# Structuring Asset Contribution for New Studio Services DropCo

**February 26, 2026 at 11:07 AM** · 7m 46s · Participants: JAMES ADCOCK, JD BUSFIELD

### Bottom Line
The parties are structuring a complex asset contribution from multiple entities into a new 'DropCo' in a potential tax-free reorganization under Section 721. The equity treatment for one party is still to be negotiated based on risk-reward preferences.

### Key Takeaways
- **Deal Structure:** Multiple entities from two sides (MT Studio Services/Packet Co. and Hudson Pacific) will contribute assets/liabilities into a new 'DropCo', with fleet assets separated into a single asset company.
- **Equity Negotiation:** The form of Hudson Pacific's membership interest (preferred vs. common equity) in DropCo is pending final negotiation, representing a choice between lower risk/reward and higher risk/reward.
- **Tax Analysis:** There is high-level confidence that a tax-free reorganization under Section 721 is possible for this transaction.
- **Excluded Asset:** The assets and operations of 'Transportation Resources' are currently being held back from the contribution and may be addressed separately.

### Action Items
- [ ] Create a straw man/structure document by feeding the discussed deal mechanics and provided information into a model or template. — @JAMES `high`
- [ ] Verify the final structure with tax advisory to ensure it supports a tax-free reorganization under Section 721. `high`
- [ ] Determine the final treatment (preferred or common equity) of HPP's membership interest in DropCo based on the culmination of parties' negotiations. `high`
- [ ] Clarify the status and potential future inclusion of the 'Transportation Resources' entity/assets, which were held back from the current contribution plan. `medium`
- [ ] Establish the new OpCo for non-fleet assets and liabilities and the single asset company for all fleet assets as outlined in the structure. `medium`

### Topics
Asset Contribution Structure, Tax-Free Reorganization (Section 721), Equity Negotiation (Preferred vs Common), Entity Consolidation, Excluded Assets (Transportation Resources)

**Sentiment:** neutral

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*Generated by Call Assistant on 2026-04-09 11:43*