Rule(s):	802.30, 801.2
Staff:	Michael Verne
Response / Comments:	11/21/2011 – Correct.
	Original Image File

From:        (Redacted)
Sent:         Friday, November 18, 2011 8:05 PM
To:            Verne, B. Michael
Subject:    Joint Venture Issue

Mike, I hope this finds you well. I have the following fact pattern and would appreciate your input. Please assume size of transaction and size of parties tests are met.

1. Our client, entity X ("X") is constructing a pipeline.

2. X will create a wholly-owned subsidiary LLC (the "JV").

3. X will contribute the pipeline assets to the JV. X will still own 100% of the LLC interests in the JV.

4. Subsequently, a third party ("Y") will contribute cash equal to 25% of the cost of construction in exchange for a 25% interest in the JV, thus diluting the ownership interests of X to 75% in the JV.

Analysis: Steps 2 through 3 should be exempt as an intraperson transaction pursuant to Section 802.30 of the HSR regulations.

Step 4 would be non-reportable, irrespective of the dollar value of the 25% interest, since Y would not be acquiring a 50% or more interest in the JV.

Please let me know if my analysis is correct.