[Federal Register Volume 59, Number 87 (Friday, May 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10889]
[[Page Unknown]]
[Federal Register: May 6, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20262, 812-8898]
The Haven Fund, et al.; Notice of Application
April 29, 1994.
AGENCY: Securities and Exchange Commission (``SEC``).
ACTION: Notice of Application for Exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANTS: The Haven Fund (the ``Fund''), HCM Partners, L.P. (the
``Partnership''), and Haven Capital Management, Inc. (the ``Adviser'').
RELEVANT ACT SECTIONS: Order requested under section 17(b) of the Act
for an exemption from section 17(a) of the Act.
SUMMARY OF APPLICATION: Applicants seek an order that would permit the
exchange of shares of the Fund for portfolio securities of the
Partnership. Thereafter, the Partnership will dissolve and distribute
the shares it received in the exchange pro rata to its partners.
FILING DATE: The application was filed on March 18, 1994. By
supplemental letter dated April 29, 1994, counsel to applicants agreed
to file an amendment during the notice period to make certain changes
to its application. This notice reflects the changes to be made to the
application by that amendment.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on May 24, 1994,
and should be accompanied by proof of service on applicants, in the
form of an affidavit or, for lawyers, a 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, SEC, 450 Fifth Street, NW., Washington, DC 20549.
Applicants, c/o Haven Capital Management, Inc., 655 Third Avenue, New
York, New York 10017.
FOR FURTHER INFORMATION CONTACT:
Deepak T. Pai, Staff Attorney, at (202) 942-0574, or Robert A.
Robertson, Branch Chief, at (202) 942-0564 (Division of Investment
Management, Office of Investment Company Regulation).
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.
Applicants' Representations
1. The Partnership was organized in 1984 as a limited partnership
under New York state Law. It has not been registered under the Act in
reliance upon section 3(c)(1) of the Act, and the Partnership interests
have not been registered under the Securities Act of 1933 in reliance
upon section 4(2) thereof. The general partners of the Partnership,
Messrs. Stephen Ely, Colin C. Ferenbach, and Denis M. Turko (the
``General Partners''), have exclusive control over the management and
business of the Partnership. The General Partners have maintained an
investment in the Partnership not less that 1% of the net assets of the
Partnership, and are allocated net income, gains, and losses of the
Partnership in proportion to their respective investments.
2. The Fund is the initial series of The Haven Capital Management
Trust, a business trust formed under the laws of Delaware on March 17,
1994. The Fund, an open-end management investment company, filed a
notification of registration under the Act on Form N-8A and a
registration statement under the Act and the Securities Act on Form N-
1A on March 18, 1994. The registration statement has not yet been
declared effective, and no offering of shares has commenced.
3. The Adviser is the investment adviser to the Partnership and
will be the investment adviser to the Fund. PFPC, Inc. and Provident
Distributors, Inc., which are not affiliated with any of the
applicants, will act as the Fund's administrator and principal
underwriter, respectively. The Fund does not currently intend to enlist
the assistance of other broker-dealers to market shares and there is no
intention to advertise the Fund in newspapers or other media. Neither
the Adviser nor Provident intends to solicit widespread public interest
in the Fund.
4. Applicants propose that, prior to offering the shares to the
public, the Fund will exchange shares for the assets of the
Partnership, less funds required to pay the liabilities of the
Partnership. Thereafter, the Partnership will dissolve and distribute
the shares it received to its partners pro rata, including the General
Partners. Partners of the Partnership will constitute all of the
holders of shares, except for shares representing seed capital
contributed to the Fund by the Adviser pursuant to section 14(a) of the
Act. The Fund was designed as a successor investment vehicle to the
Partnership, with investment objectives and policies substantially the
same as those of the Partnership. The same persons who selected the
investments for the Partnership will select them for the Fund.
5. The Fund intends to adopt a plan of distribution pursuant to
rule 12b-1 under the Act. Under the rule 12b-1 plan, the Fund may spend
no more than 0.25% of its average daily net assets for sales activities
including compensation paid to Provident and the printing and mailing
of prospectuses and sales literature. The Fund will comply with rules
regarding distribution expenses adopted by the National Association of
Securities Dealers.
