<SEC-DOCUMENT>0001062993-16-010751.txt : 20160901
<SEC-HEADER>0001062993-16-010751.hdr.sgml : 20160901
<ACCEPTANCE-DATETIME>20160801115509
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001062993-16-010751
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20160801

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ENERGY FUELS INC
		CENTRAL INDEX KEY:			0001385849
		STANDARD INDUSTRIAL CLASSIFICATION:	MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			A6
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		225 UNION BLVD., SUITE 600
		CITY:			LAKEWOOD
		STATE:			CO
		ZIP:			80228
		BUSINESS PHONE:		303-974-2140

	MAIL ADDRESS:	
		STREET 1:		225 UNION BLVD., SUITE 600
		CITY:			LAKEWOOD
		STATE:			CO
		ZIP:			80228
</SEC-HEADER>
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   <TITLE>Energy Fuels Inc.: CORRESP - Filed by newsfilecorp.com</TITLE>
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<P align=justify>August 1, 2016 </P>
<P align=justify>Mr. John Reynolds <BR>Assistant Director <BR>Office of
Beverages, Apparel and Mining <BR>Securities and Exchange Commission <BR>100 F
Street, N.E. <BR>Washington, D.C. 20549</P>
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  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD align=left ><B>Re:</B> </TD>
    <TD align=left width="90%"><B>Responses to the Securities and Exchange
      Commission</B> </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="90%"><B>Staff Comments dated July 28, 2016
      regarding</B> </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="90%"><B>Energy Fuels Inc.</B> </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="90%"><B>Application for Qualification of Indenture
      on Form T-3</B> </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="90%"><B>File No. 022-29022</B> </TD></TR></TABLE>
<P align=justify>Dear Mr. Reynolds: </P>
<P align=justify>This letter responds to the comments of the staff (the
&#147;<B>Staff</B>&#148;) of the United States Securities and Exchange Commission (the
&#147;<B>Commission</B>&#148;) set forth in the July 28, 2016 letter (the &#147;<B>Comment
Letter</B>&#148;) regarding the above-referenced Application for Qualification of
Indenture on Form T-3 (the &#147;<B>Form</B> <B>T-3</B>&#148;) of Energy Fuels Inc. (&#147;the
<B>Company</B>&#148;). For your convenience, the Staff&#146;s comments are included below
and we have numbered our responses accordingly. Capitalized terms used in this
letter and not defined herein have the meanings assigned to them in the letter
the Company filed with the Commission on July 26, 2016.</P>
<P align=justify>Our responses are as follows: </P>
<P align=justify>Staff Comment No. 1. </P>
<P align=justify>We note in the response to comment 1 that &#147;the Company does not
believe that the Amendments constitute an offer or sale of a new security under
Section 2(a)(3) of the Securities Act of 1933.&#148; The Management Information
Circular states, however, that the Company is &#147;relying on Section 3(a)(9) of the
U.S. Securities Act to exempt the exchange of the existing Debentures for the
Amended Debentures pursuant to the Debenture Amendments from the registration
requirements of the U.S. Securities Act&#148; and the T-3 states that the Company
&#147;structured the exchange that may be deemed to occur upon the completion of the
Consent Solicitation and the amendment of the Original Indenture and Debentures
to be exempt from registration under the Securities Act of 1933, as amended (the
&#147;Securities Act&#148;), pursuant to the provisions of Section 3(a)(9).&#148; The
amendments appear to propose fundamental changes -- including an extension of
the maturity date -- to the nature of an investment in the debentures. Section
3(a)(9) of the Securities Act appears to have been cited in recognition of the
fact the amendments to the debentures could be viewed as resulting in the
issuance of a new security. Please provide us with additional analysis as to
whether Rule 13e-4 applies to protect the investment decision that ultimately
results in &#147;the exchange that may be deemed to occur upon the completion of the
Consent Solicitation and the amendment of the Original Indenture and
Debentures.&#148; </P>
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<P align=justify>Mr. John Reynolds <BR>August 1, 2016 <BR>Page 2</P>
<P align=justify>The Company&#146;s Response No. 1: </P>
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  <TR>
    <TD vAlign=top width="5%">I. </TD>
    <TD>
      <P align=justify>Tender Offer Analysis</P></TD></TR></TABLE>
