Corporate group receives rulings on proposed restructuring

View official IRS release (PDF)

Plain-English summary

A public company's worldwide group proposed a large restructuring involving liquidations, reincorporations, contributions, internal distributions, asset sales, debt exchanges, and a public-company spinoff. The IRS addressed eight discrete legal issues rather than ruling on the transaction's overall tax consequences. It ruled that one contribution and distribution would not prevent related transfers from qualifying under section 351, and that relative business sizes would not prevent several distributing or controlled corporations from meeting section 355's active-business requirement. It also ruled that later asset transfers and reincorporations would not prevent specified liquidations from qualifying under section 332. The letter further addressed when deferred losses from two sales would be taken into account and how investment banks and historic debt holders would be treated in the debt exchange under section 361.

Ruling snapshot

• Question: Would eight specified features of the proposed restructuring interfere with intended tax treatment under sections 267, 332, 351, 355, and 361?
• Outcome: Approved as to the eight discrete issues addressed, with no opinion on the transaction's overall tax consequences.
• Key authorities: IRC §§ 267, 332, 351, 355, 361, and 368; Treas. Reg. § 1.1502-13.

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201641011 Third Party Communication: None
Release Date: 10/7/2016 Date of Communication: Not Applicable
Index Number: 355.00-00, 351.00-00
Person To Contact:
--------------------- --------------------------, ID No. ----------------
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----------------------------- Telephone Number:
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--------- Refer Reply To:
------------------------------------- CC:CORP:B02
PLR-116636-16
Date:
June 30, 2016

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Dear ---------------:

   This letter responds to your authorized representatives’ letter dated May 17,

2016, requesting rulings on certain federal income tax consequences of a proposed
PLR-116636-16 11

transaction (the “Proposed Transaction”). The material information provided in that
request and in subsequent correspondence is summarized below.

    The rulings contained in this letter are based upon information and

representations submitted by the taxpayer and accompanied by a penalties of perjury
statement executed by an appropriate party. This office has not verified any of the
materials submitted in support of the request for rulings; however it is subject to
verification on examination.

   This letter is issued pursuant to section 6.03 of Rev. Proc. 2016-1, 2016-1 I.R.B.

1, regarding one or more significant issues under sections 332, 351, 355, 368, or 1036.
The rulings contained in this letter only address one or more discrete legal issues
involved in the transaction. This Office expresses no opinion as to the overall tax
consequences of the Proposed Transaction described in this letter or as to any issue
not specifically addressed by the rulings below.

                             SUMMARY OF FACTS

   Distributing 8, a State A corporation, is a widely held public company that is the

parent of a worldwide group of entities (the “Distributing 8 Worldwide Group”) and is
also the common parent of an affiliated group of corporations filing a consolidated
federal income tax return (the “Distributing 8 Group”).

   Distributing 8 has outstanding several tranches of publicly-held, long-term debt

(the “Distributing 8 Debt”) and commercial paper.

    Distributing 8 owns all of the issued and outstanding stock of Sub 1, a State A

corporation, and Sub 2, a State H corporation. Distributing 8 also indirectly owns all of
the issued and outstanding stock of FSub 1, a Country A corporation. FSub 1 owns all
of the issued and outstanding equity interests of DRE 1, a Country A entity disregarded
as an entity separate from FSub 1. DRE 1 is engaged in the DRE 1 Business.

   Sub 1 owns all of the issued and outstanding stock of the following subsidiaries:

Sub 3, a State A corporation; Sub 4, a State A corporation; Sub 5, a State B
corporation; Sub 6, a State A corporation; Sub 7, a State A corporation; Sub 8, a State
C corporation; Sub 9, a State A corporation; Sub 10, a State D corporation; and, Sub 1
indirectly owns all of the stock of Sub 27, a State A corporation. Sub 10 owns all of the
issued and outstanding stock of Sub 11, a State E corporation.

  Sub 1 also directly owns a percent of the stock of Sub 12, a State A corporation,

b percent of the stock of Sub 13, a State A corporation, and all of the issued and
outstanding common stock of Sub 14, a State F corporation and Sub 15 a State A
corporation. Members of the Distributing 8 Worldwide Group own the remaining issued
and outstanding equity interests in Sub 12, Sub 13, and Sub 15. Sub 3 owns all of the
PLR-116636-16 12

outstanding preferred stock of Sub 14. Sub 1 also owns indirectly all of the stock of
FSub 2, a Country B corporation, which owns all of the equity interests in DRE 3, a
Country B entity disregarded as an entity separate from FSub 2. DRE 3 is engaged in
the DRE 3 Business.

