Company Name: Abingworth Limited
Public Availability Date: Jan. 15, 1982

INQUIRY LETTER

BUCHALTER, NEMER, FIELDS, CHRYSTIE & YOUNGER
700 SOUTH FLOWER STREET
LOS ANGELES, CALIFORNIA 90017

December 07, 1981

Office of Chief Counsel
Division of Corporation Finance
Securities & Exchange Commission
Washington, D.C. 20549

Gentlemen:

We are counsel to Abingworth Limited, a United Kingdom Corporation ("Abingworth") and have had some discussion with Ann M. Glickman, Special Counsel to the Division of Corporation Finance ("Division"), regarding the issues set forth in this letter. As such, we would appreciate your advising us as to whether the staff of the Division would interpret paragraph (d)(1) of Rule 144 ("Rule 144") under the Securities Act of 1933, as amended ("1933 Act"), to permit Abingworth and its wholly-owned subsidiary, Abingworth (St. George) Limited, a Bermuda Corporation, to tack the holding periods of a group wholly-owned subsidiaries of Abingworth ("Abingworth Subsidiaries") for shares of restricted stock of unaffiliated issuers held by the various Abingworth subsidiaries which both St. George and Abingworth will acquire from each of the Abingworth Subsidiaries as part of a reorganization of Abingworths holdings.

Abingworth was organized in 1973 and is engaged in the business of venture capital investing in the United States and elsewhere around the world. The Abingworth Subsidiaries were established over the past years for the purpose of purchasing securities of unaffiliated issuers. Most of the securities held by the Abingworth Subsidiaries are "restricted securities" as such term is defined in Rule 144. As part of a corporate reorganization, Abingworth has decided to consolidate most of its holdings which are not held directly by the parent into St. George. Accordingly, Abingworth, as the sole shareholder of St. George, will cause that entity to purchase the restricted shares held by Abingworth Subsidiaries (a) in almost all instances in exchange for promissory notes in an amount equal to the current market value of such securities thereby increasing St. Georges basis in the purchased shares and (b) in one case in exchange for stock of St. George equal to the current market value of the particular securities. In addition, one other wholly-owned subsidiary of Abingworth is transferring all of its assets consisting of "restricted securities" directly to Abingworth in exchange for a cash payment equal to all of such subsidiarys liabilities. Abingworth has requested this firms advice as to whether upon the transfer of securities from the wholly-owned Abingworth Subsidiaries to St. George and to Abingworth, Abingworth or St. George can, for purposes of Rule 144, tack the Abingworth Subsidiaries holding period for the securities transferred.

For the reasons set forth below, it is our opinion that Abingworth in the one case, or its wholly-owned subsidiary St. George, in the other instances referred to above, can compute their holding period under Rule 144 by including the holding period of the Abingworth Subsidiaries. We feel that our view is justified by the language and intent of paragraph (d)(1) of Rule 144, as well as the position taken by the Division of Corporation Finance in the following interpretive letters: American Diversified Enterprises, Inc., available March 28, 1974 ("ADE"); The Black and Decker Manufacturing Company, available June 13, 1975 ("Black and Decker"); General Energy Corporation, available April 29, 1976 ("General Energy"); Bay Equities, Inc., available October 25, 1976; The Harbel Corporation, available October 19, 1979, J. H. Foster & Company Limited Partnership, available February 15, 1980 ("Foster"); and Hellman, Gal Investment Associates, available January 19, 1981 ("Hellman").

We believe that the facts presented in this situation are sufficiently analogous to those in ADE and Black and Decker. In addition, we believe that the distinguishing features of the subject situation do not compel a conclusion different from the one reached in ADE and Black and Decker.

The parent company in ADE, a privately held investment company, established a series of wholly-owned subsidiaries which made particular investments in restricted securities. At issue was the applicability of Rule 144(d)(1) to the parent companys liquidation of the subsidiaries and subsequent distribution of their assets. The Division of corporation Finance concluded that the parent could tack the holding periods of the subsidiaries upon the liquidating distribution of the restricted securities. The Abingworth procedure has been very much the same as in ADE in that Abingworth and its wholly-owned subsidiary, St. George, wish to tack the holding periods of the Abingworth Subsidiaries, also wholly-owned by Abingworth.

