0706021 Informal Interpretation

From: (redacted)

Sent: Wednesday, June 27, 2007 2:59 PM

To: Verne, B.Michael

Subject: LLC FormationQuestion

DearMike:

I have a question in the context ofthe formation of an LLC. In my view, no HSR filing is required in the followingcircumstance.

Facts:

"A" and "B" forma 50/50 joint venture LLC. They each commit to contribute $60.2 million to theventure. "A"'s contribution consists entirely of cash. "B"'scontribution consists of barges, to be used by the LLC in its ordinary courseof business. B contributes (i) slightly used barges valued at $58.3 million and(ii) contracts for the delivery by the manufacturer of brand new barges to theLLC valued at $2.5 million.

Analysis:

"A" and "B" areboth acquiring persons, 801.50(a). As each acquires a controlling (50%)non-corporate interest valued at more than $59.7 million, "A" and"B" must determine if the exemption in 802.4 is applicable to theiracquisitions.

(1)Inthe case of "B", the barges are exempt as intra-person transfers,802.30(c). The cash contributed by "A" is exempt under 801.21(a). Asa result, from "B"'s point of view, the LLC does not hold non-exemptassets with an aggregate fair market value of more than $59.7 million. (Infact, all of the LLC's assets are exempt.) No filing is required for"B".

(2)Inthe case of "A", the cash contributed by "A" is exemptunder 801.21(a). As "A" cannot avail itself of 802.30(c) with respectto the barges, the question whether the barges are exempt assets turns on802.1. For purposes of this analysis, let's assume that the "used"barges are not exempt assets under 802.1(d). However, the contracts to acquirenew barges, in my view, come under 802.1(b). As a result, the non-exempt assetsare valued at $58.3 million, which is below the $59.7 million filing threshold.No filing is required for "A".

Please let me knowif you agree with this assessment, in particular the treatment of the contractsto acquire new barges as exempt under 802.1(b).

(redacteded)