[Federal Register Volume 67, Number 82 (Monday, April 29, 2002)]
[Notices]
[Pages 21003-21005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-10391]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-25533; 812-12808]


Price Communications Corporation et al.; Notice of Application

April 23, 2002.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: Notice of application for an order under section 3(b)(2) of the 
Investment Company Act of 1940 (the ``Act'') or, alternatively, section 
6(c) of the Act.

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SUMMARY OF APPLICATION: Price Communications Corporation (``Price'') 
and Price Communications Wireless, Inc. (``PCW'' and, together with 
Price, ``Applicants'') request an order under section 3(b)(2) of the 
Act declaring that PCW is primarily engaged in a business other than 
that of investing, reinvesting, owning, holding or trading in 
securities or, alternatively, under section 6(c) of the Act exempting 
Price and PCW from all provisions of the Act for a period no longer 
than four years.

Filing Date: The application was filed on April 17, 2002.

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 May 21, 2002, 
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 Fifth Street, NW., Washington, DC 20549-
0609. Applicants, 45 Rockefeller Plaza, New York, NY 10021.

FOR FURTHER INFORMATION, CONTACT: Janet M. Grossnickle, 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 Fifth Street, NW., Washington, DC 
20549-0102 (tel. (202) 942-8090).

Applicants' Representations

    1. Price, a Delaware corporation, is a publicly-held company with 
shares listed and traded on the New York Stock Exchange that has 
conducted a national communications business since 1981. PCW, also a 
Delaware corporation, is an indirect wholly-owned subsidiary of Price 
and is Price's sole remaining business property. PCW and a predecessor 
corporation have been continuously and exclusively engaged since 1987 
in the business of constructing, developing, managing and operating 
cellular telephone systems in the southeastern United States under 
licenses from the Federal Communications Commission (``FCC'').
    2. On December 18, 2001, Price and PCW entered into a transaction 
agreement (``Transaction Agreement'') with Cellco Partnership 
(``Cellco'') pursuant to which the parties agreed to form and operate a 
new joint venture in limited partnership form (``New LP''). PCW agreed 
to contribute its cellular business assets and approximately $150 
million in cash to New LP (``Contribution'') in consideration for a 
limited partnership interest having an initial valuation of 
approximately $1.150 billion (or approximately 45% of New LP's initial 
capital) and carrying the economic preferences and management rights 
set forth in New LP's Agreement of Limited Partnership (``Partnership 
Agreement''). New LP will be majority-owned and primarily controlled by 
Cellco through two wholly-owned subsidiaries which will contribute 
business assets, a note and cash (representing approximately 55% of New 
LP's initial capital). Cellco is the leading provider of wireless 
communications in the United States and is a joint venture between 
Verizon Communications, Inc. (``Verizon Communications'') and Vodafone 
Group plc. The date on which the contributions are to be made and New 
LP will commence operations (the ``Closing Date'') is expected to occur 
before the end of the second quarter of 2002.
    3. The acquisition of PCW's cellular operations through New LP 
represents a geographical expansion of Cellco's business in preparation 
for an initial public offering by a corporate subsidiary, Verizon 
Wireless, Inc. (``Verizon Wireless''). A registration statement 
relating to this offering (``Verizon Wireless IPO'') was filed with the 
Commission under the Securities Act of 1933 on November 9, 2001. 
Applicants state that from Price's point of view PCW's Contribution and 
participation in New LP represents a transitional stage in Price's 
movement from ownership and management of an independent wireless 
business to liquidation. Since the business assets to be contributed by 
PCW to New LP represent substantially all of Price's assets, the 
Contribution requires approval by the shareholders of Price and a proxy 
solicitation for that purpose will begin in early May 2002.
    4. New LP will have a management committee (``Management 
Committee'') consisting of three members, one appointed by PCW and two 
by the managing general partner. Under the Partnership Agreement, the 
managing general partner will need approval of a majority of the 
Management Committee, including the member appointed by PCW, with 
respect to a variety of matters relating to New LP and its business, as 
more fully described in the application. A Cellco subsidiary will serve 
as managing general partner of New LP and will have active charge of 
the day-to-day business operations of New LP. Applicants state that, 
under the Partnership Agreement, any profits of New LP will be 
allocated to PCW annually in an amount equal to 4% annually of PCW's 
capital account before any profits are allocated to Cellco's 
subsidiaries. Any losses incurred by New LP will be allocated to the 
capital accounts of Cellco's subsidiaries before being allocated to 
PCW.
    5. If a Verizon Wireless IPO producing gross proceeds of $4 billion 
and meeting certain other conditions occurs within four years from the 
Closing Date, PCW will have the right, subject to approval by the 
shareholders of Price, to exchange the limited partnership interest in 
New LP for Verizon Wireless shares at the initial public offering 
price. If the Verizon Wireless IPO does not occur within four years 
from the Closing Date, or PCW exercises this right but Price's 
shareholders do not approve that exchange, the limited partnership 
interest in New LP must be exchanged for shares of Verizon 
Communications no later than ten years after the Closing Date.\1\ 
Applicants state

