0605021 Informal Interpretation

From:(redacted)

Sent:Thursday, May 18, 2006 3:06 PM

To:Verne, S. Michael

Subject: 801.11(e) question

HiMike. I left a vm message for you, but thought email might be more expeditious.

New LLC is being formed byseveral entities, none of which will receive a controlling interest. Oneparticipant is contributing a wholly-owned LLC ("LLC2") that owns (1)an operating, but not yet revenue generating, entity; (2) a minority interestin another LLC; and (3) a shell company that holds a contract to purchase 100%of the membership interests of yet another LLC ("LLC3") forconsideration in excess of $56.7 million. All other participants arecontributing cash that will be used to purchase LLC3.

Iunderstand that the formation of the New LLC is not reportable, as no personwill hold an interest of 50% or more. New LLC will be its own UPE. My questionrelates to analysis of the subsequent acquisition (to occur soon afterformation) of LLC3 by an entity within New LLC. At the time of thisacquisition, neither New LLC nor LLC2 will have a regularly prepared balancesheet. The operating entity beneath LLC2 does have a regularly prepared balancesheet. Please confirm that 801.11(e) applies such that the total assets of NewLLC (the acquiring person in the acquisition of LLC3) are its assets (includingcash contributed upon formation, total assets as reflected on the operatingentity's balance sheet and the value of the minority LLC interest owned byLLC2) less cash to be used to acquire LLC3.

Thank you.