1111009 Informal Interpretation

Date:
Rule:
802.30, 801.2
Staff:
Michael Verne
Response/Comments:

  – Correct.

Question

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

Mike, I hope this findsyou 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 willstill own 100% of the LLC interests in the JV.

4. Subsequently, a third party ("Y") willcontribute 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 theJV.

Analysis: Steps 2 through3 should be exempt as an intraperson transaction pursuant to Section 802.30 ofthe HSR regulations.

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

Please let me know if myanalysis is correct.

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

Learn more about Informal Interpretations.