January
26, 2010
Securities
and Exchange Commission
100 F
Street, N.E.
Judiciary
Plaza
Washington,
D.C. 20549
Attn: Division of Corporation
Finance
|
Re:
|
General
Environmental Management, Inc.
|
|
|
Preliminary
Proxy Statement on Schedule 14A
|
|
|
Filed
on: December 18, 2009
|
|
|
File
No. 033-55254-38
|
Dear
Ladies and Gentlemen:
By this
letter, General Environmental Management, Inc. (the “Company”), is responding to
the comments raised by the Staff of the Securities and Exchange Commission (the
“Commission”) in the comment letter dated January 21, 2010 from Pamela A. Long
of the Commission to Timothy J. Koziol, Chief Executive Officer of the Company,
relating to the Preliminary Proxy Statement on Schedule 14A filed with the
Commission on December 18, 2009 (the “Proxy Statement”) and the amended Proxy
statement filed on January 12, 2010 in response to the Staff's initial
comments. We have filed simultaneously Amendment No. 2 to the Proxy
Statement and have attached a marked copy of such Amendment No. 2
indicating the changes that the Company has made to the Proxy
Statement.
The
numbered paragraph below corresponds to the paragraph in which the comment was
made. For your convenience, we have included above our response a copy of
the comment to which we are responding.
General
1. We
have read your response to comment one of our letter dated January 11, 2010, and
note that you plan to file audited financial statements of CLW on Form 8-K on or
before January 26, 2010. We note that cash proceeds from the sale will be used
to retire senior debt, a condition of the CLW acquisition, and to pay other
obligations in connection with the acquisition of CLW. Since the sale is being
made to facilitate the acquisition of CLW (the: sole continuing business post
disposition GEM) and shareholders did not have an opportunity to vote on the
acquisition, please provide the information required by Item 14 of Schedule 14A,
including audited financial statements for the latest fiscal year and unaudited
interim financial statements for CLW in your filing. Please refer to Note A to
Schedule 14A.
Response
We have
included in the Proxy Statement audited financial statement for the most recent
fiscal year, December 2008 and unaudited financial statements for the 10 months
ended October 31, 2009. In addition we have included a Management's Discussion
and Analysis comparing October 31, 2009 to October 31,
2008. We have further provided a Section in the Proxy entitled "CLW
Business Description" which provides a description of the history, background,
and business of CLW. With this added information, we believe that our
shareholders will have adequate information concerning CLW to enable them to
make an informed decision in whether to vote in favor or against the proposed
sale of GEM DE.
2. Please
tell us how you considered the requirements of Item 9.01(e) to Form 8-K in
concluding that you had an additional 71 days to file the financial statements
of CLW. Discussions regarding the sale of GEM DE began in July 2009,
and a letter of intent was proffered by PSC on September 25, 2009. Given the
plan to dispose of all of your preexisting operations, please tell us how you
determined that these assets and operations would not be considered "nominal"
for purposes of the definition of a shell company in Securities Act Rule 405 and
Exchange Act 12b-2.
Response
We are
providing our shareholders with the audited and unaudited financial information
mentioned by the Staff in comment Number 1 above. In addition, we do
not believe that the Company at any time would be a "Shell" as defined in
Securities Act Rule 405. The Company acquired CLW, a company with
substantial assets and operations in November of 2009. The Company
will not be selling GEM DE, assuming that shareholders approve of the sale,
until mid to late February of 2010. At no time will the Company have "'nominal"
assets.
Reasons for the Sale:
Recommendation of the Company's Board of Directors, page 30
3. We
note your disclosure on top of page 32 in response to comment four of our letter
dated January 11, 2010. Please expand your disclosure about the type informal
survey the board conducted, the nature of the data that the board reviewed and
took into consideration. and how this analysis affected the board's decision to
approve the transaction and recommend it to the shareholders for their approval
In addition, please further elaborate on your disclosure that the board
conducted "an overview of non-favorable economic trends" to explain what they
are and how they fit into the board's analysis and decision regarding the
transaction with Luntz. Please also discuss all material components of your
decision and potential risks that the board considered during its
decision-making process.
Response
We have
added disclosure in response to this Comment under Reasons for the Sale;
Recommendation of the Company’s Board of Directors on page 33
of the Proxy
Description of Luntz:
Acquisition (Delaware), LLC and PSC. LLC, page 51
4. We
note your revised disclosure in response to comment five of our letter dated
January 11, 2010 that the company does not have the financial statements of
Luntz, a private company. Item 14(c)(1) of Schedule 14A requires that you
provide information about the buyer in accordance with Part B of Form S-4, which
requires disclosure of not only financial information, but also disclosure about
the buyer's business, properties, legal proceedings and market, an in accordance
with Items 101,102, 103
and 201 of Regulation S-K (see Item 14 of Form S-4). Since you have provided no
disclosure about the buyer's ability to comply with the terms of the stock
purchase agreement, but instead you are warning your shareholders that Luntz may
not complete the sale, we are reissuing our prior Comment five. Please
advise or revise.
