United States securities and exchange commission logo
December 30, 2021
Aron English
Portfolio Manager
22NW, LP
1455 NW Leary Way, Suite 400
Seattle, Washington 98107
Re: DIRTT Environmental
Solutions Ltd.
Preliminary Proxy
Statement on Schedule 14A filed by 22NW Fund, LP,
22NW, LP, 22NW Fund
GP, LLC, 22NW GP, Inc., Aron R. English et. al
Filed December 23,
2021
File No. 001-39061
Dear Mr. English:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments by providing the requested
information or advise us as
soon as possible when you will respond. If you do not believe our
comments apply to your facts
and circumstances, please tell us why in your response.
After reviewing your
response to these comments, we may have additional comments.
Preliminary Proxy Statement on Schedule 14A
Letter to Shareholders, page i
1. Disclosure indicates
that the enclosed WHITE proxy card may only be voted for our
nominees and does not
confer voting power with respect to any of the Company s director
nominees. Shareholders
who return the WHITE proxy card will only be able to vote for
our six nominees and
will not have the opportunity to vote for the two other seats up for
election at the
Meeting. Please expand the disclosure to advise shareholders that the
WHITE proxy card will
not permit shareholders to vote on any other proposals that may
be included on the
Company s proxy card.
Background to the Solicitation, page 6
2. Refer to the following
two statements found in this section:
Aron English
FirstName
22NW, LP LastNameAron English
Comapany30,
December Name22NW,
2021 LP
December
Page 2 30, 2021 Page 2
FirstName LastName
"On September 10, 2021, Mr. English had an in-person meeting
with Messrs.
O Meara and Lillibridge, in Jackson Hole, Wyoming, to discuss
22NW s governance
concerns with respect to the Company."
"On October 11, 2021, Mr. English participated in a telephone
call with Mr.
Lillibridge to reiterate his concerns about the Company s
governance."
It is our understanding that Mr. English s sole concern both at the
in-person meeting and
on the telephone call was his potential appointment to the Board as
opposed to his broader
concerns about the Company s governance. Please advise or
revise.
3. Refer to the following statement found in this section:
"On November 12, 2021, Mr. English participated in a telephone
call with Mr.
Lillibridge and Ms. Karkkainen to further discuss Mr. English
being appointed to the
Board. Mr. Lillibridge and Ms. Karkkainen indicated that the
Board declined to
appoint Mr. English."
It is our understanding that Mr. Lillibridge and Ms. Karkkainen
reiterated to Mr. English
on the telephone call that the Board would consider his candidacy in
February 2022
consistent with its customary review and selection process for
director nominees for
election at an annual general meeting, and Mr. Lillibridge and Ms.
Karkkainen offered to
send to Mr. English a form of standstill agreement that they believed
would be required by
the Company in connection with any appointment of Mr. English. Please
advise or revise.
4. Refer to the following statement found in this section:
On December 7, 2021, the Company issued a press release
announcing that, in
response to the Requisition, the Board had decided to call a
joint special and annual
meeting to be held on April 26, 2022, more than four months after
the latest date for
the meeting requested by 22NW in the Requestion, being January
21, 2022, and
alleged that 22NW did not propose any new business or strategy at
the Meeting
warranting an earlier special meeting.
It is our understanding that the latest date for the meeting requested
by 22NW was January
21, 2022. The date April 26, 2022 is approximately three months and
five days after
January 21, 2022, not more than four months after such date.
Please advise or revise.
5. Disclosure indicates that "Members of 22NW have continuously been
shareholders of
DIRTT since early 2020." Please revise to identify such "members."
Reasons for the Solicitation, page 11
6. Please expand the disclosure to explain what is meant by the phrase
"analyzing DIRTT
from various perspectives."
7. Disclosure refers to the term "cash burn" without definition or
reference to a metric in
order for a shareholder to properly ascertain the merits of 22NW's
claims. Please revise to
Aron English
FirstName
22NW, LP LastNameAron English
Comapany30,
December Name22NW,
2021 LP
December
Page 3 30, 2021 Page 3
FirstName LastName
define what is meant by term and why 22NW considers it "high."
8. Refer to the following two statements found on pages 11 and 12:
"In addition, DIRTT s revenue declined by 26% year over year,
while its competitors
and the industry at large have experienced a positive
inflection."
"Out of a group of nearly 40 public companies that we believe
are peers to DIRTT,
DIRTT is only one of two companies that does not disclose
quantitative metrics
around its pipeline. Shareholders have repeatedly requested
improved disclosure
surrounding these metrics from the Company s management and
these requests have
thus far been ignored."
Please revise the disclosure to provide support for the first
statement, identify the
referenced "competitors" and explain the meaning of "positive
inflection." We note that
the comparison of stock prices to the Russell 2000 and TSX SmallCap
Index in page 12
does not appear specific to the construction industry. Please also
revise the disclosure to
identify the 40 companies and provide support for your belief that
these are appropriate
peers for comparison to DIRTT.
9. Disclosure states that "[s]hareholders have repeatedly requested
improved disclosure
surrounding these metrics from the Company s management and these
requests have thus
far been ignored." Please revise to clarify if such shareholders
include any shareholders
other than 22NW and the Participants.
Certain Additional Information, page 30
10. Please advise us if the Participants anticipate distributing their
proxy statement before
the registrant distributes its proxy statement. Given that reliance on
Exchange Act Rule
14a-5(c) is impermissible at any time before the registrant
distributes its proxy statement,
the Participants will accept all legal risk in connection with
distributing the initial
definitive proxy statement without all required disclosures. Please
confirm the Participants
understand their obligation to subsequently provide any omitted
information in a
supplement in order to mitigate that risk to the extent it arises in
the context of this
solicitation.
General
11. We note disclosure on pages 1 and 2 that "[t]he Company has not yet
publicly disclosed
the Record Date or the number of Common Shares outstanding as of the
Record Date.
Once the Company publicly discloses such information, we intend to
supplement this
Proxy Statement with such information and file revised definitive
materials with the
SEC." With a view towards revised disclosure, please (1) confirm
whether 22NW will
disseminate proxy cards prior to the public disclosure of the Record
Date and (2) if 22NW
will so disseminate, advise us of 22NW's plans with respect to any
proxy cards received
from shareholders who ultimately were not entitled to notice of and to
vote at the Meeting.
Aron English
22NW, LP
December 30, 2021
Page 4
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 Perry Hindin at 202-551-3444.
Sincerely,
FirstName LastNameAron English
Division of
Corporation Finance
Comapany Name22NW, LP
Office of Mergers &
Acquisitions
December 30, 2021 Page 4
cc: Ryan Nebel
FirstName LastName