[Federal Register Volume 83, Number 131 (Monday, July 9, 2018)]
[Notices]
[Pages 31808-31810]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14658]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33146; 812-14921]


Altaba Inc.

July 3, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of application for an order under section 17(b) of the 
Investment Company Act of 1940 (the ``Act'') for an exemption from 
section 17(a) of the Act.

Summary of Application: Applicant seeks an order that would permit in-
kind repurchases of shares of the Fund held by certain affiliated 
stockholders of the Fund.

Applicant: Altaba Inc. (the ``Fund'').

Filing Dates: The application was filed on June 14, 2018, and amended 
on June 28, 2018.

Hearing or Notification of Hearing: An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicant with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on July 30, 2018, and should be accompanied by proof of 
service on applicant, in the form of an affidavit or, for lawyers, a 
certificate of service. Pursuant to rule 0-5 under the Act, hearing 
requests should state the nature of the writer's interest, any facts 
bearing upon the desirability of a hearing on the matter, 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 
Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE, Washington, DC 20549-1090. Applicant, 140 East 45th Street, 
15th Floor, New York, New York 10017.

FOR FURTHER INFORMATION CONTACT: Elizabeth G. Miller, Senior Counsel, 
at (202) 551-8707 or Aaron T. Gilbride, Branch Chief, at (202) 551-6825 
(Chief

[[Page 31809]]

Counsel's Office, Division of Investment Management).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's website by searching for the file number, or an applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Applicant's Representations

    1. The Fund is a Delaware corporation registered as a closed-end, 
non-diversified management investment company under the Act. The Fund's 
investment objective is to seek to increase the price per share at 
which its common stock trades relative to the then-current values of 
its principal underlying assets, the Alibaba shares (defined below) and 
Yahoo Japan Corporation (``Yahoo Japan'') shares. It seeks to do this 
by reducing the discount at which it trades relative to the underlying 
value of its net assets (before giving effect to deferred taxes on 
unrealized appreciation). As of March 31, 2018, the Fund's assets 
consist of the following: Alibaba Group Holding Limited (``Alibaba'') 
ordinary shares and American Depositary Shares (``Alibaba ADSs'' and 
together with the Alibaba ordinary shares, ``Alibaba shares''); Yahoo 
Japan shares of common stock; miscellaneous investments in equity 
securities and warrants issued by public and private operating 
companies; cash, cash equivalents, and short-term marketable debt 
securities (the ``Marketable Debt Securities Portfolio''); and a 
portfolio of intellectual property assets held in a wholly-owned 
subsidiary, Excalibur IP, LLC. Shares of the Fund are listed and trade 
on the Nasdaq Global Select Market. The Fund is internally managed by 
its executive officers under the supervision of the Board of Directors 
and does not currently intend to depend on a third-party investment 
adviser, except that the Fund has hired BlackRock Advisors, LLC 
(``BlackRock'') and Morgan Stanley Smith Barney LLC (together with 
BlackRock, the ``External Advisers'') as external investment advisers 
to manage its Marketable Debt Securities Portfolio. Each External 
Adviser is an investment adviser registered under the Investment 
Advisers Act of 1940 and manages approximately half of the Marketable 
Debt Securities Portfolio.
    2. The Fund proposes to conduct a tender offer for up to 
195,000,000 shares of the Fund's outstanding common stock, representing 
approximately 24% of the Fund's outstanding shares (the ``In-Kind 
Repurchase Offer''). Payment for any shares repurchased during the In-
Kind Repurchase Offer would be made in-kind through a pro rata 
distribution of the Fund's Alibaba ADSs and cash. Applicant states that 
if a greater number of shares is tendered for repurchase than the total 
amount offered to be repurchased in the In-Kind Repurchase Offer, each 
participating stockholder will receive a pro rata share of the 
distribution in proportion to the total shares accepted for repurchase 
by Applicant. The In-Kind Repurchase Offer will be made pursuant to 
section 23(c)(2) of the Act and conducted in accordance with rule 13e-4 
under the Securities Exchange Act of 1934.
    3. Applicant states that the In-Kind Repurchase Offer is designed 
to minimize disruption to the market price of Alibaba ADSs relative to 
a sale of Alibaba ADSs to raise cash to finance a cash tender offer and 
therefore minimizing the impact on the investments of stockholders who 
remain invested in the Fund after the In-Kind Repurchase Offer or who 
own Alibaba ADSs outside the Fund. Applicant further states that, under 
the In-Kind Repurchase Offer, the Fund will minimize transaction costs 
associated with selling shares to conduct a cash tender offer.
    4. Applicant requests relief to permit (a) any common stockholders 
of the Fund who are ``affiliated persons'' of the Fund within the 
meaning of section 2(a)(3)(A) of the Act or (b) second-tier affiliates 
of the Fund because the External Advisers are affiliates of the Fund 
within the meaning of Section 2(a)(3)(E) of the Act (each, an 
``Affiliated Stockholder'') to participate in the proposed In-Kind 
Repurchase Offer.

