[Code of Federal Regulations]
[Title 17, Volume 2]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR229.910]

[Page 449-450]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER II--SECURITIES AND EXCHANGE COMMISSION
 
 PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND CONSERVATION ACT OF 1975--
REGULATION S-K--Table of Contents
 
                  Subpart 229.900--Roll-Up Transactions
 
Sec. 229.910  (Item 910) Fairness of the transaction.

    (a) State whether the general partner reasonably believes that the 
roll-up transaction is fair or unfair to investors and the reasons for 
such belief. Such discussion must address the fairness of the roll-up 
transaction to investors in each of the partnerships and as a whole. If 
the roll-up transaction may be completed with a combination of 
partnerships consisting of less than all partnerships, or with portions 
of partnerships, the belief stated must address each possible 
combination.
    (b) Discuss in reasonable detail the material factors upon which the 
belief stated in paragraph (a) of this Item (Sec. 229.910) is based and, 
to the extent practicable, the weight assigned to each such factor. Such 
discussion should include an analysis of the extent, if any, to which 
such belief is based on the factors set forth in Instructions (2) and 
(3) to this Item (Sec. 229.910), paragraph (b)(1) of Item 909 of this 
subpart (Sec. 229.909(b)(1)) and Item 911 of this subpart 
(Sec. 229.911). This discussion also must:
    (1) Compare the value of the consideration to be received in the 
roll-up transaction to the value of the consideration that would be 
received pursuant to each of the alternatives discussed in response to 
Item 908(b) of this subpart (Sec. 229.908(b)); and
    (2) Describe any material differences among the partnerships (e.g., 
different types of assets or different investment objectives) relating 
to the fairness of the transaction.
    (c) If any offer of the type described in Instruction (2)(viii) to 
this Item (Sec. 229.910) has been received, describe such offer and 
state the reason(s) for its rejection.
    (d) Describe any factors known to the general partner that may 
affect materially the value of the consideration to be received by 
investors in the roll-up transaction, the values assigned to the 
partnerships for purposes of the comparisons to alternatives required by 
paragraph (b) of this Item (Sec. 229.910) and the fairness of the 
transaction to investors.
    (e) State whether the general partner's statements in response to 
paragraphs (a) and (b) of this Item (Sec. 229.910) are based, in whole 
or in part, on any report, opinion or appraisal described in response to 
Item 911 of this subpart (Sec. 229.911). If so, describe any material 
uncertainties known to the general partner that relate to the 
conclusions in any such report, opinion or appraisal including, but not 
limited to, developments or trends that have affected or are reasonably 
likely to affect materially such conclusions.

Instructions to Item 910: (1) A statement that the general partner has 
no reasonable belief as to the fairness of the roll-up transaction to 
investors will not be considered sufficient disclosure in response to 
paragraph (a) of this Item (Sec. 229.910(a)).
    (2) The factors which are important in determining the fairness of a 
roll-up transaction to investors and the weight, if any, which should be 
given to them in a particular context will vary. Normally such factors 
will include, among others, those referred to in paragraph (b)(1) of 
Item 909 (Sec. 229.909(b)(1)) and whether the consideration offered to 
investors constitutes fair value in relation to:
    (i) Current market prices, if any;
    (ii) Historic market prices, if any;
    (iii) Net book value;
    (iv) Going concern value;
    (v) Liquidation value;
    (vi) Purchases of limited partnership interests by the general 
partner or sponsor or their affiliates since the commencement of the 
partnership's second full fiscal year preceding the date of filing of 
the disclosure document for the roll-up transaction;
    (vii) Any report, opinion, or appraisal described in Item 911 of 
this subpart (Sec. 229.911); and
    (viii) Offers of which the general partner or sponsor is aware made 
during the preceding eighteen months for a merger, consolidation, or 
combination of any of the partnerships; an acquisition of any of the 
partnerships or a material amount of their assets; a tender offer for or 
other acquisition of securities of any class issued by any of the 
partnerships; or a change in control of any of the partnerships.
    (3) The discussion concerning fairness should specifically address 
material terms of the transaction including whether the consideration 
offered to investors constitutes fair value in relation to:
    (i) The form and amount of consideration to be received by investors 
and the sponsor in the roll-up transaction;

[[Page 450]]

    (ii) The methods used to determine such consideration; and
    (iii) The compensation to be paid to the sponsor in the future.
    (4) Conclusory statements, such as ``The roll-up transaction is fair 
to investors in relation to net book value, going concern value, 
liquidation value and future prospects of the partnership,'' will not be 
considered sufficient disclosure in response to paragraph (b) of this 
Item (Sec. 229.910(b)).
    (5) Consideration should be given to presenting the comparative 
numerical data as to the value of the consideration being received by 
investors, liquidation value and other values in a tabular format. 
Financial and other information concerning the partnerships should be 
prepared based upon the most recent available information, such as, in 
the case of financial information, the periods covered by interim 
selected financial information included in the prospectus in accordance 
with Item 914 of this subpart (Sec. 229.914).