[Federal Register Volume 64, Number 147 (Monday, August 2, 1999)]
[Notices]
[Pages 41978-41980]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19719]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 23920; 812-11696]
Alliance Capital Management, L.P.; Notice of Application
July 27, 1999.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for an order under sections 6(c) and 6(e)
of the Investment Company Act of 1940 (the ``Act'') granting relief
from all provisions of the Act, except sections 37 through 53 of the
Act and the rules and regulations under those sections.
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SUMMARY OF APPLICATION: Applicant, alliance Capital Management L.P.
(``Alliance Holding''), requests an order under sections 6(c) and 6(e)
of the Act exempting it from all provisions of the Act, except sections
37 through 53 of the Act and the rules and regulations under those
sections.
FILING DATES: The application was filed on July 20, 1999.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a
[[Page 41979]]
hearing by writing to the SEC's Secretary and serving applicant with a
copy of the request, personally or by mail. Hearing requests should be
received by the SEC by 5:30 p.m. on August 17, 1999, and should be
accompanied by proof of service on applicant, in the form of an
affidavit or, for lawyers, certificate of service. Hearing requests
should state the nature of the writer's interest, the reason for the
request, and the issues contested. Persons who wish to be notified of a
hearing may request notification by writing to the SEC's Secretary.
ADDRESSES: Secretary, Securities and Exchange Commission, 450 Fifth
Street, N.W., Washington, DC 20549-0609. Applicant, Alliance Capital
Management L.P., 1345 Avenue of the Americas, New York, NY 10105.
FOR FURTHER INFORMATION CONTACT: Susan K. Pascocello, Senior Counsel,
at (202) 942-0674, or Nadya B. Roytblat, Assistant Director, at (202)
942-0564 (Office of Investment Company Regulation, Division of
Investment Management).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
SEC's Public Reference Branch, 450 Fifth Street, N.W., Washington, DC
20549-0102 (tel. (202) 942-8090).
Applicant's Representations
1. Applicant is a limited partnership organized under the laws of
Delaware, with its equity interests publicly traded in the form of
units (``Units''). Applicant provides diversified investment management
services to institutional clients and individual investors. Applicant's
sole general partner and holder of a 1% general partnership interest is
Alliance Capital Management Corporation (``ACMC''), a wholly owned
indirect subsidiary of The Equitable Life Assurance Society of the
United States (``Equitable Life''). Equitable Life also owns, directly
and indirectly, approximately 57% of the applicant's outstanding Units.
Applicant's remaining Units are public held. For tax and business
purposes discussed below, applicant proposes to reorganize into a new
partnership structure (the ``Reorganization'').
2. Alliance Capital Management L.P. II (``Alliance Capital'') was
formed as a Delaware private limited partnership in order to effect the
Reorganization. Applicant will transfer its business to Alliance
Capital, in exchange for equity interests in Alliance Capital
(``Alliance Capital Units''). Immediately following the Reorganization,
applicant's business activities will consist of holding Alliance
Capital Units and engaging in related activities.\1\ Alliance Capital
will not be an investment company under section 3(a) of the Act, nor
will it rely on an exemption from the definition of investment company
under section 3(c)(1) or 3(c)(7) of the Act. Alliance Capital Units
will not be listed on an exchange and will be subject to significant
transfer restrictions.
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\1\ Such activities will include filing periodic reports with
the SEC pursuant to the Securities Exchange Act of 1934, maintaining
its New York Stock Exchange listing, holding shareholder meetings,
and holding certain assets for which consents for assignment or
transfer to Alliance Capital must be obtained. These assets consist
of contracts, such as leases and service contracts, licenses,
including those obtained from governments and regulatory
authorities, and regulatory and other approvals necessary for the
conduct of Alliance Capital's business.
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3. Applicant states that after the Reorganization Alliance Capital
will continue the business conducted by applicant prior to the
Reorganization. Applicant also states that Equitable Life will have the
same degree of control over, and the same ability to manage the
business of, Alliance Capital, as it currently has with respect to
applicant. Applicant further states that the reorganization will not
result in any material change in the rights and benefits of its
Unitholders. As a limited partner of Alliance Capital, applicant will
be required to allow its Unitholders to vote on certain matters
affecting Alliance Capital. Therefore, Unitholders will be allowed to
vote with respect to Alliance Capital on those matters on which they
currently vote with respect to applicant. As a result, applicant
asserts that the Unitholders will be in substantially the same position
following the Reorganization as they were prior to it.
4. A majority of applicant's public Unitholders (excluding
Equitable Life and its affiliates and applicant's management and
employees) must approve the Reorganization. A proxy solicitation will
be conducted for that purpose. If the Reorganization is approved,
applicant will offer to all its Unitholders, pursuant to an exchange
offer, a one-time election to exchange outstanding Units on a one-for-
one basis for Alliance Capital Units. Following the exchange offer,
Equitable Life and its affiliates, other than applicant, will own
approximately 55% of the Alliance Capital Units, and the remainder will
be owned by applicant and any public Unitholders who accept the
exchange offer. Applicant expects that it will own approximately 45% of
Alliance Capital Units.