   Sub 1 and Sub 13 own all of the issued and outstanding preferred stock of Sub

16, a State A corporation; members of the Distributing 8 Worldwide Group own the
outstanding common stock of Sub 16. Sub 16 owns directly all of the issued and
outstanding ordinary stock of FSub 3, a Country C corporation, and owns indirectly all of
the stock of FSub 4, a Country D corporation, and FSub 5, a Country E corporation. Sub
16 owns indirectly aa percent of the ordinary shares of FSub 6, a Country F corporation.
Members of the Distributing 8 Worldwide Group own the remaining outstanding shares
of FSub 6.

   FSub 3 owns indirectly all of the stock of Distributing 7, which owns all of the

stock of Distributing 6, which owns all of the stock of Distributing 5. Each of Distributing
7, Distributing 6, and Distributing 5 is a Country G corporation. Distributing 5 owns
indirectly through entities disregarded as entities separate from Distributing 5 all of the
stock of Controlled 5, a Country B corporation.

   FSub 6 owns c percent of the stock of Distributing 4, a Country H corporation.

Sub 16 owns indirectly through entities disregarded as entities separate from Sub 16
the remaining d percent of the stock of Distributing 4. Distributing 4 owns all of the stock
of Controlled 4, a Country H corporation and approximately e percent of the stock of
FSub 7, a Country G corporation. Members of the Distributing 8 Worldwide Group own
the remaining outstanding stock of FSub 7. Controlled 4 is engaged in the Controlled 4
Business.

   Sub 3 owns all of the equity interests in DRE 2, a State A limited liability

company disregarded as an entity separate from Sub 3, DRE 4, a State A limited liability
company disregarded as an entity separate from Sub 3, and FSub 16, a Country I
corporation. DRE 4 owns all of the stock of FSub 8, a Country I corporation, which
owns, directly and indirectly, u percent of the equity interests of FSub 9, a Country I
limited partnership that is treated as a corporation. FSub 16 indirectly owns v percent of
the equity interests of FSub 9. FSub 9 owns f percent and Sub 13 owns g percent of the
stock of FSub 10, a Country J corporation.

   Sub 4 owns indirectly all of the equity interests in DRE 5, a Country A entity

disregarded as an entity separate from Sub 4. DRE 5 owns all of the issued and
outstanding stock of Sub 17, a State A corporation, and z percent of the issued and
outstanding ordinary shares of FSub 11, a Country A corporation. Sub 4, FSub 11, DRE
5, and Distributing 1 own h percent, i percent, j percent, and k percent, respectively, of
the stock of Sub 18, a State A corporation. Sub 18 owns all of the issued and
PLR-116636-16 13

outstanding equity interests of DRE 6, a Country I entity disregarded as an entity
separate from Sub 18.

   Sub 15 owns l percent of the stock of FSub 12, a Country I corporation.

Distributing 1 owns the remaining m percent of the stock of FSub 12. FSub 12 is
engaged in the FSub 12 Business. FSub 12 owns all of the issued and outstanding
stock of FSub 13, a Country K corporation.

   Sub 12 owns all of the equity interests of Sub 19, a State A limited liability

company that is treated as a corporation. Sub 19 owns all of the stock of Sub 21, a
State A corporation. Sub 12 owns indirectly, through wholly owned subsidiaries,
approximately n percent of the common stock and o percent of the nonvoting preferred
stock of Sub 20, a State A corporation. Members of the Distributing 8 Worldwide Group
own the remaining outstanding common and nonvoting preferred stock and class of
voting preferred stock of Sub 20. Sub 20 is the common parent of an affiliated group of
corporations that join in filing a consolidated U.S. federal income tax return (the “Sub 20
Consolidated Group”).

   Sub 20 owns all of the issued and outstanding stock of Sub 22, Sub 23, Sub 24,

and Sub 25. Sub 22 is a State D corporation. Sub 23 and Sub 24 are State A
corporations. Sub 25 is a State E corporation. Sub 20 owns p percent of the stock of
Distributing 1, a State G corporation. FSub 4 owns the remaining q percent of the stock
of Distributing 1. Distributing 1 owns, among other subsidiaries and assets, all of the
stock of FSub 14, a Country A corporation and all of the common interests of Sub 26, a
State A limited liability company treated as a corporation. Sub 27 owns the preferred
interests of Sub 26. The equity interests of Sub 26 are treated as stock for U.S. federal
income tax purposes.

