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Date
Rule
801.40
Staff
Alice Villavicencio
Response/Comments
June 5, 1996, writer was advised that anyone receiving a reportable amount of voting stock (over $15MM) of NEWCO will be required to file. Writer was also instructed on how to report the contributions etc. on the HSR Form. Writer stated that Shareholder 1 meets the size-of-person test and that the JV also meets the requirements of the Act under Rule 801.40.

Question

(redacted)

June 5, 1996

Via Facsimile

Ms. Alice M. Villavicencio
Â鶹´«Ã½ Trade Commission
Premerger Notification Office
Room 303
6th & Pennsylvania Avenue
Washington, D.C. 20580

Dear Ms. Villavicencio:

As we discussed yesterday, I have attached a chart demonstrating a transaction currently being contemplated by one of our clients. I believe the transaction is covered by Rule 801.40.

Under the structure currently being contemplated, the shareholders of Company A will contribute significantly all of their holdings in Company A to NEWCO in exchange for shares in NEWCO. Company A is an ongoing business with revenues in excess of $100 million. NEWCO is a newly created shell. The largest shareholder of Company A (identified in the chart as Shareholder #1, a natural person) holds 44% of the outstanding voting securities of Company A).

The shareholders of Company B will likewise contribute significantly all their holdings in Company B to NEWCO in exchange for NEWCO shares. Company B has in excess of $10 million in assets and annual revenues. Company Bs ultimate parent entity is Shareholder #1, holding 62% of Company B.

The remaining shareholders of Company A and Company B will not be engaging in a reportable transaction because they either do not meet the size of the persons test or the size of the transaction test or both.

I understand that NEWCO will not need to make a filing as directed by Rule 802.41. Additionally, under Rule 801.40(a), the contributors to NEWCO will be deemed acquiring persons only, and NEWCO will be deemed the acquired person only. Based upon my analysis, the structure results in a single filing by Shareholder #1 in connection with Shareholder #1's acquisition of approximately 51% of NEWCO. I cannot envision a filing by Company A under the structure since Company A will not be making any acquisition of NEWCO voting securities or assets.

I would appreciate it if you could confirm these conclusions for me at your earliest convenience. I look forward to hearing from you soon.

Sincerely,

(Redacted)

Enclosure

cc: (redacted)

 

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