Shearman & Sterling , (July 02, 1993)

INQUIRY LETTER

Shearman & Sterling

599 Lexington Avenue

New York, New York

July 02, 1993

Ms. Meredith B. Cross, Chief Counsel

Division of Corporation Finance

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549

Dear Ms. Cross:

The staff of the Division of Corporation Finance (the "Division") has permitted the type of exchange offer transaction described in Exxon Capital Holdings Corporation (available May 13, 1988) (an "Exchange Offer") to be used in connection with non-convertible debt securities, investment grade non-convertible preferred stock, unrated non-convertible preferred stock that is exchangeable into debt securities, broker-remarketed or auction preferred stock and, in certain cases, equity securities of foreign issuers. In an Exchange Offer, the holders of privately placed securities ("Initial Securities") exchange such securities for similar securities ("Exchange Securities") pursuant to a registered exchange offer.

This letter requests that the Division confirm our understanding that a broker-dealer may participate in an Exchange Offer with respect to Initial Securities acquired for its own account as a result of market-making activities or other trading activities ¹, provided that

(1) in connection with any resales of Exchange Securities received in exchange for such Initial Securities, the broker-dealer delivers a prospectus meeting the requirements of the Securities Act, which may be the prospectus for the Exchange Offer so long as it contains a plan of distribution with respect to such resale transactions (such plan of distribution need not name the broker-dealer or disclose the amount of Exchange Securities held by the broker-dealer);

(2) the broker-dealer has not entered into any arrangement or understanding with the issuer or an affiliate of the issuer to distribute the Exchange Securities; and

(3) the issuer

(i) will make each person participating in the Exchange Offer aware (through the Exchange Offer prospectus) that any broker-dealer who holds Initial Securities acquired for its own account as a result of market-making activities or other trading activities, and who receives Exchange Securities in exchange for such Initial Securities pursuant to the Exchange Offer, may be a statutory underwriter and must deliver a prospectus meeting the requirements of the Securities Act as described in (1) above in connection with any resale of such Exchange Securities; and

(ii) will include in the transmittal letter or similar documentation to be executed by an exchange offeree in order to participate in the Exchange Offer the following additional provision

if the exchange offeree is a broker-dealer holding Initial Securities acquired for its own account as a result of market-making activities or other trading activities, an acknowledgment that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of Exchange Securities received in respect of such Initial Securities pursuant to the Exchange Offer. The transmittal letter or similar documentation may also include a statement to the effect that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.

The supplemental letters provided to the staff prior to effectiveness of Exchange Offer registration statements will be revised to include additional representations as to the matters set forth in (2) and (3) above.

We appreciate your attention to this matter. If you have any questions or wish to discuss this matter further, please call Arbie R. Thalacker at (212) 848-7085, Robert Lewis at (212) 848-8736 or Jerry Elliott at (212) 848-7961.

Sincerely,

Arbie R. Thalacker

STAFF REPLY LETTER

July 2, 1993

RESPONSE OF THE OFFICE OF CHIEF COUNSEL

DIVISION OF CORPORATION FINANCE

Re: Shearman & Sterling

Incoming letter dated July 2, 1993

Based on the facts presented, it is the Divisions view that for purposes of the registration and prospectus delivery requirements of the Securities Act of 1933, a broker-dealer may, upon the terms and subject to the conditions set forth in your letter, participate in an Exchange Offer with respect to Initial Securities acquired for its own account as a result of market making activities or other trading activities and resell Exchange Securities received in exchange for such Initial Securities. In this regard, we note that the terms and conditions set forth in your letter supplement those which are set forth in prior letters concerning Exchange Offers (e.g., Morgan Stanley & Co. Incorporated (June 5, 1991)).

Because this position is based on the facts and representations contained in your letter, it should be noted that any different facts or conditions might require another conclusion.

Sincerely,

Meredith B. Cross

Chief Counsel

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SEC_CODE_REF_0090001192884