Partners (admitted in Hong Kong) Pierre-Luc Arsenault3 Christopher Braunack6 Henry M.C. Cheng6 Michel Debolt3 Justin M. Dolling6 David Patrick Eich1,5,6 Liu Gan2 Wing Lau6 Douglas S. Murning6 Nicholas A. Norris6 John A. Otoshi3 Jamii Quoc8 Jesse D. Sheley1 Steven Tran6,7 Dominic W.L. Tsun3,6 Li Chien Wong Ashley Young (non-resident)6 David Yun6,7
Registered Foreign Lawyers Benjamin W. James4 Benjamin Su3 Qiuning Sun3 Shichun Tang3 David Zhang3 | 26th Floor, Gloucester Tower The Landmark 15 Queen’s Road Central Hong Kong
Telephone: +852 3761 3300 Facsimile:: +852 3761 3301
www.kirkland.com |
David T. Zhang To Call Writer Directly: | ||
July 11, 2014
VIA EDGAR
Mr. Daniel F. Duchovny, Special Counsel
Office of Mergers and Acquisitions
Securities and Exchange Commission
100 F. Street, N.E.
Washington, DC 20549
| Re: | iSoftStone Holdings Limited |
Amendment No. 1 to Schedule 13E-3
Filed on June 20, 2014 by iSoftStone Holdings Limited et. al.
File No. 005-85929
Dear Mr. Duchovny:
On behalf of iSoftStone Holdings Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands (“the “Company”), we have set forth below responses to the comments of the staff (the “Staff”) of the Securities and Exchange Commission contained in its letter of July 7, 2014 with respect to Amendment No. 1 to Schedule 13E-3, File No. 005-85929 (the “Amendment No. 1”) filed on June 20, 2014 by the Company and the other filing persons named therein.
| 1. | Admitted in the State of Illinois (U.S.A.) |
| 2. | Admitted in the Commonwealth of Massachusetts (U.S.A.) |
| 3. | Admitted in the State of New York (U.S.A.) |
| 4. | Admitted in the State of Texas (U.S.A.) |
| 5. | Admitted in the State of Wisconsin (U.S.A.) |
| 6. | Admitted in England and Wales |
| 7. | Admitted in New South Wales (Australia) |
| 8. | Admitted in Victoria (Australia) |
Beijing Chicago Houston London Los Angeles Munich New York Palo Alto San Francisco Shanghai Washington, D.C.
July 11, 2014
Page 2
For your convenience, the Staff’s comments are repeated below in bold and italics, followed in each case by the responses of the filing persons. Please note that all references to page numbers in the responses are references to the page numbers in Amendment No. 2 to Schedule 13E-3 (the “Amendment No. 2”) or the second revised preliminary proxy statement attached as Exhibit (a)-(1) thereto (the “Second Revised Proxy Statement”), as the case may be, filed concurrently with the submission of this letter in response to the Staff’s comments. In addition, a marked copy of the Amendment No. 2 and the Second Revised Proxy Statement indicating changes against the Schedule 13E-3 and the revised preliminary proxy statement attached as Exhibit (a)-(1) thereto, respectively, are being provided to the Staff via email.
We represent the independent committee of the board of directors of the Company (the “Independent Committee”). To the extent any response relates to information concerning New Tekventure Limited, New iSoftStone Holdings Limited, New iSoftStone Acquisition Limited, Tekventure Limited, Tianwen Liu, Xiaosong Zhang, Yong Feng, Junhe Che, Ying Huang, Qiang Peng, Xiaohui Zhu, Yen-wen Kang, Li Wang, Li Huang, Miao Du, Yan Zhou, New Tekventure Management Limited, BENO Group Limited, Jiadong Qu, Jinyuan Development (Hong Kong) Company Limited, Wuxi Jinyuan Industry Investment & Development Co. Ltd., Benson Tam, CSOF SoftTech Limited, Accurate Global Limited, Advance Orient Limited, CSOF Technology Investments Limited, China Special Opportunities Fund III, LP, CSOF III GP Limited, Windsor Venture Limited, China Everbright Limited, China Special Opportunities Fund, L.P., China Everbright GP Limited, China Everbright Investment Management Limited, or Forebright Partners Limited, such response is included in this letter based on information provided to the Independent Committee and us by such other persons or their respective representatives.