6. The proposed exchange will be effected pursuant to an agreement
and plan of exchange (the ``Plan'') to be approved by the limited
partners of the Partnership. Under the Plan, the portfolio securities
of the Partnership will be acquired at their independent ``current
market price,'' as defined in rule 17a-7 under the Act. The Fund will
not acquire securities that, in the opinion of the Adviser, are
overvalued or would result in a violation of the Fund's investment
objectives, policies, or restrictions. It is not expected that the
Partnership will hold any such securities. Any remaining securities
will be liquidated by the partnership for cash and these proceeds
distributed pro rata to the partners of the Partnership.
7. The General Partners of the Partnership will consider the
desirability of the exchange from the point of view of the Partnership
and must conclude that (a) the exchange is in the best interests of the
Partnership and its partners and (b) upon the exchange, the interests
of the partners of the Partnership will not be diluted as a result of
the exchange.
8. The Fund's board of trustees will consider the desirability of
the exchange from the point of view of the Fund and a majority of the
trustees, including a majority of the non-interested members, must
conclude that: (a) The exchange is desirable as a business matter from
the point of view of the Fund; (b) the exchange is in the best interest
of the Fund; (c) upon the exchange, the interests of existing
shareholders of the Fund will not be diluted as a result of the
exchange; and (d) the terms of the exchange as reflected in the Plan
have been designed to meet the criteria contained in section 17(b) of
the Act. The trustees will consider each aspect of the exchange,
including: (i) The method of valuing the portfolio securities to be
acquired from the Partnership, (ii) the value of the shares to be
delivered to the Partnership, (iii) the procedure for selecting among
the portfolio securities of the Partnership, (iv) the possibility of
incurring excessive brokerage costs, (v) the allocation of the costs of
the exchange, (vi) the possibility of adverse tax consequences to
future shareholders of the Fund, (vii) the benefits from the exchange
accruing to the Adviser, and (viii) the benefits from the exchange
accruing to the General Partners.
9. The exchange will not be effected unless: (a) The registration
statements of the Fund have been declared effective, (b) the limited
partners of the Partnership have approved the Plan and an amendment to
the partnership agreement authorizing the General Partners to take such
actions as they deem necessary or appropriate to effect the exchange,
(c) the requested order has been granted, and (d) the limited partners
have received an opinion of counsel that: (i) The distribution of
shares from the Partnership to its limited partners, which will be in
liquidation of the Partnership, will not cause taxable gain or loss to
be recognized by the limited partners, (ii) the basis to the limited
partners for the shares will be equal to the adjusted basis of the
limited partners' interests in the Partnership, and (iii) the limited
partners' holding periods with respect to the shares will include their
holding periods for their Partnership interests.
10. The Partnership, the Fund, and the Adviser will each pay their
respective costs in connection with the forming of the Fund and
completing the exchange. No brokerage commission, fee, or other
remuneration will be paid in connection with the exchange.
Applicants' Legal Conclusions
1. Section 17(a) of the Act generally prohibits an affiliated
person of a registered investment company from selling to or purchasing
from such investment company any security. The Fund and the Partnership
may be affiliated persons of each other because they are under the
common control of the Adviser and the General Partners. Thus, the
proposed exchange may be prohibited by section 17(a). Section 17(b)
authorizes the SEC to exempt a proposed transaction from section 17(a)
if evidence establishes that the terms of the transaction, including
the consideration to be paid or received, are reasonable and fair and
do not involve overreaching on the part of any person concerned, the
transaction is consistent with the policies of the registered
investment company, and the transaction is consistent with the general
purposes of the Act.
2. Applicants believe that the proposed transaction satisfies the
criteria of section 17(b). They contend that because the Fund and the
Partnership have similar investment objectives and policies, the Fund
will obtain portfolio securities that initially will be substantially
identical to those held by the Partnership. The Fund will acquire the
Partnership securities at their independent ``current market price.''
Applicants believe that this price will be as advantageous to the Fund
as open-market purchases. In addition, by acquiring suitable securities
from the Partnership, the Fund will avoid incurring brokerage and other
transactions costs. Applicants believe that the exchange can be viewed
as a change in the form in which the assets are held, rather than as a
disposition giving rise to section 17(a) concerns.
For the Commission, by the Division of Investment Management,
under delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 94-10889 Filed 5-5-94; 8:45 am]
BILLING CODE 8010-01-M