Applicant's Legal Analysis

    1. Section 17(a) of the Act prohibits an affiliated person of a 
registered investment company, or any affiliated person of the person, 
acting as principal, from knowingly purchasing or selling any security 
or other property from or to the company. Section 2(a)(3)(A) and (E) of 
the Act define an ``affiliated person'' of another person to include 
any person who directly or indirectly owns, controls, or holds with 
power to vote 5% or more of the outstanding voting securities of the 
other person and any investment adviser of an investment company, 
respectively. Applicant states that to the extent that the In-Kind 
Repurchase Offer could be deemed the purchase or sale of securities by 
an Affiliated Stockholder, the transactions would be prohibited by 
section 17(a). Accordingly, Applicant requests an exemption from 
section 17(a) of the Act to the extent necessary to permit the 
participation of Affiliated Stockholders in the In-Kind Repurchase 
Offer.
    2. Section 17(b) of the Act authorizes the Commission to exempt any 
transaction from the provisions of section 17(a) if 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, and the transaction is consistent with the policy of 
each registered investment company and with the general purposes of the 
Act.
    3. Applicant asserts that the terms of the In-Kind Repurchase Offer 
meet the requirements of sections 17(b) of the Act. Applicant asserts 
that neither the Fund nor an Affiliated Stockholder has any choice as 
to the amount or form of consideration to be received as proceeds from 
the In-Kind Repurchase Offer. Instead, each tendering stockholder will 
receive, for each Fund share tendered, the same amount of Alibaba ADSs 
and the same amount of cash. If a greater number of shares is tendered 
for repurchase than the total amount offered to be repurchased in the 
In-Kind Repurchase Offer, each participating stockholder will receive a 
pro rata share of the distribution in proportion to the total shares 
accepted for repurchase by Applicant. Moreover, Applicant states that 
the portfolio securities to be offered and exchanged in the In-Kind 
Repurchase Offer will be valued in accordance with section 2(a)(41) of 
the Act, which will be an objective, verifiable standard that removes 
any discretion of an Affiliated Stockholder to conduct the In-Kind 
Repurchase Offer at a price that would be beneficial or detrimental to 
the interests of any particular stockholder. Applicant further states 
that the In-Kind Repurchase Offer is consistent with the Fund's 
investment policies. Applicant represents that the In-Kind Repurchase 
Offer is consistent with the general purposes of the Act because the 
interests of all stockholders are equally protected and no Affiliated 
Stockholder would receive an advantage or special benefit not available 
to any other stockholder participating in the In-Kind Repurchase Offer.

Applicant's Conditions

    Applicant agrees that any order granting the requested relief will 
be subject to the following conditions:
    1. Applicant will distribute to stockholders participating in the 
In-Kind Repurchase Offer cash and an in-kind pro rata distribution of 
Alibaba ADSs which represent approximately

[[Page 31810]]

80% of the Fund's total assets and are publicly traded on a United 
States stock exchange like shares of the Fund's common stock. The 
number of Alibaba shares to be exchanged per tendered Fund share will 
be based on a fixed exchange ratio. The amount of cash to be paid per 
tendered Fund share will be equal to a fixed multiple applied to the 
volume weighted average price for Alibaba ADSs on the second to last 
full trading day of the In-Kind Repurchase Offer. Stockholders will not 
be given a choice as to the amount or form of consideration. Each 
tendering stockholder will receive, for each Fund share tendered, the 
same number of Alibaba ADSs and the same amount of cash.
    2. The Alibaba ADSs offered and exchanged to stockholders pursuant 
to the In-Kind Repurchase Offer are securities that are listed on a 
public securities market for which quoted bid and asked prices are 
available.
    3. The Alibaba ADSs offered and exchanged to stockholders pursuant 
to the In-Kind Repurchase Offer will be valued in the same manner as 
they would be valued for purposes of computing Applicant's net asset 
value, consistent with the requirements of section 2(a)(41) of the Act.
    4. Applicant will maintain and preserve for a period of not less 
than six years from the end of the fiscal year in which the In-Kind 
Repurchase Offer occurs, the first two years in an easily accessible 
place, a written record of the In-Kind Repurchase Offer, that includes 
the identity of each stockholder of record that participated in the In-
Kind Repurchase Offer, whether that stockholder was an Affiliated 
Stockholder, a description of each security distributed, the terms of 
the distribution, and the information or materials upon which the 
valuation was made.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-14658 Filed 7-6-18; 8:45 am]
BILLING CODE P


