January 6, 2005
Mail Stop 03-06
Via Facsimile (617-926-4304) and U.S. Mail
Stephen Korn, Esq.
Vice President and General Counsel
Ionics, Incorporated
65 Grove Street
Watertown, Massachusetts 02472-2882
Re: Ionics, Incorporated
Preliminary Schedule 14A filed December 22, 2004
File No. 001-07211
Dear Mr. Korn:
This is to advise you that we have monitored selected issues
in
the above-captioned proxy statement 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 filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on 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 Relating to the Merger - Page 4
Opinions of Ionics` Financial Advisors - Page 5
1. Please revise to disclose that all of the fees payable to
Goldman
Sachs and UBS are contingent upon consummation of the merger, and
quantify the fees paid to each for the fairness opinions. Clarify
on
pages 21 and 22 that the fees are contingent upon consummation of
the
merger.
Interests of Certain Persons in the Merger - Page 6
2. Please describe those provisions of the merger agreement that
will
benefit Ionics` directors and officers. Identify the directors
and
officers who will receive benefits, and quantify the amount of the
benefits derived by each for the various reasons listed. For
example, if any executive officers are getting payments pursuant
to
severance arrangements, expand to identify them and quantify the
payments they will receive.
3. Include a section in the proxy statement that provides a
discussion about the Ecolochem Holders` agreement so that
investors
can understand the interest described in the second paragraph.
The
disclosure should include the background of and reasons for the
agreement, the material terms of the agreement, the amount of cash
and stock held in escrow and why it is being held in escrow. In
the
summary section, provide a cross reference to the discussion in
the
proxy statement, and quantify the "substantial beneficial
interest"
and the amount of shares and cash Lyman Dickerson and persons
related
to him have in the escrowed funds.
The Merger - Page 16
4. In an appropriate location in the filing, please disclose why
the
Ionics board decided to obtain two fairness opinions for this
transaction.
Background of the Proposed Merger
5. Expand to discuss the negotiations surrounding the entry into
the
voting agreement. Also expand to discuss how the price was
determined and the role of the fairness advisors in determining
the
price.
Opinions of Ionics` Financial Advisors - Page 19
6. We note that both Goldman Sachs and UBS have provided certain
investment banking and other financial services to Ionics and its
affiliates and GE and its affiliates within the past two years.
Please revise to disclose all compensation received or to be
received
by each financial advisor as a result of these services and
material
relationships.
7. Disclose the estimated amount of the 1.5% cash fee to be paid
to
each of Goldman Sachs and UBS upon consummation of the merger.
8. It appears that Ionics engaged Goldman Sachs and UBS to deliver
independent fairness opinions based on their individual fairness
determinations. The financial analyses summary, however,
discusses
only one process for both financial advisors. For example, the
disclosure seems to suggest that Goldman Sachs and UBS performed
the
same analyses, used the same companies for the selected companies
analysis, and arrived at the same results. Please revise your
disclosure to separately discuss the analyses performed by each
financial advisor and the respective conclusions. If the two
advisors collaborated in performing the analyses discussed, please
disclose this.
9. Please provide a summary of any instructions given to Goldman
Sachs and UBS regarding the preparation of their respective
opinions.
10. Supplementally provide copies of the materials that Goldman
Sachs
and UBS prepared in connection with their respective fairness
opinions or otherwise provided to the Ionics` board of directors
in
connection with this transaction, including, among other things,
any
"board books," drafts of fairness opinions provided to the board,
and
summaries of all oral presentations made to the company`s board.
We
may have additional comments after we review these materials.
As appropriate, please 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 supplemental information. Detailed cover letters
greatly
facilitate our review. Please file your correspondence on EDGAR.
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 reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed 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, 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 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 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 Eduardo Aleman at (202) 824-5661, or me at
(202)
942-1880 with any questions.
Sincerely,
Peggy Fisher
Assistant Director
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Stephen Korn
January 6, 2005
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