BAKER, TRI-CITIES TENNESSEE/VIRGINIA
DONELSON, 207 MOCKINGBIRD LANE
BEARMAN, CALDWELL SUITE 300
& BERKOWITZ, PC JOHNSON CITY, TENNESSEE 37604
PHONE: 423.928.0181
FAX: 423.928.5694
MAILING ADDRESS:
P.O. BOX 3038
JOHNSON CITY, TENNESSEE 37602
www.bakerdonelson.com
LINDA M. CROUCH-MCCREADIE
Direct Dial: (423) 975-7623
Direct Fax: (423) 979-7623
E-Mail Address: lcrouch@bakerdonelson.com
September 19, 2005
Ms. Jessica Livingston
Senior Attorney
Securities and Exchange Commission
Division of Corporation Finance
Mail Stop 4561
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: United Tennessee Bankshares, Inc.
Amendment No. 2 to Preliminary Schedule 14A
Filed September 6, 2005
File No. 05-53331
Dear Ms. Livingston:
This letter responds to the comments received from the Staff of the
Securities and Exchange Commission by letter dated September 14, 2005, to Mr.
Christopher Triplett, with respect to the above-referenced filing of United
Tennessee Bankshares, Inc. (the "Company" or "Registrant").
The following discussion summarizes the manner in which we have revised the
Preliminary Schedule 14A in response to Staff comments made in the September 14,
2005 letter (the "Letter"). The following paragraphs of this letter are numbered
to correspond to the numbers of the comments contained in the Letter and page
numbers refer to pages in the Amendment to the Preliminary Schedule 14A "marked
to show changes."
Preliminary Schedule 14A
- ------------------------
Special Factors, page 12
- ------------------------
Background of the Going Private Merger, page 12
- -----------------------------------------------
1. Registrant has revised the proxy statement to include its supplemental
response to prior comment 3. Please see page 15.
2. Registrant has considered Staff's comment regarding disclosing the
identity of the third party making an unsolicited offer to the Registrant in
March 2004. Since the discussions were very preliminary, many of the material
terms of the offer were unknown, and Registrant believes that while the fact
that discussions were held is material and is responsive to the Schedule 13E-3
requirements, the identity of the offering party is not material. However,
Registrant has expanded the discussion to provide more information about the
liquidity of the stock which was the subject of the offer. It has also made
clear that there was no set ratio as to how much stock of the third party or how
much cash would be combined for the aggregate $22.00 per share consideration.
Registrant respectfully submits that it believes the disclosure it has provided
regarding that potential transaction is adequate.
Summary Term Sheet Regarding the Going Private Merger
- -----------------------------------------------------
3. The American Jobs Creation Act of 2004 amended Internal Revenue Code
Section 1361(b)(1)(A) by striking "75" and inserting "100" effective for tax
years beginning after December 31, 2004. Thus currently an entity converting to
a Subchapter S entity must have 100 or fewer shareholders.
4. Registrant has revised the disclosure to explain why the Board chose to
pursue a specific acquisition target first rather than one of the other options
presented by Triangle in its presentation. Please see page 15.
Recommendation of the Board of Directors; Fairness of the Going Private Merger
Proposal, Page 22.
- --------------------------------------------------------------------------------
5. Registrant has revised the language to state that although the Board
considered the detrimental factors described, it concluded that the benefits
also described outweighed the detriments and that the transaction was
substantively and procedurally fair to and in the best interests of the
unaffiliated shareholders.
We have provided Staff with marked copies of the amendment to the Schedule
14A and Schedule 13E-3 to expedite its review.
If you have any questions or require additional information, please feel
free to contact me.
Very truly yours,
/s/ Linda M. Crouch-McCreadie
Enclosure
cc: Richard G. Harwood