March 9, 2005
Via facsimile 414.277.0656 and U.S. Mail
Thomas J. Bare, President
First Manitowoc Bancorp, Inc.
402 North Eighth Street
Manitowoc, Wisconsin 53221-0010
Re: First Manitowoc Bancorp, Inc.
Schedule 13E-3 filed on February 28, 2005
File No. 005-80577
Dear Mr. Bare:
We have the following comments on your filing. Where
appropriate, please file a revised Schedule 13E-3 and accompanying
information statement to give effect to these comments. If you
disagree with a comment, we will consider your explanation as to
why a comment is inapplicable or a revision is unnecessary. Please be
as detailed as necessary in your explanation. In some of our
comments, we may ask you to provide us with supplemental information so
we may better understand your disclosure. After reviewing this
information, we may or may not raise additional comments.
Please understand that the purpose of our review process is
to assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect of our review. Feel free to call us at the telephone numbers
listed at the end of this letter.
Schedule 13E-3
General
1. Please update the financial statements throughout the document
pursuant to Rule 3-12 of Regulation S-X.
2. We note that Southeastern First Manitowoc will be the surviving
entity in this transaction and will be issuing shares of common
stock to continuing shareholders. Advise us whether the shares to be
issued by Southeastern First Manitowoc will be registered or will
be offered and sold pursuant to an exemption. If First Manitowoc
will be relying on an exemption, supplementally advise of the exemption
and provide the basis for its belief that the exemption will be available.
3. It does not appear that you include Southeastern First
Manitowoc as a filing person. In light of Southeastern First Manitowoc`s
relationship with the company, revise your Schedule 13E-3 to name
Southeastern First Manitowoc as a filing person or advise.
4. Revise to include the complete summarized financial information
required by Item 1010(c) of Regulation M-A. In the event the
issuer elects to incorporate by reference the information required by
Item 1010(a) and (b), all of the summarized financial information
required by Item 1010(c) must be disclosed in the Schedule 13E-3. See
Instruction 1 to Item 13 of Schedule 13E-3. In addition, refer to
telephone interpretation H.7 in the July 2001 supplement to our
"Manual of Publicly Available Telephone Interpretations" that is
available on the Commission`s website at http://www.sec.gov for
guidance on complying with a similar instruction in the context of
a tender offer.
5. We note your response to Item 13 of Schedule 13E-3. Please advise
us why you do not include or incorporate pro forma information
required by Item 1010(b) of Regulation M-A.
Item 3. Identity and Background of Filing Persons, page 4
6. You disclose that the section "Information about FMB and its
Affiliates" is incorporated by reference into your Schedule 13E-3
to comply with the information required by Item 3 concerning filings
persons. Please note the staff considers all officers and
directors of the issuer to be affiliates of the issuer. Revise your
disclosure to clarify whether you are referring to all of the directors
and executive officers discussed on pages 31 and 32 and that all of
your directors and executive officers are filings persons. If not,
advise us of the basis for your belief that all of your directors and
executive officers should not be filing persons. Also, if true,
the facing page of your Schedule 13E-3 should be revised to reflect
all of your directors and executive officers as filing persons. See
section II.D.3. of the Division of Corporation Finance`s Current
Issues and Rulemaking Projects outline, which is available on our
website, www.sec.gov.
Information Statement
Special Factors, page 7
Background of the Merger Proposal, page 7
7. You disclose on page 9 that the directors chose a price in
excess of the fair value of First Manitowoc`s shares of common stock
and the current trading price. Please revise to clearly identify who
determined the consideration to be offered to redeeming security
holders. Also, revise to disclose the criteria used to determine
the ultimate consideration to shareholders and quantify how the company
was valued. Was it the company, the financial advisor, or another party?
8. We note that the board was advised that going private would
eliminate much of the expense and executive time involved in
preparing periodic reports, reduce accounting expense and
eliminate the need to comply with the provisions of Sarbanes-Oxley in
the first paragraph on page 8. Please revise to identify who advised the
board of these anticipated savings.
9. We refer you to the preliminary oral report valuing your shares
on ebruary 1, 2005. Provide us, with a view toward disclosure, with
a summary of this oral report to the Staff upon refilling your
Schedule 13E-3. To the extent material differences exist between this
preliminary oral report valuing your shares and the final report
received from American Appraisal, your information statement
should summarize the differences.
Our Position as to the Fairness of the Merger to
Unaffiliated Shareholders, page 14
10. You disclose that your board of directors has determined that
the merger and merger consideration are fair to your unaffiliated
shareholders. Rule 13e-3, however, requires that each issuer and
affiliate directly or indirectly engaged in a going private
transaction file a Schedule 13E-3 and furnish the required
disclosures. See Item II.D.3 of the Division of Corporation
Finance`s "Current Issues and Rule Making Projects" outline, dated
November 14, 2000, available on our website at www.sec.gov.
Accordingly, each filer must independently disclose its belief as
to whether the transaction is substantively and procedurally fair and
provide the bases for the belief provided. Further, if one or
more of the filing persons relied upon the analysis of another, or the
financial advisor, the filing person must expressly adopt the
conclusion and analyses. A filing person cannot insulate itself
from liability by relying upon the summary of a financial advisor`s
analyses that, by their terms, do not comply with the specific
disclosure requirements of Schedule 13E-3. Refer to Q&A No. 21 of
SEC Release No. 34-17719.
