UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE `
`
March 23, 2020
D. Hunt Hawkins
Chief Executive Officer
Stein Mart, Inc.
1200 Riverplace Blvd.
Jacksonville, FL 32207
Re: Stein Mart, Inc.
PREM14A preliminary merger proxy statement on Schedule 14A
Filed on March 2, 2020 by Stein Mart, Inc.
File No. 000-20052
Schedule 13E-3
Filed on March 2, 2020 by Stein Mart, Inc., et al.
File No. 005-43686
Dear Mr. Hawkins:
We have reviewed the above-captioned filings, and have the following
comments. All
defined terms used herein have the same meaning as in the proxy statement filed
under cover of
Schedule 14A. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by amending your filings, by providing the
requested
information or by advising us when you will provide the requested response. If
you do not
believe our comments apply to your facts and circumstances, or do not believe
an amendment is
appropriate, please tell us why in your response.
After reviewing any amendment to your filings, and any information you
provide in
response to these comments, we may have additional comments.
Schedule 13E-3
General
1. We note that Kingswood Capital Opportunities Fund I GP, L.P. is the
general partner of
Kingswood Fund I and Kingswood Fund II and Kingswood Capital
Opportunities Fund
I-A, L.P. is a guarantor of certain of Kingswood's obligations in favor
of the Company
pursuant to section 4.12 of the merger agreement. Please advise us how
you determined
that Kingswood Capital Opportunities Fund I GP, L.P. and Kingswood
Capital
Opportunities Fund I-A, L.P. are not affiliates engaged in the Rule
13e-3 transaction that
should be identified as filing persons for purposes of Schedule 13E-3.
D. Hunt Hawkins
c/o Stein Mart, Inc.
March 23, 2020
Page | 2
2. Please refer to the paragraph in which disclaimers are introduced
whereby the persons
filing the Schedule 13E-3 disclaim responsibility for the accuracy of
information
supplied by any other filing person. Use of these disclaimers is
inconsistent with the
required attestation that appears at the outset of the signature page in
Rule 13e-100, and
otherwise operates as an implied disclaimer for the entire filing except
for the discrete
portion of the disclosure specifically provided by each filing person.
Please revise.
Item 8
3. Page 31 of the proxy statement, in the "Background of the Merger"
section states: "After
concluding the proposed sale was the best option available, each of the
directors
expressed his or her opinion that the better choice would be to waive
the requirement for
majority of the disinterested shareholder approval if that was necessary
in order to effect
a sale the Company." Notwithstanding this disclosure, please advise us,
with a view
towards revised disclosure, how compliance with Item 1014(c) of
Regulation M-A has
been effectuated. Please note that an affirmative response to this
disclosure requirement
must be provided, even if the response is in the negative. Refer to
General Instruction E
of Schedule 13E-3. In that regard, we note that the "Background of the
Merger" section
of the proxy statement is not incorporated by reference into Item 8(c)
of the Schedule
13E-3.
Item 13
4. Financial information has been incorporated by reference from the proxy
statement,
which in turn incorporates financial data by reference from periodic
reports. Under
General Instruction F of Schedule 13E-3, an express reference must be
made to a
document that explicitly contains the required information. Under Item
16 of Schedule
13E-3 and corresponding Item 1016(a)(5) of Regulation M-A, the document
from which
the information has been so incorporated also must be filed as an
exhibit. The reference
to "a copy" in General Instruction F is only intended to mean the
substantive content of
information so incorporated as distinguished from the controlling
requirement to identify
the information so incorporated as an entry on the exhibit list.
Accordingly, please
revise the exhibit list.
Exhibit (a)(2)(i) Proxy Statement
5. The legend required by Rule 13e-3(e)(1)(iii) is required to appear on
the outside front
cover page of the disclosure document that must be distributed to
unaffiliated security
holders under the federal securities laws. As the Shareholder Letter is
not a required
disclosure under the federal securities laws, please revise the
submission to ensure that
the legend appears on the outside front cover page of a
federally-mandated disclosure
document.
6. The first page of the proxy statement, as defined in Rule 14a-1(g) and
distinguished
D. Hunt Hawkins
c/o Stein Mart, Inc.
