March 1, 2005
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0405
Attention: Julia E. Griffith
Special Counsel
Office of Mergers and Acquisitions
RE: UNIFAB INTERNATIONAL, INC.
SCHEDULE 13E-3
AMENDMENT NO. 3
FILE NO. 5-53539
Dear Ms. Griffith:
We are responding to comments received in a letter dated February 14,
2005 from you to the undersigned with respect to the filing listed above. For
your convenience, we have repeated in bold type the comments and requests for
additional information exactly as set forth in your letter. Our response follows
each question. Page numbers mentioned in our response refer to the Schedule
13E-3A filed with the Commission on the date hereof, a copy of which is enclosed
with this letter for your convenience.
1. WE NOTE YOUR RESPONSE TO PREVIOUS COMMENT 3. AS REQUESTED PREVIOUSLY,
PLEASE PROVIDE YOUR ANALYSIS AS TO WHY THE CONVERSION OF THE DEBENTURE
INTO COMMON STOCK IN 2004 SHOULD NOT BE CONSIDERED THE FIRST STEP IN
THE GOING PRIVATE TRANSACTION.
Response:
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Midland converted a portion of its debenture into common stock of
UNIFAB on September 30, 2004. On September 8, 2004, Midland amended its Schedule
13D to disclose that it had given UNIFAB notice of such conversion, and that the
effect of the conversion would be that Midland would own over 90% of the
outstanding shares of UNIFAB common stock. The 90% ownership threshold has legal
significance in that 90% owners have the option to acquire 100% ownership
through the vehicle of a short-form merger.
On September 8, 2004, Midland was considering all of the possible
alternatives for maximizing the value of its investment in UNIFAB, as disclosed
in Midland's Schedule 13D. At that point, Midland had not yet received the
preliminary recommendations of Chaffe & Associates, the financial consulting
firm that Midland had engaged to advise with respect to its investment in
UNIFAB. By converting a part of its debenture, Midland merely increased the
options available to it should Midland have
determined, based upon the advice it would receive, to take UNIFAB private
through the vehicle of a short-form merger.
Prior to converting a portion of its debenture, Midland held a majority
of the shares of UNIFAB common stock entitled to vote at any meeting of
shareholders. Midland had sufficient voting power to effect a going private
transaction either by voting to effect a reverse stock split of UNIFAB common
stock or by voting to merge UNIFAB into a wholly-owned subsidiary of Midland.
Converting the debenture gave Midland a third alternative structure to use
should it have decided to take UNIFAB private - a short form merger. In that
sense, Midland's acquisition of 90% of the total voting power of UNIFAB could be
viewed as the first step in a short form merger transaction, so Midland amended
its Schedule 13D, reporting specifically that the conversion increased Midland's
voting power above the 90% threshold.
2. WE NOTE YOUR RESPONSE TO PREVIOUS COMMENT 6. UNLESS THE INDIVIDUAL
DIRECTORS WERE REPORTING ON SCHEDULE 13G PURSUANT TO 13d-1(d), IT WOULD
APPEAR THAT, AS DIRECTORS OF THE COMPANY, THEY ARE IN POSITIONS OF
CONTROL AND WOULD BE UNABLE TO MAKE THE CERTIFICATIONS REQUIRED BY
SCHEDULE 13G IF FILED PURSUANT TO RULE 13D-1(c). IF APPLICABLE, PLEASE
REFILE ON THE APPROPRIATE SCHEDULE.
Response:
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In compliance with the Staff's comment, Messrs. Hines, Segura, Berard
and Broussard, the four UNIFAB directors who owned more than 5% of UNIFAB's
outstanding common stock while serving on the board, have re-filed their
beneficial ownership reports on Schedule 13D for all applicable periods.
Supplementally with this letter, Midland is including a copy of each such
report.
Special Factors, page 2.
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3. WE NOTE FROM YOUR RESPONSE TO COMMENT 16 THAT UNIFAB HAS ENGAGED A
BROKER TO SELL ITS LAKE CHARLES AND ALLEN PROCESS SYSTEMS FACILITIES.
REVISE THE DISCLOSURE TO DISCUSS HOW THE FILING PERSONS CONSIDERED
THESE SALES, AND THE VALUATION OF THESE ASSETS, IN REACHING THEIR
FAIRNESS CONCLUSIONS.
Response:
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At the time that the merger price was established and the filing
persons reached their conclusions as to the fairness of the proposed merger
price, UNIFAB had not received any indication of interest in either its Lake
Charles or Allen Process Systems facilities. Accordingly, the proposed sales of
these facilities did not factor into the analysis made by the filing persons as
to the adequacy of the merger price.
As of the present time, UNIFAB management informed Midland that there
have been no offers to acquire Allen Process Systems. UNIFAB has sold its Lake
Charles
facility at a price slightly above book value, which would not impact the
fairness of the merger consideration, as receipt of the purchase price does not
materially impact the balance sheet of UNIFAB.
Factors Considered in Determining Fairness, Page 8.
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4. WE REISSUE COMMENT 20. WHILE THE FILING PERSONS MAY RELY ON THE
FAIRNESS ANALYSIS OF THE FAIRNESS ADVISOR OR ANOTHER PARTY, IT MUST
SPECIFICALLY ADOPT THE FAIRNESS ANALYSIS AND THE CONCLUSIONS IN THE
DISCLOSURE.
Response:
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Midland proposes to comply with this comment by including the following
sentence within the Summary section of the Schedule 13E-3, in the fifth
paragraph on page 8, to read as follows:
The filing persons specifically adopt the fairness analysis
and the conclusions of Chaffe & Associates.
5. WE NOTE YOUR RESPONSE TO OUR PREVIOUS COMMENT 25. PLEASE FILE THE
APPRAISAL REPORTS AS EXHIBITS TO THE SCHEDULE 13E-3 PURSUANT TO ITEMS
1015 AND 1016 OF REGULATION M-A. SEE IN THE MATTER OF MEYERS PARKING
SYSTEM, INC. (SEPT. 12, 1988). FURTHER, REVISE TO DISCLOSE THE
INTERNALLY GENERATED INFORMATION AS NOTED IN YOUR RESPONSE.
Response:
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Midland's Schedule 13E-3A filed on the date hereof includes the four
appraisals referred to in this comment as Exhibits (c)(2), (c)(3), (c)(4) and
(c)(5).
In response to the Staff's comment 25 in a letter from the Staff to
Midland dated December 17, 2004, Midland amended its Schedule 13E-3 to include
the following sentence with respect to Chaffe & Associates' analysis of the four
appraisals:
Chaffe & Associates also relied on internally generated
information provided by UNIFAB's management relative to assets
that were disposed of or missing.
The internally generated information referred to in the foregoing sentence was
not provided to Chaffe & Associates in written format, but rather during a
telephone conversation between representatives of UNIFAB and Chaffe & Associates
in which the UNIFAB representative informed the Chaffe & Associates
representative about which pieces of equipment found in the appraisals referred
to above no longer were owned by UNIFAB. During that conversation, the Chaffe &
Associates' representative made notes on pages ME-18 through ME-19 and ME-24
through ME-27 of the appraisal filed as Exhibit (c)(4).
If you have any questions about the foregoing or any further comments,
please call the undersigned at your convenience at (504) 585-0331. In my
absence, please ask to speak with Price Wilson.
Sincerely yours,
Virginia Boulet