UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
SCHEDULE 13D/A
Under the Securities Exchange Act of
1934
(Amendment No.
2)*
China
Yuchai International Limited
(Name of
Issuer)
Common
Stock
(Title of
Class of Securities)
G21082105
(CUSIP
Number)
Shah
Capital Management, Inc.
8601 Six
Forks Road, Suite 630
Raleigh,
NC 27615
(919)
719-6360
November
27, 2009
(Date of
Event which Requires Filing of this Statement)
If the
filing person has previously filed a statement on Schedule 13G to report the
acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box. o
Note:
Schedules filed in paper format shall include a signed original and five copies
of the schedule, including all exhibits. See Rule 13d-7 for other parties to
whom copies are to be sent.
* The
remainder of this cover page shall be filled out for a reporting person’s
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The
information required on the remainder of this cover page shall not be deemed to
be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934
(“Act”) or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP
No.
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G21082105
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Schedule
13D/A
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Page 1 of 8 Pages |
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1
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NAMES
OF REPORTING PERSONS / I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
(entities only)
Shah
Capital Management, Inc.
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2
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CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS)
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(a) þ
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(b) o
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3
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SEC
USE ONLY
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4
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SOURCE
OF FUNDS (SEE INSTRUCTIONS)
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OO
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5
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CHECK
BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
OR 2(e)
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o
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6
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CITIZENSHIP
OR PLACE OF ORGANIZATION
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North
Carolina
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7
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SOLE
VOTING POWER
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NUMBER
OF
SHARES
BENEFICIALLY
OWNED
BY
EACH
REPORTING
PERSON
WITH
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0
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8
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SHARED
VOTING POWER
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2,026,040
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9
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SOLE
DISPOSITIVE POWER
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0
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10
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SHARED
DISPOSITIVE POWER
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2,026,040
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11
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AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
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2,026,040
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12
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CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS)
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o
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13
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PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
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5.4%
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14
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TYPE
OF REPORTING PERSON (SEE INSTRUCTIONS)
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IA
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CUSIP
No.
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G21082105
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Schedule
13D/A
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Page 2 of 8 Pages |
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1
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NAMES
OF REPORTING PERSONS / I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
(entities only)
Shah
Capital Fund, L.P.
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2
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CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS)
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(a) þ
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(b) o
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3
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SEC
USE ONLY
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4
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SOURCE
OF FUNDS (SEE INSTRUCTIONS)
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OO
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5
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CHECK
BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
OR 2(e)
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o
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6
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CITIZENSHIP
OR PLACE OF ORGANIZATION
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North
Carolina
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7
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SOLE
VOTING POWER
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NUMBER
OF
SHARES
BENEFICIALLY
OWNED
BY
EACH
REPORTING
PERSON
WITH
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0
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8
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SHARED
VOTING POWER
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1,506,000
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9
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SOLE
DISPOSITIVE POWER
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0
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10
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SHARED
DISPOSITIVE POWER
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1,506,000
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11
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AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
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1,506,000
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12
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CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS)
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o
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13
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PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
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4.0%
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14
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TYPE
OF REPORTING PERSON (SEE INSTRUCTIONS)
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PN
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CUSIP
No.
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G21082105
|
Schedule
13D/A
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Page 3 of 8 Pages |
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1
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NAMES
OF REPORTING PERSONS / I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
(entities only)
Himanshu
Shah
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2
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CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS)
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(a) þ
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(b) o
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3
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SEC
USE ONLY
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4
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SOURCE
OF FUNDS (SEE INSTRUCTIONS)
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PF
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5
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CHECK
BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
OR 2(e)
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o
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6
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CITIZENSHIP
OR PLACE OF ORGANIZATION
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United
States
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7
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SOLE
VOTING POWER
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NUMBER
OF
SHARES
BENEFICIALLY
OWNED
BY
EACH
REPORTING
PERSON
WITH
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101,421
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8
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SHARED
VOTING POWER
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2,127,461
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9
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SOLE
DISPOSITIVE POWER
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|||
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||||
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101,421
|
||||
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|||
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10
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SHARED
DISPOSITIVE POWER
|
|||
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|||
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2,127,461
|
|||
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11
|
|
AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
|
|||
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|
||||
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2,127,461
|
||||
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|||
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12
|
|
CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS)
|
|||
|
|
|
||||
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|
o
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||||
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|||
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13
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PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
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5.7%
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||||
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|||||
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14
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TYPE
OF REPORTING PERSON (SEE INSTRUCTIONS)
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|||
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IN
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CUSIP
No.
|
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G21082105
|
Schedule
13D/A
|
Page 4 of 8 Pages |
Item 1. Security and
Issuer.
