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(CHINESE CHARACTERS)
AMERICAN LAWYERS
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FACSIMILE: (852) 2869-7694
DIRECT DIAL NUMBER E-MAIL ADDRESS
(852) 2514-7665 jpark@stblaw.com
December 1, 2005
BY HAND
Mr. Owen Pinkerton
Senior Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: WIDERTHAN CO., LTD.
FORM F-1
FILED NOVEMBER 18, 2005
FILE NO. 333-129806
Dear Mr. Pinkerton:
We are writing on behalf of our client, WiderThan Co., Ltd. (the
"Company"), in response to your letter, dated November 29, 2005, containing the
comments of the Staff of the Securities and Exchange Commission with respect to
the Registration Statement on Form F-1 publicly filed on November 18, 2005.
Enclosed on behalf of the Company are ten copies of the amended
Registration Statement filed with the Commission today, five of which are marked
to show all revisions made to the Registration Statement publicly filed on
November 18, 2005.
The responses of the Company to the Staff's comments are set forth in this
letter and each response follows the text of the paragraph of the comment letter
to which it relates.
We would like to advise the Staff that the Company currently plans to
request acceleration of the Registration Statement and price the offering by
December 8, 2005.
* * * * * * * * * *
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Securities and Exchange Commission - 2 - December 1, 2005
General
1. Please file all prior correspondence, which was submitted to us in hard
copy, electronically on EDGAR. This includes, but is not limited to, your
response letter submitted to us on November 18, 2005.
RESPONSE
As of today, the Company has filed all of its prior correspondence with the
Commission electronically on EDGAR. The Company plans to file this letter
shortly hereafter and any future correspondence promptly thereafter.
Financial Condition, page 59
2. We note your responses to prior comments 1 and 2 and your revisions to the
disclosure. Please give consideration to further revision as your response
to prior comment 2 that begins "In such a case,..." doesn't appear to be
consistent with the preceding situation which is that Melody Share
Corporation's Series C preferred stock is converted into common stock which
is sold into the Offering.
RESPONSE
In response to the Staff's comment, the Company has revised the disclosure
on page 59 of the Registration Statement.
Unaudited Consolidated Statements of Operations, page F-3
3. We have reviewed your response to prior comment four and do not understand
how you concluded that costs incurred by Melody Share Corporation are
"directly attributable" to the offering of securities. It appears that the
offering could occur without the formation of Melody Share Corporation.
Also, because Melody Share Corporation was formed to facilitate stock-based
compensation, it appears that these costs could have also been incurred
without the issuance of securities. Please explain the basis for your
conclusions in further detail giving consideration to the above scenarios.
RESPONSE
As mentioned in previous correspondence with the Staff, in connection with
the Company's preparation for this IPO, the Company was informed by its
advisors, including the underwriters, that it would not be able to conduct
an offering with its existing VSO compensation plan (the "VSO Plan") in
place. The Company was advised that the cash outlay required to be made by
the Company under the VSO Plan would make it impossible for the Company to
access the public financial markets. Accordingly,
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Securities and Exchange Commission - 3 - December 1, 2005
it was clear to the Company that the offering could not occur without some
type of VSO cancellation and exchange ("VSO exchange").
Due to Korean legal restrictions and U.S. tax and accounting
considerations, the Company and its advisors, after careful consideration,
identified the Melody Share Corporation structure as the only practical
solution to execute the VSO exchange. Although other means may have existed
to facilitate stock-based compensation to the employees of WiderThan
Americas, there was no other alternative that fits within the boundaries of
Korean law, also satisfying the existing obligations to the VSO holders,
meeting the Company's needs and garnering shareholder support. Thus, the
offering could not have occurred without the formation of Melody Share
Corporation.
All of the actions to create the Melody Share Corporation structure,
including (i) creating Melody Share Corporation itself; (ii) Melody's
borrowing of funds; (iii) forming WT Investor Corp.; (iv) creating the put
agreements to support the loan; (v) Melody's using the proceeds from the
loan to purchase Series C shares of the Company; and (vi) the awarding of
the cash rights to former VSO holders, were executed solely for the purpose
of enabling the Company's IPO. In other words, the Company would not have
performed these actions if it was not preparing for the offering. In
addition, the two shareholders of the Company, who are also the
shareholders of WT Investor Corp., never would have taken the risks of the
put arrangement supporting Melody Share Corporation's loan if the Company's
IPO was not going to be a direct result of the Melody Share Corporation
structure.