March 23, 2020
Page | 3
from the Notice of Special Meeting of Shareholders and the Shareholder
Letter must
be marked as preliminary. Given that a preliminary proxy statement may
be lawfully
disseminated under Rule 14a-3(a), please revise the proxy statement to
include the
disclosure required by Rule 14a-6(e)(1).
Summary Term Sheet, pages 1-9
7. We note the disclosure on page 3 indicating that the completion of the
merger is subject
to the satisfaction of the condition that the Company have at least 35%
of excess
availability under its credit agreement at the time of closing. To help
shareholders
assess the likelihood of such condition being satisfied, please indicate
(in the appropriate
section of the proxy statement) the dollar equivalent of such 35% excess
availability and
the current excess availability under such credit agreement.
Background of the Merger, pages 17-33
8. Please refer to the following statement on page 26: "Representatives
from Kingsdale
Advisors, a proxy advisory firm, briefed the Special Committee on the
Company's
shareholder base, the potential difficulty of obtaining the approval of
the merger by a
majority of the disinterested shareholders and the general composition
of the Company's
shareholder base." Please revise to clarify the potential difficulties
that Kingsdale
Advisors identified in obtaining the approval of the merger by a
majority of the
Company's disinterested shareholders.
9. We note multiple references to "Jay Stein and his affiliates and related
parties." With a
view towards disclosure, please clarify for us which persons are being
referred to as Mr.
Stein's "affiliates and related parties" and whether any of such
affiliates or related
parties other than the Rollover Investor hold shares of the Company's
common stock.
Certain Effects of the Merger, pages 54-55
10. Given that the Company, as a privately-held entity, will be relieved of
many of the
expenses, burdens and constraints imposed on companies that are subject
to the public
reporting requirements under the federal securities laws of the United
States, including
the Exchange Act and Sarbanes-Oxley Act of 2002, please revise to
quantify the annual
savings that are expected to be received and identify the constituency
that will become
the beneficiary of such savings. See Item 1013(d) of Regulation M-A and
corresponding Instruction 2 thereto.
11. We note that the Company suffered net operating losses in the fiscal
year ended
February 3, 2018, as well as the 39 weeks ended November 2, 2019 and
November 3,
2018. To the extent net operating losses exist, or are anticipated to
exist before the date
a definitive proxy statement is filed, please specify the constituency
expected to become
the beneficiary of the Company's and/or its successor's future use of
any net operating
D. Hunt Hawkins
c/o Stein Mart, Inc.
March 23, 2020
Page | 4
loss carryforwards. Please quantify that benefit to the extent
practicable. See Instruction
2 to Item 1013(d) of Regulation M-A.
Projected Financial Information, page 56
12. Notwithstanding the disclosure that the "prospective financial
information does not take
into account any circumstances or events occurring after the date it
was prepared,"
please advise us whether any plans exist to further qualify these
projections. See Rule
13e-3(b)(1)(ii).
Merger Proceeds in Respect of Company Equity-Based Awards, pages 65-69
13. The disclosures on pages 68 and 69 under the title "Intent to Vote in
Favor of the
Merger" indicates that the directors and executive officers intend to
vote the shares
"owned directly by them" and sets forth the aggregate number of shares
"directly
owned" by them. Item 1012(d) of Regulation M-A, however, requires
disclosure of
"how each person currently intends to vote subject securities,
including any securities
[for which] the person has proxy authority." Please revise to clarify
whether such
directors and executive officers indirectly own and/or have authority
to vote additional
shares and, if so, their intention with respect to the voting of those
shares.
Voting Agreement, pages 69-70
14. Please revise this section to clarify whether the voting agreement
requires the Rollover
Investor to vote in favor of the advisory vote on merger-related
executive compensation
and the adjournment proposal, in addition to the merger agreement. If
so, please also
revise the other relevant disclosures throughout proxy statement,
including those on
pages 126 through 128.
Common Stock Transaction Information, pages 91-93
15. We note that Jay Stein acquired 234,197 shares of Company common stock
pursuant to
a private settlement agreement on January 29, 2020, one day before the
merger
agreement was executed. Please provide us with a legal analysis that
explains why this
purchase was not treated as the first in a series as described within
Rule 13e-3(a)(3) and
therefore consummated in compliance with Rule 13e-3. See Rule
13e-3(a)(3)(i)(A).
