corresp
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Lynn Toby Fisher
212.836.8685
lfisher@kayescholer.com
425
Park Avenue
New York, New York 10022-3598
212.836.8000
Fax 212.836.6685
www.kayescholer.com |
November 2, 2010
BY EDGAR AND BY HAND
Russell Mancuso
Branch Chief
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
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Re:
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Harbinger Group Inc. |
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Preliminary Information Statement on Schedule 14C |
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Filed October 8, 2010, as revised on October 25, 2010 |
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File No. 001-04219 |
Dear Mr. Mancuso:
This letter is submitted on behalf of our client, Harbinger Group Inc. (the Company)
in response to comments of the staff (the Staff) of the Division of Corporation Finance
of the U.S. Securities and Exchange Commission (the SEC) contained in its letter dated
November 1, 2010 (the Comment Letter) to Philip A. Falcone, the Companys Chairman of the
Board, Chief Executive Officer and President, with respect to the Companys Preliminary Information
Statement on Schedule 14C filed with the SEC on October 8, 2010, as revised on October 25, 2010
(File No. 001-04219) (the Information Statement). The Companys Definitive Information
Statement (the Definitive Information Statement) to be filed with the SEC will include
revisions, where applicable, intended to address the Staffs comments set forth below. The
information in these responses was provided to us by the Company.
The text of each comment contained in the Comment Letter is set forth in italics below,
immediately followed by the Companys corresponding response.
General
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Please provide us your analysis of whether Spectrum Brands Holdings, Inc. and Spectrum
Brands, Inc. are smaller reporting companies. Refer to Regulation S-K Rule 10(1)(1)-(2).
Include in your response all calculations you performed and the authority on which you relied
to arrive at your conclusions. |
Response: For issuers that are required to file reports under section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the Exchange Act), such as Spectrum Brands, Inc.
(SBI) and Spectrum Brands Holdings, Inc. (SB Holdings), the determination of whether
the issuer qualifies as a smaller reporting company is based on whether the issuer came within the
definition of smaller reporting company as of the last business day of the second fiscal quarter of
the issuers previous fiscal year (the Test Date). In order to satisfy the definition of smaller
reporting company, on the Test Date the issuer may not be an investment company, an asset-backed
issuer (as defined in Rule 229.1101), or a majority-owned subsidiary of a parent that is not a
smaller reporting company and must have had a public float held by non-affiliates of less than $75
million.
With respect to SBI, the relevant Test Date is the last business day of its second fiscal
quarter of 2009 (March 29, 2009) (the 2009 Test Date). On that date, SBI was not an investment
company, asset-backed issuer, or a majority-owned subsidiary of a parent that is not a
smaller reporting company and had a total public float (counting both affiliate and non-affiliate
holdings) of less than $8 million.1 As of the last business day of the second fiscal
quarter of 2010 (April 4, 2010), SBI failed to qualify as a smaller reporting company as a result
of having a public float held by non-affiliates in excess of
$75 million. However, under Rule 10(f)(2) of
Regulation S-K, SBI is permitted to continue to file as a smaller reporting company until its first
Quarterly Report on Form 10-Q for its 2011 fiscal year (i.e., for the quarter ending January 3,
2011).
Pursuant to the terms of the Agreement and Plan of Merger, dated as of February 9, 2010, the
SB/RH Merger (as such term is defined in the Information Statement) was effected through a holding
company structure. SB Holdings was formed as a holding company for the SB/RH Merger
and each of SBI and Russell Hobbs, Inc. merged with and into newly-formed subsidiaries of SB
Holdings and, as a result, became the subsidiaries of SB Holdings. Based on the Staffs guidance in
Compliance and Disclosure Interpretation 230.01 under the Exchange
Act rules, in which a newly formed
holding company took on the filer status of the reporting company subsidiaries, SB Holdings took on
the filer status of SBI, the only company involved in the mergers that was an Exchange Act
reporting company. As noted above, SBI was a smaller reporting company at the time the SB/RH
Merger was completed.
