SEC Company Response from NEXTEL PARTNERS INC (CIK 0001085707) — Aug 1, 2005
NEXTEL PARTNERS INC (CIK 0001085707)
Date: Aug. 1, 2005 · CIK: 0001085707 · Accession: 0000950123-05-009232
AI Filing Summary & Sentiment
Referenced dates: July 22, 2005
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LETTER TO THE S.E.C.
Wachtell, Lipton, Rosen & Katz
51 WEST 52ND STREET
NEW YORK, N.Y. 10019-6150
TELEPHONE: (212) 403 — 1000
FACSIMILE: (212) 403 -2000
GEORGE A. KATZ (1965-1989)
JAMES H. FOGELSON (1967-1991 )
OF COUNSEL
WILLIAM T. ALLEN LEONARD M. ROSEN
THEODORE GEWERTZ MICHAEL W. SCHWARTZ
THEODORE A. LEVINE ELLIOTT V. STEIN
NORMAN REDLICH J. BRYAN WHITWORTH
JOHN M. RICHMAN AMY R. WOLF
COUNSEL
ADRIENNE ATKINSON LAWRENCE A. PASINI
ANDREW J.H. CHEUNG ADAM J. SHAPIRO
PAMELA EHRENKRANZ
MARTIN LIPTON
HERBERT M. WACHTELL
BERNARD W. NUSSBAUM
RICHARD D. KATCHER
PETER C. CANELLOS
ALLAN A. MARTIN
LAWRENCE B. PEDOWITZ
ROBERT B. MAZUR
PAUL VIZCARRONDO, JR.
PETER C. HEIN
HAROLD S. NOVIKOFF
DAVID M. EINHORN
KENNETH B. FORREST
MEYER G. KOPLOW
THEODORE N. MIRVIS
EDWARD D. HERLIHY
DANIEL A. NEFF
ERIC M. ROTH
WARREN R. STERN
ANDREW R. BROWNSTEIN
MICHAEL H. BYOWITZ
PAUL K. ROWE
MICHAEL B. BENNER
MARC WOLINSKY
DAVID GRUENSTEIN
PATRICIA A. VLAHAKIS
STEPHEN G. GELLMAN
STEVEN A. ROSENBLUM
PAMELA S. SEYMON
STEPHANIE J. SELIGMAN
ERIC S. ROBINSON
JOHN F. SAVARESE
SCOTT K. CHARLES
ANDREW C. HOUSTON
PHILIP MINDLIN
DAVID S. NEILL
JODI J. SCHWARTZ
ADAM O. EMMERICH
CRAIG M. WASSE RMAN
ADAM D. CHINN
GEORGE T. CONWAY III
RALPH M. LEVENE
RICHARD G. MASON
KAREN G. KRUEGER
DOUGLAS K. MAYER
DAVID M. SILK
ROBIN PANOVKA
DAVID A. KATZ
MITCHELL S. PRESSER
ILENE KNABLE GOTTS
JEFFREY R. BOFFA
DAVID M. MURPHY
JEFFREY M. WINTNER
TREVOR S. NORWITZ
BEN M. GERMANA
ANDREW J. NUSSBAUM
MICHAEL S. KATZKE
RACHELLE SILVERBERG
DAVID C. BRYAN
STEVEN A. COHEN
GAVIN D. SOLOTAR
DEBORAH L. PAUL
DAVID C. KARP
RICHARD K. KIM
JOSHUA R. CAMMAKER
MARK GORDON
JOSEPH D. LARSON
LAWRENCE S. MAKOW
JARED M. RUSMAN
JEANNEMARIE O’BRIEN
WAYNE M. CARLIN
JAMES COLE, JR.
