April 4, 1984
Patrick Sharpe, Esq.
Premerger Notification Office
Federal Trade Commission
7th & Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Dear Mr. Sharpe:
On March 30, 1984, I wrote you requesting an informal interpretation that the hypothetical transaction described therein need not be reported under the Hart-Scott-Rodino (HSR) Premerger Notification and Waiting Requirements. This supplements my previous letter to you and more fully describes the nature of the transaction and the preexisting relationship between the parties.
On December 16, 1974, Company A and an electric utility which has since been merged into Company B entered into a General Agreement to jointly construct, own and operate an electric power generating plant (generating plant) and related lignite mining facilities and equipment (mining facilities). Each of the parties to the General Agreement owns and undivided percentage interest in the unincorporated venture and shares in the construction and operating costs in proportion to their respective ownership interests. As discussed in our previous letter, under the terms of this General Agreement, Company B has a right to first refusal to purchase Company As interest. It is pursuant to this right of first refusal that Company B intends to purchase Company As minority interest in the joint venture. Upon consummation of this transaction, the General Agreement governing the unincorporated joint venture will terminate and Company A will no longer be involved in the business of constructing or operating the planned facilities.
We believe that this transaction is not subject to the Premerger Notification and Waiting Requirements of HSR because it is in substance an acquisition of a minority interest in an unincorporated joint venture. We understand that the Commission takes the position that the acquisition of partnership or unincorporated joint venture interests is not a reportable transaction under HSR. While the parties to the General Agreement creating this relationship each own an undivided percentage interest in the assets of the joint venture, the substance of the transaction is that of one party to an unincorporated joint venture buying out the other partys interest.
I hope that this letter clarifies the transaction previously described. If you need any additional information or have any further questions, please feel free to contact me.