August 30, 2016
VIA EDGAR
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549-3561
Attention: David L. Orlic, Special Counsel
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Re: Professional Diversity Network, Inc.
Schedule TO-C
Filed August 15, 2016
File No. 005-87999
Dear Mr. Orlic:
On behalf of Professional Diversity Network, Inc. (“PDN”), set forth below is PDN’s response to comments received from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) in their letter dated August 23, 2016 with respect to the above referenced Schedule TO-C of PDN.
For reference purposes, the text of the letter has been reproduced herein with responses below each numbered comment. For your convenience, the reproduced Staff comments from the letter have been italicized.
General
1. We note that the price in the Share Issuance and Sale is the same as the price in the Tender Offer, that the consideration for tendered shares will be paid from the proceeds of the Share Issuance and Sale, and that consummation of the Tender Offer is conditioned on consummation of the Share Issuance and Sale. Please advise as to which entity or entities will be identified as bidders in the Schedule TO and whether PDN is bidding for 2.5 million of its outstanding shares on CFL’s behalf.
Response:
PDN will be identified as the sole offeror in the Schedule TO. Cosmic Forward Limited, a Republic of Seychelles company wholly-owned by a group of Chinese investors (“CFL”), has not been identified as a “bidder” (as defined in Rule 14d-1(g)(2) of Regulation 14D) in the issuer tender offer (the “Tender Offer”) for up to 2.5 million shares of common stock of PDN (the “Common Stock”) because we have concluded that CFL is neither a person making the Tender Offer nor on whose behalf the Tender Offer is made. In reaching this conclusion, we considered, among other things, the Staff’s analysis and interpretive position set forth in Section II.D.2 of the Commission’s Division of Corporation Finance Current Issues and Rulemaking Projects (November 14, 2000), as updated (the “CIRP”), which describes the factors the Staff will consider in connection with determining the “bidder” in a tender offer.
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ALBANY
AMSTERDAM
ATLANTA
AUSTIN
BOCA RATON
BOSTON
CHICAGO
DALLAS
DELAWARE
DENVER
FORT LAUDERDALE
HOUSTON
LAS VEGAS
LONDON*
LOS ANGELES
MEXICO CITY+
MIAMI
MILAN**
NEW JERSEY
NEW YORK
NORTHERN VIRGINIA
ORANGE COUNTY
ORLANDO
PHILADELPHIA
PHOENIX
ROME**
SACRAMENTO
SAN FRANCISCO
SEOUL∞
SHANGHAI
SILICON VALLEY
TALLAHASSEE
TAMPA
TEL AVIV^
WARSAW~
WASHINGTON, D.C.
WESTCHESTER COUNTY
WEST PALM BEACH
* OPERATES AS
GREENBERG TRAURIG MAHER LLP
+ OPERATES AS
GREENBERG TRAURIG, S.C.
* * STRATEGIC ALLIANCE
∞ OPERATES AS
GREENBERG TRAURIG LLP
FOREIGN LEGAL CONSULTANT OFFICE
^ A BRANCH OF
GREENBERG TRAURIG, P.A.,
FLORIDA, USA
~ OPERATES AS
GREENBERG TRAURIG GRZESIAK SP.K.
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Did CFL play a significant role in initiating, structuring, and negotiating the Tender Offer? The Tender Offer is contemplated by the stock purchase agreement between PDN and CFL dated August 12, 2016 (the “Purchase Agreement”). Pursuant to the Purchase Agreement, PDN will issue and sell to CFL in a private placement a number of shares of Common Stock such that CFL will hold shares of Common Stock equal to approximately 51% of the outstanding shares of Common Stock, determined on a fully-diluted basis, after giving effect to the consummation of the transactions contemplated by the Purchase Agreement, including the Tender Offer (the “Share Issuance and Sale”). The Purchase Agreement was negotiated on an arm’s length basis between unaffiliated parties.
Although the Tender Offer is contemplated by the Purchase Agreement, it was included in the Purchase Agreement at PDN’s request. PDN and its bankers negotiated and structured the material terms of the Tender Offer solely to provide liquidity to PDN’s stockholders for the benefit of PDN’s stockholders. CFL did not play a significant role in initiating, structuring or negotiating the Tender Offer. CFL was and is neutral as to whether the Tender Offer occurs because the terms of the Purchase Agreement ensure that CFL will obtain a 51% ownership interest in PDN following the consummation of the transactions contemplated by the Purchase Agreement regardless of the amount of shares PDN acquires in the Tender Offer or whether or not it occurs. The Tender Offer merely impacts the ultimate number of shares to be issued to CFL to get it to 51% ownership in PDN following consummation of the transactions. We note, in particular, that completion of the Tender Offer is not a condition to completion of the Share Issuance and Sale.
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· | Is CFL acting together with the named bidder? No. PDN is acting solely on its own in connection with the purchase of Common Stock in the Tender Offer to provide liquidity to PDN stockholders. |
· | To what extent did or does CFL control the terms of the offer? CFL does not and did not control the terms of the Tender Offer. The terms of the Tender Offer were initiated and structured by PDN. CFL has certain consent rights pursuant to the Purchase Agreement with respect to the ability of PDN to (1) terminate or withdraw the Tender Offer, (2) amend, change or waive any term of condition of the Tender Offer, (3) reduce or extend the time period during which the Tender Offer remains open or (4) take any action that would reasonably be expected to unreasonably delay consummation of the Tender Offer. However, these consent rights were intended simply to assure CFL that the financial terms on which PDN proposed, on an arm’s length basis, to conduct the Tender Offer could not be varied unilaterally by PDN. These terms protect CFL’s position in PDN’s capital structure and the financial terms of its investment, but do not afford CFL control over PDN or the terms of the Tender Offer. |
· | Is CFL providing financing for the Tender Offer, or playing a primary role in obtaining financing? It is anticipated that substantially all of the funds to be used to purchase Common Stock in the Tender Offer will come from the proceeds of the Share Issuance and Sale. While CFL is providing financing for the Tender Offer, this is only one fact to be considered in determining whether CFL is a bidder. |
· | Does the person control the named bidder, directly or indirectly? No. Neither CFL nor any of its control persons currently own any shares of Common Stock of PDN or otherwise control PDN, directly or indirectly. No such interest will arise until the closing of the Share Issuance and Sale. |
· | Did the person form the nominal bidder, or cause it to be formed? No. PDN is not a nominal bidder. Rather, PDN is an established, publicly traded company with substantive operations and assets that are unrelated to the Tender Offer. PDN had revenues of approximately $38.6 million for the year ended December 31, 2015 and total assets of $37.4 million as of June 30, 2016. |
· | Would the person beneficially own the securities purchased by the named bidder in the Tender Offer or the assets of the target company? No, all shares of PDN Common Stock which PDN acquires in the Tender Offer will be cancelled. CFL will not beneficially own the shares that are purchased in the Tender Offer. Importantly, the number of shares purchased in the Tender Offer will not impact the ultimate beneficial ownership percentage of CFL in PDN Common Stock following consummation of all of the transactions contemplated by the Purchase Agreement. Pursuant to the terms of the Purchase Agreement, CFL will own that number of shares that constitutes 51% of PDN’s then-outstanding shares of Common Stock, determined on a fully-diluted basis, regardless of the number of shares PDN purchases in the Tender Offer. |
Very truly yours,
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GREENBERG TRAURIG, P.A.
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/s/ Laurie L. Green
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Laurie L. Green
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cc: |
David Mecklenburger
Chief Financial Officer
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