Concurrently with the submission of this letter, the Company is filing via EDGAR the Amendment No. 2, which has been amended in response to the Staff’s comments.
Schedule 13E-3
Exhibit 99.(A)(1)
Questions and Answers about the Extraordinary General Meeting and the Merger, page 17
| 1. | We reissue prior comment 4. We note that this section contains substantial disclosure about the special meeting and that this section, together with the Summary Term Sheet, extends for 23 pages. Refer to Item 1001 of Regulation M-A for guidance. |
In response to the Staff’s comment, we have revised the sections of the Second Revised Proxy Statement entitledSummary Term Sheet, beginning on page 1, andQuestions and Answers about the Extraordinary General Meeting and the Merger, beginning on page 13, to eliminate duplicative information.
July 11, 2014
Page 3
Special Factors
Background of the Merger, page 28
| 2. | We note the revisions made in response to prior comment 7. In those revisions, you have replaced the reference to discussions taking place between “late April [2013] and early June” with a reference to June 3, 2013. With a view toward revised disclosure, tell us whether any discussions were held between late April 2013 and June 3, 2013. |
In response to the Staff’s comment, we have revised the Second Revised Proxy Statement. Please refer to page 18 of the Second Revised Proxy Statement.
Reasons for the Merger and Recommendation of the Independent Committee and our Board of Directors, page 36
| 3. | We note your response to prior comment 5. Revise to quantify the “expense … needed for the maintenance of a U.S. public company.” Also, revise to explain in your disclosure how the company was, apparently, unaware of the factors cited in your disclosure in December 2010, when the company entered the U.S. public equity markets. |
In response to the Staff’s comment, we have revised the disclosure on page 32 of the Second Revised Proxy Statement to quantify the Company’s estimated costs of complying with United States federal securities laws for the years ended December 31, 2012 and December 31, 2013 and clarified that the factors cited were being considered and evaluatedat this time as required by Item 1013(c) of Regulation M-A.
| 4. | We reissue prior comment 17. We note that Goldman Sachs, as your financial advisor, is not required to make disclosures required by Item 1014 of Regulation M-A, while the independent committee and the board of directors are so required. To the extent that neither considered the results of the Acquisition Premium Analysis individually, please disclose so and explain the reason for such decision. |
In response to the Staff’s comment, we have revised the disclosure on pages 31 to 32 of the Second Revised Proxy Statement.
Certain Financial Projections, page 40
| 5. | Please provide us supplementally any portion of the financial projections, referenced in your response to prior comment 21, that were not included in your revised disclosure. |
In response to the Staff’s comment, we are providing to the Staff under separate cover on a supplemental basis pursuant to Rule 12b-4 under the Exchange Act of 1934, as amended, the financial forecasts that the Staff has requested. In accordance with such Rule, the Company hereby requests that these materials be returned promptly following completion of the Staff’s review thereof. In addition, the Company is also requesting confidential treatment, pursuant to 17 C.F.R. §200.83, of the information provided.
July 11, 2014
Page 4
Opinion of the Independent Committee’s Financial Advisor, page 48
| 6. | We note your response to prior comment 23. Although the preamble to the opinion excludes the Parent, Rollover Shareholders and their affiliates, the final paragraph of the opinion letter which delivers the opinion of Goldman Sachs does not exclude any specific shareholders and instead addressed fairness to all holders of the Shares. Please reconcile. |
We respectfully advise the Staff that the final paragraph of the opinion letter begins with the language “Based upon and subject to the foregoing…”, which has the effect of qualifying that paragraph with all conditions and limitations set forth earlier in the opinion, including the exclusion of Parent, the Rollover Shareholders and their affiliates in the first paragraph. We therefore believe that the last paragraph of the opinion is consistent with the first paragraph and the rest of the opinion.
