Warnaco Inc. , (Oct. 11, 1991)INQUIRY LETTER 1
SKADDEN, ARPS, SLATE, MEAGHER & FLOM TELEPHONE(212) 735-3000 July 29, 1991 Securities Act of 1933 HAND DELIVERY Office of the Chief Counsel Attention: Abigail Arms, Deputy Chief Counsel Re: Warnaco Inc. Dear Ms. Arms: On April 19, 1991, our client, Warnaco Inc. (the "Company"), issued and sold to a group of institutional investors $75,176,000 aggregate principal amount of its Senior Secured Discount Term Notes due 1997 (the "Unregistered Notes") in a private placement (the "Private Placement") pursuant to Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"). Pursuant to a contractual obligation described below, it is contemplated that prior to November 19, 1991, the Company will register, pursuant to Section 5 of the Securities Act, an exchange offer (the "Exchange Offer") whereby the then holders of the Unregistered Notes (the "Exchange Offerees") will be offered a new series of Term Notes (the "Registered Notes"), in exchange for their Unregistered Notes. The contractual terms of the Registered Notes will be identical to the Unregistered Notes so exchanged. The purpose of this letter is to request concurrence with our view, in reliance on Exxon Capital Holdings Corp. (avail. May 13, 1988), Mary Kay Cosmetics, Inc. and Morgan Stanley & Co. Incorporated (both avail June 5, 1991), that the Exchange Offerees may resell the Registered Notes without any further registration under the Securities Act and without delivering to the purchaser a prospectus that meets the requirements of Section 10 of the Securities Act. The Company The Company is a Delaware corporation and a wholly owned subsidiary of The Warnaco Group, Inc. The Company is a diversified brand name apparel company which designs, manufactures, imports, markets and sells a broad line of moderate to premium priced womens intimate apparel and mens apparel, accessories and related products. Its products are marketed under nationally recognized directly owned and exclusively licensed brand names. The proceeds from the Private Placement were used to refinance certain existing indebtedness of the Company. The Private Placement and Exchange Offer The Company offered the Unregistered Notes in the Private Placement only to persons who represented to the Company that they were "accredited investors" as defined in Rule 501 under the Securities Act. The Unregistered Notes are currently held by 18 persons, each of which is either an insurance company, an investment partnership or a mutual fund. Each of the purchasers in the Private Placement represented to the Company that it was purchasing the Unregistered Notes solely for its own account and with no intention of distributing any of the Unregistered Notes in any transaction which would be in violation of the securities laws of the United States of America or any state thereof. The Company agreed with the purchasers in the Private Placement that, subject to certain conditions, it would either (a) file a registration statement under the Securities Act with respect to the Exchange Offer or (b) file a "shelf" registration statement under the Securities Act with respect to the Unregistered Notes, in either case prior to July 18, 1991. Pursuant to its agreement with such purchasers, the Company intends to register the Exchange Offer under the Securities Act on Form S-1, thereby offering to each holder of the Unregistered Notes a new series of Registered Notes the contractual terms of which will be identical to the Unregistered Notes so exchanged. The Company intends to effect the Exchange Offer as soon as practical and, to that end, filed a registration statement with respect thereto (the "Registration Statement") with the Securities and Exchange Commission (the "Commission") on July 18, 1991. If a Registration Statement with respect to the Exchange Offer (or the Unregistered Notes) had not been filed with the Commission prior to July 18, 1991, the Company would have been required to pay liquidated damages. Status of and Resales by Exchange Offerees In reliance on Mary Kay Cosmetics, Inc. and Morgan Stanley & Co. Incorporated, the Company asks confirmation that resales of the Registered Notes by the Exchange Offerees will be viewed no differently from resales by nonaffiliated purchasers after the completion of any registered primary offering of securities. Accordingly, the Company also requests confirmation that the Exchange Offerees may resell the Registered Notes without any further registration under the Securities Act and without delivering to the purchaser a prospectus which meets the requirements of Section 10 of the Securities Act. The Staff has concurred with the foregoing views in situations with virtually identical operative facts (see Mary Kay Cosmetics, Inc. and Morgan Stanley & Co. Incorporated) and substantially similar operative facts (see Exxon Capital Holdings Corporation and Equipmark Corporation (avail. August 22, 1985)) notwithstanding a position of the Staff issued almost 20 years ago which appears, at least in part, to be to the contrary (see Meridian Industries, Inc. (avail. January 31, 1972)). In Mary Kay Cosmetics, Inc. (an offer to exchange notes for notes), the Staff concurred with the view that in exchange offers identical to the one presented here the exchange offerees may resell the notes without any further registration under the Securities Act and without delivering a prospectus that meets the requirements of Section 10 of the Securities Act so long as the exchange offerees were not in the business of underwriting or trading securities. In Morgan Stanley & Co. Incorporated, the investment banking firm sought the Staffs concurrence concerning a private placement of non-convertible debt or preferred stock. The Staff concurred in principal that holders of privately placed securities could resell the securities received in a subsequent registered Exchange Offer without registering such securities or delivering a prospectus which met the requirements of Section 10. In Meridian Industries, Inc., the issuer, whose common stock was held by approximately 1,800 persons, proposed to register an exchange offer to 40 persons holding in the aggregate approximately 65% of its outstanding common stock. Although the exchange offerees in Meridian Industries, Inc. included nonaffiliates of the issuer, the majority of the shares subject to the exchange offer were held by various directors and officers of the issuer. The Staff concluded that each of the persons accepting the exchange offer (including the stockholders who were not affiliated with the issuer) would be deemed to be an underwriter and any resale by them would require the delivery of a current prospectus. In Equimark Corporation (offer to exchange