Exhibit (12)
AllianceBernstein International Research Growth Portfolio
a series of AllianceBernstein Variable Products Series Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
AllianceBernstein International Growth Portfolio
a series of AllianceBernstein Variable Products Series Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
Re: Acquisition of the Assets and Assumption of the
Liabilities of AllianceBernstein International Research Growth
Portfolio by AllianceBernstein International Growth Portfolio
Ladies and Gentlemen:
I. Introduction
We have acted as counsel to AllianceBernstein International Research Growth
Portfolio ("Target") and to AllianceBernstein International Growth Portfolio
("Acquirer"), each of which is a series of AllianceBernstein Variable Products
Series Fund, Inc., a Maryland corporation, in connection with the Acquisition
provided for in the Plan of Acquisition and Liquidation of AVP with respect to
Target and Acquirer, dated as of September 25, 2007 (the "Plan"). Pursuant to
Section 5(b) of the Plan, Target and Acquirer have each requested our opinion as
to certain of the federal income tax consequences to Target, Acquirer and the
stockholders of Target ("Target Stockholders") in connection with the
Acquisition. Each capitalized term not defined herein has the meaning ascribed
to that term in the Plan.
II. Relevant Facts
AVP is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "Act").
The Plan and the Acquisition have been approved by the Board of Directors
of AVP (the "Board"). The terms and conditions of the Acquisition are set forth
in the Plan.
Pursuant to the Plan, Target will transfer all of its Assets to Acquirer
solely in exchange for shares (including fractional shares) of the stock of
Acquirer ("Acquirer Shares") and the assumption by Acquirer of all the
Liabilities of Target existing on or after the Effective Time of the
Acquisition. At the Closing Date, Target will liquidate and distribute all of
the Acquirer Shares that it received in connection with the Acquisition to those
then former Target Stockholders in exchange for all the then outstanding shares
of the stock of Target ("Target Shares"). Upon completion of the Acquisition,
each such former Target Stockholders will be the owner of full and fractional
Acquirer Shares equal in net asset value as of the Closing Date to the net asset
value of the Target Shares such Target Stockholder held prior to the
Acquisition. Pursuant to the Plan, Target and Acquirer will bear any expenses
incurred in connection with the Acquisition on a pro rata basis in accordance
with their respective net asset values as of the Effective Time of the
Acquisition.
The investment objective of both Target and Acquirer is long-term growth of
capital. Target invests primarily in an international portfolio of equity
securities of companies within various market sectors selected by the Adviser
for their growth potential in both developed and emerging countries. Acquirer
invests primarily in an international portfolio of equity securities of
companies located in both developed and emerging countries. Each of Target and
Acquirer invests (i) primarily in the equity securities of non-U.S. companies
and (ii) under normal circumstances, in the equity securities of companies
located in at least three countries (and normally substantially more) other than
the United States. According to the Form N-CSR filed by each of Target and
Acquirer with the United States Securities and Exchange Commission, on September
7, 2007 in the case of Acquirer for the period ended June 30, 2007 and on
October 9, 2007 in the case of Target for the period ended July 31, 2007, each
of Target and Acquirer has over 94 percent of its net assets invested in common
equity securities and substantially all of the equity securities are issued by
non-U.S. companies.
In rendering the opinions set forth below, we have examined the
Registration Statement on Form N-14 of Acquirer relating to the Acquisition and
such other documents and materials as we have deemed relevant. For purposes of
rendering our opinions, we have relied exclusively, as to factual matters, upon
the statements made in that Registration Statement and, with your approval, upon
the following assumptions the correctness of each of which have been verified
(or appropriately represented) to us by officers of Acquirer and Target:
(1) The Plan has been duly approved by the Board.
(2) Each of Target and Acquirer: (a) is a "fund" (as defined in Section
851(g)(2) of the United States Internal Revenue Code of 1986, as amended (the
"Code")); (b) has qualified for treatment as a regulated investment company
under Part I of Subchapter M of Subtitle A, Chapter 1, of the Code (a "RIC") for
each taxable year since the commencement of its operations and qualifies for
treatment as a RIC during its current taxable year which includes the Effective
Time; (c) will invest its assets at all times through the Effective Time in a
manner that ensures compliance with the foregoing; and (d) has no earnings and
profits accumulated in any taxable year in which it did not qualify as a RIC.
