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October 30, 2012
via edgar
| Mr. Daniel F. Duchovny, Special Counsel | |
| Mr. Edwin Kim, Attorney-Advisor | |
| Office of Mergers and Acquisitions | |
| Division of Corporation Finance | |
| Securities and Exchange Commission | |
| 100 F Street, N.E. | |
| Washington, D.C. 20549 |
| Re: | Yucheng Technologies Limited Schedule 13E-3 Filed August 24, 2012 File No. 005-82213 |
Dear Messrs. Duchovny and Kim:
On behalf of Yucheng Technologies Limited, a company organized under the laws of the British Virgin Islands (“Yucheng” or the “Company”), we have set forth below responses to the comments of the staff (the “Staff”) of the Securities and Exchange Commission contained in its letter of October 24, 2012 with respect to Amendment No. 1 to the Schedule 13E-3, File No. 005-82213 (the “Amendment No. 1”), filed on October 10, 2012 by the Company and the other filing persons named therein. For your convenience, the Staff’s comments are repeated below in bold and italics, followed in each case by the responses of the filing persons. Please note that all references to page numbers in the responses are references to the page numbers in Amendment No. 2 to the Schedule 13E-3 (the “Amendment No. 2”) filed concurrently with the submission of this letter.
We represent the independent committee of the board of directors of the Company. To the extent any response relates to information concerning any of Mr. Weidong Hong, Ms. Hong Wu, Ms. Yun Shi, Mr. Dong Wang, Mr. Steve Shiping Dai, Ms. Rebecca B. Le, Mr. Chun Zheng, Mr. Xun Yang, Ms. Weihua Hong, Mr. Lijing Ren, Ms. Yanmei Wang, Ms. Danhui Ma, Ms. Xinmin Yu, New Sihitech Limited, New Sihitech Acquisition Limited, Sihitech Company Limited, CSOF FinTech Limited, CEL FinTech Limited, China Special Opportunities Fund III, L.P., CSOF III GP Limited, Forebright Partners Limited, Windsor Venture Limited, China Everbright Limited, ROTH Capital Partners LLC (“Roth”) or Lazard Asia (Hong Kong) Limited (“Lazard”), such response is included in this letter based on information provided to the Company and us by such other entities or persons or their respective representatives.
| Securities and Exchange Commission | - 2 - | October 30, 2012 |
Concurrently with the submission of this letter, the Company is filing via EDGAR the Amendment No. 2. In addition, a marked copy of the Schedule 13E-3 to show changes between the Amendment No. 2 and the Amendment No. 1 is being provided to the Staff via email.
* * *
Schedule 13E-3/A
| 1. | We note your response to prior comment 4. Please tell us, with a view toward revised disclosure, why you have not provided the ratio of earnings to fixed charges in US dollars for 2011. |
The Amendment No. 1 has been revised to reflect the Staff’s comment. Please refer to page 81 of the Amendment No. 2.
Revised Proxy Statement
| 2. | Please fill in the blanks in your proxy statement. |
The Company respectfully advises the Staff that it is considering the engagement of a proxy solicitation agent and the date for calling the shareholders meeting and will fill in the blanks in the proxy statement in due course.
Special Factors
Background of the Merger, page 19
| 3. | We note your response to prior comment 14 regarding Lazard’s contact with Shah Capital Management, Inc. Please revise your disclosure on page 23 to disclose Shah Capital Management’s response to Lazard’s inquiry as to whether they would vote in favor of the proposed transaction. Also, please revise to describe the proposed transaction presented by Lazard to Shah Capital Management on behalf of Mr. Hong “based on the information then publicly available.” By July 26, 2012, the only publicly available description of the proposed transaction was disclosed in a May 21, 2012 press release by the board. However, since the date of the press release, there had been a significant amount of negotiation and revisions of major terms of the proposed transaction between the Mr. Hong and the independent committee. |
The Amendment No. 1 has been revised to reflect the Staff’s comment. Please refer to page 23 of Amendment No. 2. The Buyer Group respectfully advises the Staff that Shah Capital was not advised of the status or content of the negotiations subsequent to the date of the Company's press release on May 21, 2012.
