[FFD FINANCIAL CORPORATION LETTERHEAD]
July 14, 2005
Ms. Abby Adams, Special Counsel
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
Re: FFD Financial Corporation
Schedule 13E-3
Preliminary Proxy Statement on Schedule 14A
Filed May 24, 2005
Dear Ms. Adams:
Set forth below are the responses of FFD Financial Corporation ("FFD") to
the comment letter of the staff of the Securities and Exchange Commission (the
"Staff") dated June 20, 2005, with respect to the captioned Schedule 13E-3 and
Preliminary Proxy Statement on Schedule 14A (the "Proxy Statement"). The
responses below are keyed numerically to the comments in the Staff's letter.
Please note that the page numbers of the Proxy Statement may have changed from
the preliminary Proxy Statement filed on March 3, 2005 and the page references
in this letter correspond to the revised Proxy Statement filed on the date
hereof.
COMMENTS
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Preliminary Proxy Statement on Schedule 14A
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1. For purposes of Rule 13e-3(a)(3)(ii)(A), we will count the number of
record holders in the manner required by Rule 12g5-1.
2. We have revised the Proxy Statement throughout to reflect the anticipated
increase in beneficial ownership of approximately 7% for each shareholder
who is not cashed out in the reverse and forward stock splits (the "Stock
Splits").
3. Under Ohio law, a reverse split is accomplished through an amendment to
the articles of incorporation, which requires shareholder approval.
Ms. Abby Adams, Special Counsel
July 14, 2005
Page 2
Forward stock splits do not require shareholder approval under Ohio law.
Because we have chosen to effect both the reverse and the forward stock
splits through amendments to our articles, shareholder approval of both
amendments is required. The reasons we decided to effect the forward stock
split through an articles amendment, even though it was not required, and
why we have not unbundled the proposals are set forth below.
The September 2004 Fifth Supplement to the Manual of Publicly Available
Telephone Interpretations states that unbundling is generally required
when "state law, securities exchange listing standards, or the company's
charter or bylaws would require shareholder approval of the proposed
changes if they were presented on their own." Pursuant to Section 1701.33
of the Ohio Revised Code, the directors of an Ohio corporation may declare
a distribution of shares of the corporation and this is commonly done in
the form of a forward stock split. In applying the above standard, under
Ohio law, forward stock splits would not generally be "presented on their
own" to shareholders because shareholder approval is not required.
Although amendments to articles of incorporation require shareholder
approval under Ohio law, a forward stock split may be accomplished by
director resolution only and without an amendment to the articles.
Although not required, we chose to use one proposal with two articles
amendments for several reasons. The Board feels that the forward split
amendment provides a clear record of the forward split that would be
evidenced in the records of the Ohio Secretary of State, as opposed to
only a resolution of the Board contained in FFD's records. An amendment
also avoids any shareholder confusion as to the effective time of the
forward stock split by basing the forward split's effectiveness on the
acceptance of the amendment by the Ohio Secretary of State instead of it
being declared by the board at a later time. Further, we believe that the
use of an amendment gives our shareholders certainty regarding the
occurrence of the forward split because reverse split cannot be effected
without the subsequent forward split if both splits are combined into one
proposal.
Second, the operative transaction and the one that will result in FFD
falling below 300 record holders is the reverse stock split. The forward
split itself has no impact on our ability to deregister our common shares.
The sole purpose of the forward split is to return the trading price of
our shares after the reverse split to a price per share similar to the
price per share before the reverse split to facilitate the marketability
of our shares after the Stock Splits. In the September 2004 Supplement,
the Staff took the position that unbundling is not required when an
acquired company's shareholders would be voting on bylaw amendments in a
merger that are the same or similar to those already contained in the
acquired company's charter or bylaws. In that situation, there was no need
to approve the similar amendments because nothing new would affect the
Ms. Abby Adams, Special Counsel
July 14, 2005
Page 3
shareholders. The same is true here. The purpose of the forward split is
solely to return our shareholders to a comparable situation after the
forward split regarding the number of shares held by remaining
shareholders and the price per share as before the reverse split.
Cautionary Notice Regarding Forward-Looking Statements, page 7
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4. In the Cautionary Notice Regarding Forward Looking Statements on page 7 we
do not state that we have no duty to update forward looking statements.
However, we have revised the notice to clarify FFD's duty to update the
document to reflect a material change in information previously disclosed,
as required by Rule 13e-3(d)(2) and (e)(2).
Special Factors, page 9
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Effects on Continuing Holders, page 12
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5. On page 14 of the Proxy Statement we have revised the document to inform
security holders what financial or other information we plan to
disseminate to security holders after the reverse split.
Effects on FFD, page 13
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6. On page 14 the Proxy Statement we have revised the section "Effects on
FFD" to clarify when termination of registration and the accompanying
requirements cease in relation to our filing of a Form 15.
