KRAMER LEVIN NAFTALIS & FRANKELLLP
PETER G. SMITH
PARTNER
PHONE 212-715-9401
FAX 212-715-8000
PSMITH@KRAMERLEVIN.COM
February 17, 2011
VIA EDGAR
Perry J. Hindin
Special Counsel
Office of Mergers & Acquisitions
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549-3628
Ameron International Corporation
Preliminary Proxy Statement on Schedule 14A filed February 4, 2011
Filed by Barington Companies Equity Partners, L.P., et al.
File No. 001-09102
Dear Mr. Hindin:
On behalf of Barington Companies Equity Partners, L.P., Barington Companies Investors, LLC, Barington Capital Group, L.P., LNA Capital Corp. and James A. Mitarotonda (collectively, the “Barington Group”), we hereby provide the Barington Group’s responses to the letters dated February 11, 2011 (the “February 11 Comment Letter”) and February 16, 2011 (the “February 16 Comment Letter” and, together with the February 11 Comment Letter, the “Comment Letters”) setting forth the comments of the staff (the “Staff”) of the Office of Mergers & Acquisitions, Division of Corporation Finance of the Securities and Exchange Commission (the “Commission”) regarding the filing referenced above.
For your convenience, the Staff’s comments contained in the Comment Letters have been restated below in their entirety, with the responses to each comment set forth immediately under the comment. The numbered paragraphs in this letter correspond to the numbered paragraphs of the respective Comment Letters.
February 11 Comment Letter
General
1.
We note that the proxy card provides that "unless otherwise instructed, the named proxy holders will cumulate and allocate votes between nominees in their discretion." We note similar statements in the disclosure on pages 3, 23, 24 and 25. With a view towards disclosure, please advise us how a holder could "otherwise instruct" the named proxy holders, including in the scenario where holders vote by telephone or by internet. Please also include a discussion of how this would work for street name stockholders.
In view of the Staff’s comment, the Barington Group has removed the “unless otherwise instructed” language and the similar statements.
1177 AVENUE OF THE AMERICAS NEW YORK NY 10036-2714 PHONE 212.715.9100 FAX 212.715.8000 WWW.KRAMERLEVIN.COM
ALSO AT 47 AVENUE HOCHE 75008 PARIS FRANCE
KRAMER LEVIN NAFTALIS & FRANKEL LLP
Perry J. Hindin
February 17, 2011
Page 2
The Barington Group is Committed to Improving Shareholder Value..., page 10
2.
We refer you to the second paragraph of this section. Please identify the investor and provide support for the following statements:
·
“members of the Barington Group, along with the co-investor, collectively owned approximately 3.8% of the common stock of the Company;” and
·
the investor “previously told us that they agree with our recommendations to improve shareholder value at Ameron.”
Also disclose the date on which the 3.8% collective ownership existed, confirm whether such percentage is still currently accurate, specify the particular Barington Group recommendations to improve shareholder value with which such investor agreed and provide support for your expectation that such co-investor will support the filing persons' nominees at the 2011 annual meeting.
The “co-investor” referred to in this paragraph is Millennium Management LLC (“Millennium”).
With respect to the first statement indicated above, as of December 31, 2010, the Barington Group understands that Millennium and its affiliates held 238,505 shares of common stock, representing approximately 2.58% of the outstanding shares of the Company, and the Barington Group held 120,658 shares of common stock, representing approximately 1.30% of the outstanding shares of the Company, in each case based upon 9,249,105 shares of common stock reported by the Company to be outstanding as of September 17, 2010 in its Form 10-Q filed with the Commission on September 27, 2010. Collectively, therefore, the Barington Group and Millennium and its affiliates owned approximately 3.88% of the common stock of the Company as of December 31, 2010. Although the parties no longer work together as a group, as a result of the Staff’s inquiry, the Barington Group contacted Millennium for the limited purpose of confirming that Millennium and its affiliates still held 238,505 shares. Millennium confirmed that they continue to hold 238,505 shares.
With respect to the second statement indicated above, in order to avoid any question, the Barington Group has removed such statement from the proxy statement. However, for the information of the Staff, the Barington Group can confirm that when the parties were still working together with respect to the Company, Millennium had indicated agreement with the Barington Group’s recommendations to improve shareholder value set forth in some of the Barington Group’s correspondence with the Company during that period.
The Barington Group anticipates that Millennium will support its nominee for the 2011 Annual Meeting based on discussions representatives of the Barington Group had with representatives of Millennium just prior to the time that the Barington Group and Millennium decided to no longer work together as a group with respect to the Company in January 2011.
Background of Proxy Solicitation, page 13
3.