This
amendment No. 2 to Schedule 13D (“13D Amendment No. 2”) amends and
supplements the
first amendment to Schedule 13D (“13D Amendment No. 1”), as filed on December
31, 2008, amending the initial Schedule 13D (the “Original 13D”), filed
on November 24, 2008, by Shah Capital Management, Inc. (“SCM”), a
North Carolina corporation, relating to the common stock of China Yuchai
International, a foreign private issuer (the “Issuer”). The principal executive
offices of the Issuer are located at 16 Raffles Quay #26-00, Hong Leong
Building, Singapore 048581.
Item
2. Identity and Background
(a) In
addition to SCM, this 13D Amendment No. 2 also adds Shah Capital Fund, L.P., a
North Carolina limited partnership (the “Fund”), and Mr. Himanshu Shah, a
citizen of the United States of America (“Mr. Shah”), as reporting persons
(collectively, SCM, the Fund and Mr. Shah are the “Reporting Persons”). This
Amendment No. 2 is filed jointly by SCM, the Fund and Mr. Shah.
Additionally,
the Reporting Persons constituted a “group” with several other shareholders of
the Issuer in the period from May 2009 through September 2009. During this time,
the Reporting Persons, in addition to Mr. Patrick Manning, on behalf of Quasar
Capital Management and its respective investment funds (collectively the “Quasar
Funds”) and Trellus Management and its respective investment funds (collectively
the “Trellus Funds”), and Mr. Theo Muller (collectively, the Reporting Persons,
Mr. Manning, the Quasar Funds, the Trellus Funds, and Mr. Muller are the “Ad Hoc
Shareholder Group”), submitted several items of correspondence to the Issuer. As
of May 8, 2009, the Ad Hoc Shareholder Group collectively beneficially owned
12.5% of the Issuer’s Common Stock.
(b) The
address of the principal business and principal office of each of the Reporting
Persons is 8601 Six Forks Road, Suite 630, Raleigh, NC 27615.
(c) SCM’s
principal business is serving as investment advisor to certain affiliated funds
and individual client accounts. The principal occupation of Mr. Shah is serving
as the president and chief investment officer of SCM.
(d) and
(e) During the last five years, none of the Reporting Persons (i) has been
convicted in a criminal proceeding or (ii) was a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violations with respect to such
laws.
(f) See
Item 1.
Item
3. Source and Amount of Funds or Other Consideration.
SCM
advises the Fund, in addition to other individual accounts. SCM currently has
beneficial ownership of an aggregate of 2,026,040 shares of the Common Stock.
The source of funding for the purchase of the shares of Common Stock was derived
from investment capital of SCM clients, including the Fund.
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CUSIP
No.
|
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G21082105
|
Schedule
13D/A
|
Page 5 of 8 Pages |
Mr.
Shah’s personally owned shares were purchased with his personal funds, without
any special arrangements with any third party for that purpose.
Item 4. Purpose of
Transaction.
The
Reporting Persons initially began to purchase Common Stock of the Issuer at
varying times in 2006 for investment purposes based on the belief that the
Issuer was a fundamentally strong, undervalued company.
In the
period between the Reporting Persons’ initial purchases and the Original 13D,
the Reporting Persons made several suggestions to the Issuer regarding the
governance and corporate structure of the Issuer, including:
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·
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A
discussion between Mr. Shah and the Issuer’s management at the August 29,
2008 annual meeting of the Issuer suggesting that the Issuer initiate a
stock buyback program;
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and
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·
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An
October 8, 2008 letter to the Issuer suggesting that the
Issuer
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o
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Communicate
more clearly to the market
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o
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Concentrate
on its primary diesel engine
business
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o
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Issue
past due but previously unreleased financial statements;
and
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o
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Appoint
a new chief executive officer
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On
November 21, 2008, the Reporting Persons, in the aggregate, had acquired a
sufficient number of shares to require the filing of the Original
13D.
In the
period between the Original 13D and 13D Amendment No. 1, and in the months that
followed, the Reporting Persons purchased additional Common Stock of the Issuer
for investment purposes. In the aggregate, such additional amount of
Common Stock was less than 1% of the Issuer’s outstanding Common Stock), and the
purchases were not made for the purpose of acquiring control of the
Issuer.