| 4. | We note your response to prior comment 15. Please revise to clarify why Shah Capital Management was not considered to be part of the Buyer Group. |
The Amendment No. 1 has been revised to reflect the Staff’s comment. Please refer to page 23 of Amendment No. 2. The Buyer Group respectfully advises the Staff that at no time were there any substantive discussions between the Buyer Group and Shah Capital relating to the transaction other than the discussion with respect to Shah Capital's intention to vote as disclosed in the Schedule 13E-3.
| Securities and Exchange Commission | - 3 - | October 30, 2012 |
Reasons for the Merger and Recommendation of the Independent Committee and Our Board of Directors, page 25
| 5. | In your response to prior comment 19, you indicate on page 27 that Mr. Hong did not indicate whether he would leave Yucheng Technologies if you remained a public company. Please revise to provide a discussion whether the independent committee considered rejecting the Buyer Group’s offer and remain a public company. |
The Amendment No. 1 has been revised to reflect the Staff’s comment. Please refer to page 27 of the Amendment No. 2.
| 6. | We reissue prior comment 20. Note that your directors and officers are considered your affiliates and that unless all directors and officers hold Excluded Shares, which does not appear to be the case, then the Roth opinion and your fairness determination are addressed to a different group of security holders. |
The Amendment No. 1 has been revised to reflect the Staff’s comment. Please refer to page 27 of the Amendment No. 2.
Certain Financial Projections, page 35
| 7. | We reissue prior comment 25. Please tell us the assumptions and estimates or revise the disclosure to describe them. |
The Amendment No. 1 has been revised to reflect the Staff’s comment. Please refer to page 35 of the Amendment No. 2.
| 8. | You provide additional projections on page 36 in response to prior comment 26, but you still indicate on page 21 that this section contains summarized financial projections. Please revise to disclose the full projections provided to Roth or explain why they are not material. |
The Amendment No. 1 has been revised to reflect the Staff’s comment. Please refer to pages 21 and 36 of the Amendment No. 2.
Opinion of Roth, the Independent Committee’s Financial Advisor
Selected Comparable Transaction Analysis, page 40
| 9. | We note your response to prior comment 29 regarding your use of blended multiples of Application Software Company and IT Consulting Business Company transactions. You indicate on page 41 your description of 87% of your prior fiscal year’s revenues as consisting of “Software and Solutions” comprising of revenues in both categories. Please revise to provide some quantitative and/or qualitative disclosure that indicates the nature of the split of your total revenue between the Application and IT Consulting Business categories and provide a discussion as to why the use of the blended multiples is appropriate in your Selected Comparable Transactions Analysis. |
The Amendment No. 1 has been revised to reflect the Staff’s comment. Please refer to page 41 of the Amendment No. 2.
| Securities and Exchange Commission | - 4 - | October 30, 2012 |
Analyses of Implied Premia, page 42
| 10. | Your response to prior comment 31 indicates that Roth believes the use of privatizations of formerly U.S. listed Chinese companies for use in its implied premia analysis is appropriate because such a specific market is “unique,” as disclosed on page 42. Please revise to clarify why Roth or you believe such a sample is unique or appropriate under this valuation method. |
The Amendment No. 1 has been revised to reflect the Staff’s comment. Please refer to page 42 of the Amendment No. 2.
Material U.S. Federal Income Tax Consequences, page 84
| 11. | We note your response to prior comment 35, but you still refer to this section as providing a summary “for general information purposes only …” on page 84. Please remove this statement in your next amendment. |
The Amendment No. 1 has been revised to reflect the Staff’s comment. Please refer to page 84 of the Amendment No. 2.
* * *
| Securities and Exchange Commission | - 5 - | October 30, 2012 |
Please note that attached hereto as Exhibit A is the written acknowledgement by each of the Company, Mr. Weidong Hong, Ms. Hong Wu, Ms. Yun Shi, Mr. Dong Wang, Mr. Steve Shiping Dai, Ms. Rebecca B. Le, Mr. Chun Zheng, Mr. Xun Yang, Ms. Weihua Hong, Mr. Lijing Ren, Ms. Yanmei Wang, Ms. Danhui Ma, Ms. Xinmin Yu, New Sihitech Limited, New Sihitech Acquisition Limited, Sihitech Company Limited, CSOF FinTech Limited, CEL FinTech Limited, China Special Opportunities Fund III, L.P., CSOF III GP Limited, Forebright Partners Limited, Windsor Venture Limited and China Everbright Limited, as requested by the Staff.
