1812003 Informal Interpretation

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Sheinberg, Samuel I.
From:
Sent: 	Monday, December 10, 2018 2:30 PM
To: 	Walsh, Kathryn E.; Berg, Karen E.; Shaffer, Kristin; Sheinberg, Samuel I.; Whitehead, Nora
Subject: 	FW: Size-of-person question
From: Carson, Timothy
Sent: Monday, December 10, 2018 2:29:58 PM (UTC-05:00) Eastern Time (US & Canada)
To:
Cc:
Subject: RE: Size-of-person question
Assuming the facts support the conclusion that SPV2 is its own UPE, we agree the acquisition will not satisfy the size‐of‐
person test.
From:
Sent: Thursday, December 6, 2018 3:05:34 PM (UTC-05:00) Eastern Time (US & Canada)
To:
Subject: Size-of-person question
I have a question relating to an acquisition to be made by a political subdivision of a US state (the “Agency”). Assume the
Agency wholly owns a special purpose vehicle (“SPV1”) through which it holds a non-controlling interest in an LLC (the
“Target”). For independent business reasons unrelated to HSR, the Agency intends to form a separate special purpose
vehicle (“SPV2”) to acquire the remaining interests in the Target in a two-step transaction under a single purchase
agreement (the “Agreement”). At the initial closing SPV2 will acquire more than 50% of the outstanding LLC interests of
the Target for more than $84.4 million and, on or prior to the 12-month anniversary of the initial closing, SPV2 will acquire
the remaining interests in Target not held by SPV1 for additional consideration. The total acquisition price for both
closings under the Agreement is less than $337.6 million.
Since it will be wholly owned by the Agency, SPV2 will be its own UPE and we understand that the total assets and
annual net sales of the Agency and SPV1 need not be taken into account for determining SPV2’s size-of-person. (See
informal interpretation 1312005.) Prior to the initial closing SPV2 will not have a regularly prepared balance sheet, and its
only assets will consist of cash to be used as consideration for the acquisition of Target’s LLC interests under the
Agreement (and possibly transaction-related expenses). Therefore, we understand that the entire transaction is non-
reportable since SPV2 will not meet the size-of-person test. Please confirm.

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