Fairness of the Stock Splits, page 16
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7. On page 17 and throughout the Proxy Statement we have revised the
discussion of the fairness of the Stock Splits to clarify that the Board
determined that the Stock Splits are fair to both Cashed Out Holders and
Continuing Holders, which are the only two groups of unaffiliated
shareholders.
8. On pages 18 and 19 of the Proxy Statement we have revised the Proxy
Statement to address historical market prices and prior stock purchases by
FFD.
9. On page 19 of the Proxy Statement we have revised the discussion to
clarify that the Board assigned no weight to FFD's liquidation value
because it believes that liquidation value would be less than the trading
price of the FFD shares and we have revised the Proxy Statement to clarify
that the Board assigned no weight to FFD's going concern value. Other than
as set forth in the Proxy Statement, the Board has no other bases for its
beliefs regarding liquidation value and going concern value and we
respectfully request that the Staff accept this disclosure, as revised.
Ms. Abby Adams, Special Counsel
July 14, 2005
Page 4
Background of the Stock Splits, page 21
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10. On pages 23 and 24 of the Proxy Statement we revised the discussion to
clarify when the Board first considered going private and how the Board
and management first became aware of this option.
11. On page 43 of the Proxy Statement we have added disclosure regarding the
specific repurchases made during the periods indicated.
Rule 13e-3 and Question #4 of Exchange Act Release No. 17719 provide that
a transaction will be deemed to be part of a series of transactions
involving a Rule 13e-3 transaction if it is effected as a part, or in
furtherance, of a series of actions which, taken together, have a
reasonable likelihood or a purpose of resulting in a going private
transaction. For the reasons discussed below, the repurchases shown had
neither the likelihood nor purposes of resulting in a going private
transaction.
The vast majority of shares were repurchased in the open market as part of
a previously announced, ongoing repurchase program. In these repurchases,
conducted through brokers, we did not know the identity and holdings of
the beneficial owner of the shares we were purchasing. A few repurchases
were from employees or other shareholders who wished to sell shares and
approached us to see if we were interested in purchasing the shares. These
repurchases had no likelihood, or possibility, of resulting in a going
private transaction.
During the Board's initial consideration of the option of going private in
late 2004 and early 2005, we continued to repurchase shares under a
previously announced, ongoing repurchase program as a part of our capital
management strategy. During that time, the Board was only beginning to
consider going private and was educating itself regarding the benefits,
the disadvantages and the process of going private. The repurchases that
were made during this time were made at market prices and were all
completed well in advance of the May 10, 2005 meeting at which the Board
established the cash out price for the Stock Splits. At a meeting on
January 11, 2005, the Board further discussed the possibility of going
private and, although further analysis and consideration remained to be
done before a fully-informed decision could be made, it began to appear to
be a strong possibility that the Board may approve a going private
transaction in the future. We suspended our repurchase program on January
11, 2005, pending the outcome of the going-private process, and we have
not repurchased any shares since that date.
12. On page 26 and throughout the Proxy Statement, we have revised to clarify
that Keller & Company, Inc. ("Keller") recommended to FFD the $19.00 cash
out price.
Ms. Abby Adams, Special Counsel
July 14, 2005
Page 5
Opinion of Keller & Company, page 30
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13. FFD's reasons for retaining Keller to deliver the fairness opinion and
recommend the cash out price are discussed in full on page 33 of the Proxy
Statement. As is set forth in the Proxy Statement, FFD retained Keller
based on its knowledge of Keller's experience and reputation in the
financial institutions industry and positive past experiences with Keller.
14. Keller has revised the concluding paragraph of its fairness opinion to
clarify that, in its opinion, the cash our price was fair, as of the date
of the opinion, to all of FFD's shareholders, including unaffiliated
shareholders who will be cashed out in the Stock Splits as well as
unaffiliated shareholders who will continue to hold FFD shares after the
Stock Splits.
15. All presentations by Keller to the Board have been described in the Proxy
Statement. The recommendation by Keller of the cash out price of $19.00
was included in the presentation by Keller to the Board summarized in the
section of the Proxy Statement entitled "Opinion of Keller & Company."
Keller provided two memorandums to the Board regarding his analyses of
$19.00 and $20.00 as potential cash out prices. We have filed copies of
these memorandums as exhibits to the Amendment No. 1 to our Schedule
13E-3.
Additional revisions, unrelated to your letter of June 20, 2005, have also
been made to the Proxy Statement. These changes are marked, along with your
requested changes, in the attached blacklined copies.
By this letter, FFD acknowledges that: (1) it is responsible for the
adequacy and accuracy of the disclosure in the filings; (2) 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 (3) FFD 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.
If you have any questions, please call Ms. Terri R. Abare at (513)
723-4001 or Mr. Jason L. Hodges at (513) 723-8590.
Very truly yours,
/s/ Trent B. Troyer
Trent B. Troyer
President and Chief Executive Officer
Ms. Abby Adams, Special Counsel
July 14, 2005
Page 6
Enclosures
cc: Terri R. Abare, Esq.
Jason L. Hodges, Esq.
Mr. Michael Keller