(3) The Adviser will operate the business of Target in the ordinary course
between the date of the Plan and the Effective Time, including the declaration
and payment of customary dividends and other distributions and any other
distributions deemed advisable in anticipation of the Acquisition. From the date
it commenced operations through the Effective Time, Target will conduct its
"historic business" (within the meaning of Section 1.368-1(d)(2) of the Treasury
Regulations) in a substantially unchanged manner. Before the Effective Time,
Target will not (a) dispose of and/or acquire any assets (i) for the purpose of
satisfying Acquirer's investment objective or policies, or (ii) for any other
reason except in the ordinary course of its business as a RIC, or (b) otherwise
change its historic investment policies.
(4) Following the Acquisition, Acquirer (a) has no plan or intention to
sell or otherwise dispose of any of the securities acquired from Target, except
for dispositions made in the ordinary course of its business and dispositions
necessary to maintain its status as a RIC and (b) will continue in the same
business as it conducted prior to the Acquisition and will continue to invest
its assets in accordance with the description of its investment activities set
forth in the Prospectus.
(5) The Target Stockholders will receive no consideration pursuant to the
Acquisition other than Acquirer Shares.
(6) The Target Stockholders will pay any expenses incurred by them in
connection with the Acquisition.
(7) The liabilities of Target to be assumed by Acquirer in the Acquisition
have been incurred in the ordinary course of business of Target or were incurred
by Target solely and directly in connection with the Acquisition.
(8) During the five-year period ending at the Effective Time, (a) neither
Target nor any person "related" (within the meaning of Section 1.368-1(e)(3) of
the Treasury Regulations) to Target will have acquired Target Shares, either
directly or through any transaction, agreement, or arrangement with any other
person, with consideration other than Acquirer Shares or Target Shares, except
for Target Shares redeemed in the ordinary course of Target's business as a
series of an open-end investment company as required by Section 22(e) of the
Act, and (b) no distributions will have been made with respect to Target Shares,
other than normal, regular dividend distributions made pursuant to Target's
historic dividend-paying practice and other distributions that qualify for the
deduction for dividends paid (within the meaning of Section 561 of the Code)
referred to in Sections 852(a)(1) and 4982(c)(1)(A) of the Code.
(9) Acquirer has no plan or intention to issue additional Acquirer Shares
following the Acquisition except for Acquirer Shares issued in the ordinary
course of its business as a series of an open-end investment company; nor does
Acquirer, or any person "related" (within the meaning of Section 1.368-1(e)(3)
of the Treasury Regulations) to Acquirer, have any plan or intention to acquire,
during the five-year period beginning at the Effective Time, either directly or
through any transaction, agreement, or arrangement with any other person, any
Acquirer Shares issued to Target Stockholders pursuant to the Acquisition,
except for redemptions in the ordinary course of such business as required by
Section 22(e) of the Act.
(10) During the five-year period ending at the Effective Time, neither
Acquirer nor any person "related" (within the meaning of Section 1.368-1(e)(3)
of the Treasury Regulations) to Acquirer will have acquired Target Shares with
consideration other than Acquirer Shares.
(11) Without limiting the effect of paragraphs 8, 9, and 10 above, the
aggregate value of the acquisitions, redemptions and distributions will not
exceed 50% of the value (without giving effect to such acquisitions,
redemptions, and distributions) of the Target Shares at the Effective Time.
(12) (a) There is no plan or intention of the Target Stockholders to
redeem, sell or otherwise dispose of (i) any portion of their Target Shares
before the Acquisition to any person "related" (within the meaning of Section
1.368-1(e)(3) of the Treasury Regulations) to either Target or Acquirer or (ii)
any portion of the Acquirer Shares they receive in the Acquisition to any person
"related" (within such meaning) to Acquirer. (b) It is not anticipated that
dispositions of those Acquirer Shares at the time of, or immediately after, the
Acquisition will exceed the usual rate and frequency of dispositions of Target
Shares as a series of an open-end investment company. (c) It is expected that
the percentage of Target Shares, if any, that will be disposed of as a result
of, or at the time, of the Acquisition will be de minimis, and that there will
be no extraordinary redemptions of Target Shares immediately following the
Acquisition.
(13) The fair market value of the assets of Target transferred to Acquirer
will equal or exceed the sum of (a) the amount of liabilities of Target assumed
by Acquirer, and (b) the amount of Liabilities, if any, to which the transferred
assets are subject.
(14) There are no pending or threatened claims or assessments that have
been asserted by or against Target, other than any disclosed and reflected in
the net asset value of Target.
(15) There are no unasserted claims or assessments against Target that are
probable of assertion.
(16) There is no plan or intention for Acquirer to be dissolved or merged
into another business trust or a corporation or any "fund" thereof (as defined
in Section 851(g)(2) of the Code) following the Acquisition.
