0707019 Informal Interpretation

From: (redacted)

Sent: Tuesday, July 24, 2007 3:22 PM

To: Verne,B. Michael

Subject: Emailing: Informal Staff Opinion 0512009 -801.10

Mike,

I am attaching an interpretationthat I believe may be applicable to the facts below. Alternatively, I believeSection 802.4 may exempt this transaction as well.

Today:

Company A ownsshares of Company B valued at approximately $200 million and 1 millionmembership units that are convertible into shares of Company B (but carry nocurrent voting rights).

Intermediate Step:

Company A will sellapp. $160 million of shares of Company B, retaining app $40 million of CompanyB stock. Company A will also keep the 1 million convertible membership units.Company A will retain the cash from selling the shares of Company B.

Transaction:

Buyer (which hastwo UPEs) will merge a subsidiary with and into Company A, with Company Asurviving. Buyer will pay app. $33 million in cash that will go into Company A.Most of the Company A shareholders will receive cash for their Company A sharesin the merger. The cash will come from that on hand at Company A and the cashfrom Buyer.

Each of the UPEs ofBuyer will be left holding 49% each of Company A. Company A will consist of the$40 million of Company B stock and one million convertible membership units.[An HSR would be required prior to converting the 1 million membership units.]

The direct acquisition of theCompany B stock and the convertible membership units remaining in Company Awould not be HSR reportable. But would the use of the cash from the sale ofCompany B shares by Company A to redeem Company A shares count toward the valueof the transaction?

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