April 3, 2006
Mark P. Shuman
Branch Chief -- Legal
United States Securities and Exchange Commission
100 F Street NE
Room 4561
Washington, D.C. 20549
Re: TechTeam Global, Inc.
Definitive Additional Soliciting Materials filed
March 8, 2006 By TechTeam Global Inc.
File No. 0-16284
Dear Mr. Shuman:
We are in receipt of your letter, dated March 9, 2006, setting forth
the comments of the staff (the "Staff") of the Division of Corporation Finance
of the Securities and Exchange Commission (the "Commission") with respect to the
above-referenced filing of TechTeam Global, Inc. ("TechTeam," the "Company" or
"we"). We understand the seriousness of the Staff's comments, and we appreciate
the opportunity to respond to them. On behalf of the Company, we provide the
following responses to the Staff's comments:
1. In response to the Staff's first comment, we respectfully advise the
Staff that we now fully understand the applicability of the requirements under
Rule 14a-12(a)(1). We will include, in any future definitive additional
soliciting materials, the legend advising shareholders, among other things, to
read the proxy statement when it is available.
2. In response to the Staff's second comment, we respectfully advise
the Staff that we understand the importance of providing a reasonable factual
basis for allegations made with respect to any party. Initially, we note that
Costa Brava Partnership III, LP ("Costa Brava") has been involved in litigation
with other companies in which it holds an equity position. We refer the Staff to
the Schedule 13-D/A filed by Costa Brava with respect to its holdings in Telos
Corporation dated October 18, 2005, which has as an exhibit thereto a complaint
filed by Costa Brava against Telos Corporation. In Costa Brava's Schedule 13-D/A
filed by Costa Brava with respect to its holdings in TechTeam on December 20,
2005, there is included a letter (the "Letter") addressed to our Board of
Directors that specifically references the litigation tactics used by Costa
Brava in relation to Telos Corporation.
Moreover, we believe the Letter included as part of Costa Brava's
Schedule 13-D/A filed on December 20, 2005 provides evidence of the disruptive
tactics of Costa Brava. The language
Mr. Mark P. Shuman
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April 3, 2006
used in the Letter "appears to be intended" to disrupt the Company's activities.
Specifically, we consider the Letter to be accusatory and inflammatory. Costa
Brava uses language like "...each of you (the Company's Directors) are
attempting to maliciously deceive Costa Brava;" "We are both under-whelmed and
appalled by your choice of CEO;" "... you have exposed the odious underbelly of
the executive recruitment business;" "There is a simple definition for behavior
such as this -- 'CRONYISM'"; "These pages [Costa Brava's Schedule 13-D filing in
regard to Telos] print a grim legal future for Directors who breach their
duties." Accordingly, we believe that this Letter, as well as subsequent
communication received by us from Costa Brava, provide support for the statement
that Costa Brava engages in disruptive tactics.
With respect to the statement in our press release that "Costa Brava's
recent history of litigation and disruptive tactics appear to be intended to
produce quick returns", we note that in Costa Brava's Schedule 13-D/A filed on
December 20, 2005, they refer to unlocking the value of TechTeam. In particular,
they reference that our government sector business, if sold, would be worth "at
least $45 million." We also have had conversations with Costa Brava in which
they have stated that we should sell this business in the short term, despite
our announced longer term strategic objectives for the government sector
business.
Further, our financial advisor, Thomas Rooney of Chesapeake Group,
Inc., submitted a report to TechTeam's Board of Directors on December 6, 2005,
in which he made the following points:
- True activist hedge funds are those that focus exclusively or
predominately on activist situations and are structured to
deal with the issue of "illiquidity."
- In most cases the hedge fund is under-water and is simply
pursuing an activist path to get back to their cost basis as
quickly as possible (get me even, get me out!).
- These funds are not structured to be activists (read: long
term investors), they are not "paid" to be long term investors
(if I want to invest in mutual funds at a significantly lower
cost!) and their skill sets are around trading (in contrast to
PE [private equity]).
- BEWARE: Hedge funds are the investor vehicle of choice today
and going forward but short term performance not the long term
interest of the corporation is their focus.
Mr. Rooney also informed our Board of Directors that he had received
unsolicited calls from private equity groups inquiring as to the Company's
interest in potentially selling to a private equity group. He indicated that
these unsolicited calls were unusual. In one instance, the private equity firm
indicated that it had received a call from Costa Brava inquiring as to such
private equity firm's interest in potentially buying the Company.
In the Staff's comment letter, the Staff states that we should
"expressly characterize these allegations as your belief." We note that our
Chairman, Mr. Cooper, did couch subjectively the statement made in our press
release by noting "we are concerned" that Costa Brava was acting in a fashion
"intended to produce quick returns." However, in our future filings, we will
redouble
Mr. Mark P. Shuman
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April 3, 2006
our efforts to make certain that we characterize any allegations as our
belief and provide a reasonable factual foundation for them.
Further, as requested by the Staff, we acknowledge that:
- The Company is responsible for the adequacy and accuracy of
our disclosures in its filings;
- Staff comments or changes to disclosure in response to Staff
comments do not foreclose the Commission from taking any
action with respect to the filing; and
- The Company may not assert Staff comments as a defense in any
proceeding initiate by the Commission or any person under the
federal securities laws of the United States.
Should you require any further information regarding the foregoing,
please contact me, at (248) 213-3645, or our outside counsel, Todd Pfister, of
Foley & Lardner LLP, at (312) 832-4579.
Sincerely,
/s/ Michael A. Sosin
Michael A. Sosin
Vice President, General Counsel,
And Secretary
cc: William C. Brown
Todd Pfister, Foley & Lardner LLP