[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