Illustrative Discounted Cash Flow Analysis, page 53
| 7. | We reissue the portion of prior comment 25 in which we asked that you disclose the illustrative terminal values for the company at the end of 2018. |
We respectfully advise the Staff that the illustrative terminal values for the Company were not separately presented by Goldman Sachs to the Independent Committee or included in the written materials filed as Exhibit (c)-(2) to the Amendment No. 1. However, Goldman Sachs did present and include in the written materials the estimated amount of the Company’s unlevered free cash flow for the terminal year. We have revised the disclosure on page 47 of the Second Revised Proxy Statement to include this number.
General, page 55
| 8. | We reissue prior comment 30. It remains unclear why you believe that Item 1015(b)(4) of Regulation M-A (which addresses the outside party, i.e., Goldman Sachs and not just its investment banking operation, and its affiliates) is inapplicable. |
In response to the Staff’s comments, we have expanded the disclosure on page 50 of the Second Revised Proxy Statement to cover fees received by Goldman Sachs, not just its Investment Banking Division, during the relevant 2-year period.
* * * * *
Please note that attached hereto as Exhibit A is the written acknowledgement by each of the Company, New Tekventure Limited, New iSoftStone Holdings Limited, New iSoftStone Acquisition Limited, Tekventure Limited, Tianwen Liu, Xiaosong Zhang, Yong Feng, Junhe Che, Ying Huang, Qiang Peng, Xiaohui Zhu, Yen-wen Kang, Li Wang, Li Huang, Miao Du, Yan Zhou, New Tekventure Management Limited, BENO Group Limited, Jiadong Qu, Jinyuan Development (Hong Kong) Company Limited, Wuxi Jinyuan Industry Investment & Development Co. Ltd., Benson Tam, CSOF SoftTech Limited, Accurate Global Limited, Advance Orient Limited, CSOF Technology Investments Limited, China Special Opportunities Fund III, LP, CSOF III GP Limited, Windsor Venture Limited, China Everbright Limited, China Special Opportunities Fund, L.P., China Everbright GP Limited, China Everbright Investment Management Limited and Forebright Partners Limited.
July 11, 2014
Page 5
Should you have any questions relating to the foregoing or wish to discuss any aspect of the proposed merger or the Company’s filings, please contact me at (852) 3761-3318, Jesse Sheley at (852) 3761-3344, Stephanie Tang at (852) 3761-3356 or Jason Frank at (852) 3761-3490.
| Sincerely, |
| /s/ David T. Zhang |
| David T. Zhang of Kirkland & Ellis |
| cc: | Cheng Zhang - iSoftStone Holdings Limited Ling Huang - Cleary Gottlieb Steen & Hamilton LLP Kurt Berney - O’Melveny & Myers LLP |
EXHIBIT A
ACKNOWLEDGEMENT
In response to the comments of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) contained in its letter dated July 7, 2014 with respect to the Amendment No. 1 to Schedule 13E-3, File No. 005-85929 (the “Amendment No. 1”), filed on June 20, 2014 by the Company and the other filing persons named therein, the undersigned hereby acknowledges that in connection with Amendment No. 2 to Schedule 13E-3 filed concurrently with the submission of this response, as well as any subsequent amendment thereto filed with the Commission:
| • | the filing person is responsible for the adequacy and accuracy of the disclosure in the filings; |
| • | Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filings; and |
| • | the filing person may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
| iSoftStone Holdings Limited | ||