STEPHEN R. DiPRIMA
NICHOLAS G. DEMMO
IGOR KIRMAN
JONATHAN M. MOSES
J. AUSTIN LYONS
LORI S. SHERMAN
PAULA N. GORDON
T. EIKO STANGE
DAVID A. SCHWARTZ
JED I. BERGMAN
MICHAEL A. CHARISH
DAMIAN G. DIDDEN
JOHN F. LYNCH
ERIC M. ROSOF
WILLIAM SAVITT
MARTIN J.E. ARMS
BENJAMIN D. FACKLER
ISRAEL FRIEDMAN
DIMITRY JOFFE
ROY J. KATZOVICZ
ROBERT J. LIUBICIC
GREGORY E. OSTLING
JONATHAN E. PICKHARDT
GREGORY N. RACZ
EDWARD J.W. BLATNIK
BENJAMIN S. BURMAN
NELSON O. FITTS
JEFFREY C. FOURMAUX
MICHAEL GAT
JEREMY L. GOLDSTEIN
MAURA R. GROSSMAN
JOSHUA M. HOLMES
JOSHUA A. MUNN
DAVID E. SHAPIRO
ANTE VUCIC
IAN BOCZKO
MATTHEW M. GUEST
WILLIAM R. HARKER
DAVID KAHAN
MARK A. KOENIG
DAVID K. LAM
KENNETH K. LEE
LAURA E. MUÑOZ
MICHAEL S. WINOGRAD
FORREST G. ALOGNA
JAMES R. LEVINE
GORDON M. MEAD
SAMUEL J. RASCOFF
DANIELLE L. ROSE
BENJAMIN M. ROTH
ROBIN M. WALL
DAVID M. ADLERSTEIN
SHIRI BEN — YISHAI
ANATOLIY BIZHKO
JOSHUA D. BLANK
JOSHUA A. FELTMAN
JONATHAN H. GORDON
CHETAN GULATI
ADAM HICKEY
MARGARET ISA
ANDREW S. JACOBS
EMIL A. KLEINHAUS
CHI T. STEVE KWOK
JASON M. LYNCH
HEATHER L. MAHAR
DEBORAH MARTINEZ
WILLIAM E. SCHEFFER
DAVID B. SILVA
KRISHNA VEERARAGHAVAN
ADIR G. WALDMAN
B. UMUT ERGUN
KRISTELIA A. GARCIA
ANNIE H. JEONG
SARAH S. JOHNSON
MICHAEL KRASNOVSKY
SARAH A. LEWIS
Y ELENA LUNGIN
SARAH FERN MEIL
GARRETT B. MORITZ
ALISON L. PLESSMAN
ADAM M. GOGOLAK
DANIEL E. HEMLI
SCOTT B. LUFTGLASS
PAUL S. MISHKIN
KEVIN OTERO
VIA EDGAR
Kathleen Krebs, Esq.
Special Counsel
U.S. Securities and Exchange Commission
Division of Corporation Finance
Washington, D.C. 20549
RE:
Nextel Partners, Inc.
Preliminary Schedule 14A; File No. 0-29633
Filed June 23, 2005
Definitive additional soliciting materials
Filed on June 23, July 5, and July 15, 2005
Dear Ms. Krebs:
Set forth below are responses of Nextel Partners, Inc. (“Nextel Partners”) to the
comments of the Staff of the Division of Corporation Finance which were set forth in your letter
dated July 22, 2005 regarding Nextel Partners’ Preliminary Proxy Statement on Schedule 14A
(the “Proxy Statement”). In connection with this letter responding to the Staff’s comments, we
are filing electronically Amendment No. 1 to the Proxy Statement, and we have enclosed a copy
of such Amendment No. 1 marked to show changes from the Proxy Statement as filed on June
23, 2005. Nextel Partners has authorized us to make this filing and these statements on its
behalf.
Securities and Exchange Commission
August 1, 2005
Page 2
The
Staff’s comments, indicated in bold, are followed by responses on behalf of
Nextel Partners. The responses make reference to page numbers of
the enclosed marked copy of Amendment No. 1, which shows changes
from the Proxy Statement as filed on June 23, 2005. These page
numbers may or may not correspond to the page numbers of Amendment
No. 1 as filed electronically on EDGAR.
Schedule 14A
General
1.
COMMENT:
Please revise your preliminary merger proxy statement to include
material additional information you have set forth in your subsequent
proxy statement soliciting materials. For example, include in the
appropriate risk factor and in your later fuller discussion of the
appraisal process, the number of days that equals the maximum
amount of time allotted by your certificate for the determination of
fair market value by the three appraisers.
RESPONSE
We have revised the Proxy Statement in response to the Comment. Please
see pages 3, 13, 21, 37, 40, 43, 44 and 46.
2.