<P align=justify>The Company concluded that the consent solicitation with
respect to the Amendments (as hereinafter defined) to its Convertible Debenture
Indenture dated as of July 24, 2012 (the &#147;<B>Indenture</B>&#148;) between the Company
and BNY Trust Company of Canada, as trustee (the &#147;<B>Trustee</B>&#148;) (filed as
Exhibit 99.66 to the Company&#146;s Form 40-F Registration Statement filed with the
United States Securities and Exchange Commission on November 15, 2013), pursuant
to which the Company&#146;s Floating Rate Convertible Unsecured Subordinated
Debentures Due 2017 (the &#147;<B>Debentures</B>&#148;) are issued and governed, should
not constitute an issuer tender offer subject to Rule 13e-4 promulgated under
the Exchange Act of 1934, as amended (the &#147;<B>Exchange Act</B>&#148;). </P>
<P align=justify>The Debentures were issued by the Company in a Canadian public
offering prior to the Company becoming an SEC registrant. The Company&#146;s
Indenture and the Debentures are governed by Canadian law and contain provisions
which permit the Company to call a meeting and seek a favorable vote of holders
of as few as 16<font face="Times New Roman">&#8532;</font>%<SUP>1</SUP> of the aggregate principal amount of Debentures
in order to, among other things, extend the maturity date of the Debentures,
reduce the conversation price of the Debentures, add a redemption provision with
a premium redemption payment, add a put right and add a co-trustee eligible for
qualification under the Trust Indenture Act of 1939, as amended (the &#147;<B>Trust
Indenture Act</B>&#148;) (collectively, the &#147;<B>Amendments</B>&#148;). With a favorable
vote from holders of as few as 16<font face="Times New Roman">&#8532;</font>% of the aggregate principal amount of
Debentures, the Company is allowed to implement the Amendments by amending the
Indenture and also amending all of the Debentures, including Debentures held by
persons who voted against the Amendments or who abstained from voting.
Thereupon, the extended maturity date and all of the other Amendments will apply
to all Debentures. These approval provisions are relatively common in Canadian
law indentures and were agreed to by the Debentureholders at the time they made
their investment decision to acquire the Debentures. The Company is undertaking
the consent solicitation with respect to the Amendments in accordance with these
meeting and voting procedures.</P>
<P align=justify>This approval process is different than most U.S. law
indentures which ordinarily prohibit any amendment that affects the payment
terms of debt securities, such as the extension of the maturity date, without
the consent of each individual holder. Such an amendment would ordinarily be
made pursuant to an issuer tender offer conducted in accordance with Rule 13e-4,
and each individual holder would be entitled to make its own decision as to
whether to accept or reject the amendment. Under a typical U.S. law indenture,
such an amendment would only be effective against those holders who voted in
favor of the amendment and agreed to tender or exchange their debt securities
for amended debt securities. Non-consenting and abstaining holders would
continue to hold their original debt securities. </P>
<P align=justify>_____________________<BR><SUP>1 </SUP>$22,000,000 aggregate
principal amount of Debentures are outstanding. 25% (or $5,500,000 aggregate
principal amount) constitutes a quorum for the meeting. 66<font face="Times New Roman">&#8532;</font>% of the quorum (or
$3,663,300 aggregate principal amount) must vote in favor or the Amendments in
order to approve the Amendments. $3,663,300 equals 16<font face="Times New Roman">&#8532;</font>% of the aggregate
principal amount of all Debentures outstanding. </P>
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<P align=justify>Mr. John Reynolds <BR>August 1, 2016 <BR>Page 3</P>
<P align=justify>The procedures set forth in the Company&#146;s Indenture for
approving the Amendments are not analogous to a typical issuer tender offer
whereby certain holders can tender or exchange their debt securities while
others can refuse or abstain. If the Amendments are approved by holders of as
few as 16<font face="Times New Roman">&#8532;</font>% of the aggregate principal amount of Debentures, the Amendments
will bind all holders. The Company believes the meeting and voting process
described above should be viewed similar to a meeting of equity holders in
connection with a recapitalization or stock split or meeting of target
