Company Name: Kerr-McGee Corp.
Public Availability Date: August 9, 2004
Securities Exchange Act of 1934 12(h) 12h-3
Securities Exchange Act of 1934 Section 12(h) ---
Securities Exchange Act of 1934 Section 13(a) ---
Securities Exchange Act of 1934 Section 15(d) --- Document Sections: INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
August 9, 2004 BY HAND DELIVERY Office of the Chief Counsel Division of Corporation Finance Securities and Exchange Commission 450 Fifth Street, N.W. Washington, DC 20549 Ladies and Gentlemen: On behalf of our clients, Kerr-McGee Corporation ("Kerr-McGee"), and its
wholly-owned subsidiary, Kerr-McGee (Nevada) LLC ("KMG Nevada"), we are writing
to respectfully request advice from the staff (the "Staff") of the Securities
and Exchange Commission (the "Commission") that it will not recommend
enforcement action to the Commission if, under the circumstances described
below, KMG Nevada does not file periodic reports that might otherwise be
required under Sections 13(a) and 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act"). BACKGROUND On April 6, 2004, Kerr-McGee, KMG Nevada and Westport Resources Corporation
("Westport") entered into an agreement and plan of merger (the "Merger
Agreement"), providing for the merger of Westport with and into KMG Nevada (the
"Merger"), with KMG Nevada as the surviving entity. Approval of the Merger was
solicited from the stockholders of each of Kerr-McGee and Westport pursuant to
the joint proxy statement/prospectus included in Kerr-McGee's Registration
Statement on Form S-4 (Registration Statement No.: 333-114886) under the
Securities Act of 1933 (the "Securities Act"). On June 25, 2004, the
stockholders of each of Kerr-McGee and Westport Resources Corporation approved
the Merger, which was consummated that same day. Prior to the consummation of the Merger, Westport's Common Stock, par value
$0.01 per share ("Westport Common Stock"), and 6 1/2% Convertible Preferred
Stock, par value $0.01 per share ("Westport Preferred Stock"), were each listed
on the New York Stock Exchange (the "NYSE") and registered under Section 12 of
the Exchange Act. In addition, Westport had outstanding senior subordinated
notes guaranteed by certain Westport subsidiaries (the "Notes"), in the
outstanding principal amount of $700,000,000. The Notes were not listed on any
national securities exchange or registered under the Exchange Act. However, all
of the Notes were issued pursuant to effective Form S-4 registration statements
under the Securities Act, including $125,000,000 principal amount of Notes that
were issued pursuant to a Form S-4 Registration Statement (Registration
Statement No.: 333-105834) that was declared effective by the Commission on
February 9, 2004 (the "2004 Registration Statement"). In connection with the Merger, each share of Westport Common Stock was converted
into the right to receive 0.71 shares of Kerr-McGee common stock. The Merger
Agreement also required Westport to redeem all of the outstanding shares of
Westport Preferred Stock prior to the consummation of the Merger, which
redemption occurred on June 21, 2004. As a result of the Merger and the
redemption of the Westport Preferred Stock, KMG Nevada succeeded to all of
Westport's assets, rights, liabilities and obligations, with Kerr-McGee owning
all of the outstanding equity of KMG Nevada. The Notes, which remained
outstanding following the Merger, were redeemed in full by KMG Nevada on July
31, 2004. On June 29, 2004 with respect to the Westport Preferred Stock and on July 13,
2004 with respect to the Westport Common Stock, the NYSE filed Form 25s with the
Commission (copies of which are attached as Exhibits A-1 and A-2) notifying it
that such securities would be removed from listing and registration as of July
15, 2004 and July 30, 2004, respectively. Pursuant to Section 12(d) of the
Exchange Act and Rule 12d2-2 thereunder, such removal relieved KMG Nevada from
continued compliance with Section 13(a) reporting obligations based on Section
12(b) of the Exchange Act relating to the Westport Preferred Stock and the
Westport Common Stock. On August 9, 2004, KMG Nevada, as successor issuer to Westport, filed a Form 15
with the Commission (a copy of which is attached as Exhibit B) certifying that
the Westport Preferred Stock and the Westport Common Stock are each held of
record by less than 300 persons (in fact, there are no holders of either
security as KMG Nevada only has outstanding limited liability company interests,
all of which are held by Kerr-McGee) and requesting termination of the
registration of each such class under Section 12(g) of the Exchange Act.
