Analyze potential backside filing requirements (801.2(e)) based on where the entities stand before the main transaction.
Question
From: Walsh, Kathryn E.
Sent: Tuesday, March 22, 2016 3:09 PM
To: [REDACTED]
Subject: RE: Interpretation Question Regarding Rule 802.10
You analyze companies as they stand before the transaction. So, here any backside filing would be exempt under 802.4 because all X holds is cash and cash equivalents.
From: [REDACTED]
Sent: Tuesday, March 22, 2016 11:33 AM
To: Walsh, Kathryn E.
Subject: Interpretation Question Regarding Rule 802.10
Hi Kate,
We are analyzing whether there is the need for a potential backside filing based on the facts below and we would appreciate your insight.
Corporation X is a blank check development stage company. Corporation X was formed as public company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or assets. Corporation X is a “shell company” as defined under Regulation M under the Exchange Act of 1934 because Corporation X has no operations and nominal assets consisting solely of cash and/or cash equivalents. Corporation X generated less than $0.5 million of non-operating income in the form of interest on cash and cash equivalents from the proceeds derived from the Public Offering in the most recent fiscal year.
Corporation X will be acquiring all of the non-corporate interests of Company ABC. Certain Company ABC non-corporate interest holders will receive in excess of $78.2 million of Corporation X voting securities as partial consideration for the transaction; however, no such rollover holder will have a per centum increase in its indirect ownership of Company ABC (i.e., indirect ownership of Company ABC through Corporation X) as a result of the transaction. The only operations within Corporation X will be the non-operating interest income generated by Corporation X and that of Company ABC. A filing will be required for Corporation X to acquire Company ABC.
Given the above, do you agree that the ABC non-corporate holders receiving in excess of $78.2 million of Corporation X voting securities do not have a backside filing obligation pursuant to 16 CFR 802.10? Please see https://www.ftc.gov/enforcement/premerger-notification-program/informal-interpretations/0904003.
We very much appreciate your assistance.
Best regards,
[REDACTED]