In Black and Decker. Mr. R. McCullock acquired record and beneficial ownership of a substantial block of common stock of The Black and Decker Manufacturing Company. Subsequently the shares were transferred to a newly formed corporation in exchange for all of the outstanding shares of the corporation. Mr. McCullock was the sole shareholder of the corporation. It was the view of the Division of Corporation Finance that the holding period of the corporation may be tacked to that of Mr. McCulloch.

We suggest the Divisions position underlying ADE and Black and Decker is equally applicable to the present fact situation. Rule 144(d)(1) requires, with respect to the holding period for restricted securities to be sold thereunder, that the person for whose account the securities are sold shall have been the beneficial owner of the securities for a period of at least two years prior to the sale. As articulated in the Preliminary Note to Rule 144, the holding period is required to assure that the economic risk of an investment in restricted securities has been assumed and that the seller is not acting as a mere conduit for the issuer. Herein, upon the transfer of securities to St. George and to Abingworth, the beneficial ownership of the securities will not have changed. Abingworth, in substance, has been and will continue to be the beneficial owner of the securities; the Abingworth Subsidiaries have been merely investment vehicles. As sole owner of the Abingworth Subsidiaries and of St. George, Abingworth has borne the full economic risk of all of the subsidiarys investments. Black and Decker, supra. Abingworth has at all times maintained complete investment authority and control over the Abingworth Subsidiaries and St. George with regard to the purchase, sale and voting of all securities held by the Abingworth Subsidiaries and St. George. The shift of record ownership of the securities from the Abingworth Subsidiaries to Abingworth Original Text Illegible the other instances changes neither the beneficial ownership interest of Abingworth nor Abingworths economic risk in the investment in the portfolio of securities. See Foster.

The Abingworth structure and procedure is distinguishable from that presented in General Energy where the Division of Corporation Finance denied the tacking of the holding period of a Small Business Investment Company ("SBIC") upon distribution of portion of its restricted securities to its shareholders. The proposed distribution in General Energy would have constituted a partial liquidation to the multiple shareholders of the SBIC. The rationale of the Divisions position was that the SBICs interests were not identical to the individual interests of the shareholders and, thus, the beneficial ownership of the securities in question could not be deemed to have remained the same upon distribution. In contrast, the identity of interests among Abingworth, the Abingworth Subsidiaries and St. George is, as described above, quite clear and the instant situation involving a simple transfer of securities presents an obvious continuation of the beneficial ownership of the securities by Abingworth. As such, it is our opinion that Abingworth and its wholly-owned subsidiary, St. George, may tack the Abingworth subsidiaries holding period with respect to the proposed transfer of the securities described hereinabove.

We would appreciate your advising us as soon as possible as to whether the Division is in agreement with our position.

Sincerely,

BUCHALTER, NEMER, FIELDS, CHRYSTIE & YOUNGER
By James H. Grossman

STAFF REPLY LETTER

DEC 15, 1981

RESPONSE OF THE OFFICE OF CHIEF COUNSEL
DIVISION OF CORPORATION FINANCE

Re: Abingworth Limited ("Abingworth")

Incoming letter dated December 7, 1981

On the basis of the facts presented, it is the view of this Division that Abingworth and its wholly-owned subsidiary, Abingworth (St. George) Limited ("St. George") may "tack" the holding periods of a group of wholly-owned subsidiaries of Abingworth upon the transfer of restricted shares from those subsidiaries to Abingworth and St. George, for purposes of satisfying the condition of Rule 144(d)(1) under the 1933 Act. In arriving at this conclusion, we have given particular consideration to the fact that Abingworth has been and will be the beneficial owner of the securities during all relevant time periods.

Sincerely,

Ann M. Glickman

Special Counsel