SEC Company Response from SEA PINES ASSOCIATES INC (CIK 0000846926) — Sep 3, 2004
SEA PINES ASSOCIATES INC (CIK 0000846926)
Date: Sept. 3, 2004 · CIK: 0000846926 · Accession: 0000950144-04-008887
AI Filing Summary & Sentiment
File numbers found in text: 000-17517
Letter
Securities and Exchange Commission Sea Pines Associates, Inc. Schedule 14A Filed: August 16, 2004 File No. 000-17517
Dear Mr. Shady:
At your request and to follow up on our telephone conversation of September 2, 2004, I am writing to confirm our analysis as to why the acquisition of our client, Sea Pines Associates, Inc. (“Sea Pines”), by The Riverstone Group, LLC (“Riverstone”) is not a going-private transaction subject to Rule 13e-3.
As we discussed, the proposed merger between Sea Pines and Riverstone’s wholly owned subsidiary, RG Subsidiary Corporation, would constitute a “Rule 13e-3 transaction” only if Riverstone is an affiliate of Sea Pines. An affiliate of Sea Pines is a person that controls, is controlled by or is under common control with Sea Pines. Sea Pines has no ability to control Riverstone and Riverstone and Sea Pines are not commonly controlled by a third person. Thus, control exists for these purposes only if Riverstone possesses the power to direct or cause the direction of the management and policies of Sea Pines. No such power now exists or has existed at any time. The following facts support this conclusion.
Except for the ownership of Sea Pines common stock and the merger agreement, there is no relationship between Riverstone and Sea Pines. Neither Riverstone nor Sea Pines has provided services or loans to the other and, except in connection with the exchange offer described below, there have been no transactions between them.
Riverstone increased its ownership of Sea Pines common stock from approximately 20% to its current level of approximately 27% in early 2000 in connection with an exchange offer which was made to all holders of Sea Pines preferred stock. This exchange offer, which was initiated by Sea Pines in order to improve cash flow and increase common equity, provided each
ANDERSON • CHARLESTON • CHARLOTTE • COLUMBIA • GEORGETOWN • GREENVILLE • HILTON HEAD ISLAND • MYRTLE BEACH • RALEIGH
McNair Law Firm, p.a.
ATTORNEYS AND COUNSELORS AT LAW
Jeffrey A. Shady, Esq.
September 3, 2004
Page 2
holder of Sea Pines preferred stock the opportunity to exchange those shares for either common stock or a trust preferred security. Subsequent to the closing of that offer, Riverstone has not acquired any additional Sea Pines stock and would trigger the Sea Pines shareholder rights plan if it were to do so.
Riverstone has never had, nor has it ever sought, representation on the Sea Pines Board of Directors. As a 27% shareholder of Sea Pines, Riverstone has little power. It does not have the power to elect or remove directors or to direct the management and policies of Sea Pines. And while Riverstone is the largest stockholder of Sea Pines, the directors and executive officers of Sea Pines collectively own beneficially approximately 20% of Sea Pines common stock.
Other than communications by Sea Pines to its stockholders generally, contacts between Sea Pines and Riverstone have occurred infrequently. Sea Pines has never sought guidance from Riverstone relating to Sea Pines’ business, and Riverstone has never offered any such guidance.
The proposed merger was not initiated by Riverstone. Instead, as described in the preliminary proxy statement, the merger agreement was the culmination of a process initiated by the Sea Pines Board following an adverse result in a lawsuit which required Sea Pines to incur significant additional bank debt. As a result, the Board formed an independent committee to investigate the strategic alternatives available to Sea Pines, including sale of some or all of the company’s assets and sale of the company. The Board retained consulting, investment banking and law firms which were entirely independent of Riverstone, and the Board’s actions were consistent with advice which it received from those firms. When Riverstone was first contacted on behalf of the Board about the possibility of purchasing Sea Pines, Riverstone expressed some interest in considering a transaction but would not commit to move forward at that time.
The merger agreement was heavily negotiated over a period of approximately two months. During those negotiations, the Board was motivated in its actions by the welfare of the public shareholders of Sea Pines, including themselves, and not the welfare of Riverstone.
The Sea Pines Board continues to be independent of Riverstone. No Sea Pines director, officer or employee has any interest in Riverstone. No Sea Pines director will receive any compensation from Riverstone in connection with the merger other than the merger consideration that would be received by all shareholders. No Sea Pines director will remain on the Board of Sea Pines following the merger. There are no lockup or voting agreements requiring directors, officers or others to vote in favor of the merger. Riverstone does not have any option or other arrangement to purchase shares from Sea Pines or any Sea Pines director.
Finally, the affirmative vote of holders of at least 80% of Sea Pines common stock is required to approve the merger. This means that in order to consummate the merger, more than
McNair Law Firm, p.a.
ATTORNEYS AND COUNSELORS AT LAW
Jeffrey A. Shady, Esq.
September 3, 2004
Page 3
70% of the stock not owned beneficially by Riverstone, and more than 60% of the stock owned beneficially by neither Riverstone nor Sea Pines’ directors and executive officers, must be voted for the transaction.
Based on the foregoing facts, we believe that it is clear that Riverstone is not an affiliate of Sea Pines and that therefore the proposed merger is not a going-private transaction subject to Rule 13e-3.
If you should have any questions with regard to this letter, or if you require any additional information, please do not hesitate to call me at 803 376-2272.
Very truly yours,
/s/ John W. Currie
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Sea Pines Associates, Inc.
McNair Law Firm, p.a.
