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0703003 Informal Interpretation
us-ftc-hsr-informal-interpretations-dc4631d305593df8fa75fa98c4cd6fec0703003 Informal InterpretationGuidance
Date
Rule
802.50, 802.4
Response/Comments
I'm assuming that if 80% of the passengers are U.S., then a majority of the revenues are attributable to U.S. customers? If so, I think that is dispositive in determining that the ships are U.S. assets. Is this true of all three vessels? If you analyze each ship on a stand-alone basis and determine that one has less than 50% US revenues, then you can apply 802.4 to the transaction. If the value of the remaining two US ships is less than $59.8 MM, then the acquisition of the voting securities is exempt. If all three are US, there is no exemption available despite the fact that US sales are only $45.6 MM
Question
From:(redacted)
Sent:Sunday, March 04, 2007 1:58 PM
To:Verne, B. Michael
Subject:Overview of facts to determine filing obligation
Mike,
Subsequent to my voicemail, I realized that we havegiven you piecemeal information regarding the clients' proposed transaction, soI wanted to lay out the facts in one email:
1.The Ultimate Parent company of theacquirer and the acquiror each have a principle place of business in the US and thusare considered US persons; both are in the large cruise ship business.
2.The entity being bought via anacquisition of its voting securities, is a Bahamian corporation and its mainassets are 3 vessels are motor yachts that conduct luxury, specialty sailingvoyages. Passenger capacity on two of the vessels is 148 persons and for thethird vessel capacity is 312 persons. It is estimated that on average last year80-85% of passengers on all voyages were US citizens.
3.The majority of voyages taken by the 3vessels are in the Mediterranean and Caribbean, with 36 trips last year into or out of the USVirgin Islands.
4.Total US source revenue booked eitherdirectly or through US travel agents is approximately $45.6 million.
Itwould seem that if I view the vessels as moveable assets, for which I mustexamine the nexus to US commerce, the US source revenue numbers show an amount ofapproximately $45.6, that is significantly below the HSR filing threshold.Further, if I look at the nexus to the US with regard to the additional facts Ihave (a) the majority of time spent in US ports as quite small (36 times duringthe last fiscal year; all 3 vessels are almost always in operation throughoutthe year); (b) 80-85% of the passengers as US, however the number of USpassengers in the aggregate is quite small given the limit of 148 and 312passengers per voyage depending on the vessel, and (c) the US passengers areinvolved in voyages that are mostly outside the US. Based on the totality ofthe facts, I would tend to view the assets as being more akin to foreignassets, but there seemed to be a feeling on last week's call that you viewedthe fact that 80-85% of the passengers were US citizens as dispositive ofthe issue that the assets should be viewed as US assets. However, I was not sosure that you were that definitive in your statements and wanted to give you acohesive overview. Please let me know if after reviewing the facts above, it isthe FTC's view that the assets should be considered US assets or foreignassets, and if the assets are considered US assets whether the percentage of USpassengers is the critical fact in determining the status of the assets. Thankyou.
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