SHUMAKER, LOOP & KENDRICK, LLP
NORTH COURTHOUSE SQUARE
1000 JACKSON OTHER OFFICE LOCATIONS:
David J. Mack TOLEDO, OHIO 43624-1573 CHARLOTTE
(419) 321-1396 TELEPHONE (419) 241-9000 COLUMBUS
dmack@slk-law.com FAX (419) 241-6894 TAMPA
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December 16, 2005
VIA EDGAR SUBMISSION AND E-MAIL
Mr. Jeffrey B. Werbitt
Attorney Advisor
United States Securities and Exchange Commission
Division of Corporation Finance
Office of Mergers and Acquisitions
100 F Street, N.E.
Washington, D.C. 20549
RE: MERCHANTS BANCORP, INC.
Schedule 13E-3/A -- Amendment No 2 Preliminary Proxy Statement on
Filed December 15, 2005 Schedule 14A
SEC File No. 5-80876 December 15, 2005
File No. 0-49771
Dear Mr. Werbitt:
On behalf of Merchants Bancorp, Inc. and in response to your comment
letters dated November 22, 2005 and December 6, 2005, respectively, this
correspondence is being provided in connection with the filing of revised drafts
of the above referenced Schedule 13E-3/A and Preliminary Proxy Statement on
Schedule 14A. The following responses are numbered in accordance with the
November 22, 2005 comment letter.
Summary Term Sheet
1. A brief description of when a transfer would not result in a greater number
of record holders is now provided in the referenced section of the Preliminary
Proxy Statement.
Amendment to Articles of Incorporation
2. Additional language more prominently disclosing the 20 year term of the
Series A Preferred Stock is provided in the Notice to Shareholders of the
Special Meeting, the Cover Page of the
Mr. Jeffrey Werbitt
December 16, 2005
Page 2
Preliminary Proxy Statement, and in other relevant sections of the
Preliminary Proxy Statement. Additional language explaining why the Board
chose to include the 20 year term as part of the Series A Preferred Stock
is now provided in the Preliminary Proxy Statement.
3. Additional language more prominently disclosing the callable nature of the
Series A Preferred Stock is provided in the Notice to Shareholders of the
Special Meeting, the Cover Page of the Preliminary Proxy Statement, and in
other relevant sections of the Preliminary Proxy Statement.
Accounting Treatment
4. Language describing the accounting treatment was included in the
Preliminary Proxy Statement filed on November 2, 2005.
Background of the Merger Proposal
5. Language disclosing the date that the Company retained the services of
Austin Associates to assist with the preparation of its strategic plan,
along with a materially complete summary of the strategic plan as it
relates to the going-private transaction, is now provided in the referenced
section of the Preliminary Proxy Statement. In addition, and without
agreeing with your legal analysis, a complete draft of the Company's
strategic has been filed as Exhibit 99.6 to the Company's Schedule 13E-3/A,
Amendment No 2.
6. Language disclosing the date that the Company retained the services of
Austin Associates to analyze the financial impact and feasibility of
going-private is now provided in the referenced section of the Preliminary
Proxy Statement. Except as otherwise indicated therein, the Company took no
action with respect to going-private between the time it engaged Austin
Associates to develop the strategic plan and the time the Board voted to
engage Austin Associates to conduct the feasibility analysis.
7. The most common reasons for going-private, as presented to the Company's
Board of Directors on February 23, 2005, are now provided in the referenced
section of the Preliminary Proxy Statement.
8. The fact that the Company contacted no other financial advisor in
connection with the going-private transaction, along with its rationale
therefore, is now provided in the referenced section of the Preliminary
Proxy Statement.
Negative factors for shareholders receiving Series A Preferred Shares in the
Merger
9. Language clarifying the extent of the restrictions on the transfer of
shares of Series A Preferred Stock, and reconciling it with earlier
disclosures, is now provided in the referenced section of the Preliminary
Proxy Statement.
10. Language discussing the callability and finite term of the Series A
Preferred Stock as negative factors to shareholders electing to receive
shares of Series A Preferred Stock is now provided in the referenced
section of the Preliminary Proxy Statement.
Mr. Jeffrey Werbitt
December 16, 2005
Page 3
Recommendation of our Board of Directors
11. Language indicating that the Board specifically adopted the findings of the
Austin Associates in arriving at its determination that the transaction is
substantively fair is now provided in the referenced section of the
Preliminary Proxy Statement.
Source of Funds and Expenses
12. The discussion regarding financing has been modified to: (1) name the party
supplying the line of credit; (2) indicate that financing has not been
finalized; and (3) indicate that, in the event the Company fails to secure
the line of credit, it will finance the transaction through its internal
liquidity and capital base, which it is well positioned to do. The Company
has no reason to suspect that financing will not be finalized prior to the
close of the transaction.
The following responses are numbered in accordance with the December 6,
2005 comment letter.
Amendment to Articles of Incorporation
1. The relevant sections of the document have been revised to clarify the
consideration to be received by holders of Series A Preferred Stock: (1)
upon the expiration of the 20 year term; (2) in the event the stock is
called other than in connection with a change in control transaction; and
(3) in the event the stock is called in connection with a change in control
transaction.
Background of the Merger Proposal
2. Without agreeing with your legal analysis, a complete draft of the
Company's strategic has been filed as Exhibit 99.6 to the Company's
Schedule 13E-3/A, Amendment No 2.
Recommendation of our Board of Directors
3. Language indicating that the Board specifically adopted the findings of the
Austin Associates in arriving at its determination that the transaction is
substantively fair is now provided in the referenced section of the
Preliminary Proxy Statement.
If you have any questions or require additional information with respect to
this filing, please call me directly at 419.321.1396.
Sincerely,
/s/ David J. Mack
David J. Mack
Mr. Jeffrey Werbitt
December 16, 2005
Page 4
cc: Paul W. Pence, Jr., President
Merchants Bancorp, Inc.
Rick Maroney, Principal
Austin Associates, LLC
Thomas C. Blank, Esq.
Shumaker, Loop & Kendrick, LLP
James Brandt, Partner
Deloitte & Touche, LLP