   Sub 2 owns all of the issued and outstanding common stock of Distributing 3, a

State A corporation. A member of the Sub 20 Consolidated Group owns all of issued
and outstanding class of voting preferred stock of Distributing 3. Sub 2 owns all of the
issued and outstanding class of common stock of Distributing 2, a State A corporation.
Sub 20, DRE 2, and DRE 6, own r percent, s percent, and t percent, respectively, of the
class of nonvoting preferred stock of Distributing 2. Sub 17 owns all of the issued and
outstanding class of voting preferred stock of Distributing 2 (such voting preferred stock
together with the nonvoting preferred stock of Distributing 2, the “Distributing 2
Preferred Stock”). Distributing 2 owns u percent of the stock of FSub 15, a Country L
corporation directly and the remaining v percent indirectly through entities disregarded
as entities separate from Distributing 2.

                          PROPOSED TRANSACTION

Distributing 8 proposes to undertake, pursuant to one overall plan, the following

transaction steps, which may occur in a different order than described below:
PLR-116636-16 14

(i) Sub 3 converts to a limited liability company (“Sub 3 LLC” and the “Sub 3
Liquidation”).

(ii) Sub 1 (through DRE 4) forms Newco 3, a State A limited liability company.

(iii)
a. FSub 8 forms New ULC, a Country I unlimited liability company that will be
treated as an entity disregarded as separate from FSub 8.

         b. FSub 8 continues to Province.

         c. New ULC amalgamates with FSub 8 pursuant to Country I law, with New
            ULC surviving to form FSub 8 M.ULC (the “FSub 8 Liquidation”).

(iv) FSub 8 M.ULC distributes the equity interests in a subsidiary to DRE 4.

(v)
a. Sub 5 liquidates (the “Sub 5 Liquidation”).

         b. Sub 1 contributes the Business B assets of Sub 5 to Newco 3 (the “Sub 5
            Reincorporated Assets”).

(vi)
a. Sub 1 forms New Sub 6, a corporation, and contributes the stock of Sub 6
to New Sub 6.

         b. Sub 6 converts to a limited liability company (“Sub 6 LLC”).

         c. Sub 6 LLC distributes its Business A assets and cash to New Sub 6.

(vii)
a. Sub 7 converts to a limited liability company (the “Sub 7 Liquidation”).

         b. Sub 7 distributes its Business A assets and cash to Sub 1.

         c. Sub 1 contributes its equity interests in Sub 7 to Newco 3 (the “Sub 7
            Reincorporated Assets”).

(viii)
a. Sub 1 forms New Sub 8, a State A corporation, and contributes the stock
of Sub 8 to New Sub 8.

         b. Sub 8 converts to a limited liability company (“Sub 8 LLC”).

PLR-116636-16 15

       c. Sub 8 distributes its Business A assets and cash to New Sub 8.

(ix)
a. Sub 1 and Sub 3 LLC form New Sub 14, a State A corporation, and
contribute the stock of Sub 14 to New Sub 14.

       b. Sub 14 converts to a limited liability company (“Sub 14 LLC”).

       c. Sub 14 distributes assets and cash to Sub 1.

(x)
a. Sub 9 converts to a limited liability company (the “Sub 9 Liquidation”).

       b. Sub 9 distributes certain assets and cash to Sub 1.

       c. Sub 1 contributes its equity interests in Sub 9 to Newco 3 (the “Sub 9
          Reincorporated Assets”).

(xi)
a. Sub 13 sells its stock in FSub 10 to Distributing 8 in exchange for cash.

       b. FSub 9 sells its stock in FSub 10 to an indirect subsidiary of Newco 3 in
          exchange for cash (step (xi), the “FSub 10 Sale”).

(xii)
a. Sub 10 converts to a limited liability company (the “Sub 10 Liquidation”).

       b. Sub 10 distributes its stock in Sub 11 to Sub 1.

       c. Sub 1 contributes the stock of Sub 11 to Newco 3 (the “Sub 10
          Reincorporated Assets”).

(xiii)
a. Sub 19 elects to be treated as an entity disregarded as separate from Sub
12 (the “Sub 19 Liquidation” and together with the Sub 3 Liquidation, FSub
8 Liquidation, Sub 5 Liquidation, the Sub 7 Liquidation, the Sub 9
Liquidation, and the Sub 10 Liquidation, the “Liquidations”).

       b. Sub 19 distributes Sub 21 to Sub 12.

       c. Sub 12 contributes Sub 19 to Newco 5, a newly formed State A
          corporation (the “Sub 19 Reincorporated Assets”).

