Question
From:
(Redacted)
Sent:
Friday, March 23, 2012 4:25 PM
To:
Verne, B. Michael
Cc:
(Redacted)
Subject:
line of credit -valuation question
Mike,
I hope this finds youwell. We are acting for the Buyer in connection with the purchase of 100% ofthe shares of a UK company that has one wholly owned US subsidiary. The totalpurchase price is GBP 35 million, well below the threshold without even gettinginto 802.51 analysis. However, the target is an insurance company and itsparent company has caused a bank to issue an L/C of GBP 101.5 million toa Lloyds syndicate as a condition of the target's membership in the syndicate.Our client will have to make its own L/C facility available in the sameamount in order to be able to have the Lloyds syndicate underwrite the risks.Our view is that the provision of this Lie facility should not beconsidered in the valuation of the transaction for HSR purposes. Seller is notreceiving consideration from the Buyer. Buyer provides its L/C to havethe Lloyds syndicate underwrite risk. I was unable to find any authoritydirectly on point and was hoping you could confirm our view.