We refer you to website cited in footnote 7 on page 14 of the proxy statement. As you know, soliciting materials used prior to the furnishing of definitive proxy materials must be filed no later than the date the materials are first sent or given to shareholders. Refer to Exchange Act Rule 14a-12(b). While the website currently appears inactive, please confirm that when the website is made active, the filing persons will file all materials posted under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy, including the complete copies of the Barington Group letters described in this section of the proxy statement. Furthermore, the website should contain legends identifying the participants and encouraging security holders to read the proxy statement. In addition, any future written soliciting material, including any emails, postings to your website and scripts to be used in soliciting proxies over the telephone, should comply fully with the disclosure and filing requirements of Rule 14a-12.
The Barington Group confirms that, when the website is made active, it will file all materials posted under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy, including the complete copies of the Barington Group letters described in the “Background of Proxy Solicitation” section of the proxy statement. Furthermore, the Barington Group will include any appropriate legends on the website and to comply with the requirements of Rule 14a-12.
KRAMER LEVIN NAFTALIS & FRANKEL LLP
Perry J. Hindin
February 17, 2011
Page 3
Solicitation of Proxies, page 22
4.
We note your disclosure that consents may be solicited "by mail, facsimile, telephone, telegraph, Internet, in person and by advertisements." Please also tell us whether the filing persons plan to solicit via Internet chat rooms, and if so, tell us which websites it plans to utilize. Please confirm that the filing persons will not include a form of proxy card on any Internet web site until it has filed a definitive proxy statement.
The Barington Group does not currently have any plans to solicit via Internet chat rooms, but reserves the right to do so in the future. The Barington Group confirms that it will not include a form of proxy card on any Internet web site until it has filed a definitive proxy statement.
5.
Please be advised that all written soliciting materials, including any e-mails or scripts to be used in soliciting proxies must be filed under the cover of Schedule 14A on the date of first use. Refer to Rule 14a-6(b) and (c). Please confirm your understanding.
The Barington Group confirms that all written soliciting materials, including any e-mails or scripts to be used in soliciting proxies, will be filed under cover of Schedule 14A on the date of first use.
Other Matters, page 23
6.
Based on the disclosure in the second paragraph of this section, it appears the filing persons intend to rely on Rule 14a-5(c) with respect to the information referenced therein. Please assure that the filing persons provide in the disclosure a clear reference to the particular document containing such information. In addition, please note that we believe that reliance upon Rule 14a-5(c) before Ameron International distributes the information to security holders would be inappropriate. Alternatively, if the filing persons determine to disseminate their proxy statement prior to the distribution of Ameron International's proxy statement, they must undertake to provide the omitted information to security holders. Please advise as to their intent in this regard.
The Barington Group has revised this section to include a clear reference to the particular document containing the information referenced therein. In addition, the Barington Group has revised this section to indicate that they will undertake to provide the omitted information to security holders.
Additional Information, page 23
7.
We note the statement in this section that the Barington Group is not responsible for the accuracy or completeness of certain publicly available information contained in the proxy statement. While the filing persons may include appropriate language about the limits on the reliability of the information, please revise to eliminate the suggestion that they are not responsible for the accuracy of the information that they have chosen to include in their proxy statement.
The Barington Group acknowledges the Staff’s comment and has revised the paragraph in question accordingly.
February 16 Comment Letter
Reasons for Our Solicitation, page 5
1.
We refer you to the tables on pages 5 and 14. Please supplement the disclosure to provide a legend and labels explaining the figures in the table. For example, what metric is being used to evaluate the Company's performance? Also provide an explanation as to why such metric is an appropriate measure of the Company's performance.
The disclosure has been revised to explain that the tables indicate the share price performance of the Company over various time periods compared to the peer group chosen by the Company in its most recent Form 10-K and several well-established indices. This measure compares the performance of the Company’s stock price to other companies identified as comparable by the Company itself and to certain indices. The Barington Group believes that, among other things, the trading price of a public company’s stock is widely followed by investors and compared to the performance of peer companies and relevant indices as an indication of the ability of the company to create value for its stockholders as compared to those peer companies and the components of those indices.
KRAMER LEVIN NAFTALIS & FRANKEL LLP
Perry J. Hindin
February 17, 2011
Page 4
We Believe that the Ameron Board has Failed to Protect Stockholders..., page 6
2.
We refer you to the disclosure on page 7 indicating that the Barington Group has “learned that all three of Mr. Marlen's sons have been employed by the Company or one of its joint venture partners in senior positions,” and finds this “extremely disturbing...in light of the fact that their employment has not been disclosed to the stockholders of Ameron in a timely fashion, if disclosed at all.” Disclosure on page 18 of the proxy statement indicates that the Barington Group was informed of "instances of potential wrongdoing or mismanagement at the Company,” including “among other things, the employment of all three of Mr. Marlen's sons by the Company or one of its joint venture partners in senior positions, which employment has not been disclosed to the stockholders of Ameron in a timely fashion, if disclosed at all.” Please advise us in your response letter of the basis for the Barington Group’s conclusion that the above information was required to be disclosed by the Company. Please also disclose support for the Barington Group’s conclusion as to why such information constitutes potential wrongdoing or mismanagement.