(17) At no time during the five-year period ending at the Effective Time,
has the Acquirer directly or indirectly owned any Target Shares.
(18) The fair market value of the Acquirer Shares each Target Stockholder
receives in connection with the Acquisition will be approximately equal to the
fair market value of the Target Shares it surrenders in exchange therefor.
(19) Pursuant to the Acquisition, Target will transfer to Acquirer, and
Acquirer will acquire, at least 90% of the fair market value of the net assets,
and at least 70% of the fair market value of the gross assets, that Target held
immediately before the Acquisition. For the purposes of the foregoing, any
amounts Target uses to pay its Acquisition expenses and to make redemptions and
distributions immediately before the Acquisition (except (a) redemptions in the
ordinary course of its business required by Section 22(e) of the Act and (b)
regular, normal dividend distributions made to conform to its policy of
distributing all or substantially all of its income and gains to avoid the
obligation to pay federal income tax and/or the excise tax under Section 4982 of
the Code) will be included as assets held thereby immediately before the
Acquisition.
(20) There is no intercompany indebtedness between Acquirer and Target that
was issued or acquired, or will be settled, at a discount.
(21) The sum of (a) the expenses incurred by the Adviser pursuant to the
Plan and (b) the liabilities of Target to be assumed by Acquirer in the
Acquisition will not exceed 20% of the fair market value of the assets of Target
transferred to Acquirer pursuant to the Acquisition.
III. Relevant Law
A corporation which is a "party to a reorganization" will not recognize
gain or loss if it exchanges property pursuant to a plan of reorganization
solely for stock or securities of another corporation which is a party to the
reorganization.(1) Likewise, the shareholders of a corporation will not
recognize gain or loss if they exchange stock or securities of a corporation
which is a party to a reorganization solely for stock or securities in such
corporation or another corporation which is a party to the reorganization in
pursuant of the plan of reorganization.(2)
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(1) Code ss. 361.
(2) Code ss. 354.
In order to be a treated as a "reorganization," a transaction must satisfy
certain statutory requirements contained in Code Section 368 as well as certain
regulatory requirements contained in the Treasury Regulations thereunder.
Code Section 368(a)(1)(C) provides that a "reorganization" includes the
acquisition by one corporation in exchange solely for all or a part of its
voting stock of substantially all of the properties of another corporation. Code
Section 368(a)(2)(F) provides that two or more investment companies may engage
in a "reorganization" only if each of them is either a RIC, a real estate
investment trust or they each meet certain diversification requirements.
In addition to the statutory language of Code Section 368, there are two
significant non-statutory requirements for a reorganization, the continuity of
interest ("COI") requirement and the continuity of business enterprise ("COBE")
requirement. (3)
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(3) Treas. Reg. ss. 1.368-1(b).
In order to satisfy the COI requirement, "a substantial part of the value
of the proprietary interests in the target corporation must be preserved."(4)
This is accomplished "if, in a potential reorganization, [the proprietary
interest in the target corporation] is exchanged for a proprietary interest in
the issuing corporation..."(5) For this purpose, a proprietary interest in the
target corporation is not preserved if persons related to the acquiring
corporation acquire stock of the target corporation for consideration other than
stock of the acquiring corporation.(6)
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(4) Treas. Reg. ss. 1.368-1(e)(1)(i).
(5) Id.
(6) Treas. Reg. ss. 1.368-1(e)(3).
In order to satisfy the COBE requirement, a reorganization may satisfy
either the "historic business test" or the "historic asset test." Under the
"historic business test," a taxpayer can establish COBE if it either (i)
continues the target's historic business, or (ii) continues any significant
historic line of business of the target if the target has more than one line of
business. For this purpose, a line of business entered into as part of the plan
of reorganization is not a historic business. Under the "historic asset test," a
taxpayer can establish asset continuity if is uses a "significant" portion of
the target's historic business assets in a business. " Historic business assets"
may include stock, securities, or intangible operating assets if they are used
in the target's historic business.(7)
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(7) Treas. Reg. ss. 1.368-1(d)(1)-(3).
In interpreting the "historic business test" in the case of a
reorganization involving a RIC, the Internal Revenue Service has held that a
corporation engaged in the business of investing in a portfolio of corporate
stocks and bonds was not in the same business as a diversified open-end RIC
investing in high-grade municipal bonds.(8)
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(8) Rev. Rul. 87-76, 1987-2 C.B. 84.
The Acquisition will be a transfer of substantially all of the assets of
Target to Acquirer, each of which is a corporation, in exchange solely for stock
of Acquirer, which will then be distributed to the Target Stockholders.