Unaudited Pro Forma Condensed Combined Financial Statements, page 193
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements, page 198
Note 4. Acquisition of Russell Hobbs by Spectrum Brands in SB/RH Merger, page 201
2. |
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With a view towards disclosure, please revise this note to describe the key terms of this
transaction including a description of the consideration given and the debt assumed. |
Response: The Company will revise this note to include a description of the key terms of the
transaction, including a description of the consideration given and the debt assumed. The revised
text of Note 4 is included in Annex I attached hereto.
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1 |
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On the 2009 Test Date, SBI had 52,794,156
shares of common stock outstanding. On March 27, 2009 (the last trading day of
SBIs second fiscal quarter) the closing price of SBIs common stock was $0.15
per share. As a result, SBIs total public float was approximately $7.9
million as of the 2009 Test Date. |
Note 5. Pro Forma Adjustment Fresh-Start Reporting, page 201
3. |
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We note from page 196 and here that you made pro forma adjustments that impact certain lines
items related to the Spectrum Brands Holding, Inc. fresh start reporting within the pro forma
condensed combined statement of operations for the year ended December 31, 2009. However, we
do not see where you have made any adjustments for the tax impact related to these
adjustments. Please advise or revise. |
Response: The following text will be added to Note 5 and appropriate adjustments will be made to the pro forma financial information:
(e) SBI recorded a decrease of $2,572 of net tax expense for non-U.S. subsidiaries for the
period from October 1, 2008 to August 30, 2009. During all periods presented, SBI had a full
valuation allowance for all net U.S. deferred tax assets, exclusive of indefinite-lived
intangibles. Due to SBIs full valuation allowance position, any tax effect of the fresh-start pro
forma adjustments for the U.S. parent and U.S. subsidiaries would be offset by an adjustment to the
valuation allowance. As such, SBI has recorded a zero tax effect for the pro forma adjustments
related to the U.S. parent and U.S. subsidiaries.
Index to Consolidated Financial Statements, page F- 1
4. |
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Please revise this section and Annex D and Annex F to comply with Rule 8-08 and Rule 8-04 of
Regulation S-X, or, to the extent applicable, Item 3.12 and Rule 3-05 of Regulation S-X.
Similarly, please update your pro forma financial statements starting on page 193 and any
related information included within the filing to comply with Rule 8-05 of Regulation S-X, or,
to the extent applicable, Rule 11-02(c)(3) of Regulation S-X. |
Response: The Company has reviewed the referenced section and Annexes D and F and has concluded
they comply with Rule 8-08 and Rule 8-04 of Regulation S-X. This conclusion was based, in part, on
the fact that (i) the Company is both a smaller reporting company and accelerated filer and elects
to comply with the scaled disclosure rules applicable to smaller reporting companies, (ii) SBI is a
smaller reporting company (although it will cease to be such for its 2011 fiscal year based on its
public float as of the end of its second quarter of fiscal 2010, which does not alter the updating
requirements for the age of financial statements of the acquiree) and (iii) as discussed in our
response to comment 1 above, SB Holdings is also a smaller reporting company (although it too will
cease to be such for its 2011 fiscal year, which does not alter the updating requirements for the age of financial statements of the acquiree).
The Company will update its interim financial statements in Annex D and its pro forma
financial statements and related information if it is not able to begin mailing the Definitive
Information Statement to stockholders on or before November 8, 2010.
In connection with our response on behalf of the Company to the Staffs comments, the Company
has provided in Exhibit A a written statement by the Company acknowledging that:
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the Company is responsible for the adequacy and accuracy of the disclosure in the
filing; |
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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 |
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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. |
Thank you for your assistance regarding this matter. Please contact me at (212) 836-8685 with
any further comments or questions you may have.