Response
Disclosure
has been added to the "Information About the Parties" section of the Schedule
14A showing that Luntz Acquisition (Delaware) LLC has received $14 million in
cash and has deposited such cash in a separate bank account that is available
for Luntz to complete the purchase of GEM DE, provided all other terms and
conditions of the Agreement to sell GEM DE are met.
Paragraph
2.a of the Instructions to Item 14 of Schedule 14A provides that
"In
transactions in which the consideration offered to security holders consists
wholly of cash, the information required by paragraph (c)(1) of this Item for
the acquiring company need not be provided unless the information is material to
an informed voting decision (e.g., the security holders of the target company
are voting and financing is not assured)."
The
Company believes that with the assurance of Luntz's ability to complete the
transaction, evidenced by the
cash in Luntz's separate bank account, the Part B of Form S-4 information ("Part
B Information")called for by Paragraph (c)(1) of Schedule 14A is not
required, as information about Luntz
is not material to the shareholders of the Company in making their
decision on how they will vote. It is clear that if the
shareholders approve the sale of GEM DE to Luntz (the "Transaction") that
the shareholders will have no interest in Luntz whatsoever.
The
Company believes that Release # 33-7760 and specifically Section
II. "Discussion of New
Regulatory Scheme"--Paragraph F. "Disclosure Requirements for Tender
Offers and Mergers" Section 2. "Streamline and Improve Required Disclosure" supports
the Company's position. Under this Section, the Commission
states:
"In
addition, we are adopting several substantive changes regarding the information
required for acquirors and targets under Item 14. All commenters that addressed
the proposed changes to Item 14 believed they were appropriate. We continue to
believe that in certain circumstances the disclosure requirements in Item 14 may
be unnecessarily burdensome and inconsistent with the level of information that
would be required if the same transaction was structured as an all-cash,
all-share tender offer. Therefore, we are adopting the following proposed
revisions:
|
§
|
Item
14 is revised to clarify that financial statement and other information
about the acquiror is required in a cash merger only if that information
is material to voting security holders' evaluation of the transaction.
161
Similar to the need for a bidder's financial statements in a cash tender
offer, information about the acquiror in a merger is generally not needed
when target security holders are receiving cash and the acquiror has
demonstrated its financial ability to satisfy the terms of the offer.
162
|
|
§
|
In
cases where financial statement information for the acquiror would be
material to a security holder's voting decision, acquiror information is
required for only two years and not three, consistent with the treatment
of tender offers.
163
|
|
§
|
The
requirement to provide information about the target in a cash merger is
eliminated when the acquiror's security holders are not voting on the
transaction.
164
Most likely, target security holders will have information about the
securities they already hold. As a result, security holders can receive a
shorter disclosure document that is focused on the terms and effects of
the transaction. This revision harmonizes the disclosure required in cash
merger transactions with that required in all-cash, all-share tender
offers.
165
"
|
We call
the attention to the Staff to the first bullet point where the language refers
not only to "financial statement" but also to "other information about the
acquiror only if that information is material to voting security holders'
evaluation of the transaction." While the Transaction is not a "cash
merger", it is a sale of assets for cash only and therefore applicable to the
Transaction.
We
further call the attention of the Staff to the fact that the acquiror is
identified in the Schedule 14A as a subsidiary of PSC Environmental Services,
LLC, which is a wholly owned subsidiary of PSC, LLC ("PSC"). Notwithstanding
that PSC is a privately held company, its website www.pscnow.com, is available
for viewing by shareholders.
In
addition, General Environmental Management, Inc. acknowledges that:
|
§
|
The
Company is responsible for the adequacy and accuracy of the disclosure in
its filings;
|
|
§
|
Staff
comments or changes to disclosure in response to Staff comments do not
foreclose the Commission from taking any action with respect to the
filing; and
|
|
§
|
the
Company may not assert Staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
|
We
request that the Staff expedite their review of Amendment #2 by responding to
this response letter as soon as practicable as the financial condition of the
Company will be adversely affected by any delay in completing the sale of
General Environmental Management, Inc. (DE) . Should members of the Commission
Staff have any questions or comments, or require any additional information
regarding any of the responses or the attached filing, please contact the
undersigned or Stanley Moskowitz, Esq at 858 523-0100 fax
(858) 523-0444
Very
truly yours,
General
Environmental Management, Inc.
| |
|
|
|
|
|
By:
/s/Timothy
J. Koziol
|
|
|
|
|
|
Timothy
J. Koziol
|
|
|
|
|
Cc: Stanley
Moskowitz, Esq.