Mail Stop 3561
September 9, 2005
Marvin G. Kiser, Sr.
Vice President of Finance
McRae Industries, Inc.
400 North Main Street
Mount Gilead, North Carolina 27306
Re: McRae Industries, Inc.
Amendment No. 2 to Schedule 13E-3
Filed August 18, 2005
File No. 5-34909
Amendment No. 2 to Preliminary Proxy Statement on Schedule
14A
Filed August 18, 2005
File No. 1-8578
Dear Mr. Kiser:
We have reviewed your filings 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
information so we may better understand your disclosure. After
reviewing this information, we may 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 any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Schedule 14A
Summary Term Sheet, page 1
Treatment of Shares Held in "Street Name"
1. We refer you to prior comment 6. It is unclear why you are
disclosing that "[n]either brokers and other nominees nor
beneficial
owners are record holders." Similarly, it is unclear how this
statement explains why beneficial holders who hold less than 200
shares of a particular class of common stock in street name will
not
have their shares cashed out in the transaction. Please explain
this
statement or revise your disclosure. Also, your disclosure should
be
revised to explain what, if any, actions security holders may take
to
be certain of the manner in which their shares will be treated.
To
the extent that they may purchase additional shares, dispose of
shares or change their ownership structure to be certain that they
remain a security holder or are cashed out, please disclose.
Finally, on pages 7 and 13 you state that beneficial holders who
hold
less than 200 shares will not be cashed out in the transaction.
Please tell us how you can be certain of this fact.
Recommendation of the Special Committee, page 19
2. We note your response to prior comment 10 on page 22. However,
your disclosure appears to be circular and it remains unclear how
each of the substantive factors outlined on page 20 and 21
supports
the fairness determination with respect to those unaffiliated
security holders who will continue to be security holders of the
company. Revise your disclosure to clarify how each of the
factors
cited support the special committee`s fairness determination with
respect to unaffiliated security holders who will remain security
holders after the transaction.
3. We note the revised disclosure in response to comment 11.
Please
further revise the discussion to provide additional detail,
quantifying the discussion where possible.
Opinion of the Financial Advisor, page 23
4. We refer you to prior comment 12 and your disclosure on page 25
in
response to this comment. Please expand your disclosure to
further
explain why Oxford believed that, among all such methodologies
typically used by expert financial advisors, these valuation
methodologies were the most appropriate for determining the value
of
McRae in this particular transaction.
5. We refer you to prior comment 13. In this regard, we note that
Oxford chose the companies in the comparable company analysis
because
they were footwear companies that compete in McRae`s industry.
Did
Oxford consider any other factors, such as the size of the
companies
that were used in this analysis? If not, please expand the
discussion to explain the basis of Oxford`s belief that these
other
footwear manufacturers were comparable. Similarly, revise to also
clarify whether the only criteria that Oxford considered in the
comparable transactional analysis was the fact that the other
companies also conducted reverse stock splits for the purpose of
going private. Did Oxford consider the size of the comparable
going
private transactions? If not, explain why Oxford believes that
the
selected transactions are comparable.
6. In view of the fact that the proposed cash out price of Class A
and B are not within the range of implied valuation premiums
derived
in the comparable transactions analysis, expand your disclosure to
clarify how this analysis supports Oxford`s fairness opinion. In
this regard, further explain why Oxford believes that the highest
price paid for the common stock over the 12-month period prior to
announcement of the transaction was a better indicator of fairness
than the closing price on the day prior to the announcement of the
transaction.
* * * * *
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 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 to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment 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, we continue to
remind you to provide, in writing, a statement from the company
and
all filing persons acknowledging that:
* the company or filing person 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 or filing person 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 contact Scott Anderegg, Staff Attorney, at (202) 551-
3342, David Mittelman, Legal Branch Chief, at (202) 551-3214 or me
at
(202) 551-3720 with any questions.
Sincerely,
Abby Adams
Special Counsel
Office of Mergers and Acquisitions
cc: Mark R. Busch, Esq.
Via Fax (704) 353-3140
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Marvin G. Kiser, Sr.
McRae Industries, Inc.
September 9, 2005
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