On or
about May 8, 2009, the Ad Hoc Shareholder Group issued a letter to the board of
directors of the Issuer requesting several actions by the Issuer, including: (i)
that the Issuer remove its then CEO as an officer and director; (ii) that the
Issuer replace its audit committee chairman; (iii) that the issuer appoint two
independent directors from among the Ad Hoc Shareholder Group; (iv) that the
Issuer agree to forego the recently approved increase in director fees; (v) that
the Issuer commit to a program of effective communication with the financial
community; and (vi) that the Issuer assess its non-core investments and fully
disclose any conflicts of interest regarding the same.
After the
Issuer did not respond to the requests in the May 8, 2009 letter, the various
persons comprising the Ad Hoc Shareholder Group submitted formal requests for
the Issuer to hold a special meeting (the “Special Meeting”). The requests for
the Special Meeting were sent by Cede & Co., the nominee of The Depository
Trust Company, on behalf of SCM, the Fund, Mr. Muller, the Trellus Funds and the
Quasar Funds between June 17, 2009 and June 26, 2009. In the notice requesting
the Special Meeting, the Ad Hoc Shareholder Group requested that the
shareholders of the Issuer convene to consider proposals to (i) amend the
Issuer’s bye-laws to remove the provisions relating to the special share, which
is currently held by Hong Leong Asia Ltd. Through its wholly-owned subsidiary,
HL Technology Systems Pte Ltd. and gives its holder the ability to veto any
shareholder resolution (“Special Share”), (ii) remove the then current
president as an officer and director of the Issuer, and appoint a replacement
(iii) remove the audit committee chairman from that position and as a
director of the Issuer and (iv) amend the Issuer’s bye-laws to permit the
appointment of two independent directors by shareholders who have no interest in
the Special Share.
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CUSIP
No.
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G21082105
|
Schedule
13D/A
|
Page 6 of 8 Pages |
On July
9, 2009, the Issuer reported the foregoing information regarding the Special
Meeting on Form 6-K. On July 28, 2009, the Issuer provided notice to all of its
shareholders regarding the Special Meeting, which was scheduled for (and held
on) September 4, 2009.
During
the ensuing months, several of the Ad Hoc Shareholder Group’s desires that had
been expressed in the above communications with the Issuer were achieved.
Accordingly, since September 4, 2009, the Reporting Persons have neither
communicated with the Issuer, nor have they continued to participate in the Ad
Hoc Shareholder Group. From the perspective of the Reporting Persons,
the Ad Hoc Shareholder Group no longer exists.
Currently,
the Reporting Persons do not propose to engage the Issuer in discussions
regarding the Issuer’s strategy, business, assets, management, financial
conditions or operations, nor do they intend (or have any plan) to propose any
other action described in subsections (a) through (j) of Item 4 of Schedule 13D.
The Reporting Persons are currently holding the Common Stock of the Issuer only
for investment purposes.
Item
5. Interest in Securities of the Issuer.
(a) and
(b) Based upon the Issuer's annual report on Form 20-F filed on January 30,
2009, there were 37,267,673 shares of the Common Stock outstanding as of
December 31, 2007. Based on the foregoing, the 2,127,461 shares of the Common
Stock beneficially owned by the Reporting Persons (the “Subject Shares”)
represent approximately 5.7% of the shares of the Common Stock issued and
outstanding. The ownership of the Reporting Persons is as follows:
|
SCM
|
The
Fund
|
Mr.
Shah
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(a) Amount
Beneficially Owned:
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2,026,040
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1,506,000
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2,127,461
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(b) Percent
of Class:
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5.4%
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4.0%
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5.7%
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(c) Number
of Shares to Which
Reporting Person Has:
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(i)
Sole Voting
Power:
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N/A
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N/A
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101,421
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(ii) Shared
Voting Power:
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2,026,040
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1,506,000
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2,127,461
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(iii) Sole
Dispositive Power:
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N/A
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N/A
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101,421
|
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(iv)
Shared
Dispositive Power:
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2,026,040
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1,506,000
|
2,127,461
|
|
CUSIP
No.
|
|
G21082105
|
Schedule
13D/A
|
Page 7 of 8 Pages |
Mr. Shah,
in his individual capacity as a shareholder, has the power to vote and dispose
of 101,421 Subject Shares.