preferred stock for notes), the Staff appears to have concurred with the view that no prospectus delivery requirement applies to exchange offerees with respect to exchange offers similar to the one presented here and in Exxon Capital Holdings Corporation so long as the exchange offerees were not in the business of underwriting or trading in securities. In Equimark Corporation, the Staff noted that, in addition, the preferred stock could be resold pursuant to Rule 144(k) by such exchange offerees due to the length of their holding period of the notes. We see no reason why the Exchange Offer should be viewed any differently from the exchange offer described in Mary Kay Cosmetics, Inc. and Morgan Stanley & Co. Incorporated, particularly since the operative facts are so closely aligned. It is our understanding that (i) none of the Exchange Offerees is an affiliate of the Company, (ii) the Registered Notes will be acquired by the Exchange Offerees in the ordinary course of business, (iii) there is no agreement or understanding between any of the Exchange Offerees and any person with respect to any resale or distribution of the Unregistered Notes or the Registered Notes and (iv) none of the Exchange Offerees is in the business of underwriting or trading in securities. 1 In accordance with Mary Kay Cosmetics, Inc. and Morgan Stanley & Co. Incorporated, prior to the effective date of the Registration Statement, the Company would provide a letter to the Staff (i) stating that the Company is registering the Exchange Offer in reliance on the staff position enunciated in Mary Kay Cosmetics, Inc. and this letter and (ii) including a representation substantially to the following effect: The Company has not entered into any arrangement or understanding with any person to distribute the Registered Notes to be received in the Exchange Offer and, to the best of the Companys information and belief, each person participating in the Exchange Offer is acquiring the Registered Notes in its ordinary course of business and has no arrangement or understanding with any person to participate in the distribution of the Registered Notes to be received in the Exchange Offer. In this regard, the Company will make each person participating in the Exchange Offer aware that if such person has any such arrangement or understanding with respect to the distribution of the Registered Notes to be acquired in the Exchange Offer, such person (i) could not rely on the Staff position enunciated in Mary Kay Cosmetics, Inc. and Morgan Stanley & Co. Incorporated, or interpretive letters to similar effect and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. The Company acknowledges that such a secondary resale transaction by such person participating in the Exchange Offer pursuant to any such arrangement or understanding for the purpose of distributing the Registered Notes should be covered by an effective registration statement containing the selling securityholder information required by Item 507 of Regulation S-K promulgated under the Securities Act. The Company wishes to comply with its registration obligations as soon as practical. Accordingly, your prompt response to this letter will be greatly appreciated. If for any reason you are unable to provide the requested confirmation, we respectfully request an opportunity to discuss this matter with you prior to your issuance of any written response. Should you have any questions or require any further information, please call me at (212) 735-3770. In accordance with Release No. 33-6269 under the Securities Act, enclosed are seven copies of this letter. Very truly yours, J. Gregory Milmoe INQUIRY LETTER 2
SKADDEN, ARPS, SLATE, MEAGHER & FLOM October 02, 1991 Securities Act of 1933 October 2, 1991 HAND DELIVERY Office of the Chief Counsel Attention: Abigail Arms Deputy Chief Counsel Re: Warnaco Inc. Dear Ms. Arms: This letter supplements our letter to you dated July 29, 1991 (the "July 29 Letter") on behalf of our client, Warnaco Inc. Capitalized terms used herein have the meanings set forth in the July 29 Letter. The Unregistered Notes were issued on April 19, 1991, prior to the issuance of the Mary Kay Cosmetics, Inc. and Morgan Stanley & Co. Incorporated letters. In connection with the Private Placement, the Company agreed with the purchasers of the Unregistered Notes that the Company could proceed with the Exchange Offer only upon receipt by the Company of a favorable "no-action" letter from the Commission with respect to the matters discussed in the July 29 Letter. While we recognize that the Mary Kay Cosmetics, Inc. and Morgan Stanley & Co. Incorporated letters deal with substantially the same issues as the July 29 Letter, because of the specific contractual requirement of a "no-action" letter, we respectfully request that a response to the July 29 Letter be issued. Should you have any questions or require any further information, please call me at (212) 735-3770. In accordance with Release No. 33-6269 under the Securities Act, enclosed are seven copies of this letter. Very truly yours, J. Gregory Milmoe Enclosures
October 11, 1991 RESPONSE OF THE OFFICE OF CHIEF COUNSELDIVISION OF CORPORATION FINANCE Re: Warnaco, Inc. ("Company") Based on the facts presented, it is the Divisions view that the holders of privately placed Senior Secured Discount Term Notes due 1997 ("Unregistered Notes") who exchange such securities for similar securities to be issued pursuant to a registered exchange offer ("Registered Notes") may resell the Registered Notes without compliance with the registration and prospectus delivery requirements of the Securities Act of 1933, provided such holder acquires the Registered Notes in the ordinary course of business and has no arrangement or understanding with any person to participate in the distribution of the Registered Notes. This position assumes that the holder is not affiliated with the Company. Further, prior to the effectiveness of the registration statement, the issuer should provide a supplemental letter to the staff that contains a statement and representation substantially in the form set forth on pages 5-6 of your July 29th letter. Because this position is based on the facts and representations contained in your letters, it should be noted that any different facts or conditions might require another result. Sincerely, Gregg W. Corso Special Counsel
1While
it should be noted that certain of the institutional Exchange Offerees
may have direct or indirect affiliates which are broker-dealers, there
are no arrangements or understandings between or among any of such
persons with respect to any resale or distribution of the Unregistered
Notes or Registered Notes.
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