JOHN W. CURRIE
jcurrie@mcnair.net
BANK OF AMERICA TOWER
1301 GERVAIS STREET
COLUMBIA, SOUTH CAROLINA 29201
ATTORNEYS AND COUNSELORS AT LAW
www.mcnair.net
POST OFFICE BOX 11390
COLUMBIA, SOUTH CAROLINA 29211
TELEPHONE (803) 376-2272
FACSIMILE(803) 933-1443
September 3, 2004
VIA FAX NO: 202 942-9635
Jeffrey A. Shady, Esq.
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re:
Sea Pines Associates, Inc.
Schedule 14A
Filed: August 16, 2004
File No. 000-17517
Dear Mr. Shady:
At your request and to follow up on our telephone conversation of
September 2, 2004, I am writing to confirm our analysis as to why the
acquisition of our client, Sea Pines Associates, Inc. (“Sea Pines”), by The
Riverstone Group, LLC (“Riverstone”) is not a going-private transaction subject
to Rule 13e-3.
As we discussed, the proposed merger between Sea Pines and Riverstone’s
wholly owned subsidiary, RG Subsidiary Corporation, would constitute a “Rule
13e-3 transaction” only if Riverstone is an affiliate of Sea Pines. An
affiliate of Sea Pines is a person that controls, is controlled by or is under
common control with Sea Pines. Sea Pines has no ability to control Riverstone
and Riverstone and Sea Pines are not commonly controlled by a third person.
Thus, control exists for these purposes only if Riverstone possesses the power
to direct or cause the direction of the management and policies of Sea Pines.
No such power now exists or has existed at any time. The following facts
support this conclusion.
Except for the ownership of Sea Pines common stock and the merger
agreement, there is no relationship between Riverstone and Sea Pines. Neither
Riverstone nor Sea Pines has provided services or loans to the other and,
except in connection with the exchange offer described below, there have been
no transactions between them.
Riverstone increased its ownership of Sea Pines common stock from
approximately 20% to its current level of approximately 27% in early 2000 in
connection with an exchange offer which was made to all holders of Sea Pines
preferred stock. This exchange offer, which was initiated by Sea Pines in
order to improve cash flow and increase common equity, provided each
ANDERSON • CHARLESTON • CHARLOTTE • COLUMBIA
• GEORGETOWN • GREENVILLE • HILTON HEAD ISLAND • MYRTLE BEACH
• RALEIGH
McNair Law Firm, p.a.
ATTORNEYS AND COUNSELORS AT LAW
Jeffrey A. Shady, Esq.
September 3, 2004
Page 2
holder of Sea Pines preferred stock the opportunity to exchange those shares
for either common stock or a trust preferred security. Subsequent to the
closing of that offer, Riverstone has not acquired any additional Sea Pines
stock and would trigger the Sea Pines shareholder rights plan if it were to do
so.
Riverstone has never had, nor has it ever sought, representation on the
Sea Pines Board of Directors. As a 27% shareholder of Sea Pines, Riverstone
has little power. It does not have the power to elect or remove directors or
to direct the management and policies of Sea Pines. And while Riverstone is
the largest stockholder of Sea Pines, the directors and executive officers of
Sea Pines collectively own beneficially approximately 20% of Sea Pines common
stock.
Other than communications by Sea Pines to its stockholders generally,
contacts between Sea Pines and Riverstone have occurred infrequently. Sea
Pines has never sought guidance from Riverstone relating to Sea Pines’
business, and Riverstone has never offered any such guidance.
The proposed merger was not initiated by Riverstone. Instead, as
described in the preliminary proxy statement, the merger agreement was the
culmination of a process initiated by the Sea Pines Board following an adverse
result in a lawsuit which required Sea Pines to incur significant additional
bank debt. As a result, the Board formed an independent committee to
investigate the strategic alternatives available to Sea Pines, including sale
of some or all of the company’s assets and sale of the company. The Board
retained consulting, investment banking and law firms which were entirely
independent of Riverstone, and the Board’s actions were consistent with advice
which it received from those firms. When Riverstone was first contacted on
behalf of the Board about the possibility of purchasing Sea Pines, Riverstone
expressed some interest in considering a transaction but would not commit to
move forward at that time.
The merger agreement was heavily negotiated over a period of approximately
two months. During those negotiations, the Board was motivated in its actions
by the welfare of the public shareholders of Sea Pines, including themselves,
and not the welfare of Riverstone.
The Sea Pines Board continues to be independent of Riverstone. No Sea
Pines director, officer or employee has any interest in Riverstone. No Sea
Pines director will receive any compensation from Riverstone in connection with
the merger other than the merger consideration that would be received by all
shareholders. No Sea Pines director will remain on the Board of Sea Pines
following the merger. There are no lockup or voting agreements requiring
directors, officers or others to vote in favor of the merger. Riverstone does
not have any option or other arrangement to purchase shares from Sea Pines or
any Sea Pines director.
Finally, the affirmative vote of holders of at least 80% of Sea Pines
common stock is required to approve the merger. This means that in order to
consummate the merger, more than
McNair Law Firm, p.a.
ATTORNEYS AND COUNSELORS AT LAW
Jeffrey A. Shady, Esq.
September 3, 2004
Page 3
70% of the stock not owned beneficially by Riverstone, and more than 60% of the
stock owned beneficially by neither Riverstone nor Sea Pines’ directors and
executive officers, must be voted for the transaction.
Based on the foregoing facts, we believe that it is clear that Riverstone
is not an affiliate of Sea Pines and that therefore the proposed merger is not
a going-private transaction subject to Rule 13e-3.
If you should have any questions with regard to this letter, or if you
require any additional information, please do not hesitate to call me at 803
376-2272.
Very truly yours,
/s/ John W. Currie
John W. Currie
JWC/jf