March 25, 2005
Mail Stop 03-06
Jay O. Wright
President and Chief Executive Officer
Mobilepro Corp.
6701 Democracy Boulevard
Bethesda, MD 20817
RE: Davel Communications, Inc.
Schedule 13E-3
Filed February 24, 2005
File No. 005-54989
Preliminary Schedule 14C
Filed February 24, 2005
File No. 000-25207
Dear Mr. Wright:
We have reviewed the above filings for compliance with Rule
13e-3 and have the following comments. Where indicated, we think
you should revise your documents in response to these comments. If
you disagree, we will consider your explanation as to why our 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
filings. We look forward to working with you in these respects. We
welcome any questions you may have about our comments or any other
aspect of our review. Feel free to call us at the telephone numbers
listed at the end of this letter.
General
1. It is unclear why Mobilepro and Davel Acquisition failed to
file either a Schedule 13D or Schedule 14F-1 in connection with their
acquisition of debt and equity from the lenders of the senior debt
in November of 2004. Please advise.
Schedule 13E-3
2. Please note that each filing person, including Mobilepro and
Davel Acquisition, must individually comply with the filing,
dissemination and disclosure requirements of Schedule 13E-3. Revise
the disclosure to include all of the information required by Schedule
13E-3 and its Instructions for each filing person. For example,
include a statement as to whether each person believes the Rule 13e-3
transaction is fair to unaffiliated security holders and an
analysis of the material factors upon which he/she relied in reaching
such conclusion. See Item 8 of Schedule 13E-3, Item 1014 of Regulation
M-A and Question 5 of Exchange Act Release no. 34-17719 (April 13,
1981). To the extent a filing person is relying on the analysis
of another to satisfy its obligations under Rule 13e-3, such filing
person must adopt the analysis of the other.
3. Please note also that you must include the information required
by Items 3, 5, 6, 10 and 11 with respect to each director, executive
officer and control person of the filing persons and each
executive officer and director of any corporation or entity ultimately
in control of any of the filing persons. See General Instruction C
to Schedule 13E-3.
Item 5
4. Please provide the disclosure required by Item 5(b) of Schedule
13E-3 or alternatively state where such disclosure is located.
Preliminary Schedule 14C
Summary Term Sheet - Page 4
5. Expand the summary term sheet to discuss the role of Mobilepro
in the transaction in more detail. For example, if the members of
the board of directors which approved the split in February 2005 are
affiliated with Mobilepro, so state.
6. Please define the term "Minority Stockholders" as used in this
summary.
Table of Contents - Page 4
7. Please ensure that the page numbers included in the table of
contents correspond to the pages where the referenced section is
included.
Special Factors
Approval of the Reverse Stock Split by our Board of Directors -
Page 6
8. Please describe the nature of the payments made to Mr. Chapman
and Mr. Barrett.
Background of the Transaction - Page 9
9. It appears that the last sentence of the penultimate paragraph
on page 11 is incomplete. Please revise it accordingly.
10. Expand the discussion on page 12 to provide more detail with
regard to the negotiations between the parties to the Loan
Purchase Agreement, particularly with regard to the requirement that
Mobilepro acquire the shares not held by the Lenders. For example,
we note from disclosure elsewhere that pursuant to the terms of the
agreements Mobilepro is obligated to purchase the shares held by
unaffiliated shareholders at $.015. Further, Mobilepro agreed to
purchase both the debt and equity from the Lenders. What portion
of the purchase price, if any, was allocated to the common stock?
Finally, we note from page 21 that a special committee negotiated
the Loan Purchase Agreement. This is unclear from the background
section.
11. Clarify what effect the reverse stock split will have on the
warrants issued to the Lenders in connection with the Loan
Purchase Agreement. In this regard, did Mobilepro or the company
engage in any discussions with the Lenders regarding the decision
to effect a stock split?
12. Please provide additional disclosure about the background of
the transaction between September 3, 2004 and the present, including
the decision to retain Reznick Fedder and its timing and the dates and
nature of any presentations made by Reznick Fedder to your board
of directors. Further, clarify Mobilepro`s role in consideration of
the transaction once it assumed control. We note for example that the
board of directors now consists of representatives of Mobilepro.
Please expand to address the timing of the board`s consideration
of the fairness of the transaction.
Procedural Factors Disfavoring the Reverse Stock Split - Page 16
13. We note your reference to the opinion provided by Skyworks
Capital. Please provide the disclosure required by Item 1015 of
Regulation M-A in an appropriate location of the information
statement. Expand the background section to discuss Skyworks`
role in more detail. Further, disclose any projections provided to
Skyworks.
Substantive Factors Favoring the Reverse Stock Split - Page 16
14. Please revise the cross-reference in the first sentence of
this section as it appears the section referenced is not included in
the information statement.
15. We note elsewhere that the price reflects a discount to the
weighted average closing price over a one-year period. Did the
board consider the discount in addition to the premiums as noted on
page 17?
Fairness Report - Page 17
16. Please provide the disclosure required by Item 1015(b)(6) of
Regulation M-A in the information statement. Please include a
summary of the results achieved in each analysis, and a tabular
description of how those results (i) compare with the per share
consideration offered to unaffiliated shareholders, and (ii)
support the ultimate fairness opinion rendered by Reznick Fedder.