5. Applicant states that the purpose of the Reorganization is to
offer a choice to Unitholders who are willing to accept the transfer
restrictions on the privately placed Alliance Capital Units so that
they may receive higher distributions as Alliance Capital is a private
partnership and will not be subject to an annual federal tax imposed on
the gross business income of publicly traded partnerships. It also will
give applicant greater flexibility to acquire businesses and raise
capital in the future, since it will be able to offer the selling party
or potential investor the choice of whether to receive publicly-traded
Units, tax advantaged Alliance Capital Units or a combination of both.
Applicant's Legal Analysis
1. Section 3(a)(1)(C) of the Act defines ``investment company'' to
include any issuer which is engaged or proposes to engage in the
business of investing, reinvesting, owning, holding, or trading in
securities, and owns or proposes to acquire investment securities
having a value exceeding 40% of the value of that issuer's total assets
(exclusive of Government securities and cash items) on an
unconsolidated basis. Under section 3(a)(2), ``investment securities''
includes all securities except (i) Government securities and (ii)
securities issued by (a) employees' securities companies or (b) certain
majority-owned subsidiaries.
2. Applicant states that its primary asset will be Alliance Capital
Units. Alliance Capital will not be a majority-owned subsidiary of
applicant, and therefore the Alliance Capital Units owned by applicant
may be ``investment securities'' as defined in section 3(a)(2) of the
Act. As the Alliance Capital Units will constitute virtually all of the
assets of applicant, applicant may be deemed to be an investment
company under section 3(a)(1)(C) of the Act.
3. Section 6(c) of the Act provides, in part, that the SEC may
exempt any person from any provision of the Act or any rule under the
Act if and to the extent the exemption is necessary or appropriate in
the public interest and consistent with the protection of investors and
the purposes fairly intended by the policy and provisions of the Act.
Section 6(e) permits the SEC to require companies exempted from the
registration requirements of the Act to comply with certain specified
provisions of the Act as though the company were a registered
investment company. Applicant requests an order under sections 6(c) and
6(e) exempting it from all provisions of the Act, except section 37
through 53 of the Act and the
[[Page 41980]]
rules and regulations under those sections.
4. Applicant contends that there are legitimate business reasons
for the Reorganization. Applicant also states that, following the
Reorganization, applicant will function solely as a holding company for
Alliance Capital Units. Alliance Capital Units will be subject to very
significant transfer restrictions.\2\ Applicant states that its
activities will be limited to holding Alliance Capital Units and
engaging in activities necessitated by its status as a publicly-held
holding company. Accordingly, applicant asserts that its business
following the Reorganization will not entail the types of risk to
public investors that the Act was designed to mitigate.
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\2\ In general, the amended partnership agreement of Alliance
Capital will permit Alliance Capital Units, including those which
will be held by applicant, to be transferred only with the written
consent of Equitable Life and ACMC. A business entity, such as
applicant, may transfer a block of units representing more than 2%
of the outstanding Alliance Capital Units without the consent of
ACMC, provided that it has received the written consent of Equitable
Life and a written opinion of counsel to the effect that Alliance
Capital will not be treated as a publicly-traded partnership for tax
purposes as a result of the transfer. Either Equitable Life or ACMC
may withhold its consent to transfer in its sole discretion.
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Applicant's Conditions
Applicant agrees that the order granting the requested relief will
be subject to the following conditions:
1. Applicant will not hold itself out as being engaged in the
business of investing, reinvesting, or trading in securities.
2. Applicant will not require any investment securities, as that
term is defined in section 3(a)(2) of the Act, except for: (a) Alliance
Capital Units and (b) for cash management purposes, certificates of
deposit, banker's acceptances and time deposits maturing within 180
days from the date of acquisition thereof, and shares of money market
funds. Applicant will not acquire these short-term securities for
speculative purposes but solely to obtain a reasonable return while
preserving capital. Applicant may acquire other investment securities
provided that (i) the acquisition is in connection with the purchase of
any business, assets or property, (ii) applicant simultaneously with
the purchase contributes the investment securities to Alliance Capital,
(iii) applicant contributes any remaining portion of the purchased
business, assets or property to Alliance Capital as soon as
practicable, (iv) the value of the consideration received by applicant
from Alliance Capital in connection with its contribution to Alliance
Capital equals the fair value of the business, assets or property
contributed to Alliance Capital and (v) any investment securities
received by applicant from Alliance Capital in connection with
applicant's contribution to Alliance Capital will be either Alliance
Capital Units or investment securities of the type specified in clause
(b) of the first sentence of this condition.
For the SEC, by the Division of Investment Management, pursuant
to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-19719 Filed 7-30-99; 8:45 am]
BILLING CODE 8010-01-M
