United States securities and exchange commission logo
March 4, 2022
Charles R. Kraus
Senior Vice President, General Counsel and Corporate Secretary
DIRTT Environmental Solutions Ltd.
7303 30th Street SE
Calgary, Alberta
T2C 1N6
Re: DIRTT Environmental
Solutions Ltd.
Preliminary Proxy
Statement on Schedule 14A
Filed February 25,
2022
File No. 1-39061
Dear Mr. Kraus:
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 filed February 25, 2022
Background to this Solicitation, page vi
1. We note that this
section contains many allegations regarding 22NW s failure to comply
with Canadian
securities laws including, without limitation, the following disclosure:
We also believe
that this chronology illustrates 22NW s refusal to cooperate or
engage in
meaningful discussions with the Board and what appears to be breaches of
Canadian securities
laws.
Since November
30, 2020, it appears that 22NW and 726 have been in breach of the
take-over bid
regime under NI 62-104 with respect to 63 instances of Common Share
purchases.
On November 4,
2021, Messrs. O Meara and Krause and Ms. MacEachern had a
call with Mr. Noll.
On November 4, 2021 and November 5, 2021, Messrs. O Meara
and Krause and Ms.
MacEachern also had calls with Messrs. English, Broderick and
Charles R. Kraus
FirstName LastNameCharles R. Kraus
DIRTT Environmental Solutions Ltd.
Comapany
March NameDIRTT Environmental Solutions Ltd.
4, 2022
March2 4, 2022 Page 2
Page
FirstName LastName
Mitchell. The calls were to discuss 2021 third quarter financial
results. Each of
Messrs. Noll and English, Broderick and Mitchell raised similar
concerns on their
respective calls, surrounding (i) concern with the lack of
insider/Board ownership of
Common Shares, and (ii) an opinion that the Company should
disclose what is in the
pipeline for the Company.
On January 20, 2022, the Company announced that it believed
it should file an
application with the ASC against 22NW and 726 for breaching
take-over bid and
early warning reporting provisions under applicable Canadian
securities laws, in
order to protect minority shareholders and ensure that all
shareholders are provided
with full and accurate information.
Please provide support for the suggestion that 22NW has been acting in
concert with 726
and 726 s principal, Shaun Noll. In addition, it is our
understanding that on January 20,
2022, the Company did in fact file the above referenced application
with the ASC against
22NW, that a hearing before a panel of the ASC was scheduled for March
3, 2022, and
that the ASC s ruling is expected to be issued today, March 4, 2022.
Please revise the
background section to confirm, if true, that such application was
filed and that a hearing
was held. Summarize the relief sought in the application and the
allegations claimed.
Please also supplement the disclosure to disclose the outcome of such
hearing including
the panel s finding with respect to the various allegations claimed
in this section.
2. Disclosure on page xi indicates that [a]lso on November 5, 2021,
Mr. English
participated in a telephone call with Mr. Lillibridge and Denise E.
Karkkainen, the Chair
of the Nominating and Governance Committee, to discuss Mr. English s
desire to be
appointed to the Board on an immediate basis, and his unwillingness to
sign a standstill
agreement. It is our understanding that Mr. English had indicated
that he would be
willing to become subject to standstill restrictions as part of a
negotiated settlement
agreement and that the proposal and term sheet delivered to the
Company in early
December provided that the proposed cooperation agreement would
include customary
standstill provisions. Please revise or advise.
3. Disclosure on pages xi and xii includes the following statements:
At 10:15 a.m. MST, a Board meeting was held to discuss the
implications if Mr.
English and 726 were not supportive of the Convertible Debenture
Financing based
on the 9:00 a.m. call. Ultimately, the Board approved the
Convertible Debenture
Financing.
At 2:07 p.m. MST, Mr. Broderick emailed Mr. Krause, copying
Messrs. English and
Mitchell, expressing 22NW s opposition for the Convertible
Debenture Financing,
which again had not been announced.
At 2:10 p.m. MST, Mr. English also contacted Mr. O Meara
separately to express
22NW s opposition to the unannounced financing.
Such disclosure suggests that 22NW was opposed to the Convertible
Debenture Financing
Charles R. Kraus
DIRTT Environmental Solutions Ltd.
March 4, 2022
Page 3
specifically. It is our understanding that 22NW had no knowledge of
such deal at the time
and that 22NW expressed a general opposition to any type of dilutive
transaction that did
not involve 22NW in the process. Please revise or advise.
Certain Effects of the 22NW Solicitation, page xv
4. Please disclose the Board s intent with respect to issuing the
referenced endorsement
before the date of appointment or election should a change of
control occur at the
annual and special meeting of shareholders scheduled to be held on
April 26, 2022.
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.
FirstName LastNameCharles R. Kraus Sincerely,
Comapany NameDIRTT Environmental Solutions Ltd.
Division of
Corporation Finance
March 4, 2022 Page 3 Office of Mergers
& Acquisitions
FirstName LastName