Question
[redacted]
December 14, 2000
Nancy Ovuka
Premerger Notification Office
Federal Trade Commission
Room H-319
Washington, D.C. 20580
Re:Real Estate Exemption Section 802.2(c)
Dear Nancy:
I am writing to confirm tow conversations that we had this weak concerning the
applicability of the exemption in section 802.2(c) to tow proposed transactions.
In the first transaction, Company A will acquire an option pursuant to which it will have
the right to acquire all of the assets of an LLC. The acquisition of the option is exempt since no
assets are being acquired. When the option is exercised, the assets that will be acquired will
include real estate on which a power project is to be built and the permits and contracts
associated with that project, including an air permit, interconnection agreement, construction and
development agreements, utility agreements, output agreements and the like. At the time of the
acquisition of the LLC, no construction will have taken place on the real estate and, since the
power plant will not have been built, no revenge will have been generated. We agreed that the
exemption in Section 802.2(c) does apply: i.e. the real estate being acquired is unproductive real
property as defined in the section and the permits and agreements are assets incidental to the
ownership of real property.
I subsequently asked you about a somewhat different situation which Company B will
acquire 100 percent of the interests in a partnership. The facts are the same as those involving
Company A except that the real estate will be leased rather than purchased. You said that the
exemption would apply because the Staff has interpreted Section 802.2 to apply to leases if the
lease pertains to real property, The acquisition of which would be exempt if purchase outright.
Thus, the additional assets (the permits and agreements) fall with the category of assets
incidental to the purchase of real property and the acquisition of the partnership by Company B
will be exempt under Section 802.2(c).
I hope I have correctly conveyed our discussions, and, if not, please do let me know.
Thank you very much for your assistance.
Best regards.
Sincerely,
[redacted]