COMMENT:
In your response letter, elaborate as to why you have filed your
preliminary proxy statement at this time. We note that the Sprint-Nextel
Communications merger has not occurred and that your
certificate requires, for the put right to be exercisable, twenty percent
of your Class A common stockholders first to call a special meeting at
which the put right exercise would be considered, and then only after
you have sent a notice to the Class A common stockholders of the
closing of the merger. Describe to us the extent to which you have
received indications from any Class A common stockholders that they
will request such a special meeting.
RESPONSE
Nextel Partners filed the preliminary Proxy Statement in anticipation of
the upcoming closing of Nextel Communications’ merger with Sprint and
the possible request by Nextel Partners’ shareholders thereafter to convene
a special meeting in order to vote on whether to exercise the Put Right.
Although Nextel Partners’ Certificate of Incorporation does not permit
holders of shares of Class A common stock to request the special meeting
until after that merger is closed, Nextel Partners elected to file the proxy
statement on June 23, 2005 in order to place the company in a position to
organize a meeting in a timely fashion in the event it does receive requests
for such a meeting from the holders of at least 20% of its Class A shares
following the close of the Sprint-Nextel merger.
Securities and Exchange Commission
August 1, 2005
Page 3
In this regard, we note that Nextel Partners’ Certificate of Incorporation
provides that the special meeting will be held within 20 days after the date
Nextel Partners receives the requisite number of requests from its
shareholders to convene the meeting (or such later date as required by
applicable law). Nextel Partners desires to be in a position to convene the
special meeting as close to the target date set forth in the Certificate as
possible.
We note that in order to clarify the foregoing, the first page of each of the
preliminary Proxy Statement filing and the revised preliminary Proxy
Statement filing contain a legend regarding the conditions that must be
met before the special meeting can be called. We have expanded that
legend to specify that the request for the special meeting has not yet been
made.
3.
COMMENT:
We note that there is a significant degree of uncertainty regarding
when fair market value will be determinable, how the various factors
that comprise that determination will be interpreted, and the delays
that may be associated with the appraisal process, so that it will be
difficult for Class A common stockholders to make a reasonably
informed decision when voting to exercise of the put right. Please
provide us in your response letter with your analysis as to whether
you should undertake to recirculate and resolicit stockholder
approval when the fair market value is determined or in the event the
fair market value is determined to be outside of, for instance, the
range of the floor and ceiling challenge prices you estimate on page
32.
RESPONSE
The Certificate of Incorporation of Nextel Partners does not permit Nextel
Partners to resolicit holders of Class A common stock after the fair market
value is set regardless of the price set for the fair market value. Holders of
shares are required to sell their shares at the price determined in the
process without a further special meeting.
In response to the comments of the Staff, we have revised the disclosure
throughout the Proxy Statement to highlight the uncertainty with respect to
the determination of fair market value and to indicate that the appraisal
process is irrevocable. Holders of shares of Class A common stock will
thus be aware of these risks when deciding how to vote at the special
meeting.
4.
COMMENT:
Tell us in your response letter why your solicitation of votes to
exercise the put right or the closing of the Sprint-Nextel
Communications merger are not early steps of a going-private
Securities and Exchange Commission
August 1, 2005
Page 4
transaction under Exchange Act Rule 13e-3 that require the filing of a
Schedule 13e-3.
RESPONSE
We do not believe that Nextel Communications, Inc. should be treated as
an “affiliate” of Nextel Partners for purposes of determining whether the
Put Right is a Rule 13e-3 transaction. We are, of course, aware that
Nextel Communications beneficially owns approximately 32% of Nextel
Partners’ common equity and has the right to designate one member of the
Board of Directors. However, we believe that in the context of the Put
Right transaction, these factors are not relevant and Nextel Partners is
manifestly not controlled by, controlling or under common control with
Nextel Communications.
First, all decisions regarding the Put Transaction are made without any
involvement of either Nextel Communications or its designee on the
Nextel Partners’ Board of Directors. All of these decisions have been
delegated to the Special Committee of Nextel Partners’ Board of
Directors, which excludes not only the Nextel Communications’
representative on the Board but also one other member of the Board with
business ties to Nextel Communications.
Second, Nextel Partners’ Certificate of Incorporation itself provides that
the appraiser selected by Nextel Partners to participate in the
determination of fair market value will be selected by the Board of
Directors of Nextel Partners without the participation of the Nextel WIP
designee.