shareholders in connection with a merger. In these instances, less than all
security holders are permitted to bind the entire class and the meeting and
voting processes are not considered issuer tender offers. Similarly, the Company
does not believe that it is conducting an issuer tender offer in calling a
meeting and seeking approval for the Amendments in the manner described. </P>
<P align=justify>In that you have asked us to address considerations with
respect to the protection of the investment decision of the Debentureholders in
connection with the consent solicitation and the Amendments, we provide the
following information. </P>
<P align=justify>The Company&#146;s Indenture requires that the Company provide a
basic form of notice of the meeting with a brief statement of the general nature
of the business to be transacted. In connection with the meeting, the Company
prepared and mailed to Debentureholders a Management Information Circular
(&#147;<B>Circular</B>&#148;) which contains substantially identical information as
required in a Schedule TO, including a full copy of the proposed form of Amended
Indenture. Debentureholders were also given 24 days to review and consider these
materials. The Company is conducting the meeting pursuant to the requirements of
the Indenture (including the notice, voting and procedural mechanics).</P>
<P align=justify>The totality of the circumstances does not suggest a
substantial risk that holders will lack information to make a carefully
considered appraisal of the Amendments.<SUP>2 </SUP>We believe that the ample
information provided and the procedural mechanics being undertaken in accordance
with the Company&#146;s Indenture provide significant protection to investors in
their consideration of the Amendments. These are the procedural mechanics agreed
to by the Debentureholders at the time they made their investment decision to
acquire the Debentures. The Company respectfully submits that the filing of a
Schedule TO will not result in Debentureholders having additional information.
</P>
<P align=justify>We would like to note that the Company&#146;s Indenture permits the
Company to seek a written consent for the approval of the Amendments in lieu of
holding a meeting. The Company could have sought the written consent from a
relatively small number of institutional investors in order to approve and
implement the Amendments. Had the Company undertaken to obtain a written consent
in lieu of holding a meeting, the other Debentureholders would not have been
entitled to any advance notice or other information pertaining to the Amendments
until after the Amended Indenture had become effective. That process would have
resulted in the extended maturity date and all of the other Amendments applying
to all Debentures, including Debentures held by persons who were not solicited.
In connection with the Amendments, the Company has elected a significantly more
transparent process and provided ample information and sufficient time for the
consideration of the Amendments.</P>
<P align=justify>_____________________<BR><SUP>2</SUP> See <I>Hanson Trust PLC
v. SMC Corporation</I>, 774 F.2d 47 (2d Cir. 1985). </P>
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<P align=justify>Mr. John Reynolds <BR>August 1, 2016 <BR>Page 4</P>
<P align=justify>In addition, even though the Company does not believe that a
new security is being issued in connection with the Amendments as discussed
further below, the Company has treated the consent solicitation in accordance
with Section 3(a)(9) and filed a Form T-3 for the qualification of the Amended
Indenture under the Trust Indenture Act.</P>
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  <TR>
    <TD vAlign=top width="5%">II. </TD>
    <TD>
      <P align=justify>New Security Analysis</P></TD></TR></TABLE>
<P align=justify>The Company respectfully submits that the Amendments to the
Indenture and the Debentures should not constitute the offer and sale of a new
security under Section 2(a)(3) of the Securities Act. Commission no-action
letters and other Commission commentary suggest that amendments to a security do
not create a new security when made in accordance with the instrument governing
the rights of the original security holders. If the consent of each of the
Debentureholders were required to implement the Amendments, Commission no-action
letters and other Commission commentary suggest that adoption of the Amendments
could be deemed to create a new security.<SUP>3 </SUP>For example, in <I>Magic
