November 19, 2204
Via Facsimile at (213) 687-5600 and U.S. Mail
Brian McCarthy
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Ave., Suite 3400
Los Angeles, CA 90071
Re: United Online, Inc.
Schedule TO-I filed November 4, 2002
SEC File No. 5-62069
Dear Mr. McCarthy:
We have the following comments on the filing listed above.
References to the "Company" or "United Online" refer to United
Online, Inc. All other defined terms have the same meaning as in
the offer materials.
Schedule TO-I - Offer to Purchase
General
1. We believe the structure of your tender offer raises some of
the concerns we addressed in the no action letter entitled Janet S.
Thiele, Esq. (December 21, 1987). Specifically, you could not
purchase all of the 16,666,666 shares you have agreed to buy if
the offer price is set at the maximum end of the range. Please revise
to conform the offer structure to our no action precedent. Be mindful
of your extension obligations, given the change in the offer
structure. In addition, advise how you will disseminate the amended
offer materials describing the revised offer terms.
2. We note that this tender offer is conditioned on your obtaining
financing. Please be aware of our position that where a financing
condition exists, going from an unfinanced to a fully financed
transaction constitutes a material change in the terms of the
tender offer. Please file an amendment when you obtain financing
and consider the need to extend the offer and disseminate revised
materials. Also, be aware of your obligations to file any loan
agreement as an exhibit to the Schedule TO. See Item 1016(b) of
Regulation M-A.
Summary, page 1
3. In your revised offer materials, you should disclose in the
summary term sheet section the relationship between the offer
price range and the recent trading prices of the Company`s common
stock. That is, you should specifically note that the high end of the
range in this tender offer is below the highest price at which these
shares traded during the current quarter, and significantly below the
prices at which it traded during this year. Similarly, the revised
disclosure should note that the low end of the range is below the
lowest trading price during the current quarter.
Odd Lots, page 15
4. We note the disclosure that you will reserve the right to
purchase all shares properly tendered by any shareholder who tenders
at or below the offer price and who, as a result of proration, would
then own beneficially or of record fewer than 100 shares. Please
clarify whether you would give priority to shares tendered under those
circumstances. If so, explain how you could do so, consistent with
Rules 13e-4(f)(3) and 13e-4(h)(5). Specifically, Rule 13e-4(h)(5)
seems to require that the tendering shareholder already own less
than 100 shares.
Purpose of the Tender Offer, page 16
5. We note that the offer is subject to the condition that the
company will remain listed and not be eligible for deregistration
under the Exchange Act. However, we also note that you may engage
in possible future purchases of additional shares of common stock.
Please be advised that if this tender offer represents the first
Step in a series of transactions that will take the company private,
a Schedule 13E-3 must be filed now. See Rule 13e-3(a)(3). Please
confirm your understanding in your response letter.
Certain Effects of the Tender Offer, page 17
6. We note the disclosure here indicating that the Company
currently has no indebtedness and will incur substantial debt to
fund this tender offer. We also note that you have not yet secured
financing. In light of these facts, and your impending acquisition
of Classmates, expand the disclosure concerning the reasons for this
offer. See Item 1006(a) of Regulation M-A. If there is any nexus
between your decision to proceed with the Classmates acquisition
and your decision to do this tender offer, this should be described.
Withdrawal Rights, page 23
7. Please clarify the disclosure pertaining to the withdrawal
procedures in light of the fact that stockholders may tender
shares at different prices by submitting separate letters of
transmittal. For example, are they required to submit separate notices
of withdrawal for each portion of shares tendered at a particular
price? Or may they submit one withdrawal notice to withdraw any and all
shares?
Conditions of the Tender Offer, page 26
8. We note that many of the offer conditions listed here are very
broadly and generally drafted, such that it would be difficult for
a shareholder to know in determining whether or not to tender
whether a given offer condition had been "triggered." For example, what
would constitute a "material escalation" of events in Iraq given the
ongoing hostilities? Similarly, the "contemplated benefits of the
tender offer" are less than clear to the reader. Given these
issues, consider revising to more narrowly tailor and to better
describe these offer conditions, with a view to presenting them in a
manner understandable to your shareholders. Quantify where practicable,
such as for the market indices condition.
9. In addition, please be aware that if an event occurs which you
believe "triggers" a listed offer condition, you must promptly
address how you will proceed (i.e., whether you will terminate the
offer or waive the condition and proceed with the offer). You may
not wait until the scheduled expiration of the tender offer to
"assert" a condition triggered by an event that occurred on day two
of the offer. Please confirm your understanding in your response letter.
10. The first paragraph on page 26 contains language suggesting
that once a condition is triggered, you will make a secondary
determination as to whether to proceed with the tender offer.
Please note that when a condition is triggered and an offeror decides
to proceed with the offer anyway, we believe that this decision
constitutes a waiver of the triggered condition(s). As you are
aware, the waiver of a material offer condition may require an
extension of the offer, as well as filing of an amendment and
dissemination of additional offer materials. Please confirm to us
supplementally the issuer will not rely on this language to tacitly
waive a condition of the offer by failing to expressly assert it.
Source and Amount of Funds, page 30
11. Briefly describe any plans or arrangements to repay the loan
to be obtained to consummate this offer. If no plans or arrangements
concerning repayment have been made, so state. See Item 1007(d)(2)
of Regulation M-A.
12. Once you obtain financing to fund the offer, please note that
your amendment must describe the material terms of the loan
agreement. See Item 1007(d)(1).
Classmates Acquisition, page 30
13. Since this tender offer is conditioned on the consummation of
the Classmates Acquisition, briefly summarize the material conditions
to that transaction. See Item 1006(c) of Regulation M-A. Your
expanded discussion should describe any changes (if any) to the
corporate structure of the United Online that will result from the
merger. For example, if you are making changes to the articles of
incorporation or other governing instruments of the Company in
connection with that merger, these should be described here.
Exhibit (a)(5)(D) - Press Release dated November 4, 2004
14. The safe harbor protections for forward looking statements
provided in the Private Securities Litigation Reform Act of 1995
do not by their terms apply to statements made in connection with a
tender offer. See Section 21E(b)(2)(C) of the Securities Exchange
Act of 1934. Therefore, your reference to the safe harbor provisions
of the Act in this press release is inappropriate. Please avoid
future references in any additional tender offer materials.
Closing Comments
Please amend the offer materials in response to these
comments. You may wish to provide us with marked copies of the amendment,
if required, 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 file your cover letter on
EDGAR. Please understand that we may have additional comments
after reviewing your amendment and responses to our comments. In
addition, depending upon your response to these comments, a supplement
may need to be sent to security holders.
In connection with responding to our comments, please
provide, in writing, a statement from United Online acknowledging that:
* you are responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* you 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) 942-1976. 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,
Michael Pressman
Office of Mergers
and Acquisitions