PLR-116636-16 16

      d. Sub 12 distributes the stock of Newco 5 to Sub 1 in exchange for a portion
         of its stock in Sub 12.

      e. Sub 1 contributes the stock of Newco 5 to Newco 3.

(xiv) Newco 3 indirectly forms Newco 4 a Country I entity disregarded as an
entity separate from Sub 1.

(xv) Through a series of disregarded transactions, FSub 8 M.ULC transfers its
Business B assets to Newco 4 (the “FSub 8 Reincorporated Assets”).

(xvi) Newco 4 elects to be classified as a corporation.

(xvii) Newco 3 elects to be classified as a corporation, and Sub 1 distributes the
stock of Newco 3 to Distributing 8 (the assets of Newco 3, the “Sub 3
Reincorporated Assets” and together with the Sub 5 Reincorporated Assets, the
Sub 7 Reincorporated Assets, the Sub 9 Reincorporated Assets, the Sub 10
Reincorporated Assets, the Sub 19 Reincorporated Assets, and the FSub8
Reincorporated Assets, the “Reincorporated Assets”).

(xviii) FSub 8 M.ULC elects to be classified as a corporation (the “FSub 8
Reincorporation”).

(xix) Sub 3 LLC elects to be classified as a corporation for U.S. federal tax
purposes (the “Sub 3 Reincorporation” and together with the FSub 8
Reincorporation, the “Reincorporations”).

(xx) FSub 4 contributes its stock in Distributing 1 to Newco 1, a newly formed
State A limited liability company that will elect to be treated as a corporation (the
“Newco 1 Contribution”).

(xxi) Sub 20 and Newco 1 contribute their stock in Distributing 1 to Newco 2, a
newly formed State A corporation, in exchange for stock of Newco 2 (the “Newco
2 Contribution”).

(xxii) Distributing 1 borrows from third-party and/or related lenders and
distributes the borrowing proceeds along with pre-existing cash to Newco 2.

(xxiii) Sub 18 contributes its Business B assets to a newly formed corporation
and distributes the stock of the new corporation to Distributing 1 and DRE 5 in
exchange for all or a portion of their stock in Sub 18. Sub 18 (through DRE 6)
retains its Distributing 2 Preferred Stock.
PLR-116636-16 17

(xxiv) FSub 12 distributes 100 percent of the stock of FSub 13 and cash to Sub
15 in exchange for a portion of Sub 12’s stock in FSub 12.

(xxv)
a. Sub 20 contributes its Distributing 2 Preferred Stock and the stock of Sub
22, Sub 23, Sub 24, and Sub 25 to Distributing 3 in exchange for
nonvoting preferred stock of Distributing 3.

      b. Newco 2 contributes the stock of Distributing 1 to Distributing 3 in
         exchange for nonvoting preferred stock of Distributing 3.

      c. Sub 17 contributes its Distributing 2 Preferred Stock to Distributing 3 in
         exchange for shares of a new class of common stock of Distributing 3.

      d. DRE 2 contributes its Distributing 2 Preferred Stock to Distributing 3 in
         exchange for shares of a new class of common stock of Distributing 3.

      e. Sub 18 (through DRE 6) contributes its Distributing 2 Preferred Stock to
         Distributing 3 in exchange for nonvoting preferred stock of Distributing 3.

      f. Sub 15 contributes its remaining interest in FSub 12 to Distributing 3 in
         exchange for shares of a new class of common stock of Distributing 3.

      g. New Sub 6 contributes the equity interests of Sub 6 LLC to Distributing 3
         in exchange for shares of a new class of common stock of Distributing 3.

      h. New Sub 8 contributes the equity interests of Sub 8 LLC to Distributing 3
         in exchange for shares of a new class of common stock of Distributing 3.

      i.   New Sub 14 contributes the equity interests of Sub 14 LLC to Distributing
           3 in exchange for shares of a new class of common stock of Distributing 3.

      j.   Sub 27 contributes the preferred interests of Sub 26 to Distributing 3 in
           exchange for nonvoting preferred stock of Distributing 3 (step (xxv), the
           “Distributing 3 Contribution” and together with the Newco 1 Contribution
           and the Newco 2 Contribution, the “Contributions”). The nonvoting
           preferred stock and new class of common stock Sub 20, Newco 2, Sub
           17, Sub 3, Sub 18, Sub 15, New Sub 6, New Sub 8, New Sub 14, and Sub
           27 receive in the Distributing 3 Contribution will constitute control of
           Distributing 3 within the meaning of section 368(c).

