March 31, 2005
Via Facsimile (616) 752-2500 and U.S. Mail
Terri Reyering Abare
Vorys, Sater, Seymour and Pease LLP
Suite 2000, Atrium Two
221 East Fourth Street
Portsmouth, Ohio 45662
RE: ASB Financial Corp.
Schedule 13E-3 filed March 3, 2005
File no. 5-50215
Preliminary Schedule 14A filed March 3, 2005
File no. 0-25906
Dear Ms. Abare:
We have the following comments on the above-referenced
filings.
The defined terms we use here have the same meaning as in the
proxy
statement, unless otherwise indicated.
Schedule 14A
1. Please revise to indicate that the proxy statement and form of
proxy card are preliminary copies. Refer to Rule 14a-6(e)(1).
2. 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). We
believe the reverse and forward stock splits are separate matters
that should be presented separately on the proxy card for
shareholder
vote. Our belief is based on the fact that you have attached two
different amendments to the company`s articles of incorporation as
Exhibits B and C to the proxy statement, which appears to indicate
that state law and the company`s governing instruments dictate
that
both matters are subject to a shareholder vote. Please revise to
allow shareholders to separately vote on the reverse and forward
stock splits, or explain why, based on our telephone
interpretation
and the reasoning articulated in this comment, separation is not
required.
3. Ensure that the proxy statement contains the disclosure
provided
in response to Item 1015(c) as required by Instruction E to
Schedule
13E-3, which states that any responses to Items 7, 8 and 9 of
Schedule 13E-3 must be provided in full in the disclosure document
provided to security holders, even if the response is negative or
not
applicable.
4. Where you discuss the vote required to approve the Stock Splits
(including on the cover page), prominently disclose the percentage
owned by officers and directors of the company who have stated
that
they will vote in favor of the Splits. This information does not
currently appear until the "Fairness of the Stock Splits" section.
Summary Term Sheet, page 2
5. It appears that a beneficial owner of fewer than 300 shares may
not be "cashed out" in this merger if that beneficial owner holds
through a record holder who in the
aggregate, holds more than 300 shares. Since shareholders who
receive
this proxy statement may want to increase or decrease their
holdings
in order to receive cash in the merger or remain as a continuing
shareholder, this discussion is critical and should be summarized
here and appropriate disclosure provided elsewhere in the
document.
6. Include bulleted disclosure highlighting the potential
disadvantages of the reverse stock split.
7. Revise the subheading to reflect that you are addressing
"material" and not "certain" tax consequences.
Cautionary Notice Regarding Forward-Looking Statements, page 5
8. Please delete the reference the Private Securities Litigation
Reform Act of 1995. By its terms, the Private Securities
Litigation
Reform Act safe harbor for forward looking statements does not
apply
to statements made in connection with going private transactions.
Refer to Regulation M-A telephone interpretation M.2 available at
www.sec.gov in the July 2001 Supplement to the Division of
Corporation Finance`s Manual of Publicly Available Telephone
Interpretations. See Section 21E of the Securities Exchange Act of
1934 and Section 27A of the Securities Act of 1933
9. Please delete the statement that the Company does not
undertake,
and specifically disclaims any obligation to update its forward-
looking statements or explain how this statement is consistent
with
your obligations under Rules 13e-3(d)(2) and 14a-9.
Special Factors, page 8
Purpose of the Stock Splits, page 8
10. You refer to the "primary purpose" for the Stock Splits,
thereby
implying there are other less significant purposes. If so, please
describe them. Also, consider combining this section with the one
immediately following it, which describes the "Reasons for the
Stock
Splits."
Reasons for the Stock Splits, page 8
11. Given that several of the factors you list as contributing to
the
decision to take the company private appear to have existed for
several years and since the Sarbanes-Oxley Act was enacted nearly
two
years ago, revise to indicate why you seek to undertake the going
private transaction at this time as opposed to other times in the
company`s operating history. See Item 1013(c) of Regulation M-A.
12. You indicate that you will realize recurring annual cost
savings
of $165,000 in fees and expenses you have historically incurred,
including $75,000 in audit fees reflecting "a reduction in audit
fees." We also note your disclosure on page 18 indicating that
you
"currently intend to continue to provide audited financial
statements
and proxy statements to your shareholders." In that regard we
note
that your DEF14A filed on September 24, 2004 indicates that your
total audit fees for 2004 and 2003 were $66,050 and $58,735,
respectively. Supplementally provide an with an analysis
supporting
your estimation including an explanation of why your estimated
savings relating to future audit fees, less continuing audit
costs,
exceed your historical audit fees. Provide a comparable analysis
for
each estimated cost savings line item.
13. We note that the merger will cost approximately $2,061,000.
Please explain what consideration the Board gave to the fact that
it
will take several years to recoup the value of the initial
expense.
Effects of the Stock Splits, page 10
Effects on Continuing Holders, page 11
14. Revise to discuss that the company will no longer be subject
to
the provisions of the Sarbanes-Oxley Act or the liability
provisions
of the Exchange Act and that officers of the company will no
longer
be required to certify the accuracy of its financial statements.
Provide a similar discussion in the "disadvantages of the Stock
Splits" on page 18.
Alternatives to the Stock Splits, page 14
15. If known, please quantify the estimated costs associated with
undertaking the alternate methods of going private discussed.
16. If the Board considered methods to reduce expenses other than
going private, please discuss the alternatives considered and why
they were ultimately rejected. See Item 1013(b) of Regulation M-
A.
