8303001 Informal Interpretation

Staff note (graphics)

No need to report - newly formed corp with no balance sheet & no other UPE



March 4, 1983

Ms. Patricia Foster
Premerger Notification Office
Federal Trade Commission
Room 301
7th Street and Pennsylvania Avenue
Washington, D.C. 20580

Dear Ms. Foster:

In accordance with our telephone conversation of

March 2, 1983, your confirmation that the transaction

described below would not be subject to the premerger

notification requirements of the Hart-Scott-Rodino Antitrust

Improvements Act of 1976 is requested. The proposed trans-

action consists of the purchase of assets valued at more

than $15 million from an entity with total assets exceeding

$100 million by a newly formed corporation. Prior to the

acquisition, the newly formed corporation will borrow up to

$14 million from an unrelated financial institution, will

have approximately $500,000 in equity from private investors

and will have no other assets. $12 million of the loan

proceeds will be used by the newly formed corporation to

effect the acquisition which is the subject of this inquiry.

It is my understanding that the proposed trans-

action would be exempt under the Federal Trade Commissions

netting out rule; i.e., that the $12 million in loan proceeds

used to acquire the assets would be netted out for the pur-

poses of the size determination of the newly formed corporation.

Accordingly, under these facts, the newly formed corporation

would be treated as having assets of only $2.5 million and

the transaction would be below the jurisdictional threshold.

Kindly confirm you agreement with this analysis.

Please do not hesitate to contact me if you have

any questions or require any additional information., In the

event I an unavailable, you may contact my associate,

(redacted), who is fully familiar with

the proposed transaction.

Thank you for your assistance.

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