July 12, 2005
Via facsimile to ((404) 873-8707) and U.S. Mail
Robert F. Dow, Esq.
Arnall Golden Gregory LLP
171 17th Street, NW
Suite 2100
Atlanta, GA 30071
Re: Color Imaging, Inc.
Revised Preliminary Schedule 14A
Filed June 24, 2005
File No. 000-16450
Amended Schedule 13E-3
Filed June 24, 2005
File No. 005-59249
Dear Mr. Dow:
We have reviewed the above filings for compliance with Rule
13e-3 and have the following additional comments on your
transaction.
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.
Schedule 13E-3
Introduction
1. We reissue comment 6. Please include the information required
by
Item 1003(c) for Mr. Wilson.
Item 16. Exhibits
2. We note that you have requested confidential treatment for
certain
exhibits. We will review and provide comments on your request
separately. All comments concerning your confidential treatment
request must be resolved prior to mailing your proxy statement.
3. Please provide us with an unredacted copy of exhibit (c)(ii).
Preliminary Schedule 14A
General
4. We reissue comment 7 with respect to each potential ratio for
the
reverse stock split. Revise your proxy statement and proxy card
to
allow shareholders to separately vote on each potential ratio for
the
reverse stock split. See Section II.H of Release 34-31326
(October
16, 1992).
Special Factors, page 6
5. We reissue comment 12 with respect to the section "Background
of
the stock splits." We note this section is not included under the
Special Factors.
How will the board select the reverse split ratio?, page 11
6. We reissue comment 17. We note your response directed us to
revised disclosure in this section but we are unable to find a
discussion of the issues described in our prior comment.
7. We note footnote 4 is included in the table in this section but
it
is not explained. Please revise.
Is there a possibility that the board will not complete the stock
splits?, page 12
8. Please revise the second sentence in the third full paragraph
of
this section to clarify its meaning.
9. In the last paragraph on this section, it appears that you are
not
currently in compliance with the traditional leverage ratio on
your
credit facility; you disclose that this ratio should be 1:1 but
your
ratio as of March 31, 2005 is .42:1. We note, however, the
implication in the last sentence of this section that you are in
compliance with the ratio. Please clarify this apparent
discrepancy.
If you are not in compliance with the credit facility covenant,
please state so and describe how such non-compliance will affect
your
ability to pay the consideration to shareholders who will be
cashed
out as a result of the reverse stock split. Make any related
revisions, as necessary, under the caption "Stock Splits Proposal"
in
the Summary Term Sheet.
Special Factors - Opinion of CBIZ Valuation Group
Purpose and content of the fairness opinion, page 25
10. It appears that the equity value per share in each of the
discounted cash flow, publicly-traded company, and merger and
acquisition analyses as disclosed in your proxy statement does not
match the information presented to your board of directors on
April
14, 2005 by CVG. Please reconcile these discrepancies.
Going Concern Fair Value Estimates, page 29
11. Please explain the reasons for the adjustments described in
the
last paragraph of this section.
Discounted Cash Flow Method, page 29
12. With respect to the first two tables added to this section,
please include a column for 2004 information, given that the
publicly-traded company analysis uses that information. Also,
since
the CVG analyses described in the summary of CVG`s opinion show
per-
share data, please show the number of shares outstanding as of the
end of each period so readers may be able to calculate the per-
share
income information.
13. We reissue comment 42. Please disclose the industry averages
we
had previously requested. We are also unable to find the
revisions
described in the second sentence of your response.
14. With respect to the new table setting forth the estimated
weighted average cost of capital and the industry composite:
* explain the meaning of the tables and their component
information;
* explain how the tables are support the discount rates and
multiples
used;
* explain the asterisk next to the heading "Industry Composite;"
and
* describe the industries included in each of the SICs used in the
industry composite table.
15. We reissue comment 43. Revise this section to show how the
information included in the financial projections tables resulted
in
the values already disclosed.
16. Please disclose the substance of your response to comment 44.
17. Refer to the table under each of the DCF-stand alone basis and
DCF-reverse stock split basis. We note that in each of these
tables
you disclosed figures for a 17% and a 21% weighted-average cost of
capital, neither of which is included in the April 14, 2005
presentation by CVG to your board of directors. Please explain.
Publicly-traded Company Analysis, page 32
18. Refer to prior comment 45. Please revise the new table in
this
section to include the market value, the EBITDA and the net income
for each comparable company. Also, revise to disclose the period
which the data represents for each comparable company. Finally,
disclose the source of the information.
Merger and Acquisition Analysis, page 33
19. Please revise the new table to show the acquiror in each of
the
six listed transactions and explain the meaning of the term "BEV."
Also, disclose the substance of the second sentence of your
response
to comment 47 and explain how, if at all, the remaining
transactions
were used in the analysis.
Liquidation Analysis, page 35
20. It appears that the subtotals and totals in this table do not
add
up as you have presented them. Please revise or advise. Also,
please show the footnotes below the table in the table.
Premium Analysis, page 35
21. Please explain the meaning of the first line-item in the new
table.
Conclusion, page 36
22. Please revise the table in this section to show the results of
the liquidation analysis.
Information of certain persons, page 51
23. Please revise the last cross-reference included in the first
paragraph of this section as it appears that the section
referenced
is no longer in the proxy statement.
24. We reissue comment 64 with respect to footnote 3, which is
included in the table.
25. It appears that the beneficial ownership of Mr. Jui-Chi Wang
may
be overstated. We note that Mr. Wang has beneficial ownership of
4,500,000 shares held of record by CFI, 738,200 shares held
directly
by Mr. Wang, and 43,750 shares underlying options exercisable
within
60 days, all of which add up to 5,281,950 shares instead of
5,508,200
shares currently disclosed. Please revise or advise.
* * * *
Please direct any questions to me at (202) 551-3619 or, in
my
absence, to Christina Chalk, Special Counsel, at (202) 551-3263.
You
may also contact me via facsimile at (202) 772-9203. Please send
all
correspondence to us at the following ZIP code: 20549-3628.
Sincerely,
Daniel F. Duchovny
Attorney-Advisor
Office of Mergers & Acquisitions
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Robert F. Dow, Esq.
Arnall Golden Gregory LLP
July 12, 2005
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0303
DIVISION OF
CORPORATION FINANCE