[Federal Register Volume 66, Number 102 (Friday, May 25, 2001)]
[Notices]
[Pages 28937-28939]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-13213]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-24979; 812-10320]


Tremont Corporation; Notice of Application

May 17, 2001.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: Notice of application for an order under sections 2(a)(9) and 
3(b)(2) of the Investment Company Act of 1940 (the ``Act'').

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SUMMARY OF APPLICATION: Tremont Corporation (``Applicant'' or 
``Tremont'') requests an order declaring that it controls NL 
Industries, Inc. (``NL'') and that applicant is primarily engaged in a 
business other than that of investing, reinvesting, owning, holding or 
trading in securities.

FILING DATES: The application was filed on August 30, 1996, and amended 
on May 14, 1997, and April 27, 2001.

[[Page 28938]]


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 
applicant with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on June 11, 2001, 
and should be accompanied by proof of service on applicant, 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 may request 
notification of a hearing by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 5th Street, NW., Washington, DC 20549-
0609. Applicant, 1999 Broadway, Suite 4300, Denver, CO 80202.

FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Branch Chief, 
or Nadya B. Roytblat, Assistant Director, 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, 450 5th Street, NW., Washington, DC 
20549-0102 (tel. (202) 942-8090).

Applicant's Representations

    1. Applicant, a Delaware corporation formed in 1987 as a wholly-
owned subsidiary of NL, is primarily engaged in the business of 
producing and selling titanium metals and titanium dioxide. Applicant's 
shares are listed and traded on the New York and Pacific Stock 
Exchanges. Applicant conducts its operations through Titanium Metals 
Corporation (``TIMET'') and NL. Applicant states that TIMET is one of 
the world's leading integrated producers of titanium metal products. 
Applicant further states that it owns approximately 39% of TIMET's 
outstanding voting securities and primarily controls TIMET. Applicant 
also states that NL is an international producer and marketer of 
titanium dioxide pigments to customers worldwide. Applicant owns 
approximately 20.4% of NL's outstanding voting securities.\1\ Applicant 
states that, as of December 31, 2000, its interests in TIMET and NL 
represented approximately 23% and 68%, respectively, of applicant's 
total assets (exclusive of Government securities and cash items) on an 
unconsolidated basis. Applicant also has wholly-owned subsidiaries 
TRECO L.L.C. that is engaged in the real estate business and relies on 
section 3(c)(1) of the Act, and NL Insurance Limited of Vermont 
(``NLIV''), an insurance company that is exempt pursuant to section 
3(c)(3) of the Act.
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    \1\ Applicant states that approximately 60.2% of NL's 
outstanding voting securities is held by Valhi, Inc. (``Valhi''). 
Applicant also states that 80.02% of its outstanding voting 
securities is held by Tremont Group, Inc. (``TGI''), a company that 
is 80.01% held by Valhi and 19.99% held by Tremont Holdings LLC 
(``Tremont Holdings''), a single member limited liability company 
owned by NL. Tremont Holdings holds directly an additional 0.13% of 
applicant's outstanding voting securities. Applicant further states 
that TGI may be deemed to control applicant and Mr. Harold C. 
Simmons may be deemed to control Valhi.
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Applicant's Legal Analysis

    1. Under section 3(a)(1)(C) of the Act, an issuer is an investment 
company if it is engaged or proposes to engage in the business of 
investing, reinvesting, owning, holding, or trading in securities, and 
owns or proposes to acquire investment securities having a value in 
excess of 40 percent of the value of the issuer's total assets 
(exclusive of Government securities and cash items) on an 
unconsolidated basis. Under section 3(a)(2) of the Act, investment 
securities include all securities except Government securities, 
securities issued by employee securities companies, and securities 
issued by majority-owned subsidiaries of the owner which (i) are not 
investment companies, and (ii) are not relying on the exclusions from 
the definition of investment company in section 3(c)(1) or 3(c)(7) of 
the Act.
    2. Section 3(b)(2) of the Act provides that, notwithstanding 
section 3(a)(1)(C) of the Act, the SEC may issue an order declaring an 
issuer to be primarily engaged in a business other than that of 
investing, reinvesting, owning, holding, or trading in securities 
either directly, through majority-owned subsidiaries, or through 
controlled companies conducting similar types of businesses. Section 
2(a)(9) of the Act defines ``control'' as the power to exercise a 
controlling influence over the management or policies of a company. 
That section creates a presumption that an owner of more than 25% of a 
company's outstanding voting securities controls the company, and that 
an owner of 25% or less of a company's outstanding voting securities 
does not control the company. Section 2(a)(9) further provides that any 
such presumption may be rebutted by evidence.
    3. Applicant requests an order under section 2(a)(9) of the Act 
declaring that it controls NL and under section 3(b)(2) declaring that 
applicant is primarily engaged, through TIMET and NL as controlled 
companies, in a business other than that of investing, reinvesting, 
owning, holding or trading in securities.
    4. Applicant states that it controls NL within the meaning of 
section 2(a)(9) of the Act, notwithstanding that it owns less than 25% 
of NL's outstanding voting securities, through significant and active 
participation in the management of NL. Five of the members of the board 
of directors of Tremont (``Tremont board'') are also members of NL's 
seven member board of directors. Mr. J. Landis Martin, Chairman of the 
Board, Chief Executive Officer and President of Tremont also serves as 
the Chief Executive Officer and President of NL. Ms. Susan E. Alderton, 
a member of the Tremont board, also serves as Chief Financial Officer, 
Vice President and Treasurer of NL. Mr. Harold C. Simmons, a member of 
the Tremont board, also serves as Chairman of the Board of NL. 
Applicant states that the directors and officers of Tremont play an 
active role in setting NL's general policies and provide support to 
NL's management, and that a finding of control under section 2(a)(9) 
therefore is appropriate.
    5. Under section 3(b)(2) of the Act, in determining whether an 
applicant is primarily engaged in a non-investment company business, 
the SEC considers the following factors: (a) Applicant's historical 
development; (b) applicant's public representations of policy; (c) the 
activities of applicant's officers and directors; (d) the nature of 
applicant's present assets; and (e) the sources of applicant's present 
income.\2\
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    \2\ See Tonopah Mining Company of Nevada, 26 S.E.C. 426 (1946).
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    a. Historical Development: Applicants states that since its 
formation in 1987, it has been engaged primarily in the businesses of 
petroleum services and bentonite mining, as well as the production and 
sale of titanium metals and titanium dioxide.
    b. Public Representations of Policy: Applicant states that it has 
consistently held itself out as a holding company conducting its 
business operations through TIMET, NL, and TRECO. Applicant states that 
it does not hold and has never held itself out as an investment company 
within the meaning of the Act.
    c. Activities of Officers and Directors: Applicant states that the 
primary activities of its officers and directors are participating in 
the governing and operational activities of TIMET and NL.

[[Page 28939]]

    d. Nature of Assets: Applicant states that, as of December 31, 
2000, its interest in TIMET represented 23%, and its interest in NL 
represented 68%, of applicant's total assets on an unconsolidated basis 
(exclusive of Government securities and cash items).
    e. Sources of Income: Applicant states that, for the four quarters 
ended December 31, 2000, it had net income after taxes of $9.2 million, 
of which 91.5% was attributable to TIMET, NL and NLIV.
    6. Applicant thus asserts that it meets the requirements for an 
order under section 3(b)(2) of the Act.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 01-13213 Filed 5-24-01; 8:45 am]
BILLING CODE 8010-01-M