As further described below, it is the Barington Group’s opinion that the employment of three of the CEO’s sons by the Company or one of its joint venture partners in senior positions are related-party transactions that raise an appearance of impropriety and are, therefore, transactions of the type that a public companyshould disclose to its stockholders.
The Barington Group reserves judgment on whether or not such transactions were, in all cases,required to be disclosed by the Company under Item 404(a) of Regulation S-K or otherwise. The Barington Group has therefore revised its disclosure on page 8 of the Preliminary Proxy Statement to avoid any implication that the employment of the three sons was required to be disclosed under the securities laws.
With respect to your final statement indicated above, the Barington Group received a telephone call from the former head of one of the Company’s divisions, who informed the Barington Group, on a confidential basis, that Mr. Marlen directed him and others (a) to hire his son James R. Marlen as a Senior Marketing Manager, (b) to arrange for the Company to pay for his son to move from California back to Dallas, Texas, where his son previously resided and (c) to permit his son to work out of his home in Dallas as opposed to out of the headquarters of the business located in Houston, Texas. The Barington Group was told that the position for which Mr. Marlen’s son was hired was newly-created and no other candidates were interviewed for the position.
The Barington Group also spoke with the former head of one of the Company’s other divisions which employed Mr. Marlen’s son John Marlen. He informed the Barington Group, on a confidential basis, that (as with Mr. Marlen’s other son) John Marlen was hired for a newly-created position for which no other candidates were interviewed, and that this was done at the direction of “corporate.” He also informed the Barington Group that Mr. Marlen’s son lacked the requisite background and experience in safety management necessary for the position, and, as a result, the corporate head of safety management had to frequently fly out from the Company’s headquarters in Pasadena, California to assist John Marlen in the performance of his duties. This last piece of information was confirmed on a confidential basis by another former employee of the Company who the Barington Group believes was in a position to know such information.
In light of the foregoing information, as well as other information made available to the Barington Group, it believes that it is accurate to conclude that “Barington was informed of instances ofpotential wrongdoing or mismanagement at the Company.”
We Believe that the Ameron Board Should Take Prompt Action..., page 8
3.
We note the following disclosure on page 8:
·
“...it is our belief that the Board waited too long to sell the Company’s interest, and would likely have attracted a significantly higher price if it consummated the sale several years earlier. As was noted in a September 15, 2010 article entitled “Gerdau Ameristeel Set to Buy TAMCO” in American Metal Market, TAMCO might have attracted a price of $400 million if sold in mid-2008, at a time when people inside TAMCO were urging Ameron to sell the mini-mill.”
KRAMER LEVIN NAFTALIS & FRANKEL LLP
Perry J. Hindin
February 17, 2011
Page 5
Please disclose the basis of the $400 million valuation, the basis for the Barington Group’s belief that such potential acquirers were interested in acquiring TAMCO at that price and the identity of the potential acquirers of the unit. Refer to SEC Release No. 34-16833 (including the text surrounding footnote 2). Please also provide in the disclosure support for the statement that “people inside TAMCO were urging the Company to sell the mini-mill.”
The disclosure cited by the Staff was meant to support the Barington Group’s belief that the Ameron Board has at times had difficulty ensuring timely decision-making and execution during Mr. Marlen’s tenure. The Barington Group’s intended focus is not on the specific valuation, but on the fact that if the Ameron Board had acted more decisively, the Company might have attracted a significantly higher price if it had consummated a sale several years earlier. The disclosure has been revised to reflect this.
The basis for the $400 million valuation referenced is “market sources” cited in the September 15, 2010 American Metal Market article, a copy of which is attached. The same valuation was also quoted in an April 5, 2010 American Metal Market article, a copy of which is also attached. That article cites Commercial Metals Co. and Gerdau Ameristeel as potential purchasers. The Barington Group is not independently aware of whether these particular parties, or any others, were interested in acquiring TAMCO at that price. The former CEO of TAMCO, however, informed a representative of the Barington Group in a confidential January 2011 telephone conversation, that “[TAMCO] could have been sold for more earlier” and that with better timing, the sellers could have obtained a 7 to 8 times multiple of earnings for the business.
The September 15, 2010 American Metal Market article that the Barington Group quotes notes that in mid-2008, “people inside TAMCO were urging Ameron to sell the mini-mill,” and the reference appears in the Preliminary Proxy Statement as part of the quotation from that article. The apparent accuracy of the article on this point was confirmed during a confidential January 2011 conversation with the former CEO of TAMCO, who informed a representative of the Barington Group that members of TAMCO’s management team had recommended that the owners sell the business years earlier when the market was stronger.
* * *
Pursuant to the Staff’s request in the February 11 Comment Letter, the acknowledgments are attached as Exhibit A to this letter.
We trust that the foregoing responses on behalf of the Barington Group will fully address the Staff’s comments as set forth in the Comment Letters. If you have any questions or comments regarding these responses, please do not hesitate to contact me.
Sincerely,
/s/ Peter G. Smith
Peter G. Smith