| By: | /s/ Tom Manning | |
| Name: | Tom Manning | |
| Title: | Independent Committee Chairman | |
| New Tekventure Limited | ||
| By: | /s/ Tianwen Liu | |
| Name: | Tianwen Liu | |
| Title: | Director | |
| New iSoftStone Holdings Limited | ||
| By: | /s/ Tianwen Liu | |
| Name: | Tianwen Liu | |
| Title: | Director | |
| New iSoftStone Acquisition Limited | ||
| By: | /s/ Tianwen Liu | |
| Name: | Tianwen Liu | |
| Title: | Director | |
| Tekventure Limited | ||
| By: | /s/ Tianwen Liu | |
| Name: | Tianwen Liu | |
| Title: | Director | |
| Tianwen Liu | ||
/s/ Tianwen Liu | ||
| Xiaosong Zhang | ||
/s/ Tianwen Liu | ||
| Attorney-in-fact | ||
| Yong Feng | ||
/s/ Tianwen Liu | ||
| Attorney-in-fact | ||
| Junhe Che |
/s/ Tianwen Liu |
| Attorney-in-fact |
| Ying Huang |
/s/ Tianwen Liu |
| Attorney-in-fact |
| Qiang Peng |
/s/ Tianwen Liu |
| Attorney-in-fact |
| Xiaohui Zhu |
/s/ Tianwen Liu |
| Attorney-in-fact |
| Yen-wen Kang |
/s/ Tianwen Liu |
| Attorney-in-fact |
| Li Wang |
/s/ Tianwen Liu |
| Attorney-in-fact |
| Li Huang | ||
/s/ Tianwen Liu | ||
| Attorney-in-fact | ||
| Miao Du | ||
/s/ Tianwen Liu | ||
| Attorney-in-fact | ||
| Yan Zhou | ||
/s/ Tianwen Liu | ||
| Attorney-in-fact | ||
| New Tekventure Management Limited | ||
| By: | /s/ Tianwen Liu | |
| Name: | Tianwen Liu | |
| Title: | Director | |
| BENO Group Limited | ||
| By: | /s/ Tianwen Liu | |
| Name: | Tianwen Liu | |
| Title: | Attorney-in-fact | |
| Jiadong Qu | ||
/s/ Tianwen Liu | ||
| Attorney-in-fact | ||
| Jinyuan Development (Hong Kong) Company Limited | ||
| By: | /s/ Tianwen Liu | |
| Name: | Tianwen Liu | |
| Title: | Attorney-in-fact | |
| Wuxi Jinyuan Industry Investment & Development Co. Ltd. | ||
| By: | /s/ Tianwen Liu | |
| Name: | Tianwen Liu | |
| Title: | Attorney-in-fact | |
| Benson Tam | ||
/s/ Tianwen Liu | ||
| Attorney-in-fact | ||
| CSOF SoftTech Limited | ||
| By: | /s/ Tang Chi Chun | |
| Name: | Tang Chi Chun | |
| Title: | Authorized Signatory | |
| Accurate Global Limited | ||
| By: | /s/ Ip Kun Wan | |
| Name: | Ip Kun Wan | |
| Title: | Authorized Signatory | |
| Advance Orient Limited | ||
| By: | /s/ Tang Chi Chun | |
| Name: | Tang Chi Chun | |
| Title: | Authorized Signatory | |
| CSOF Technology Investments Limited | ||
| By: | /s/ Ip Kun Wan | |
| Name: | Ip Kun Wan | |
| Title: | Authorized Signatory | |
China Special Opportunities Fund III, LP By CSOF III GP Limited, its general partner | ||
| By: | /s/ Ip Kun Wan | |
| Name: | Ip Kun Wan | |
| Title: | Authorized Signatory | |
| CSOF III GP Limited | ||
| By: | /s/ Ip Kun Wan | |
| Name: | Ip Kun Wan | |
| Title: | Authorized Signatory | |
| Windsor Venture Limited | ||
| By: | /s/ Tang Chi Chun | |
| Name: | Tang Chi Chun | |
| Title: | Authorized Signatory | |
| China Everbright Limited | ||
| By: | /s/ Tang Chi Chun | |
| Name: | Tang Chi Chun | |
| Title: | Authorized Signatory | |
China Special Opportunities Fund, L.P. By China Everbright GP Limited, its general partner | ||
| By: | /s/ Tang Chi Chun | |
| Name: | Tang Chi Chun | |
| Title: | Authorized Signatory | |
| China Everbright GP Limited | ||
| By: | /s/ Tang Chi Chun | |
| Name: | Tang Chi Chun | |
| Title: | Authorized Signatory | |
| China Everbright Investment Management Limited | ||
| By: | /s/ Tang Chi Chun | |
| Name: | Tang Chi Chun | |
| Title: | Authorized Signatory | |
| Forebright Partners Limited | ||
| By: | /s/ Ip Kun Wan | |
| Name: | Ip Kun Wan | |
| Title: | Authorized Signatory | |