Tuesday, April 12, 2011 8:37 PM
Verne, B. Michael
Subject: Ordinary Course Exemption
I am writing to you to see if you agreewith our view that a filing will not be required based upon the facts as set forthbelow. For the purpose of this email please assume all the various sizethresholds (size of persons and size of transaction) are met.
Our client is an internationalcommercial bank based in a European country with offices in various countries,including the United States (the "Bank"). The Bank will be reducingtheir lending activity in the United States and will be selling severalportfolios of loans. More specifically the Bank has previously participated asa member in various lending syndicates, usually as a minority holder, who haveestablished credit facilities (including term loans and revolving lines ofcredit) for companies in tl1e real estate industry as well as loans to largecompanies on an asset based basis. The Bank, will convey its interest in thesevarious credit facilities to the purchaser.
However, after the transaction iscompleted, the Bank will also retain its participation as a lender in creditfacilities in one or more other loan portfolios and will continue to fund thoseloans in accordance with its obligations as a lender.
I have reviewed several informal staffopinions, including Informal Staff Opinions Nos. 0701012 and 0110006 as well asInterpretation No.8 from the ABA Premerger Notification Practice Manual (4thEdition, 2007). It is my understanding tl1at the Staff of the PNO currentlytakes the position that when a buyer is acquiring a portfolio of loans from aseller, even when the assets to be conveyed consist of tl1e credit assets of anoperating unit of a seller, that transaction will be exempt as a transaction intile ordinary course under 7A(c)(1) of tile Clayton Act, provided that theseller continues to have one or more other portfolios of loans or continues tobe in the business of providing other forms of credit. This exemption applieswhether or not the buyer will also be acquiring staff and/or facilitiesservicing the portfolio of loans.
In our transaction, the Bank's interestin loan portfolios is being conveyed and the Bank will retain one or more loanportfolios and will continue to extend credit under those facilities. For thereasons stated above, we believe the transaction will be exempt under 7A(c)(1).We will of course separately analyze any non-exempt assets that the Bank, wouldbe conveying to purchaser that would not be considered a servicing asset forpotential reportability under the HSR Act.
Assuming the value of any non-exemptassets to be conveyed by the Bank to purchaser will not exceed the current sizeof the transaction threshold of $66 million, based upon the above would youagree the transaction as described would be exempt under 7A(c)(1)?