We note that the materials of the presentation made by Reznick Fedder
do not appear to summarize Reznick Fedder`s analyses or its conclusions
in such a manner that an investor without a background in finance may
understand.
17. Elaborate upon the manner in which Mobilepro determined to
contact Reznick Fedder in connection with potential engagement.
Provide us with a copy of the engagement letter of Reznick Fedder.
18. You have indicated that Reznick Fedder discussed Davel`s
operations and future prospects with Davel`s management. Please
note that any non-public information used by Reznick Fedder in
formulating its fairness opinion should be disclosed in the filing.
Analysis of the Board of Directors - Page 19
19. As part of the fairness determination, each filing person must
consider the factors listed in Instruction 2 to Item 1014 of
Regulation M-A. Refer to Q&A No. 19 in Exchange Act Release No.
34-17719 (April 13, 1981). Please note that to the extent that any
filing person is relying on Reznick Fedder`s, or any other
person`s, analysis to satisfy any of the Item 1014 requirements,
that filing person must specifically adopt the analysis as its own.
Refer to Item 1014(b) of Regulation M-A and Question & Answers Nos. 5
and 21 in Exchange Release No. 34-17719 (April 13, 1981).
20. Please clarify the reference to FCC action on April 5, 2001
(page 20).
21. We note your brief disclosure of the board`s analysis of the
current and historical market prices of your common stock. Revise
your document to ensure that you have provided a reasonably
detailed discussion of each material factor forming the basis for
each party`s fairness determination in accordance with Item 1014(b)
of Regulation M-A. A listing of the factors considered, without a
discussion of how that factor relates to the determination that the
transaction is fair to the unaffiliated stockholders, is inadequate.
See In the Matter of Meyers Parking Systems Inc., Securities Exchange
Act Rel. No. 26069 (September 12, 1988). For example, on page 22, you
mention the consideration by the board of liquidation value and going
concern value of your company but you do not describe that
consideration or its effect on the board`s fairness determination.
Board of Directors` Determination and Recommendation - Page 22
22. Please clarify the reference to "the member" of your board of
directors in the penultimate sentence in this paragraph. It
appears your board of directors has three members. Which director
are you referring to?
Effect of the Reverse Stock Split on Option Holders - Page 23
23. Please quantify the number of outstanding options to purchase
common stock and the total consideration to be paid to optionees
as a result of your reverse stock split.
Certain Material Federal Income Tax Consequences - Page 25
24. We note your disclosure that this section summarizes "certain"
of the material federal income tax consequences of the reverse
stock plit. Please ensure that you discuss all such material
consequences.
Interests of Certain Persons - Page 34
25. Please disclose the beneficial owners of the shares held by
Mobilepro and Davel Acquisition Corp.
Financial Statements - Page 37
26. Please include the pro forma financial statements required by
Item 1010(b) of Regulation M-A or tell us your basis for not
including them.
Legal Proceedings - Page 37
27. Update, as necessary, the information regarding the litigation
disclosed in this section.
Appendix D. Opinion Letter and Board Presentation
28. Please state that the board presentation materials are part
of the fairness opinion in the opinion, if true.
29. Please tell us supplementally the reason for the time elapsed
between Reznick Fedder`s presentation to the board (January 15)
and its issuance of the opinion (February 9) and whether any
changes to Reznick Fedder`s opinion occurred.
30. We note that footnote (b) on page 22 of the board materials
is not included in the table. Please revise.
31. We note that in the development of the discount rate used in
the discounted cash flow analysis Reznick Fedder used a cost of
equity rate of 27%, while the four risk premiums used in page 37
add up to 23.2%. Please revise to explain the use of the risk-free
rate and the equity risk premium adjustment, which appear to account
for the difference on page 38 of the board materials.
32. Please explain on page 43 of the board materials how, in the
first table, the average number of pay phones in 2008 and a
multiple of $300 result in the terminal value of $11,100.
33. Please confirm supplementally whether the liquidation analysis
prepared by Davel`s management and provided to Reznick Fedder
(page 44) is presented on pages 45-47 of the board materials. If
not, please disclose that analysis.
As appropriate, please amend your Schedule 13E-3 and
Schedule 14C in response to these comments. You may wish to
provide us with marked copies of the amendments to expedite our
review. Please furnish a cover letter with your amendments 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 amendments and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be certain that they have provided all material information to
investors. 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, n writing, a statement from the company acknowledging that:
* the company 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 espect to the filings; 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 filings
or in response to our comments on your filings.
As appropriate, please amend your filings in response to
these comments. You may wish to provide us with marked copies of
the amended filings to expedite our review. Please furnish a cover
letter with your amended filing 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 amended filings and responses to our comments.
Please contact the undersigned at (202) 942-2962 or, in his
absence, Pamela Carmody, Special Counsel, at (202) 942-1918 with
any other questions.
Sincerely,
Daniel F. Duchovny
Attorney-Advisor
Office of Mergers and
Acquisitions
cc (via fax): Ernest Stern, Esq. ((202) 778-6460)