Question
TRANSACTIONDESCRIPTION AND ANALYSIS
FACTS
Threeindividuals will form a new entity, A LLC, which they will own in equal shares,and A LLC will be its own ultimate parent entity. A publicly traded masterlimited partnership ("MLP"), which is its own ultimate parent entity,will form a new entity, B LLC, and MLP will be the ultimate parent entity of BLLC. A LLC and B LLC will be formed for the purpose of acquiring a bargetransportation business, including vessels and other related assets. Currentlyneither the three individuals nor the MLP engage in the barge transportationbusiness.
Immediatelyprior to the transactions described below, JVco LLC will own 75% of Holdco LLC,Holdco LLC will own 52.5% of Newco LLC, and Newco LLC will operate the bargetransportation business, including owning the vessels and related assets. Athird party entity um-elated to the three individuals or the MLP ("ThirdParty") will own 99.99% of JVco LLC (a selling affiliate of Third Partyowning the other 0.01%), the remaining 25% of Holdco LLC and the remaining47.5% of Newco LLC.
ALLC and B LLC will enter into an agreement with Third Party and the sellingaffiliate pursuant to which A LLC will purchase 90.67% of JVco LLC for apurchase price of approximately $46.92 million, and pursuant to which B LLCwill purchase 9.33% of JVco LLC, 25% of Holdco LLC and 17.5% of Newco LLC foran aggregate purchase price of approximately $45.08 million, with the aggregatepurchase price being approximately $92 million. Following closing of thepurchases, Newco LLC will redeem the 30% interest in Newco LLC held by ThirdParty for $30 million, which redemption payment counts as part payment of thepurchase price. The redemption has the effect of converting Holdco LLC's 52.5%interest in Newco LLC to a 75% interest and converting B LLC's 17.5% interestin Newco LLC to a 25% interest. Immediately following closing of the purchasesand the redemption, JVco LLC, Holdco LLC and Newco LLC will be owned as setforth on the attached Ownership Structure, and prior to and following theredemption A LLC will be the ultimate parent entity of JVco LLC, Holdco LLC andNewco LLC.
Partof the related assets owned by Newco LLC include contracts for new vessels thatare currently under construction. Approximately $27 million will be stillpayable under such contracts if certain terms and conditions are satisfied, andit is contemplated that the approximately $27 million will be paid by Newco LLCfollowing the closing as the vessels are completed.
Atthe time of the closing of the approximately $92 million purchase, A LLC willnot have had any revenues and will not have a regularly prepared balance sheet.At such time of closing, A LLC will have enough cash to pay its portion of thepurchase price and the expenses related to the purchase and closing, which arecurrently estimated to be approximately $2.22 million in the aggregate.However, the value of any other cash or other assets in A LLC will be less than$10 million, and it is contemplated that the amount of cash in A LLC afterpaying its portion of the purchase price and related expenses will be $4million or less. It is not contemplated that A LLC, JVco LLC or Holdco LLC willhold any assets other than the ownership of interests shown on the attachedOwnership Structure.
QUESTIONIsany filing required under the Hart-Scott-Rodino Antitrust Improvements Act of1976, as amended (the "Act"), in connection with the transactionsdescribed above?
(MV comment NO)
Theacquisition of control of JVco LLC by A LLC is not reportable under the Actbecause the value of the interests received is less than $63.1 million, thecurrent threshold. The acquisition by B LLC of interests in JVco LLC, HoldcoLLC and Newco LLC are not reportable under the Act because B LLC did notacquire control of any of those entities and because the value of the interestsreceived is less than $63.1 million.
Inaddition, the acquisition by A LLC is not reportable under the Act because ALLC is not a $10 million person in that A LLC will have less than $10 millionof assets, after paying its purchase price and related expenses, in accordancewith 16 C.F.R. 801.11(e).
Inview of the foregoing, it is our understanding that the transactions describedabove would be exempt from the filing requirements under the Act.
Referto image file of diagram,