11. We note that the board of directors did not consider net book
value, liquidation value or pre-merger going concern value.
Although we understand that you believe that the company`s net book
value is indicative of historical costs and the liquidation value is not
a relevant valuation method, it is unclear why these valuations
cannot be indicative of the value of the company. For example, the
absence of an intention to liquidate is not determinative of whether your
information statement should address liquidation values. Do you
believe that these valuation methods would substantially over
value or under value the company? If you believe that these valuations
will overvalue the company, expand your disclosure to explain why
these valuation methods are not indicative of the value of the
company and further discuss the basis for your belief that the
transaction is substantively fair to the unaffiliated
shareholders.
12. Please clarify why you did not consider the going concern
value of the company. Is it each filing persons` conclusion that the
analysis of American Appraisal is substantially similar to the
going concern value of First Manitowoc? If so, please clarify.
13. We refer you to the discussion of procedural safeguards on
page 16. In addition to determining whether the transaction is
substantively fair, each filing person must also disclose its
belief that the transaction is procedurally fair. In this regard, you
should expand this discussion to include each filing person`s Item
1014(b) analysis, including a discussion as to why the transaction
is fair despite the fact that the safeguards provided in Item
1014(c), (d) and (e) have not been provided. Also, although the advice
and assistance provided by Appraisal Associates appear to provide
substantive safeguards to unaffiliated shareholders, it is unclear
how Appraisal Associates provided procedural safeguards. Please
revise or advise.
Interests of Certain Directors and Officers in the Transaction,
page 16
14. We note that you disclose no payments or benefits will be paid
or provided to First Manitowoc`s directors or officers as a result of
the transaction. Will your officers and directors be compensated
for their future services to Southeastern Manitowoc? If so, please
disclose whether the compensation to be received by your officers
and directors will increase as a result of this transaction. Will
there be any material alterations to the existing executive agreements
that will be favorable to your executive officers as a result of this
transaction?
Summary of Report of Financial Advisor, page 17
15. To the extent that the tax consequences of this transaction
for the company and its affiliates differ from those of the
unaffiliated security holders, revise to address this difference and
to clarify whether this potential difference was a reason for
undertaking this transaction in this form at this time. See Item
1013(c) of Regulation M-A.
Report of Financial Advisor, page 16
16. Confirm for us, if true, that First Manitowoc did not have any
material relationship with American Appraisal that existed during
the past two years.
17. We note that the summary of the American Appraisal report is
qualified in its entirety by reference to the full report. A
qualification of this type appears to be inconsistent with the
requirement that all material information be provided in the
information statement. Please revise.
Summary of Report of Financial Advisor, page 17
18. Provide us with copies of all projections and forecasts, as
wel as any other materials exchanged among the parties that quantified
any strategic, financial or operational benefits anticipated from
the merger. Also provide us with any material non-public information
exchanged among the parties. Finally, provide us with the
projections and forecasts to which you refer.
19. Please disclose the compensation received or to be received by
American Appraisal. See Item 1015(b)(4) of Regulation M-A.
Advise us whether American Appraisal was given any instructions or
limitations concerning its engagement. If any instructions or
limitations were provided, please disclose them.
20. We note that your financial advisor considered a cost method
in determining the fair value of First Manitowoc. We also note that
this method discusses a number of assumptions, projections and
utilizes a number of formulas. In addition to including a
resuscitation of the formulas used in this valuation, textually
explain how the assumptions, projections and the formulas were
used to derive the fair value of the company under this method. Also,
explain how American Appraisal derived the indicated value of
$136,967,000 under this method?
21. You disclose on page 21 that a control premium of 5% was
applied by American Appraisal, as compared to the average control premium
of 38.1%. Please disclose the basis for American Appraisal`s belief
that the control premium should be 5%.
22. Please disclose how American Appraisal determined the weight
that was applied to the multiples in the guideline company method and
the guideline transaction method. Similarly, disclose how American
Appraisal determined the weight that was applied to each valuation
method to derive the ultimate fair value of First Manitowoc.
23. Advise us whether you have disclosed all of the projections
provided to America Appraisal for use in their fairness opinion.
In this regard, ensure that your disclosure summarizes all of the
material projections that were presented to American Appraisal.
24. Although we note that American Appraisal concluded that the
fair value of First Manitowoc, please revise to also disclose the
recommendation of American Appraisal. See Item 1015(b)(6) of
Regulation M-A.
Closing Comments
As appropriate, please amend your filing and respond to
these comments within 10 business days or tell us when you will provide
us with a response. You may wish to provide us with marked copies of
the amendment to expedite our review. Please furnish a cover
letter with your amendment that keys your responses to our comments and
provides any requested supplemental information. Detailed cover
letters greatly facilitate our review. Please understand that we
may have additional comments after reviewing your amendment and
responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be certain that they have provided all information investors require
for an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide, in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with respect to the filing; and
* the company 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.
In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff
of the Division of Corporation Finance in our review of your filing
or in response to our comments on your filing.
Please direct any questions to me at (202) 942-1957. You
may also contact me via facsimile at (202) 942-9638. Please send all
correspondence to us at the following ZIP code: 20549-0303.
Sincerely,
Jeffrey B. Werbitt
Attorney-Advisor
Office of Mergers and Acquisitions
cc: K. Thor Lundgren, Esquire
W. Charles Jackson, Esquire
Michael Best & Friedrich LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin53202