Should you have any questions relating to the foregoing or wish to discuss any aspect of the proposed merger or the Company’s filings, please contact me at (86) 10 5920-1090.
| Very truly yours, | ||
| /s/ Ling Huang | ||
| Ling Huang, Esq. | ||
:
| cc: | Peter X. Huang, Esq. |
| Michael V. Gisser, Esq. |
Skadden, Arps, Slate, Meagher & Flom LLP
30th Floor, China World Office 2
1 Jianguomenwai Avenue
Beijing 100004
People’s Republic of China
Andrew Hudders
Golenbock Eiseman Assor Bell & Peskoe
437 Madison Avenue - 40th Floor
New York, New York 10022
| Securities and Exchange Commission | - 6 - | October 30, 2012 |
EXHIBIT A – ACKNOWLEDGEMENT
In response to the comments of the staff of the Securities and Exchange Commission (the “Commission”) contained in its letter of October 24, 2012 with respect to Amendment No. 1 to the Schedule 13E-3, File No. 005-82213 (the “Amendment No. 1”), filed on October 10, 2012 by Yucheng Technologies Limited and the other filings persons named therein, each of the undersigned hereby acknowledges that in connection with the Schedule 13E-3 as well as any subsequent amendment thereto filed with the Commission:
| · | the filing person is responsible for the adequacy and accuracy of the disclosure in the filing; |
| · | 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 filing person 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. |
| Yucheng Technologies Limited | |||
| By: | /s/ Yingjun Li | ||
| Name: | Yingjun Li | ||
| Title: | Director | ||
| Sihitech Company Limited | |||
| By: | /s/ Weidong Hong | ||
| Name: | Weidong Hong | ||
| Title: | Director | ||
| New Sihitech Limited | |||
| By: | /s/ Weidong Hong | ||
| Name: | Weidong Hong | ||
| Title: | Director | ||
| New Sihitech Acquisition Limited | |||
| By: | /s/ Weidong Hong | ||
| Name: | Weidong Hong | ||
| Title: | Director | ||
| Weidong Hong | |||
| By: | /s/ Weidong Hong | ||
| Hong Wu | |||
| By: | /s/ Hong Wu | ||
| Yun Shi | |||
| By: | /s/ Yun Shi | ||
| Securities and Exchange Commission | - 7 - | October 30, 2012 |
| Dong Wang | |||
| By: | /s/ Dong Wang | ||
| Steve Shiping Dai | |||
| By: | /s/ Steve Shiping Dai | ||
| Rebecca B. Le | |||
| By: | /s/ Rebecca B. Le | ||
| Chun Zheng | |||
| By: | /s/ Chun Zheng | ||
| Xun Yang | |||
| By: | /s/ Xun Yang | ||
| Weihua Hong | |||
| By: | /s/ Weihua Hong | ||
| Lijing Ren | |||
| By: | /s/ Lijing Ren | ||
| Yanmei Wang | |||
| By: | /s/ Yanmei Wang | ||
| Danhui Ma | |||
| By: | /s/ Danhui Ma | ||
| Xinmin Yu | |||
| By: | /s/ Xinmin Yu | ||
| CSOF FinTech Limited | |||
| By: | /s/ Liu Cheng | ||
| Name: | Liu Cheng | ||
| Title: | Director | ||
| CEL FinTech Limited | |||
| By: | /s/ Tang Chi Chun | ||
| Name: | Tang Chi Chun | ||
| Title: | Director | ||
| China Special Opportunities Fund III, L.P. | |||
| By: | /s/ Liu Cheng | ||
| Name: | Liu Cheng | ||
| Title: | Authorized Signatory | ||
| CSOF III GP Limited | |||
| By: | /s/ He Ling | ||
| Name: | He Ling | ||
| Title: | Director | ||
| Securities and Exchange Commission | - 8 - | October 30, 2012 |
| Forebright Partners Limited | |||
| By: | /s/ Liu Cheng | ||
| Name: | Liu Cheng | ||
| Title: | Director | ||
| Windsor Venture Limited | |||
| By: | /s/ Tang Chi Chun | ||
| Name: | Tang Chi Chun | ||
| Title: | Director | ||
| China Everbright Limited | |||
| By: | /s/ Tang Chi Chun | ||
| Name: | Tang Chi Chun | ||
| Title: | Director | ||