Marker Corp.</I>,<SUP>4</SUP> the issuer proposed to extend the maturity date of
notes by ten years, which would have required the unanimous consent of the
holders. The Staff expressed the view in its letter refusing to grant no-action
relief that the amendment would result in the issuance of new securities. The
Staff took a similar position in <I>Allied-Carson Corp.</I>,<SUP>5</SUP> where
unanimous consent of the holders was required to extend the maturity and
increase the interest rate of certain bonds. On the other hand, in <I>Wilson
Foods Corp.</I>,<SUP>6</SUP> where the issuer sought to shorten the maturity
date of certain of its debentures, the Staff granted no-action relief. Unlike in
<I>Magic Marker</I>, the indenture governing the <I>Wilson Foods Corp.</I>
debentures did not require unanimous consent to make such a change. Similarly,
the Staff has also consistently taken the position that mandatory redemption
obligations may be changed if such changes require less than unanimous consent
of the holders.<SUP>7 </SUP>For example, in <I>IDS Realty Trust</I>, the issuer
proposed to terminate its obligation to fund what was, in essence, a sinking
fund.<SUP>8 </SUP>Although such an amendment constituted an adverse change to a
payment term, the indenture did not require unanimous consent to make the
change. As such, the Staff, without passing on the question of whether a new
security was involved, granted no-action </P>
<P align=justify>_____________________<BR><SUP>3</SUP> See Bryant B. Edwards and
Jon J. Bancone, Modifying Debt Securities: <I>The Search for the Elusive</I>
&#147;<I>New Security</I>&#148; <I>Doctrine</I>, Business Lawyer, February, 1992 (noting
that the Staff maintains a long-established position that &#147;the new security
doctrine does not apply to modifications of debt securities that require less
than unanimous consent&#148;). </P>
<P align=justify><SUP>4</SUP> Edwards and Bancone, <I>supra</I>, at 596,
discussing the <I>Magic Marker Corp</I>. SEC No-Action Letter available on June
30, 1971. </P>
<P align=justify><SUP>5</SUP> <I>Allied-Carson Corp</I>., SEC No-Action Letter,
[1975-1976 Transfer Binder] Fed.Secl.L.Rep. (CCH) 60,434 (February 12, 1976). As
Edwards and Bancone note, the facts surrounding the Allied Carson request are
not clear from the no-action letter request. Most importantly, the <I>&#147;letter
does not state whether the maturity extension required the consent of each
affected bondholder.&#148; </I>Edwards and Bancone, <I>supra</I>. </P>
<P align=justify><SUP>6</SUP> <I>Wilson Foods Corp</I>., SEC No-Action Letter,
1984 SEC No-act LEXIS 2415 (Aug. 6, 1984). </P>
<P align=justify><SUP>7</SUP> Edwards and Bancone, <I>supra</I>. </P>
<P align=justify><SUP>8</SUP> <I>IDS Realty Trust</I>, SEC No-Action Letter.
[1975-1976 Transfer Binder] Fed.Sec.L.Rep. (CCH) &#182; 80,555 (May 17, 1976). </P>
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<P align=justify>Mr. John Reynolds <BR>August 1, 2016 <BR>Page 5</P>
<P align=justify>relief.<SUP>9 </SUP>As noted in a relevant legal
article,<SUP>10</SUP> the only conceptual difference between cases like <I>Magic
Marker</I>, on the one hand, and <I>Wilson Foods Corp.</I> and <I>IDS Realty
Trust</I>, on the other, is the requirement of consent of each bondholder in
those cases where the amendment to the payment term was deemed to be a new
security.</P>
<P align=justify>We believe these decisions support our view that the Amendments
should not constitute an offer or sale of a new security. As discussed above,
the Indenture specifically permits the Debentureholders to authorize the
Amendments (requiring a favorable vote of holders of as few as 16<font face="Times New Roman">&#8532;</font>% of the
aggregate principal amount of Debentures). As a result, the Company is
soliciting consents in a manner contractually agreed upon by the Debentureholders at the time they made their investment decision to acquire the
Debentures. Put another way, the Debentureholders knowingly acquired their
securities subject to the rights of the Company to effect changes in the manner
now proposed. These approval provisions are relatively common in Canadian law
indentures and are different than the ordinary exchange mechanisms whereby each
holder would have a right to separately accept or reject the Amendments with
respect to its Debentures. </P>
<P align=justify>As a result, the Company respectfully submits that the
Amendments to the Indenture and the Debentures should not constitute the offer
and sale of a new security under Section 2(a)(3) of the Securities Act. </P>
