0610017 Informal Interpretation

us-ftc-hsr-informal-interpretations-5ea393f5e01cf3ae928e905f6a0a5a480610017 Informal InterpretationGuidance

Date
Rule
801.10(d)
Staff
Michael Verne
Response/Comments
Agree.

Question

From:(redacted)

Sent:Thursday, October 12, 2006 1:17 PM

To:Verne, B. Michael

Subject:HSR--Treatment of Debt in Acquisitions of LLC Interests

DearMike:

Selleris selling 100% of the interests in two wholly-owned LLCs. These two LLCs, inturn, own a 100% interest in a trust ("Trust"). The sole asset of theTrust is a 50% undivided interest in certain commercial real estate properties.

Thepurchase price for the interests in the two wholly-owned LLCs is $45 million.The only issue I wish to confirm is the impact on the acquisition price (ifany) of the Trust's obligation with respect to $30 million of outstanding debt.

Myconclusion is that the size-of-transaction threshold is not met, relying on801.10(d). I believe that the indirect assumption of debt would not be countedtoward the size of transaction threshold under the various interpretations thatindicate that assumption of debt is a part of the consideration in an assetacquisition, but not in an acquisition of voting securities. (E.g., Interpretation122.)

Outof an abundance of caution due to the relatively recent rules involvingunincorporated entities, I simply wanted to confirm that this is correct, giventhat the interests being acquired are noncorporate interests (as opposed tovoting securities).


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