SCM, as
the investment adviser to the Fund and managed accounts, may be deemed to have
the shared power to vote or direct the vote of (and the shared power to dispose
or direct the disposition of) the 2,026,040 Subject Shares.
By virtue
of Mr. Shah’s position as the sole executive officer and sole director of SCM,
Mr. Shah may be deemed to have shared power to vote or direct the vote of (and
shared power to dispose or direct the disposition of) all of the Subject Shares
and, therefore, Mr. Shah may be deemed to be the beneficial owner of all of the
Subject Shares.
As
discussed in Item 4, the Reporting Persons are no longer acting together with
the other investors who comprised the Ad Hoc Shareholder Group as of the date
hereof. During the time when the Reporting Persons and those other
investors were acting together in that manner, the Ad Hoc Shareholder Group
beneficially owned approximately 4.7 million shares of the Issuer, or
approximately 12.5% of the shares outstanding.
(c) See
the trading data set forth in Exhibit 99.1 hereto, which is hereby incorporated
by reference into this Item 5(c) as if restated here in full.
Except as set forth in such Exhibit
99.1, no other transactions in shares of the Common Stock were effected by any
Reporting Person within the last 60 days.
(d) Not
applicable.
(e) Not
applicable.
Item
6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
As discussed above under Items 2 and
4, between May 2009 and September 2009 the Reporting Persons acted together with
several other investors (in what is called here the Ad Hoc Shareholders Group)
to request and urge the Issuer to make several changes in its corporate
governance structure. Since that time, however, none of the Reporting
Persons has been or is engaged in any such activity with those or any other
group of investors or other persons with respect to the Issuer or its
affairs.
Item
7. Material to be filed as Exhibits.
Exhibit
1. Joint Filing Agreement and Power of Attorney.
Exhibit
99.1 Trading data of the transactions in the Common Stock that were
effected since Amendment No.1.
|
CUSIP
No.
|
|
G21082105
|
Schedule
13D/A
|
Page 8 of 8 Pages |
SIGNATURES
After
reasonable inquiry and to the best of each of the undersigned’s knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date:
November 27, 2009
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SHAH
CAPITAL FUND, L.P.
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By:
|
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Shah
Capital Management, Inc.,
its
General Partner
|
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By:
Name:
|
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/s/
Himanshu Shah
Himanshu
Shah
|
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President
|
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SHAH
CAPITAL MANAGEMENT, INC.
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By:
Name:
|
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/s/
Himanshu Shah
Himanshu
Shah
|
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President
|
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/s/
Himanshu Shah
Himanshu
Shah
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EXHIBIT
1
JOINT FILING
AGREEMENT
In
accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934, as
amended, the undersigned agree to the joint filing on behalf of each of them of
a Statement on Schedule 13D (including any and all amendments thereto) with
respect to the Common Stock, par value U.S. $0.10 per share, of China Yuchai
International Limited, and further agree that this Joint Filing Agreement shall
be included as an Exhibit to such joint filings.
The
undersigned further agree that each party hereto is responsible for the timely
filing of such Statement on Schedule 13D and any amendments thereto, and
for the accuracy and completeness of the information concerning such party
contained therein; provided, however, that no party is responsible for the
accuracy or completeness of the information concerning any other party, unless
such party knows or has reason to believe that such information is
inaccurate.
This
Joint Filing Agreement may be signed in counterparts with the same effect as if
the signature on each counterpart were upon the same instrument.
In witness
whereof, the undersigned have executed this Agreement as of November 27,
2009.
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SHAH
CAPITAL FUND, L.P.
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By: Shah
Capital Management, Inc., General Partner
By: /s/ Himanshu
Shah
Name:
Himanshu Shah
Title:
President
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SHAH
CAPITAL MANAGEMENT, INC.
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By: /s/ Himanshu
Shah
Name:
Himanshu Shah
Title: President
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/s/ Himanshu
Shah
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Himanshu
Shah
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Exhibit
99.1
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Common
Stock
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Name
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Buy/Sell
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Security
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Trade
Date
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Quantity
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Trade
Amount
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Per
Share Cost
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Shah
Capital Management, Inc.
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Buy
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Common
Stock
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1/13/2009
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49,520 | $ | 208,172.00 | $ | 4.20 | ||||||||
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Shah
Capital Management, Inc.
