Â鶹´«Ã½

VIA FACSIMILE

February 10, 1995

Richard Smith
Premerger Notification Office
Bureau of Competition
Â鶹´«Ã½ Trade Commission
6th & Pennsylvania Avenue, NW
Room 303
Washington, D.C. 20580

Re: Application of Hart-Scott-Rodino Antitrust Improvements Act of 1976

Dear Dick:

Pursuant to our telephone conversation of February 7, I have been able to clarify the structure of the proposed formation of Newco, which I outlined in my letter of February 6 to you and Tom Hancock. The following is a revised description of the transaction.

The proposed transaction is between two parties who satisfy the size of person test, Company A and Company B. Company A and Company B are both not-for profit corporations. They propose to form a not-for-profit corporate joint venture, Newco, which will own and operate a (redacted). Company A and Company B will form Newco prior to closing and will be its corporate members. Newco will be a shell corporation until the consummation date of the joint venture. On or about the consummation date, (i) Company B will contribute approximately $3.3 million in cash to Newco, (ii) Newco will borrow approximately $10 million through the issuance of tax exempt bonds and (iii) Newco will purchase from Company A certain (redacted) which have a value of approximately $21 million, for a purchase price of approximately $13.3 million. After the conclusion of these actions, Company A will have 65% interest in Newco and Company B will have a 35% interest in Newco. Company A is a (redacted) and will have significant (redacted) outside of Newco. Company B is an (redacted) and will have significant (redacted) operations outside of the joint venture.

This transaction is essentially the formation of a not-for-profit joint venture corporation (Newco) by Company a and Company B, in which Company A will contribute $21 million of operating assets and will receive a 65% membership interest in Newco and an equalization payment from Newco of $13.3 million and Company B will contribute $3.3 million in cash and will receive a 35% membership interest in Newco. The only reason that the parties have worded the deal documents to reflect a purchase by Newco of assets from Company A (as opposed to a contribution by Company A of those assets coupled with an equalization payment) is to assure a more favorable tax treatment under the tax-exempt bonds to be issued by Newco. It is not at all uncommon for parties to characterize a transaction in one manner for tax purposes and in another manner for other purposes. I urge the Premerger Notification Office to view this transaction as the formation of a not-for-profit joint venture corporation which involves an equalization payment and not as a purchase of assets by Newco from Company A. I believe that this agreement should be especially persuasive in this case because a notification filing would merely report Company As acquisition of its own assets.

I look forward to hearing from you regarding the Premerger Notification Offices position on this proposed transaction. Please contact me at (redacted) as soon as you have reached a position.

Very truly yours,

(Redacted)