9906022 Informal Interpretation

(redacted)

June 25, 1999

BY HAND DELIVERY

B. Michael Verne, Esq.
Premerger Notification Office
Room H-301
6th Street and Pennsylvania Avenue, N.W.
Washington, D.C. 20580

Dear Mr. Verne:

 

This letter will confirm the telephone conversation that we had yesterday with respect to the application of the investment-purposes-only exemption under 15 U.S.C. § 18a(c)(9).               As we discussed, this firm represents an individual who intends to sell two corporation that he controls to a large corporation (“Issuer”). The individual is a $10 million person and Issuer is a $100 million person. Issuer, as an acquiring person, and the individual, as an acquired person, will each be making a filing under the Hart-Scott-Rodino Act with respect to Issuer’s acquisition of the corporations controlled by the individual. The purpose of this letter is to confirm that the individual need not make a filing as an acquiring person as well.               As part of the consideration for the two corporations controlled by the individual, Issuer will be providing to the individual (and to certain other persons involved in the transaction) voting securities of Issuer. As a result of the transaction, the individual (but no other person involved in the transaction) will hold voting securities of Issuer with a value in excess of $15 million. The voting securities of Issuer hold by the individual, however, will not exceed 10 percent of the outstanding voting securities of Issuer.               It is the intention of the individual and Issuer that, following completion of the transaction, the corporations currently controlled by the individual will continue to exist and be owned by Issuer as subsidiaries of Issuer. The individual will not serve   (redacted)(redacted)B. Michael Verne, Esq.June 25, 1999Page 2  As a director of the subsidiary corporations, but the individual will serve as an officer of the subsidiary corporations. In addition, the individual may serve as an officer of another subsidiary of Issuer, but the individual will not serve as a director of that subsidiary, or of any other subsidiary of Issuer, or of Issuer itself.   In spite of the fact that the individual will serve as an officer of one or more subsidiaries, the individual has no intention of participating in the formation, determination, or direction of the basic business decisions of Issuer. It is anticipated that the business that the individual will manage for Issuer will represent less than one-half of one percent of the business of Issuer.   You told me that, under these facts, the individual should qualify for the investment-purposes-only exemption of 15 U.S.C. 18a(c)(9) and 16 C.F.R. § 801.1(i)(1). You stated that an individual who serves as a director of an issuer or any of its subsidiaries does not qualify for the investment-purposes-only exemption. You also stated that an individual who serves as an officer of one of the subsidiaries of an issuer is presumed to have an intention of participating in the formation, determination, or direction of the basic business decisions of the issuer, but that this presumption may be rebutted. Based on our conversation, it is our understanding that where, as here, an individual serves as an officer but not a director of one or more corporate subsidiaries and the aggregate sales of those subsidiaries represent only approximately one-half of one percent of the revenue of the parent corporation and the officer will not participate in the management of the issuer’s parent corporation, [STAFF COMMENT: or intends to be involved in communications with the issuer’s board.] it is the view of the Premerger Notification Office that that individual’s acquisition of voting securities from the issuer is exempt under 15 U.S.C. § 18a(c)(9). Accordingly, it is our understanding that the individual in this case would not be required to make a Hart-Scott-Rodino filing as an acquiring person in connection with the individual’s acquisition of voting securities of Issuer valued in excess of $15 million.               If my understanding is in any way inaccurate, please contact me as soon as possible.               I look forward to speaking with you soon to confirm that the matters set forth in this letter accurately reflect the conversations that we have had on this matter. My telephone number is (redacted).   (redacted)B. Michael Verne, Esq.June 25, 1999Page 3  Thank you for your consideration of this matter.   Sincerely,  (redacted)   (redacted)