(xxvi) Distributing 1 contributes the stock of FSub 14 and other assets to
Controlled 1, a newly formed State A corporation, and distributes all of the stock
of Controlled 1 to Distributing 3 (the “Controlled 1 Distribution”).
PLR-116636-16 18

(xxvii) Sub 6 LLC converts to a corporation (“Sub 6”).

(xxviii) Sub 8 LLC converts to a corporation (“Sub 8”).

(xxix) Sub 14 LLC converts to a corporation (“Sub 14”).

(xxx) Distributing 2, directly and through entities disregarded as entities
separate from Distributing 2, forms New FSub 15, a Country L corporation, and
contributes its direct and indirect interest in FSub 15 to New FSub 15. FSub 15
elects to be treated as an entity disregarded as separate from New FSub 15.

(xxxi) New FSub 15 forms Newco 7, a Country A corporation. New FSub 15
borrows from a related party and contributes the borrowing proceeds to Newco 7.
Newco 7 acquires DRE 1 from FSub 1 in exchange for cash.

(xxxii) Distributing 2 forms Controlled 2 and contributes its direct and indirect
interest in New FSub 15 to Controlled 2.

(xxxiii) Distributing 2 distributes all of the stock of Controlled 2 and, potentially,
cash to Sub 2 and Distributing 3 (the “Controlled 2 Distribution”).

(xxxiv) Distributing 3 contributes its stock in Distributing 1, Sub 22, Sub 23, Sub
24, Sub 25, FSub 12, Sub 6, Sub 8, Sub 14, the Distributing 2 Preferred Stock,
the preferred interests of Sub 26, and other Business B assets it owns directly to
Controlled 3 (the “Controlled 3 Contribution”).

(xxxv) Controlled 3 borrows from a related party lender and distributes the
borrowing proceeds to Distributing 3.

(xxxvi) Distributing 8 forms New Sub 2, a State A corporation, and contributes the
stock of Sub 2 to New Sub 2. Sub 2 converts to a State A limited liability
company (“Sub 2 LLC”).

(xxxvii) Sub 2 LLC distributes its stock in Distributing 3, Controlled 2, cash, and
any other Business A assets it owns to New Sub 2.

(xxxviii) Sub 2 LLC converts to a State H corporation (“Sub 2”).

(xxxix) Distributing 3 distributes all of the stock of Controlled 3 (after having
received the assets described in step (xxxiv) in the Controlled 3 Contribution) to
New Sub 2 pro rata on the class of common stock Sub 2 holds (the “Controlled 3
Distribution”).
PLR-116636-16 19

(xl) New Sub 2 contributes the stock of Sub 2 to Controlled 3.

(xli) New Sub 2 distributes all of the stock of Controlled 3 to Distributing 8.

(xlii) Distributing 4 contributes its stock in FSub 7 to Controlled 4 and
distributes the stock of Controlled 4 to FSub 6 in exchange for a portion of its
stock in Distributing 4 (the “Controlled 4 Distribution”).

(xliii) Controlled 5 purchases the equity interests in DRE 3 from FSub 2 in
exchange for cash.

(xliv) Distributing 5 distributes the stock of Controlled 5 to Distributing 6 (the
“First Controlled 5 Distribution”).

(xlv) Distributing 6 distributes the stock of Controlled 5 to Distributing 7 (the
“Second Controlled 5 Distribution”).

(xlvi) Distributing 7 distributes the stock of Controlled 5 to FSub 3 (the “Third
Controlled 5 Distribution”, and together with the First Controlled 5 Distribution
and Second Controlled 5 Distribution, the “Controlled 5 Distributions”).

(xlvii) FSub 3 contributes the stock of Controlled 5 to a controlled corporation
and the controlled corporation is ultimately distributed to Distributing 8 through a
series of internal distributions and contributions.

(xlviii)
a. FSub 5 contributes the majority of its assets to Newco 6, a newly formed
Country E corporation, by way of a demerger under Country E law.

         b. FSub 5 sells all of the stock of Newco 6 to a subsidiary of Public Spinco in
            exchange for cash (the “Newco 6 Sale” and together with the FSub 10
            Sale, the “Sales”).