Accordingly, under Rule 12g-4(b), KMG Nevada's duty to file reports under
Section 13(a) based on Section 12(g) has been suspended as a result of the
filing of the Form 15. KMG Nevada has also filed posteffective amendments
deregistering any unsold securities under all effective KMG Nevada (including
its predecessor, Westport) Securities Act registration statements covering
previously unsold securities. Although KMG Nevada's reporting obligations with respect to the Westport
Preferred Stock and the Westport Common Stock have been suspended under Section
12(b) and 12(g), as further described below, it will continue to have
obligations to file periodic reports under Section 15(d). Under Rule 12h-3(c) of
the Exchange Act, KMG Nevada's reporting obligations under Section 15(d) will
continue, because the 2004 Registration Statement became effective, and
registration statements on Form S-8 with respect to the Westport Common Stock
and on Form S-3 with respect to the Westport Preferred Stock and the Westport
Common Stock were required to be updated pursuant to Section 10(a)(3) of the
Securities Act, in each case during KMG Nevada's current fiscal year. This is
the case even though, there are no publicly held KMG Nevada securities. KMG Nevada has advised us that, as required for the use of Rule 12h-3, KMG
Nevada (including Westport) has filed all reports required by Section 13(a) of
the Exchange Act, without regard to Rule 12b-25, for its most recent three
fiscal years and the portion of the current fiscal year through the date of this
letter. Accordingly, we understand that KMG Nevada could avail itself of the
suspension under Rule 12h-3(a) and (b)(1)(i) but for Subsection (c) of Rule
12h-3. DISCUSSION Based on these facts, KMG Nevada wishes to be relieved of its further reporting
obligations under the Exchange Act. We submit that, under the circumstances
described in this letter, Rule 12h-3(c) should not be applied to deny KMG Nevada
the relief otherwise provided in Rule 12h-3 with respect to termination of its
further reporting obligations. As described above, as a result of the Merger and the redemptions, the Westport
Preferred Stock, the Westport Common Stock and the Notes are no longer
outstanding and the only remaining securityholder of KMG Nevada is Kerr-McGee,
as sole holder of KMG Nevada's outstanding equity interests. Requiring KMG
Nevada's reporting obligations under the Exchange Act to continue would not
serve the purposes of Section 15(d) and would be unnecessarily burdensome to KMG
Nevada and Kerr-McGee. The Commission has stated that "[t]he purpose of Section
15(d) is to assure a stream of current information about an issuer for the
benefit of purchasers in the registered offering, and for the public, in
situations where Section 13 of the Exchange Act would not otherwise apply."
Release No. 34-20263 (Oct. 5, 1983) (a copy of which is attached as Exhibit C).
The Commission went on to say that the purpose of the limitation set forth in
Rule 12h-3(c) is to assure that the investing public will have available
complete information about an issuer's activities at least through the end of
the year in which it makes a registered offering. However, the Commission has
long-recognized that the benefits of periodic reporting by an issuer might not
always be commensurate with the burdens imposed. It is clear that in the circumstances described in this letter, the burdens
imposed on KMG Nevada and Kerr-McGee by the technical application of Rule
12h-3(c) greatly outweigh the benefits provided to the investing public, if any.