Therefore, the Acquisition will satisfy the statutory language of Section
368(a)(1)(C) to be treated as a "reorganization."
Since each of Acquirer and Target is a RIC, the Acquisition will satisfy
the statutory language of Section 368(a)(2)(F) to be treated as a
"reorganization."
Based upon the representations made above with respect to acquisitions of
Target Shares by persons "related" to Acquirer, each Target Stockholder will
receive solely stock of Acquirer as a result of the Acquisition. Therefore, the
Acquisition will satisfy the COI requirement.
Acquirer and Target are each engaged in the business of investing in the
equity securities of non-U.S. companies. Based on the most recent Form N-CSR
filed by each of Acquirer and Target, each of Acquirer and Target had invested
over 94 percent of its assets in equity securities of non-U.S. companies. In
addition, each of Acquirer and Target pursue a strategy that focuses on the
long-term growth of capital, as opposed to either a value strategy or an income
strategy. Based upon the above, we believe that Acquirer and Target are engaged
in the same "historic business" and Acquirer will continue to pursue this
historic business after the Acquisition. Therefore, in our view, the Acquisition
will satisfy the "historic business test" of the COBE requirement for a
"reorganization." Alternatively, since Acquirer has no plan or intention to sell
or otherwise dispose of any of the securities acquired from Target, except for
dispositions made in the ordinary course of that business and dispositions
necessary to maintain its status as a RIC, we believe Acquirer will use the
securities acquired from Target in its historic business so that Acquirer will
satisfy the "historic asset test" of the COBE requirement and thus will satisfy
the COBE requirement.
IV. Opinions
Based upon the foregoing and upon our consideration of the Code, the
Treasury Regulations promulgated under the Code, published Revenue Rulings,
Revenue Procedures and other published pronouncements of the Internal Revenue
Service, the published opinions of the United States Tax Court and other United
States federal courts, and such other authorities as we consider relevant, each
as they exist as of the date hereof, we are of the opinion that, for federal
income tax purposes:
(1) The Acquisition will constitute a "reorganization" within the meaning
of Section 368(a) of the Code, and Target and Acquirer will each be a "party to
a reorganization" within the meaning of Section 368(b) of the Code.
(2) Each Target Stockholder will recognize no gain or loss on such
stockholder's receipt of Acquirer Shares (including any fractional Acquirer
Share to which the stockholder may be entitled) in exchange for the
stockholder's Target Shares in connection with the Acquisition.
(3) Neither Target nor Acquirer will recognize any gain or loss upon the
transfer by Target of all of the Assets to Acquirer solely in exchange for
Acquirer Shares and the assumption by Acquirer of the Liabilities pursuant to
the Plan or upon the distribution of Acquirer Shares to Target Stockholders in
exchange for their respective Target Shares.
(4) The holding period and tax basis of the Assets acquired by Acquirer
will be the same as the holding period and tax basis that Target had in the
Assets immediately prior to the Acquisition.
(5) The aggregate tax basis of Acquirer Shares received in connection with
the Acquisition by each Target Stockholder (including any fractional Acquirer
Share to which the stockholder may be entitled) will be the same as the
aggregate tax basis of the Target Shares surrendered in exchange therefor.
(6) The holding period of Acquirer Shares received in connection with the
Acquisition by each Target Stockholder (including any fractional Acquirer Share
to which the stockholder may be entitled) will include the holding period of the
Target Shares surrendered in exchange therefor, provided that such Target Shares
constitute capital assets in the hands of the stockholder as of the Closing
Date.
(7) Acquirer will succeed to the capital loss carryovers of Target, if any,
under Section 381 of the Code, but the use by Acquirer of any such capital loss
carryovers (and of any capital loss carryovers of Acquirer) may be subject to
limitation under Section 383 of the Code.
While the payment of expenses by the Adviser pursuant to the Plan will not
affect the opinions expressed above, no opinion is expressed herein as to
whether the payment of such expenses by the Adviser will have other federal
income tax consequences to Acquirer, Target or Target Stockholders.
Because our opinion is based upon current law, no assurance can be given
that existing United States federal income tax laws will not be changed by
future legislative or administrative or judicial interpretation, any of which
could affect the opinion expressed above. This opinion is provided to you in
connection with the Acquisition. This opinion may not be quoted or relied upon
by any other person or entity, or for any other purpose, without our prior
written consent.
Very truly yours,
/s/ Seward & Kissel LLP
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Seward & Kissel LLP
SK 99999 0010 836840