The Merger Agreement, pages 100-125
16. Please refer to the following statement on page 100: "Factual
disclosures about the
Company contained in this Proxy Statement or in the Company's public
reports filed
with the SEC may supplement, update or modify the factual disclosures
about the
Company contained in the merger agreement and described in this
summary." We note,
however, that the merger agreement was filed as Appendix A to the proxy
statement. As
D. Hunt Hawkins
c/o Stein Mart, Inc.
March 23, 2020
Page | 5
such, please revise such disclosure to remove any implication that the
merger agreement
and the summary thereof do not constitute public disclosure. Please
make conforming
changes as necessary, including with respect to the reference to
representations and
warranties in the same paragraph. See Release No. 34-51283 (March 1,
2005).
17. Please refer to the following statement on page 103: "[T]he Company's
representations
and warranties in the merger agreement may not be relied upon by
persons other than
the parties thereto as characterizations of actual facts or
circumstances as of the date of
the merger agreement or as of any other date, nor may you rely upon
them in making the
decision to approve and authorize the merger agreement and the
transactions
contemplated by the merger agreement." Advise us, with a view toward
revised
disclosure, of the legal basis for the apparent belief that such
cautionary language is not
inconsistent with the Commission position expressed in Release No.
34-51283 (March
1, 2005). To the extent additional material facts exist that are made
known to the
Company, the Commission position expressed in this release made clear
that an issuer
has an obligation to amend statements contradicting or qualifying the
disclosure made
within an original representation.
18. Please refer to the following statement on page 103: "Moreover,
information
concerning the subject matter of the representations and warranties of
the Company may
change after the date of the merger agreement, which subsequent
information may or
may not be reflected fully in the Company's public disclosures." A
substantially similar
statement also appears on page 100. Please advise us of the legal basis
upon which the
filing parties have apparently relied to conclude that material changes
concerning the
subject matter of the representations and warranties may lawfully
remain undisclosed.
Appendix B Opinion of PJ Solomon Securities, LLC
19. We note the following statement: "This letter may not be reproduced,
summarized,
described, referred to or used for any other purpose without our prior
written consent,
except to the extent provided in our engagement letter dated January
26, 2018 (as
amended)." Please include disclosure in the associated proxy statement
and/or these
appendices to remove the implication that security holders are
precluded from being
eligible to rely upon these disclosures by affirmatively stating, if
true, that PJ Solomon
consents to the inclusion of such materials in these filings and
security holders may rely
upon such information without limitation. Alternatively, provide the
disclosures
recommended by the Division of Corporation Finance accessible via the
following link
as being necessary to clarify security holders' right to rely on such
materials.
http://www.sec.gov/divisions/corpfin/guidance/ci111400ex_regm-a.htm
In addition, please ensure that any changes also explicitly address the
legends appearing
with the PJ Solomon materials filed as exhibits to the Schedule 13E-3.
20. The disclosure on page B-3 indicates that PJ Solomon "will receive a
fee for our
services, a substantial portion of which is contingent upon the closing
of the Merger and
D. Hunt Hawkins
c/o Stein Mart, Inc.
March 23, 2020
Page | 6
a portion of which is payable upon the delivery of this letter." Please
disclose in the
proxy statement the extent to which the approximate $2.6 million
compensation is
contingent upon the successful completion of the transaction, and
quantify that amount
to the extent practicable. Refer to Item 1015(b)(4) of Regulation M-A
and
corresponding C&DI 217.01 publicly available on our website.
* * *
We remind you that the filing persons are responsible for the accuracy
and adequacy of
their disclosures, notwithstanding any review, comments, action or absence of
action by the staff.
Please direct any questions to Valian Afshar, Special Counsel, at (202)
551-8729, or me,
at (202) 551-3266.
Sincerely,
/s/ Nicholas P.
Panos
Nicholas P. Panos
Senior Special
Counsel
Office of Mergers
and Acquisitions
cc: John J. Wolfel, Esq.