In that regard, we note your disclosure on page 28 indicating that
management investigated alternatives to avoid increased costs
"including deregistering." For instance, disclose whether the
Board
considered the possibility of a third party buy-out. If the Board
did not consider other such options, please explain why not.
Fairness of the Stock Splits, page 15
17. Please provide a discussion of the factors underlying the
Board`s
determination that the transaction is substantively fair to
unaffiliated holders.
Advantages of the Stock Splits, page 16
18. All of the factors listed in Instruction 2 to Item 1014 of
Regulation M-A are generally relevant to the fairness
determination
and should be discussed in considerable detail. Expand your
analysis
regarding historical prices to provide a more meaningful date
range
than the 30 trading days prior to offering you currently provide.
In
that regard, the Board should address substantive fairness in
light
of the company`s trading price being in excess of $23.00 for
significant portions of preceding year. Provide an analysis of
going
concern value, including quantification. In addition, revise to
quantify the company`s liquidation value and expand your analysis
to
explain why the board believes liquidation value in not material
or
relevant. In that regard, we note your statement on page 19 that
"liquidation value was not deemed relevant because we plan to
continue to operate as a going concern following the stock splits"
is
inappropriate, since the absence of an intent to liquidate is not
dispositive of the relevance of this valuation methodology. If
the
Board did not consider one or more of the factors, state that and
explain why the factor(s) were not deemed material or relevant.
See
Question and Answer No. 20 of Exchange Act Release No. 34-17719.
Opinion of Keller & Company, page 19
19. Expand your disclosure to explain why Keller & Company "is
knowledgeable and familiar with the operation of ASB and its
business." In addition, please describe any material relationship
that existed in the past two years and any compensation received
by
Keller & Company during that time. See Item 1015(b)(4) of
Regulation
M-A.
20. Please expand your summary of the valuation report to include
a
more detailed summary procedures followed, assumptions made and
limitations imposed. See Item 1015(b)(5) of Regulation M-A.
Provide
a summary of the instructions given to the advisor by the Board
regarding the preparation of its report.
21. Provide a statement indicating whether the advisor recommended
the amount of consideration to be paid in the going private
transaction.
22. We note your reference on page 20 to non-public financial
information furnished by management Keller & Company. Disclose
all
of the financial forecasts that management provided and any
projections that management helped the advisor to develop. In
addition, disclose and quantify (to the extent possible) all
material
assumptions underlying the forecasts.
Public Company Analysis, page 21
23. We note you identify nine selected Midwest thrift
institutions.
Please separately identify the Ohio thrifts.
Stock Splits Proposal - Summary and Structure, page 24
24. Refer to the statement on page 26 that the Board reserves the
"absolute authority" not to implement the Stock Splits even if
they
are approved by shareholders. Summarizer the circumstances under
which the Board might so decide.
Background of the Stock Splits, page 26
25. Expand your discussion of the background of the reverse stock
split to describe all meetings, negotiations, contacts, etc.,
among
board members, executive officers and management. Identify the
participants in and initiators of each negotiation or contact, and
revise your discussion of those meetings to provide the reader
with
more of a sense of the content of those discussions. Please
revise
to address the following examples, which are not intended to be an
exhaustive:
* indicate when the specific dates that the Board and management
began discussion with counsel;
* disclose who first proposed the possibility of going private and
when this occurred;
* disclose when and how the reverse stock split ratio was
determined;
* address how you arrived at the $23 per share cash-out price. It
appears that the price was suggested by your fairness advisor; and
26. Explain how the Board arrived at the Repurchase Price. We know
that you`ve explained it`s a premium to current and historical
trading prices, but so would $50 per share be. How did the Board
arrive at this per share value?
Material Federal Income Tax Consequences of the Merger, page 30
27. Expand your disclosure to discuss the tax consequences to the
company. See Item 1013(d) of Regulation M-A.
Incorporation of Certain Documents by Reference, page 47
28. We note that you have incorporated by reference the
information
required by Item 13 of Schedule 14A. Please note that the
information required by Item 13(a) may be incorporated by
reference
to the same extent as would be permitted by Form S-3 pursuant to
Instruction E to Schedule 14A. It does not appear that your
public
float is sufficient and, therefore, you are probably not eligible
to
incorporate by reference pursuant to Item 13(b)(1). Please advise
us
if you intend to rely upon Item 13(b)(2) to incorporate the
required
information by reference. If so, confirm that you will deliver
the
information incorporated by reference in the information statement
to
shareholders at the same time as you send them the information
statement. Alternatively, revise the Schedule to include the
information required by Item 13(a).
Closing Information
Please revise the proxy statement and Schedule 13E-3 in
response to these comments. You may wish to provide us with
marked
copies of the amendments to expedite our review. You should
include
a letter responding to each comment, noting the location of the
change in the revised materials made in response to comments or
otherwise. If you believe a comment raised in this letter is
inappropriate or feel that no change is required, indicate your
position and the basis for that position in your response letter.
In
the absence of such response, we assume you will comply with staff
comments. We may have additional comments based upon our receipt
of
the revised materials and your response 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 information investors require.
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 in the filings reviewed by the staff 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.
Direct any questions to me at (202) 942-1976. You may also
contact me via facsimile at (202) 942-9638 or email at
PressmanM@sec.gov. Please send all correspondence to us at the
following ZIP code: 20549-0303.
Sincerely,
Michael Pressman
Special Counsel
Office of Mergers and
Acquisitions
March 31, 2005
Page 7
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0405
DIVISION OF
CORPORATION FINANCE