1908005 Informal Interpretation

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Sheinberg, Samuel I.
From:
Sent: 	Thursday, August 22, 2019 1:20 PM
To: 	Walsh, Kathryn E.; Berg, Karen E.; Carson, Timothy; Sheinberg, Samuel I.; Six, Anne
Subject: 	FW: HSR Debt Question
From: Whitehead, Nora
Sent: Thursday, August 22, 2019 1:20:09 PM (UTC-05:00) Eastern Time (US & Canada)
To:
Cc:
Subject: RE: HSR Debt Question
You cannot deduct the repayment of debt in an asset acquisition. This is the case regardless of whether the target has
secured the debt.
From:
Sent: Thursday, August 22, 2019 10:28:51 AM (UTC-05:00) Eastern Time (US & Canada)
To:
Cc:
Subject: HSR Debt Question
We are writing to seek clarification about your February 16, 2017 update to Informal Interpretation 1211011. The
update states that “the PNO’s current position is that the repayment of debt may be deducted from the acquisition price
only where the debt is held by, or secured by, Target.” Our question is about what it means for a debt to be "secured
by[] Target.” Does it include debt secured by purchased assets in an acquisition of assets?
For example, assume that Company A is acquiring assets from Company B and Company B used a portion of the target
assets as collateral to secure a $30 million debt. Company A will buy the assets for $110 million, $30 million of which
will be used to pay off debt secured by the assets. In this example, the debt being paid off belongs to Company B, the
seller of the target assets, but the target assets being bought were used to secure the debt. In this scenario, would the
transaction price be $80 or $110 million dollars?
Would the PNO treat this differently if the target assets used to secure the debt were acquired through a secured
transaction subject to UCC Chapter 9?
Thanks,

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