As such, the Company believes that all of such actions are directly
attributable to the offering and further that all of the costs associated
with each of such actions (legal fees associated with formation of Melody
Share Corporation, the taking out of the loan, and the creation of the put
agreement structure, loan origination fees, etc.) are also directly
attributable to the offering. Therefore, in accordance with SAB Topic 5A,
these costs have been deferred in the Company's consolidated balance sheet
as IPO related costs.
As detailed in the prior response letter dated November 14, 2005, at
September 30, 2005, the Company has deferred all costs related to the
offering, totaling $3.0 million, of which $0.6 million is included on the
stand-alone balance sheet of Melody Share Corporation and $2.4 million is
included on the stand-alone balance sheet of WiderThan Co., Ltd. However,
as the Company consolidates Melody Share Corporation, it does not believe
that the fact that Melody Share Corporation incurred these costs rather
than the registrant should affect the treatment of these costs in the
Company's consolidated financial statements.
In addition, the Company believes that the VSO exchange and its directly
related activities, as detailed above, are inextricably linked to the
offering, as the benefits arising from the VSO exchange are contingent on
the offering occurring. As indicated in the footnotes to the Company's
consolidated financial statements, if the offering does not occur before
December 15, 2005, the two shareholders of WT Investor Corp. will try to
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Securities and Exchange Commission - 4 - December 1, 2005
negotiate an extension of the lending arrangement to accommodate a closing
of an offering after December 15, 2005. If, however, the loan to Melody
Share Corporation is not extended, then the VSO Replacement Cash Rights
Agreements will be terminated, and WiderThan Americas will be required
either to reinstate the VSOs or provide for an alternative compensation
program. In such a situation, Melody Share Corporation will require the
Company to redeem the Series C Preferred shares held by it in order to
repay the loan, and Melody Share Corporation will be dissolved. The
offering cannot occur without the VSO exchange, and the VSO exchange will
not survive without the offering. The Company believes that this
inter-connection makes the two transactions directly attributable to each
other.
The Company believes that the VSO exchange is not analogous to another
registrant who restructures its business in order to increase its value in
a future IPO, as (a) the Company concluded that it would be unable to
consummate the offering with the VSO Plan in place, and (b) the benefits of
the VSO exchange are only realized upon an offering since the Melody Share
Corporation structure would unwind if an offering were not to occur.
Exhibit Index
4. Please revise the exhibit table to include, under Exhibit 8.1, a reference
to the foreign tax opinion included in Exhibit 5.1.
RESPONSE
As discussed with the Staff, the Company would like to advise the Staff
that the description of Exhibit 8.1 in the Exhibit Index currently includes
the reference to the tax opinion in Exhibit 5.1.
Exhibit 5.1
5. We refer you to opinion paragraph (c). In providing a short form tax
opinion, counsel must state that the referenced disclosure represents its
opinion. It is inappropriate to opine on the fairness of the disclosure, or
to state that the disclosure represents a summary of the tax effects.
RESPONSE
In response to the Staff's comment, the Company has filed a revised opinion
of counsel as Exhibit 5.1 to the Registration Statement and revised the
disclosure on page 125 of the Registration Statement.
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Securities and Exchange Commission - 5 - December 1, 2005
Exhibit 8.2
6. Please file a revised opinion from counsel that includes the file number of
your registration statement and acknowledges that the F-6, noted in the
opinion, has been filed with the Commission.
RESPONSE
In response to the Staff's comment, the Company has filed a revised opinion
of counsel as Exhibit 8.2 to the Registration Statement, which includes the
file number of the Registration Statement and acknowledging the filing of
the Form F-6 with the Commission.
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Securities and Exchange Commission - 6 - December 1, 2005
Please contact Paul B. Ford at Simpson Thacher & Bartlett LLP (425
Lexington Avenue, New York, New York 10017, telephone number 212-455-2870 and
fax number 212-455-2502) or Jin Hyuk Park at Simpson Thacher & Bartlett LLP (7th
floor, ICBC Tower, 3 Garden Road, Central, Hong Kong, telephone number
011-852-2514-7665 and fax number 011-852-2869-7694), if we can be of any
assistance to the Staff in connection with its review of the enclosed amended
Registration Statement. With respect to accounting matters, the Staff can also
contact Mr. Richard Fuchs of PricewaterhouseCoopers at 011-44-207-212-7969 or
send him an email at richard.a.fuchs@us.pwc.com.
Kindly acknowledge receipt of this letter by stamping the enclosed copy of
this letter and returning it to our messenger.
Thank you in advance for your cooperation in connection with this matter.
Very truly yours,
/s/ Jin Hyuk Park
Jin Hyuk Park
Enclosures