(xlix)
a. Distributing 8 contributes Business B, including the stock of Controlled 3,
Newco 3, and Controlled 5 (indirectly), to Public Spinco in exchange for
Public Spinco stock, the assumption of liabilities, if any, debt of Public
Spinco that will qualify as securities within the meaning of section 361(a)
(the “Public Spinco Securities”) and cash (the “Public Spinco
Contribution”).

         b. On or around the Public Spinco Contribution date:

                i. One or more investment banks (the “Investment Banks”) acquires a
                   portion of the Distributing 8 Debt and commercial paper;

PLR-116636-16 20

            ii. No less than w days after the Investment Banks acquire the
                Distributing 8 Debt, Distributing 8 enters into an exchange
                agreement (the “Exchange Agreement”) with the Investment Banks
                pursuant to which Distributing 8 will retire a portion of the
                Distributing 8 Debt and commercial paper held by the Investment
                Banks in exchange for the Public Spinco Securities.

            iii. No less than x days after the Investment Banks acquire the
                 Distributing 8 Debt, Distributing 8 transfers the Public Spinco
                 Securities to the Investment Banks in exchange for a portion of the
                 Distributing 8 Debt (the “Debt Exchange”) and commercial paper.

    c. Distributing 8 uses any cash received in the Public Spinco Contribution to
       repay debt and/or make distributions to its shareholders within y months.

    d. Distributing 8 distributes the stock of Public Spinco to its shareholders (the
        “Public Spinco Distribution”).

                                   RULINGS

1. The Controlled 3 Contribution and Controlled 3 Distribution will not disqualify the
   Contributions from otherwise qualifying as section 351(a) exchanges.
2. The relative fair market value of the gross assets of the FSub 12 Business
   compared to the fair market value of the gross assets of Distributing 1 will not
   preclude Distributing 1 from satisfying the active trade or business requirement of
   section 355(b) with respect to the Controlled 1 Distribution.
3. The relative fair market value of the gross assets of the DRE 1 Business
   compared to the fair market value of the gross assets of Controlled 2 will not
   preclude Controlled 2 from satisfying the active trade or business requirement of
   section 355(b) with respect to the Controlled 2 Distribution.
4. The relative fair market value of the gross assets of the Controlled 4 Business
   compared to the fair market value of the gross assets of Controlled 4 will not
   preclude Controlled 4 from satisfying the active trade or business requirement of
   section 355(b) with respect to the Controlled 4 Distribution.

5. The relative fair market value of the gross assets of the DRE 3 Business
   compared to the fair market value of the gross assets of Controlled 5 will not
   preclude Controlled 5 from satisfying the active trade or business requirement of
   section 355(b) with respect to any of the Controlled 5 Distributions.
   PLR-116636-16 21

6. The transfers of the Reincorporated Assets to Newco 3, Newco 4, or Newco 5
   and the Reincorporations will not preclude the Liquidations from otherwise
   qualifying as “complete liquidations” within the meaning of section 332.

7. Any loss realized in the Sales and not taken into account under section 267 or
   Treas. Reg. § 1.1502-13 will be taken into account under section 267 and/or
   Treas. Reg. § 1.1502-13 upon the Public Spinco Distribution.

8. Taking into account the involvement of the Investment Banks in the Debt
   Exchange, the Investment Banks and each participating historic holder of the
   Distributing 8 Debt will be treated as a Distributing 8 creditor to which the Public
   Spinco Securities are transferred in connection with the Public Spinco
   Distribution for purposes of section 361(c)(3), and the Public Spinco Securities
   will be treated as being distributed in pursuance of the Public Spinco Distribution
   plan of reorganization for purposes of section 361(c).

                                    CAVEATS
   

   Except as expressly provided herein, no opinion is expressed or implied
   concerning the tax consequences of any aspect of any transaction of item discussed or
   referenced in this letter.

                         PROCEDURAL STATEMENTS
   

   This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the
   Code provides that it may not be used or cited as precedent.

   A copy of this letter must be attached to any income tax return to which it is
   relevant. Alternatively, taxpayers filing their returns electronically may satisfy this
   requirement by attaching a statement to their return that provides the date and control
   number of the letter ruling.

    In accordance with the Power of Attorney on file with this office, a copy of this
   

   letter is being sent to your authorized representatives.

                                  Sincerely,
   
                                  Isaac W. Zimbalist
                                  Senior Technician Reviewer, Branch 3
                                  Office of Associate Chief Counsel
                                  (Corporate)