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Buy
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Common
Stock
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1/16/2009
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13,600 | $ | 52,802.09 | $ | 3.88 | ||||||||
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Shah
Capital Management, Inc.
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Buy
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October
Call @ 7.5
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9/17/2009
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500
Contracts
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* | $ | 105,000.00 | $ | 2.10 | |||||||
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Shah
Capital Management, Inc.
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Buy
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Common
Stock
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9/29/2009
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7,000 | $ | 60,252.50 | $ | 8.60 | ||||||||
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Shah
Capital Management, Inc.
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Buy
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Common
Stock
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10/16/2009
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50,000 | * | $ | 376,000.00 | $ | 7.52 | |||||||
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Shah
Capital Management, Inc.
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Sell
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Common
Stock
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4/16/2009
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56,667 | $ | 410,836.00 | $ | 7.25 | ||||||||
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Shah
Capital Management, Inc.
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Sell
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Common
Stock
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4/24/2009
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953 | $ | 6,337.00 | $ | 6.65 | ||||||||
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Shah
Capital Management, Inc.
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Sell
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Common
Stock
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4/30/2009
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8,500 | $ | 64,600.00 | $ | 7.60 | ||||||||
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Shah
Capital Management, Inc.
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Sell
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Common
Stock
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5/11/2009
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17,000 | $ | 144,500.00 | $ | 8.50 | ||||||||
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Shah
Capital Management, Inc.
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Sell
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Common
Stock
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11/11/2009
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64,307 | $ | 1,006,405.00 | $ | 15.65 | ||||||||
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Shah
Capital Management, Inc.
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Sell
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Common
Stock
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11/16/2009
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5,593 | $ | 90,047.00 | $ | 16.10 | ||||||||
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Shah
Capital Management, Inc.
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Sell
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Common
Stock
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11/16/2009
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56,709 | $ | 924,923.79 | $ | 16.31 | ||||||||
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Shah
Capital Management, Inc.
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Sell
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Common
Stock
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11/17/2009
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78,996 | $ | 1,269,465.72 | $ | 16.07 | ||||||||
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*
October Calls purchased on 9/17/2009 were exercised on
10/16/2009
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Mr.
Shah has neither bought nor sold securities of the issuer on his own
behalf in the period since Amendment
No.1.
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November
27, 2009
Office of
Mergers and Acquisitions
Division
of Corporation Finance
Attention:
Mr. David Orlic, Attorney-Advisor
U.S.
Securities and Exchange Commission
Washington,
DC 20549
Re: Schedule
13D of Shah Capital Management, Inc. (“SCM”)
Ladies
and Gentlemen:
We have prepared this letter at the
request, and on behalf of, our client, SCM, to respond to the comments of the
Staff in its letter dated November 16, 2009, regarding SCM’s Schedule 13D
filings with respect to China Yuchai International Limited (the
“Issuer”). Our responses are provided in the same order as the
Staff’s comments, each of which is repeated below for convenient
reference.
Item
4. Purpose of Transaction
Comment 1: Disclosures made by the Issuer
indicate that, following the most recent amendment to your Schedule 13D, you
have engaged in activities designed to change the Issuer’s board of directors
and bylaws. If so, please advise why you have not amended your Schedule 13D
accordingly.
SCM Response: In
response to the Staff’s comments, SCM has reviewed (with the assistance of our
firm) its purchases of the Issuer’s common stock (the “Issuer Stock”), its
Schedule 13D/A dated December 31, 2008 (“Amendment No. 1”) and the Issuer’s
public filings over the past year. Based on this review, SCM now
recognizes that its disclosures in its Schedule 13D and Amendment No. 1 were too
narrowly focused on SCM’s investment purposes and impact of its investments in
the Issuer’s common stock, and did not fully address the implications for its
Schedule 13D filing obligations under Item 4 of the matters the Staff
identified. SCM now recognizes the full implications of all its activities for
its Schedule 13D filing requirements. Accordingly, SCM is submitting
an amended Schedule 13D/A of even date herewith (“Amendment No. 2”). Item 4 of
Amendment No. 2 provides a narrative description of SCM’s communications with
the Issuer in the periods before and after the filing of its initial Schedule
13D on November 24, 2008, and through the filing date of Amendment No. 2. The
purpose of Amendment No. 2 is to ensure that SCM’s public disclosures regarding
its activities with respect to the Issuer are as complete as
possible.