<P align=justify>Staff Comment No. 2. </P>
<P align=justify>We note that you issued a press release on June 17, 2016,
announcing that the company was considering seeking amendments to the terms of
its convertible debentures. You filed the Form T-3 for the qualification of the
indenture on July 11, 2016. Please provide us your analysis, with a view to
disclosure, whether the solicitation of the exchange offer commenced prior to
the date the Form T-3 was filed. See Section 303(2) and Section 306(c) of the
Trust Indenture Act.</P>
<P align=justify>The Company&#146;s Response No. 2: </P>
<P align=justify>On June 17, 2016, the Company provided notice of the meeting of
the Debentureholders pursuant to the advance notice requirements established by
the Indenture and the Company issued a press release announcing that it had
provided such notice. At the time of the notice and press release, the Company had not yet established the
terms of the Amendments, and the press release specifically stated that any such
terms would be outlined in a proxy circular. Further, the press release stated
that &#147;a decision on whether the Company will pursue the [A]mendments to the
Debentures is expected to be announced in early-July 2016.&#148; The press release
also noted that the Company was considering other alternatives to the
Amendments, including retiring the Debentures through other means.</P>
<P align=justify>_____________________<BR><SUP>9</SUP> See also <I>PLM Co.,</I>
SEC No-Action Letter, 1987 SEC No-Act. LEXIS 2426, at * 1 (Aug. 12, 1987)
(increase in interest rate by up to half a percent in consideration of waiver of
merger covenant); <I>Alabama Gas Corp.</I>,<I> </I>SEC No-Action Letter, 1982
SEC No-Act. LEXIS 2237, at *1 (Aug. 9, 1982) (increase in interest rate by up to
one percent in consideration of relaxation of covenants regarding replenishment
of collateral);<I> NCNB Corp</I>., SEC No-Action Letter, 1982 SEC No- Act. LEXIS
2108, at *1 (Feb. 10, 1982) (increase in interest rate by 1/2 % in consideration
of modifications of certain financial covenants); <I>J. Ray McDermott &amp;
Co.</I>,<I> </I>SEC No-Action Letter, 1979 SEC No-Act. LEXIS 3418, at *2 (Sept.
10, 1979) (increase in interest rate by half a percent in consideration of
modification of covenant limiting funded indebtedness and certain other
definitions); <I>Susquehanna Corp</I>., SEC No- Action Letter, 1979 SEC No-Act.
LEXIS 3070, at *3 (June 29, 1979) (increase in interest rate by one and a half
percent in consideration of modification of dividend covenant); <I>Sheraton
Corp.,</I> SEC No-Action Letter, 1978 SEC No-Act. LEXIS 2237, at *3 (Nov. 24,
1978) (increase in interest rate of half a percent in consideration of
modification of dividend covenant); Continental Group, Inc., SEC No-Action
Letter, 1978 SEC No-Act. LEXIS 872, at *2 (Feb. 15, 1978) (increase in interest
rate in consideration of modification of financial covenants). </P>
<P align=justify><SUP>10</SUP> Edwards and Bancone, <I>supra</I>. </P>
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<P align=justify>Mr. John Reynolds <BR>August 1, 2016 <BR>Page 6</P>
<P align=justify>The notice and press release were not issued for the purpose of
soliciting consents or making any offer with respect to the Amendments. Nothing
in the notice or press release could have been construed to be an offer and
there was nothing for Debentureholders to vote on or consider based on the
limited information provided. At the time the notice and press release were
issued, the Company had not decided whether to pursue amending the Indenture and
the terms of the Amendments had not been established. The Company represents
that it did not commence soliciting consents or making any offer with respect to
the Amendments until July 11, 2016, the day that the Form T-3 was filed with the
Commission.</P>
<P align=center>* * * * * </P>
<P align=justify>Thank you for your review of the filing. If you should have any
questions regarding the response letter, please do not hesitate to contact the
undersigned at (303) 389-4130 or Richard Raymer of Dorsey &amp; Whitney LLP at
(416) 367-7388. </P>
<P style="MARGIN-LEFT: 50%" align=justify>Sincerely, <BR>Energy Fuels Inc.</P>
<P style="MARGIN-LEFT: 50%" align=justify>/s/ David C. Frydenlund <BR>David C.
Frydenlund <BR>Senior Vice President, General Counsel and <BR>Corporate
Secretary</P>
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    <TD align=left width="95%">Richard Raymer, Dorsey &amp; Whitney LLP
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