Page 38 - The CFIUS Book

THE CFIUS BOOK
Some companies recite their standard marketing copy, others provide a dry transactional summary. We recommend you highlight the best facts that are relevant to the CFIUS review. Recall that the Committee looks at threat and vulnerability (Section 1.2). If the foreign buyer already has operations in the United States, highlight that business as evidence that the acquirer participates in the U.S. economy and, therefore, may be considered less of a threat. If the target’s business is only at the edge of “critical infrastructure”, highlight facts about the target that show it will not be a vulnerability.
You can and should cast your deal in the most positive terms, but you will also want to be candid. If there are any hitches to the deal – for instance, some potential foreign- government ownership – get that information out early. You will not be able to hide that information – in fact, doing so may invalidate any safe harbor based on your CFIUS notice and could lead to civil and criminal penalties24 – so exposing and explaining it here will show candor on the part of the applicants and give the reviewers reason to view the rest of your submission as reliable.
In any case, do not skip over this seemingly mundane question. Take the opportunity to set the tone for your submission and frame the way the rest of your notice may be viewed.
2. Financial Institutions in the Transaction
In most cases, the banks involved in an international acquisition will be a list of the usual suspects: well-known global or regional banks often engaged in financing or underwriting acquisitions. However, financing a deal may also be a means by which an entity will exercise a control over the assets acquired. For that reason, you will want to carefully consider whether any of the banks in the deal are government-owned or -controlled. Additionally, you will want to examine how the financing obligations are structured, particularly whether a government-owned bank may end up taking the assets as collateral.
If your deal could result in a foreign-government-owned bank taking the critical U.S. assets in the case of a default or other eventuality, you will want to address that possibility. It would make it easiest for your CFIUS review if you can eliminate that possibility. However, if you cannot eliminate the possibility, you will want to address it clearly and implement mitigation to ease the inevitable CFIUS concerns.
§800.402(c)(1)(ix): The name of any and all financial institutions involved in the transaction, including as advisors, underwriters, or a source of financing for the transaction.
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