Item
5. Interest in Securities of the Issuer
Comment 2: You have not described any
transactions in subject securities in your Schedule 13D, as amended. Please
advise.
SCM Response: As
reflected in the disclosures contained in Amendment No. 2, SCM purchased most of
the shares of the Issuer under its control more than 60 days before SCM became
subject to Schedule 13D reporting requirements with respect to its
holdings. However, as part of its comprehensive review of its
Schedule 13D filing requirement in response to the Staff’s comments, SCM
recognizes that its Schedule 13D inadvertently failed to report transactions
within 60 days before the initial filing. Accordingly, Amendment No.
2 includes a detailed description of all of the transactions SCM has executed in
the common stock of the Issuer as Exhibit 99.1 to Amendment No. 2.
Comment 3: In your filings on Form 13F made
following the most recent amendment to your Schedule 13D, you have reflected
increases and decreases in your holdings of the Issuer’s common stock. In view
of the apparent activities noted above, please tell us why you believe an
amendment to your Schedule 13D was not required to reflect these changes. We
note that acquisitions and dispositions of less than one percent of the class of
securities may be material, depending on facts and circumstances. See Rule
13d-2(a) of Regulation 13D-G.
SCM Response: SCM has
reviewed purchases and sales of the Issuer’s common stock since Amendment No. 1
in light of the Staff’s comments. While SCM’s holdings of Issuer
Stock in the period between Amendment No. 1 and Amendment No. 2 fluctuated, the
amount of shares collectively and beneficially owned during that period by SCM
and its president, Mr. Himanshu Shah, has not fluctuated more than approximately
152,000 shares (approximately 0.4% of the total shares of Issuer Stock
outstanding). SCM acknowledges that acquisitions and dispositions of less than
one percent can be material e.g., in instances where they provide the filer
material advantage by crossing ownership thresholds (a) with regard to control
of a majority of an issuer’s voting shares; (b) with implications under state
anti-takeover laws; or (c) that permit a filer to defeat or ensure the passage
of corporate provisions requiring a supermajority vote;1 however, SCM did not intend to gain such an
advantage here, nor did it actually do so. Accordingly, SCM believes that the
facts and circumstances here do not point to materiality. Instead, the various
acquisitions and dispositions of shares were solely for investment purposes and
in response to market conditions.
Notwithstanding
the foregoing, and consistent with its commitment to avoid any doubt about full
compliance with its Schedule 13D filing obligations, SCM has included
in Amendment No. 2 a detailed description of all of the transactions
SCM has executed in the Issuer Stock, including increases and decreases between
the filing of Amendment No. 1 and SCM’s Schedule 13F filings.
1
See Thomas R. Stephens, Beneficial Ownership Reporting:
Schedules 13D and 13G, BNA Corporate Practice Series, A-19
(2003).
Additional
Information
As indicated above, SCM has conducted a
comprehensive review of its past 13D filings and disclosures with respect to the
Issuer. As a result, SCM has included additional updated disclosures
in the Amendment No. 2 to address other matters as well.
In addition, with the assistance of our
firm, SCM is designing and implementing new Schedule 13D reporting policies and
procedures to help ensure accurate, complete and timely filings in compliance
with applicable reporting requirements on a going forward basis (the “New
Procedures”). The New Procedures will, among other things, include a
checklist of Schedule 13D disclosure items that will be reviewed regularly by
SCM management and SCM’s Chief Compliance Officer (“CCO”) with respect to
issuers for which SCM has a current reporting requirement, and provide for
consultation with legal counsel as a routine part of the Schedule 13D compliance
process as and when appropriate. SCM will hold a training session
regarding the New Procedures with its staff in December.
SCM
acknowledges that it is responsible for the adequacy and accuracy of the
disclosure in its filings, that Staff comments or changes to disclosure in
response to Staff comments do not foreclose the Commission from taking any
action with respect to the filings, and that SCM 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.
We
hope that this letter is satisfactory to the Staff. As
discussed above, SCM is mindful of the broad nature of its obligations under
Schedule 13D and is committed to full compliance therewith.
Please do
not hesitate to call me if you have any questions or if you wish to discuss this
matter further.
Sincerely,
/s/ Jeffrey T. Skinner
Jeffrey T. Skinner, Esq.
Cc: Ms.
Chaya Rao
Mr.
Himanshu Shah
Matthew Chambers, Esq.