0907013 Informal Interpretation

July 17, 2009
Via E-mail

Mr. B. MichaelVerne
Premerger Notification Office
Bureau of Competition, Room 303
Federal Trade Commission
600 Pennsylvania Avenue, N.W.
Washington, D.C. 20580

Dear Mr. Verne:

(Redacted) and Iappreciated the opportunity to speak with you on July 10, 2009 concerning a proposedtransaction. The factual circumstances we discussed are as follows:

Company X is acorporation and owns a limited liability company ("LLC") whichindirectly owns the assets of an operating interstate natural gas pipeline.

Group Y is a groupof three investment funds, each of which is a limited partnership. None ofthese three limited partnerships has anyone partner with a fifty percent orgreater interest in profits or a fifty percent or greater interest in assets ondissolution. Even though one entity ("Group Y GP") is the generalpartner of each of the three funds and that general partner is managed by anaffiliate of Group Y GP, each of the three funds would be considered its ownUltimate Parent Entity under the HSR rules.

The three Group Yinvestment funds in the aggregate will acquire a fifty percent membershipinterest in the LLC in exchange for other interests valued at $145 million.Fund A will acquire a 17.615 percent interest in the LLC, Fund B will acquire a6.82 percent interest, and Fund C will acquire a 25.565 percent interest.

The membershipinterests to be held by Funds A, Band C will represent an aggregate investmentof $145 million and initially will be entitled to a 15% preferred return onsuch investment. As a result, all of the profits from the pipeline each yearwill be paid first to Funds A, B, and C until they receive their fifteenpercent annual return. Any LLC profits for the year above the preferred returnpaid to Funds A, B, and C would go to Company X. If certain conditions relatedto the development of another pipeline are not satisfied and Funds A, B, and Celect to retain their interests in the LLC, Fund A, B and C's membershipinterests will convert to common units and the profits would thereafter besplit 50/50, with Company X receiving half and Funds A, B, and C in theaggregate receiving the other half. In the event of a dissolution while FundsA, B, and C still held preferred interests, Funds A, B, and C in the aggregatewould receive their investment of $145 million plus any unpaid dividends beforeCompany X received anything. Next, Company X would receive the remainingproceeds from the sale of the LLC. If there were a dissolution of the LLC afterFunds A, B, and C had converted their preferred interests into commoninterests, Funds A, B, and C in the aggregate and Company X would just receivethe payout in equal amounts.

Based upon ourdiscussion with you of the foregoing facts, we understand that no HSR filing isrequired. First, for purposes of the HSR "control" test, the 15percent preferred return which Funds A, B, and C will receive is considered a"debt" of the LLC within the meaning of 16 C.F.R. 801.1(f)(1)(ii)rather than a form of profit or assets to be received by Funds A, B, and C onliquidation. Second, Funds A, B, and C are separate persons for HSR purposesand no one of such funds will have a right to 50 percent of more of the LLC'sprofits or, in the event of dissolution, a right to 50 percent or more of itsassets after payment of its debts.

We appreciate yourassistance in this matter. Should you disagree with the conclusions expressedabove, please let us know.