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Sincerely,
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/s/ Lynn Toby Fisher
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Lynn Toby Fisher |
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cc: |
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Geoffrey Kruczek
Aslynn Hogue
Tara Harkins
Lynn Dicker |
Annex I
November 2,
2010
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(4)
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ACQUISITION
OF RUSSELL HOBBS BY SPECTRUM BRANDS IN SB/RH MERGER
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Russell Hobbs was acquired by SB Holdings as a result of the
SB/RH Merger on June 16, 2010. The consideration was in the
form of newly-issued shares of common stock of SB Holdings
exchanged for all of the outstanding shares of common and
preferred stock and certain debt of Russell Hobbs held by the
Harbinger Parties. Inasmuch as Russell Hobbs is a private
company and its common stock was not publicly traded, the
closing market price of the Spectrum Brands common stock at
June 15, 2010 was used to calculate the purchase price. The
total purchase price of Russell Hobbs was approximately $597,579
determined as follows:
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Spectrum Brands closing price per share on June 15, 2010
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$
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28.15
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Purchase price Russell Hobbs allocation
20,704 shares(1)(2)
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$
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575,203
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Cash payment to pay off Russell Hobbs North American
credit facility
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22,376
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Total purchase price of Russell Hobbs
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$
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597,579
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(1) |
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Number of shares calculated based upon conversion formula, as
defined in the SB/RH Merger agreement, using balances as of
June 16, 2010. |
(2) |
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The fair value of 271 shares of unvested restricted stock
units as they relate to post combination services will be
recorded as operating expense over the remaining service period
and were assumed to have no fair value for the purchase price. |
The total purchase price for Russell Hobbs was allocated to the
preliminary net tangible and intangible assets of Russell Hobbs
by SB Holdings based upon their preliminary fair values at
June 16, 2010 and is reflected in SB Holdings
historical condensed consolidated statement of financial
position as of July 4, 2010 as set forth below. The excess
of the purchase price over the preliminary net tangible assets
and intangible assets was recorded as goodwill. The preliminary
allocation of the purchase price was based upon a preliminary
valuation and the estimates and assumptions that are subject to
change within the measurement period (up to one year from the
acquisition date). The primary areas of the preliminary purchase
price allocation that are not yet finalized relate to the fair
values of certain tangible assets and liabilities acquired,
certain legal matters, amounts for income taxes including
deferred tax accounts, amounts for uncertain tax positions, and
net operating loss carryforwards inclusive of associated
limitations, the determination of identifiable intangible assets
and the final allocation of goodwill. SB Holdings expects to
continue to obtain information to assist it in determining the
fair values of the net assets acquired at the acquisition date
during the measurement period. The preliminary purchase price
allocation for Russell Hobbs is as follows:
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Current assets
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$
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307,809
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Property, plant and equipment
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15,150
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Intangible assets
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363,327
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Goodwill
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120,079
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Other assets
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15,752
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Total assets acquired
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822,117
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Current liabilities
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142,046
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Total debt
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18,970
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(1)
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Long-term liabilities
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63,522
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Total liabilities assumed
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224,538
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Net assets acquired
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$
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597,579
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(1) |
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Represents indebtedness of Russell Hobbs assumed in the SB/RH Merger. |
EXHIBIT A
HARBINGER GROUP INC.
450 Park Avenue, 27th Floor
New York, New York 10022
November 2, 2010
BY EDGAR AND BY HAND
Russell Mancuso
Branch Chief
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
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Re:
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Harbinger Group Inc. |
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Preliminary Information Statement on Schedule 14C |
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Filed October 8, 2010, as revised on October 25, 2010 |
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File No. 001-04219 |
Dear Mr. Mancuso:
In connection with Kaye Scholer LLPs comment response letter, dated November 2, 2010, filed on behalf of Harbinger Group Inc. (the Company) with
the staff of the Securities and Exchange Commission (the
Staff) in response to the Staffs
letter to the Company dated November 1, 2010, the Company hereby acknowledges that:
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the Company is responsible for the adequacy and accuracy of the disclosure in the
filing; |
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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 |
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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. |
Thank you for your assistance regarding this matter.
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Very truly yours, |
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Harbinger Group Inc. |
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By: /s/ Francis T. McCarron |
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Francis T. McCarron
Executive Vice President and
Chief Financial Officer |