Third, as the Staff is aware, Nextel Partners has commenced legal
proceedings against Nextel Communications regarding various matters
arising under the operating agreements between the parties related to the
Nextel Communications–Sprint merger. We believe this further
demonstrates that as it relates to the pending merger, Nextel
Partners’ Special Committee is vigorously and independently seeking to protect the
rights of the holders of shares of Class A common stock and is not acting
under the influence of Nextel Communications.
We note that treating the Put Right transaction as a Rule 13e-3 transaction
and requiring Nextel Communications and/or Sprint Corporation to file a
Schedule 13E-3 will allow them the ability to delay the mailing of the
Proxy Statement indefinitely – a result that would be adverse to the
interests of Nextel Partners’ other shareholders and
inconsistent with the intent of the Rule. In the context of the Put Right, Nextel Partners has not
only an arm’s-length relationship with Nextel Communications and Sprint
but, indeed, an adversarial relationship.
Securities and Exchange Commission
August 1, 2005
Page 5
In addition, we note that Rule 13e-3(g)(4) contains an exemption from
Rule 13e-3 for redemptions, calls or similar purchases of an equity
security by an issuer pursuant to specific provisions set forth in the
instrument creating or governing that class of equity security. In similar
fashion, the Put Right transaction is being implemented pursuant to a pre-existing provision of the issuer’s Certificate of Incorporation and, in fact,
may be implemented under the Certificate in the form of a redemption of
the Class A shares. Even if the choice is made to implement the
transaction as a purchase rather than a redemption, in substance it would
still be the same as a redemption transaction that would fall within the
exemption. In any event, the Put Right is not a newly negotiated
transaction in which Nextel Communications has the ability to direct or
influence the outcome by virtue of its equity ownership or board
representation.
5.
COMMENT:
We note that the purchase price may be paid in cash or in stock at the
option of Nextel WIP’s. We also note Nextel Communications’
statement in its Rule 425 filing filed on July 13, 2005 that, “In the
event that Nextel Partners’ shareholders exercise the put right and
Nextel’s subsidiary, Nextel WIP Corp., elects to pay the put price in
shares of common stock, a registration statement will be filed with the
SEC.” In your response letter, tell us whether you intend to solicit
proxies for approval of the exercise of the put right prior to any filing
of a registration statement and, if so, why you believe this is consistent
with the federal securities laws.
RESPONSE
We believe that Nextel WIP, under the current circumstances, will not be
able to use shares to satisfy the Put Right. We also believe that Nextel
Communications, Nextel WIP and Sprint have no intention, and have
never had any intention, of settling the put with shares rather than cash.
Instead, we believe they are purporting to reserve the right to use shares in
an effort to interpose delay and roadblocks to the timely submission of the
question of whether to exercise the Put Right to Nextel Partners’
shareholders.
The reasons for our belief that Nextel WIP will not have the ability to use
shares to satisfy the Put Right, and for our views as to the intentions of
Nextel Communications, Nextel WIP and Sprint, are as follows. Nextel
Partners’ Certificate of Incorporation gives Nextel WIP, subject to
meeting specified requirements, the right to satisfy the put “by delivery of
listed Nextel common stock.” (Section 5.2.A(a)) Of course, in connection
with the Sprint-Nextel Communications merger, Nextel Communications
will become a wholly owned subsidiary of Sprint and will no longer be
listed or publicly traded. While, in theory, Sprint might take Nextel
Securities and Exchange Commission
August 1, 2005
Page 6
Communications public again, list the shares of Nextel Communications,
and try to use those listed shares to satisfy the Put Right, this scenario is
not remotely credible.
Sprint and Nextel Communications have already made innumerable public
statements about their plans to integrate the two companies. From the day
the merger was announced, one of the selling points of the merger has
been the synergies expected to result from “consolidating operations,
infrastructure support costs and overhead.” (Sprint Press Release,
“Merger Fact Sheet,” December 15, 2004) Sprint’s and Nextel
Communications’ joint proxy statement similarly touts the two companies’
belief that “Sprint Nextel can be run more efficiently than either company
could operate on its own” and provides an estimate of the net present
value of the merger synergies “at approximately
$12 billion.” (Sprint–Nextel Communications Joint Proxy Statement, p. 44) This massive
synergies number is based on a full integration of the two companies,
including networks, infrastructure and workforce. Thus, the entire
predicate of the Spr