[[Page 21004]]

that, if a liquidation takes place, it will in all likelihood result in 
the distribution to Price's shareholders of the Verizon Wireless or 
Verizon Communications shares received in exchange for PCW's limited 
partnership interest in New LP. PCW's limited partnership interest in 
New LP generally will be nontransferable, apart from the exchanges 
described above.\2\
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    \1\ A shareholder vote to approve the Contribution also will 
constitute approval of the exchange of PCW's limited partnership 
interest in New LP for shares of Verizon Communications. However, an 
exchange of the limited partnership interest in New LP for shares of 
Verizon Wireless will require a separate vote of the shareholders of 
Price after completion of the Verizon Wireless IPO.
    \2\ Applicants state that the only transfers permitted to PCW 
under the Partnership Agreement are a transfer of its entire 
interest in New LP in connection with its liquidation or merger with 
or into Price or a corporation wholly-owned by Price and a pledge of 
its entire interest in New LP in connection with a financing 
transaction. Applicants state that they have no current plans for 
any such financing transaction and recognize that, under the 
proposed conditions, any such financing transaction could result in 
a termination of any order granted pursuant to the application.
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Applicants' 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. Applicants state that the limited partnership interest in New 
LP that PCW will receive for the Contribution may cause PCW and Price 
to be deemed investment companies within the meaning of section 
3(a)(1)(C) 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.\3\
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    \3\ 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.
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    3. Applicants request an order under section 3(b)(2) declaring 
that, following the Contribution, notwithstanding section 3(a)(1)(C) of 
the Act, PCW will be primarily engaged, through New LP, in a business 
other than that of investing, reinvesting, owning, holding or trading 
in securities. Applicants state that neither Price nor PCW is now an 
investment company or will be an investment company within the meaning 
of section 3(a)(1)(A) of the Act following the Contribution.\4\ 
Applicants state that New LP will be a company controlled by PCW within 
the meaning of the Act. Applicants submit that PCW will be primarily 
engaged in the cellular telephone business through its 45% ownership 
interest in New LP and its exercise of the management rights conferred 
by the Partnership Agreement.
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    \4\ Section 2(a(1)(A) provides that an issuer is an investment 
company if it is or holds itself out as being engaged primarily, or 
proposes to engage primarily, in the business of investing, 
reinvesting or trading in securities.
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    4. 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.\5\
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    \5\ See Tonopah Mining Company of Nevada, 26 S.E.C. 426 (1946).
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    a. Historical Development: PCW states that it and its predecessor 
corporation have been operating companies engaged in the cellular 
telephone business under FCC licensing and regulation since 1987.
    b. Public Representations of Policy: PCW states that it and its 
predecessor corporation have consistently held themselves out to the 
public as an operator of cellular telephone systems and a provider of 
cellular telephone services. PCW states that it never has held itself 
out, and does not now hold itself out, as an investment company.
    c. Activities of Officers and Directors: PCW states that it has a 
sold director (who also is President and Chief Executive Officer of 
Price) and two executive officers. After the Contribution, Price will 
designate and PCW will appoint one of PCW's executive officers to serve 
on the Management Committee of New LP. Under the Partnership Agreement, 
the Management Committee will function on a variety of operating 
matters--such as approval of annual operating budgets, incurrence of 
debt, disposition of licenses, appointment on independent auditor, 
approval of annual financial statements and selection of technology--as 
well as a wide variety of major transactions and other business 
matters, such as mergers and consolidations, business acquisitions, 
acquisitions and dispositions of assets, disposition of licenses, entry 
into new business areas and distributions to and dealings with 
partners.
    d. Nature of Assets: Applicants state that, on a pro forma basis 
assuming that the Contribution occurred, PCW's limited partnership 
interest in New LP represented approximately 97.5% of PCW's total 
assets on an unconsolidated basis, as of December 31, 2001. (The 
remaining 2.5% of PCW's total assets consisted of cash and short-term, 
income producing cash equivalent investments.)
    e. Sources of Income: Applicants state that, on a pro forma basis 
assuming that the Contribution occurred, approximately 97.46% of its 
net income for the 12 months ended December 31, 2001, would have been 
attributable to New LP.
    5. PCW asserts that it meets the requirements for an order under 
section 3(b)(2) of the Act. PCW agrees that, if an order under section 
3(b)(2) is granted, the order will terminate without action on the part 
of the Commission on the earliest of (i) the date on which PCW ceases 
to own the limited partnership interest in New LP as described in the 
application, (ii) the date on which PCW makes an acquisition or 
disposition of assets by reason of which its limited partnership 
interest in New LP ceases to constitute at least 80% (or is further 
reduced below 80%) of the total assets of PCW on an unconsolidated 
basis, and (iii) the fourth anniversary of the Closing Date.
    6. In the alternative, Applicants request an order under section 
6(c) of the Act exempting Price and PCW from all provisions of the Act 
until no later than the fourth anniversary of the Closing Date. Section 
6(c) provides, in relevant part, that the Commission may conditionally 
or unconditionally exempt any person from any provisions of the Act if 
and to the extent that such exemption is necessary or appropriate in 
the public interest and consistent with the protection of investors and 
the purposes fairly intended by the policy and provisions of the Act.
    7. Applicants state that neither Price nor PCW has any of the 
structural features, functions or objectives of an investment company, 
as evidenced by the identities, business activities and

