SEC – ‘UPLOAD’ from 3/22/05 re: Rag Shops Inc – ‘LETTER’

On:  Tuesday, 3/22/05, at 11:54am ET   ·   Private-to-Public:  Filing ¶  –  Release Delayed to:  2/13/06   ·   Accession #:  0-5-13292

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Delayed-Release Comment or Other Letter from the SEC
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: LETTER      Comment or Other Letter from the SEC                   3±    14K 


October 1, 2004                                                                 

Via Facsimile (973) 643-6500 and U.S. Mail                                      

Steven R. Kamen, Esq.                                                           
Sills Cummis Epstein & Gross P.C.                                               
One Riverfront Plaza                                                            
Newark, New Jersey 07102-5400                                                   
(973) 643-7000                                                                  

RE:     Rag Shops, Inc.                                                         
Schedule 14D-9; File No.: 005-42322                             
Filed September 22, 2004 by Rag Shops, Inc.                     

Dear Mr. Weinsier:                                                              

The staff has reviewed the referenced filing, and has the                       
following comments.                                                             

General                                                                         

1. Please add Rag Shops as a filing person to the Schedule TO                   
filed by Crafts Retail Acquisition Corporation on September 22, 2004            
for purposes of Schedule 13E-3.  Because Rag Shops has recommended the          
tender offer being made by Crafts Retail, Rag Shops is a filing                 
person for purposes of Schedule 13E-3.  See interpretation K.2 in               
our July 2001 Telephone Interpretation Supplement publicly available            
on our website, www.sec.gov.   Please note that only bidders may                
appear on Schedule TO.  To the extent you believe that Rag Shops is not         
engaged in a tender offer, Rag Shops must file a stand alone                    
Schedule 13E-3.                                                                 

The Board Recommends that the Stockholders Accept the Offer and                 
Tender Their Shares Pursuant to the Offer                                       

2. Please revise to disclose how the Company and the purchaser                  
group each reached the determination that the offer is fair despite             
the apparent absence of the safeguards identified in Item 1014(c) and           
(d) of Regulation M-A.  Refer to Q & A 21 in Exchange Act Release No.           
17719.                                                                          

3. Item 8 of Schedule 13E-3 requires a discussion of the material               
factors upon which a belief as to fairness is based.  This section              
should include a discussion of each filing person`s Item 1014(b)                
analysis, including a presentation of all the material factors                  
considered by such party in reaching its determination.  If one                 
party relied upon the analysis of another, such as the financial                
advisor, that party must expressly adopt the conclusion and analyses            
of the other.  For example, if the board is relying on the financial            
advisor`s analyses, and the analyses satisfy the Item 1014(b)                   
disclosure standards, the board must specifically adopt such                    
analyses as their own.  Filing persons cannot insulate themselves from          
liability by relying upon the summary of the financial advisor`s                
analyses which, by their terms, do not comply with the specific                 
disclosure requirements of Item 1014(b).  The board does not                    
appear to have specifically adopted the analyses of the financial               
advisor in the existing disclosure.  Without expressing an opinion              
as to whether the financial advisor`s analyses satisfy the Item 1014(b)         
disclosure standards, the board must expand the discussion in support           
of their fairness determination with regard to the transaction to               
specifically address the Item 1014(b) factors. See Question and Answer          
20, Exchange Act Release No. 17719 (April 13, 1981).                            

Schedule 14D                                                                    
Past Contacts, Transactions, Negotiations, and Agreements                       
Mutual Releases, Funding Agreement and Escrow Agreement                         

4. Please expand your disclosure regarding the reason for the                   
funding agreement with Mr. Berenzweig and the nature of his obligations         
and certain expenses to be covered under same.  We note that losses             
are described in the funding agreement, but believe that your                   
disclosure should include a general description of these obligations.           

The Background of the Offer                                                     
The Board Recommends that the Stockholders Accept the Offer and                 
Tender Their Shares Pursuant to the Offer                                       

5. We note that four non-binding written acquisition proposals                  
were received by SunTrust on July 27, 2004, including the proposal              
from Sun and three from other financial buyers.  Further, the board             
instructed SunTrust to provide additional information to the                    
bidders and to solicit final and best proposals from each bidder.               
Please expand your disclosure on the information SunTrust provided to           
the three bidders that were not Sun.   We note that no revised offers,          
other than Sun`s were received from other bidders, but believe                  
that you should provide more detail regarding the nature of                     
information provided to the three other bidders.                                

Reasons for the Board`s Recommendation                                          

6. We note that your discussion of information and factors                      
considered by the board, including all of the material factors,                 
purports to include both positive and negative factors.  However,               
only one apparently "negative" factor is cited in your bullet-pointed           
list. Please tell us, with a view toward disclosure, if there are any           
other negative factors considered that should be considered material            
and included in this disclosure.  We note that lost opportunity to              
participate in the growth and profits of Rag Shops following the                
offer is referenced.                                                            

Closing Comments                                                                

We urge all persons who are responsible for the accuracy and        
adequacy of the disclosure in the filings reviewed by the staff to              
be certain that they have provided all information investors require.           
Since the company and its management are in possession of all                   
facts relating to a company`s disclosure, they are responsible for              
the accuracy and adequacy of the disclosures they have made.                    

In connection with responding to our comments, please           
provide, in writing, a statement from the filers acknowledging that             

* the Company is responsible for the adequacy and accuracy of the               
disclosure in the filings;                                                      
* staff comments or changes to disclosure in response to staff                  
comments in the filings reviewed by the staff do not foreclose the              
Commission from taking any action with respect to the filing; and               
* the Company 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.                                   

In addition, please be advised that the Division of                 
Enforcement has access to all information you provide to the staff              
of the Division of Corporation Finance in our review of your filing             
or in response to our comments on your filing.                                  

We believe that a supplement should be sent to                      
security holders to provide them with the information that will be              
given in response to these comments.  In addition, please file                  
revised materials that clearly mark the changes made in response                
to these comments.  The staff views responses to comment letters as             
correspondence in connection with filings, and Regulation S-T                   
mandates the submission of such correspondence electronically.                  
Submit a cover letter electronically that keys your responses to                
the comments to the changes made in the text, and provide any                   
requested supplemental information.  If you believe complying with              
these comments is not appropriate, tell us why in your letter. We may           
have further comments after reviewing your revised materials and                
responses.                                                                      

Direct questions to me at (202) 942-2903.                       

                 Very truly yours,

                 Celeste M. Murphy
                Attorney Adviser
                                  Office of Mergers and Acquisitions

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘UPLOAD’ Filing		Date		Other Filings
Release Delayed to:		2/13/06		UPLOAD
Filed on:		3/22/05		UPLOAD
		10/1/04		UPLOAD
		9/22/04		8-K/A,  SC 14D9,  SC TO-T,  UPLOAD
		7/27/04
				List all Filings

1 Previous Filing that this Filing References

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 9/22/04  Rag Shops Inc.                    SC 14D9                9:6M   Rag Shops Inc.                    Capital Systems 01/FA