As there are no holders of KMG Nevada securities other than Kerr-McGee as sole
holder of KMG Nevada equity interests, the preparation and filing of further
periodic reports required under Section 13(a) of the Exchange Act seem to be of
no value or benefit, as there is no one who would be protected by, or who would
in any way benefit from, such reports. The preparation of such reports, however,
would impose a financial burden on KMG Nevada and Kerr-McGee and would take up a
significant portion of each of their management's time. The Staff has often taken the position that a literal reading of Rule 12h-3(c)
can lead to an unjustified burden on a registrant. For example, in Ferrelgas
Inc. (avail. Aug. 19, 1994), the Commission granted no action relief exempting
the application of Rule 12h-3(c) where a registration statement covering
debentures went effective in the current fiscal year, but the debentures would
be redeemed prior to the due date for the report. In many other and similar
instances, the Staff has taken a no-action position on the suspension of filing
Exchange Act reports where there would remain few or no securityholders to
benefit from the disclosure to be provided by such reports, even though, as a
technical matter, Rule 12h-3 would require continued filings. See, e.g., Centex
Development Company, L.P. (avail. Mar. 17, 2004); GS Financial Products U.S.,
L.P. (avail. Jan. 31, 2000); DiMark Inc. (avail. May 29, 1996); Holnam, Inc.
(avail. Mar. 25, 1994); Technicon Instruments Corporation (avail. Nov. 2, 1989);
Colorado Springs Citizens' Cable, Inc. (avail. Apr. 5, 1989); PNC Financial
Corporation (avail. Mar. 2, 1987) (copies of each of these letters are attached
as Exhibit D). We concur in the judgment of the Staff represented by the above-described
precedents, which reflect an appropriate policy judgment with respect to the
benefits of Exchange Act reporting. As a result of the Merger and the
redemptions described above, KMG Nevada has no outstanding securities other than
the equity held by its parent, Kerr-McGee, and therefore we believe there is no
benefit to KMG Nevada's continued reporting obligations under the Exchange Act.
Accordingly, based on the above-described precedents, we respectfully request
that the Staff relieve KMG Nevada of its reporting obligations under the
Exchange Act. Upon receipt from the Staff of such relief, we understand that KMG
Nevada will file with the Commission a second Form 15 pursuant to Rule 12h-3 in
order to suspend KMG Nevada's obligation under Section 15(d) to file reports
under Section 13(a) with respect to the Westport Preferred Stock, the Westport
Common Stock and the Notes. CONCLUSION In light of the foregoing, we respectfully request that the Staff advise us that
it will not recommend enforcement action to the Commission if, under the
circumstances described in this letter, KMG Nevada does not file further reports
that might otherwise be required under Sections 13(a) and 15(d) of the Exchange
Act. Enclosed in accordance with Release No. 33-6269 are seven copies of this letter.
If you have any questions regarding the foregoing or if you need any additional
information, please do not hesitate to call David B.H. Martin at (202) 662-5128
or Stephen A. Infante at (212) 841-1039. Very truly yours, COVINGTON & BURLING /s/ David B.H. Martin cc: David Lynn Robert Plesnarski (Securities and Exchange Commission) John Reichenberger Justin Byrne (Kerr-McGee Corporation)
[STAFF REPLY LETTER]
August 9, 2004 Response of the Office of Chief Counsel Division of Corporation Finance Re: Kerr-McGee (Nevada) LLC Incoming letter dated August 9, 2004 Based on the facts presented, the Division will not object if Kerr-McGee
(Nevada) stops filing periodic reports under the Securities Exchange Act of
1934. We note that Kerr-McGee (Nevada) has already filed post-effective
amendments removing from registration unsold securities under all effective
registration statements and has filed a notice on Form 15 making appropriate
claims under rule 12g-4 under the Exchange Act. We assume that, consistent with
the representation made in your letter, Kerr-McGee (Nevada) will file a notice
on Form 15 making appropriate claims under rule 12h-3 under the Exchange Act, on
or before the due date for its next Exchange Act report. This position is based on the representations made to the Division in your
letter. Any different facts or conditions might require the Division to reach a
different conclusion. Further, this response expresses the Division's position
on enforcement action only and does not express any legal conclusion on the
question presented. Sincerely, /s/ Robert Plesnarski Deputy Chief Counsel
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