[[Page 21005]]

strategic objectives of the parties to the Transaction Agreement, the 
private and commercial nature of the joint venture they propose to 
create and carry on through New LP, and the nontransferability of PCW's 
interest in New LP. Applicants state that, after the Contribution, 
PCW's interest in New LP will constitute more than 97% of PCW's total 
assets and Price's indirect interest in New LP will constitute 
substantially all of Price's total assets. Price has publicly announced 
its intention to liquidate after PCW's limited partnership interest in 
New LP is exchanged for shares of Verizon Wireless or Verizon 
Communications. Applicants also state that the conditions to the 
requested order under section 6(c) would further assure that the 
requested exemption is consistent with the protection of investors and 
the purposes fairly intended by the policy and provisions of the Act.

Applicants' Conditions

    Applicants agree that any order under section 6(c) of the Act will 
be subject to the following conditions:
    1. Neither of the Applicants will be or will hold itself out as 
being engaged in the business of investing, reinvesting or trading in 
securities.
    2. PCW will not acquire any investment securities, as that term is 
defined in section 3(a)(2) of the Act, except (a) the limited 
partnership interest in New LP described in the application and (b) for 
cash management purposes, certificates of deposit, bankers acceptances 
and time deposits maturing within 180 days from the date of 
acquisition, and shares of money market funds.
    3. Price will not acquire any investment securities, as that term 
is defined in section 3(a)(2) of the Act, except securities the holding 
of which is consistent with the goals of preserving capital and 
maintaining liquidity.
    4. The order will terminate on the earliest of (a) the date on 
which PCW ceases to own the limited partnership interest in New LP as 
described in the application, (b) the date on which PCW makes an 
acquisition or disposition of assets by reason of which its limited 
partnership interest in New LP ceases to constitute at least 80% (or is 
further reduced below 80%) of the total assets of PCW on an 
unconsolidated basis, (c) the date on which Price makes an acquisition 
or disposition of assets by reason of which Price's ownership interest 
in PCW ceases to constitute at least 80% (or is further reduced below 
80%) of Price's total assets on an unconsolidated basis, and (d) the 
fourth anniversary of the Closing Date.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-10391 Filed 4-26-02; 8:45 am]
BILLING CODE 8010-01-M