Mail Stop 3628
July 15, 2005
VIA FACSIMILE (414) 273-5198 and U.S. Mail
Patrick S. Murphy, Esq.
Godfrey & Kahn, S.C.
780 N. Water Street
Milwaukee, WI 53202
(414) 273-3500
Re: Luxemburg Bancshares, Inc.
Preliminary Schedule 14A
Filed June 14, 2005
File No. 000-22471
Schedule 13E-3
Filed June 14, 2005
File No. 005-52821
Dear Mr. Murphy:
We have reviewed the above filings for issues related to the
Schedule 13E-3 and have the following comments. Where indicated,
we think you should revise your document 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 number
listed at the end of this letter.
Schedule 13E-3
1. It appears that a typographical error occurred with respect to
the numbering and subtitles of the Terms of the Transaction
requirement. Please revise this disclosure in accordance with
Item 1004 of Regulation M-A.
Schedule 14A
General
2. Please consider including an exhibit index to identify the
exhibits included with the information statement.
3. In your supplemental response, confirm to us that your
information statement will be provided to your shareholders at
least 20 calendar days prior to the earliest date on which the
corporate action may be taken to effect the reverse stock split
in accordance with Rule 14c-2(b) and Rule 13e-3(f)(i).
4. We note that your document pages are not enumerated. The
numbers referenced herein refer to the page numbers of the EDGAR
printout.
Background of the Split Transaction, page 12
5. Please revise your disclosure to identify the alternative
methods of effecting a going private transaction, the issues
related to a going-private transaction and various legal matters,
and the issues relating to a going private transaction and various
structures of a potential going private transaction discussed at
the November 23,2004, January 11, 2005, and February 8, 2005 meetings,
respectively. Please disclose the consideration given to these
matters by the board and all conclusions reached by board members
at those various meetings. We note your disclosure on page 16
regarding the various alternative structures considered.
Luxemburg`s Position as the Fairness of the Split Transaction,
Page 16
6. Please expand to clarify what consideration the board gave to
going concern value and historical market price. For example, we
note from 19 that the board considered going concern value but it
remains unclear how this supported the determination. Further,
your discussion of the factors considered in determining fairness
must include an analysis of the extent, if any, to which the filing
person`s beliefs are based on the factors described in Instruction
2, paragraphs (c), (d) and (e) of Item 1014 of Regulation M-A and
Item 1015 of Regulation M-A.
Valuation of Financial Advisors; Fairness Opinion, page 20
7. Please explain, in plain English, the difference between
control premium and acquisition premium. Explain how the "addition
of a control premium assures that fair value includes no inherent
minority discounts, and allows full proportionate value for each
share." Further, provide the explanation for the advice you received
that if your "use of the control premium was to eliminate a minority
share discount, then [your] analysis should include one."
8. Please remove the financial advisor disclaimer found on page
21. Alternatively, provide us with your analysis in a supplemental
response as to why such a disclaimer is appropriate in this Rule
13e-3 transaction filing.
9. We note the reference to projections and financial forecasts
provided to the fairness advisor for use in valuing the shares. We
note that you disclose some financial forecasts and projections of
Luxemburg prepared by its management. You should also describe
the material assumptions underlying them. Please confirm to us,
in a supplemental response that the entirety of forecasts and
projections provided to Ryan Beck have been disclosed. We note
your reference to projections on pages 21 and 26.
Financing of the Split Transaction, page 35
10. We note that you have received a commitment from an
independent financial institution to provide the subordinated debt
facility, which is not subject to any material conditions. Please
revise your disclosure to include a summary of the loan agreement or
arrangement containing the identity of the parties, the term, the
collateral, the stated and effective interest rates, and any other
material terms or conditions of the loan. Further, briefly describe
any plans or arrangements to finance or repay the loan, or, if no
plans or arrangements have been made, so state. Please see Item 10
of Schedule 13E-3 and Item 1007 of Regulation M-A.
Financial Information, page 42
11. Please be sure to update your disclosure to incorporate by
reference the financial information contained in your most recent
annual or quarterly reports that you file under the Exchange Act
prior to finalizing your Schedule 13E-3 and to further update your
disclosure as appropriate.
Forward Looking Statements, page 48
12. We reference your statement that you undertake no obligation
to update or revise the forward-looking statements, or to update the
reasons why actual results could differ materially from those
projected in the forward-looking statements contained in or
incorporated by reference in your offer document. This statement
seems inconsistent with your obligation to promptly disseminate
disclosure of material changes to the material required to be
filed. See Rule 13e-3(f)(iii). Please revise or delete.
Where You Can Find More Information
13. Please note that the address of the SEC has changed to 100 F
Street, N.E., Washington, DC 20549. Please revise your document
accordingly.
Proxy Card
14. Rule 14a-4(b)(1) requires you to separately break out on the
proxy card each matter to be voted on. Separate matters may be
cross-conditioned upon one another, such that one will not pass
unless the other does. See the September 2004 interim supplement to
the Division of Corporation Finance`s Manual of Publicly Available
Telephone Interpretations (available on our Web site at www.sec.gov).
Please revise to allow shareholders to separately vote on the reverse
1-for-500 stock split followed immediately by a forward 500-for-1
stock split of the common shares, or explain why, based on our
telephone interpretation, separation is not required.
Form 10KSB/A for the fiscal year ended December 31, 2004 and Form
10-QSB for the fiscal period ended March 31, 2005
15. Please revise your Form 10-KSB/A for the year ended December
31, 2004 and your Form 10-QSB for the quarter ended March 31, 2005
to include a comprehensive discussion of the terms of the memorandum
of understanding that your subsidiary bank entered into with the
Federal Deposit Insurance Corporation and the Wisconsin Department of
Financial Institutions on December 21, 2004.
16. We note that you recorded an additional charge of $500,000 to
your loan loss provision in the second quarter of 2004 as required
by banking regulators and amended your Forms 10-QSB for the second
and third quarters of 2004 as a result. Tell us how you concluded in
Item 8A of your 2004 Form 10-KSB that this restatement did not reflect
a material weakness in your disclosure controls and procedures and
call into question your assertions on the effectiveness of your
disclosure controls or procedures as of the end of the periods impacted
in 2004.
Closing Comment
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, in 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 respect 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.
If you have any questions please contact me at (202) 551-
3257 or by facsimile at (202) 772-9207.
Very truly yours,
Celeste Murphy
Special Counsel
Office of Mergers & Acquisitions