0902006 Informal Interpretation

From: (REDACTED)
Sent: Wednesday, February 18, 2009 11 :42 AM
To: Verne, B. Michael

Subject: Formationof a Non-Corporate Entity

Dear Mike,

Thanks for taking thetime to talk with me yesterday regarding certain issues surrounding theformation of a noncorporate entity. I am confirming the following facts andanalysis we discussed and would appreciate your confirmation that you agreewith the conclusions below.

1. An existing private equity fund ("OldFund") is transferring some investments to a newly-created fund ("NewFund," a non-corporate entity).

2. Old Fund holds interests in New Fund but will notcontrol New Fund.

3. New Fund's interest holders consist of Old Fund, OldFund Investors, and third-party investors ("New Investors").

4. New Fund has been formed but is still in the processof being capitalized and recruiting New Investors.

5. When capitalization is complete, no investor willcontrol New Fund, as defined in 16 C.F.R. 801.1 (b)(1 )(ii).

6. Old Fund intends to contribute a majority interest ina publicly-traded company (Company) with a total value over $65.2 million toNew Fund, but has not yet done so.

7.Company was not contributed earlier in the formation of New Fund because theparties are still determining whether certain (non-HSR) regulatory approvals ornotices will be required.

8. NewFund has made small investments so far using some of the funds contributed byNew Investors.

We discussedwhether the contribution of Company to New Fund should be viewed as part of theformation of New Fund, rather than an acquisition by New Fund of Company.Because Old Fund is receiving only interests in New Fund as consideration (notcash or other compensation), the contribution is properly viewed as part of theongoing "formation" of New Fund. We discussed anticipated additionalcontributions from Old Fund to New Fund and how to distinguish betweencontributions viewed as part of the "formation" and those that shouldbe characterized as acquisitions by New Fund. In sum, if Old Fund is receivingonly interests in New Fund as consideration, then the contribution would bepart of the formation. But if New Fund uses cash or other consideration to makeacquisitions, those acquisitions would be viewed as new acquisitions and not aspart of the formation of New Fund.

Here, because thecontribution of Company is properly viewed as part of the formation of NewFund, then the transfer to New Fund would not be reportable because no investorwill have control of New Fund (16 C.F.R. 801.50).