Question
December 20, 2001
Mr. Michael Verve
Premerger Notification Office
Bureau of Competition
Room 303
Federal Trade Commission
6th Street & Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Dear Mr. Verve:
This is to confirm our conversation several weeks ago concerning the consolidation of two rural electric cooperatives.
The specific facts described are as follows. Rural electric cooperative A ("Cooperative A') and rural electric cooperative B ("Cooperative B") have both beta created under Chapter 161 of the Texas Utilities Code- They are also non-profit corporations for purposes of Section 501(c)(12) of the Internal Revenue Code.
It is proposed that the business of the two be consolidated. This will be accomplished by crating a new noel cooperative ("Cooperative C") into which Cooperatives A and B will be combined pursuant to a Consolidation Agreement
Based on our discussion, I understand that the formation of a new rural electric cooperative in the manna described above is not subject to Hart-Scott-Rodino filing requirements. Membership interests in electric cooperatives are not 'holing securities", so that 16 CFR 801.40 dots not apply. Even if the membership interests were somehow viewed to be voting securities, the formation would nevertheless be exempt under 802.40 since Cooperative C will be a non-ptv8t corporation within the meaning of Suction 501(cx12) of the Internal Revenue Code. 16 C.F.R. 802.40 The transfer of assets of Cooperatives A and B to Cooperative C is part of the overall formation of the new Cooperative C and is thus exempt.
We appreciate your assistance.
Sincerely yours,
(redacted)