% 10% 10% 10% 60%
Discussion: In my telephone conversation with you on July 26, 1989, I explained to you the above-stated structure of the acquired person, and we discussed how to determine the ultimate parent entity of the acquired person. You further explained that I could submit a request for an informal interpretation for confirmation purposes and that such request would be circulated throughout your office and receive an expeditious telephonic response.
For that purpose, with reference to the factual situation above, please confirm whether the conclusions below, based on our discussions, properly interpret the HSR Act and the rules and policies of the Federal Trade Commission (FTC) to determine the ultimate parent entity:
1. Based upon the current shareholdings of the Company, none of Shareholders V1, V2, V3 or V4 has 50% or more of the outstanding voting securities of the Company; and thus, none of V1, V2, V3, or V4 controls the Company under 801.1.
2. Holding non-voting preferred stock and having no voting shares currently, Shareholder NV does not hold 50% or more of the outstanding voting securities of the Company; thus Shareholder NV does not control the Company under 801.1.
3. The Company itself is the ultimate parent entity for the purpose of applying the sign-of -person test.
Please contact the undersigned if you have any questions on the facts or the informal interpretations being requested, and when the FTC has completed its review and you can discuss the FTCs interpretations. Thank you for your attention to this matter.
Very truly yours,
(Redacted)