October 18, 2004
Mail Stop 0409
J. Michael Schroeder
Chief Counsel and Corporate Secretary
Great Wolf Resorts, Inc.
122 West Washington Avenue
Madison, Wisconsin 53703
Re: Great Wolf Resorts, Inc.
Amendment No. 1 to Form S-1
Registration No. 333-118148
Filed September 23, 2004
Dear Mr. Schroeder:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
For purposes of this comment letter, we refer to the
pagination, paragraphs, sentence and line numbers as displayed by
the
marked courtesy copy version of your Form S-1 filed on September
23,
2004.
General
1. We have received your application for confidential treatment
for
portions of Exhibit 10.4 and will respond to your request in a
separate letter.
2. We note your response to prior comment 1 and the additional
supplemental response letter dated October 18, 2004. It does not
appear that execution of a power of attorney, which allows another
individual to negotiate on behalf of the participants, would
result
in a "completed" transaction for purposes of Rule 152. Please
provide a further discussion of why you believe the formation
transactions were completed prior to filing the registration
statement, or provide an additional analysis of why the formation
transactions should not be integrated with the IPO. Please tell
us
whether the Agreement and Plan of Merger for each of the formation
transactions has been executed and, if so, provide the dates that
each agreement was signed by both parties. Also, please tell us
whether the consideration for each of the formation transactions
has
been determined, as well as when and how that information was or
will
be communicated to the participants.
3. Supplementally, please describe all of the conditions to
closing
the formation transactions. Also, please provide a copy of the
private placement memorandum referenced in the first paragraph of
the
Irrevocable Consent.
4. Supplementally, please describe all conditions to the closing
of
the put exercise by the TIC holders. Also, we note that paragraph
2
of the subscription agreement refers to consideration "specified
herein," however, we were unable to locate any other references to
consideration under that agreement. Supplementally, please tell
us
how and when the amount of consideration will be fixed and how
that
information will be communicated to the TIC holders.
5. We note your response to prior comment 2 regarding application
of
the roll-up rules to this registration statement. We may have
further comment on the roll-up rules after we receive your
additional
analysis on integration of the formation transactions with the
IPO.
6. In your response to prior comment 7, you state that the
condominiums are not sold with an emphasis on economic benefits,
with
rental pool arrangements or with company required use limitations.
However, we note that you amended the Development Agreement on
June
25, 2004, to no longer require individual owners of condominium
units
to make their units available for sale. Further on page 2 of the
Amended Development Agreement, you amend and restate the Original
Agreement to remove all references to a "Rental Pool." Please
provide a detailed analysis of why prior to June 25, 2004, the
offers
and sales of these condominiums did not constitute offers and
sales
of securities under the federal securities laws.
7. Supplementally, please provide us with copies of sales
literature,
marketing materials and a form of agreement used to sell
condominiums
to private investors at the Wisconsin Dells and Sheboygan resort
locations. If practicable, in your supplemental submission
include
sales, marketing or subscription materials distributed prior to
June
25, 2004.
Summary
8. We note your response and reissue prior comment 8 from our last
letter. The Summary section continues to be lengthy and does not
provide investors with a clear, concise and coherent "snapshot"
description of the most significant aspects of the offering.
Specifically, please revise pages 3-4 of the summary to reduce
your
Competitive Strengths and Business and Growth Strategies sections
to
bullet pointed disclosure with one sentence per bullet.
Alternatively, delete these sections from the summary. Refer to
the
Instruction to Item 503(a) of Regulation S-K.
Our Structure, page 9
9. We note and appreciate your response to prior comments 10 and
20
by including document no. 5 in your supplemental materials. For
purposes of clarity regarding the nature of this transaction and
actual ownership stakes held by the Great Lakes Co. versus the
seven
shareholders of Great Lakes Co., please include a diagram
depicting
the structure of the Great Lakes Companies as predecessor prior to
the formation transaction.
Benefits to Related Parties, page 8
10. In connection with your response to prior comment 25 from our
last letter, please revise your disclosure to identify the 7
shareholders and their current roles as officers and directors.
Summary Financial and Other Data, page 11
11. Reference is made to comment 28. The adjustments to your non-
GAAP measure to derive Adjusted EBITDA have occurred within the
past
two years and most recent interim period. It is not clear how you
have complied with Item 10(e) of Regulation S-K that prohibits
adjusting a non-GAAP financial performance measure to smooth
earnings. Further it is not evident that a material term of the
new
credit agreement will be a significant covenant regarding Adjusted
EBITDA. See related comment below. Please revise to comply with
Item 10(e) of Regulation S-K.
Allocation of Consideration in the Formation Transactions, page 30
12. Regarding your response to prior comment 39 from our last
letter,
we continue to believe that identifying Houlihan, Lokey, Howard &
Zukin as the financial advisor would assist investors in assessing
the quality of the fairness opinion you received in connection
with
the formation transactions. Please revise to identify the firm,
as
previously requested.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations, page
Net income (loss), page 50
13. In connection with your supplemental response to prior comment
49, please revise your disclosure to briefly discuss the
background
information about the prior issuance of the mandatory redeemable
ownership the first time you discuss these interests in the MD&A
section.
Liquidity and Capital Resources, page 55
14. We note your disclosure of Adjusted EBITDA and your basis for
using it to monitor compliance with financial covenants contained
in
your credit agreements. Please provide the following additional
disclosures:
* the materiality of the credit agreement(s) and the covenant(s);
* the amount or limit required for compliance with the covenant;
and
* the actual or reasonably likely effects of compliance or non-
compliance with the covenant on Great Wolf`s financial condition
and
liquidity.
Refer to Question 10 of the Staff`s June 13, 2003 Release-
Frequently
Asked Questions Regarding the Use of Non-GAAP Measures.
Business
Great Wolf Lodge of Niagara Falls, Ontario, page 73
15. We reissue prior comment 59 from our last letter requesting
that
you revise your disclosure to include the material terms of the
Niagara Falls, Ontario management and license agreement.
Specifically, revise to describe any material fees other than the
monthly license fee. Further, please confirm that the only
material
obligations Ripley must fulfill are its payment obligations and
maintaining the Great Wolf operating standards.
Underwriting, page 104
16. We note your response to prior comment 71 from our last
letter.
In your next amendment, please file your Underwriting Agreement.
Alternatively, please provide us with a supplemental list of all
"other conditions contained in the underwriting agreement" that
could
release the underwriters from their obligations to purchase the
shares in the offering.
17. Regarding your response to prior comments 72 and 73, revise to
state whether the shares will be subject to lock-up agreements
describing these agreement. The directed share materials refer to
a
lock-up agreement and you provide potential lock-up disclosure in
your response, but it appears you are unsure whether there will be
a
lock-up.
Great Wolf Resorts, Inc.-Unaudited Pro Forma Condensed
Consolidated
Financial Statements
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet,
page F-4
18. We note your response to our previous comment 79, however, the
relationship between the Great Lakes Companies and Great Wolf
Resorts
is still not clear. You state that the Great Lakes Companies is
expected to have the largest single portion of the voting rights
in
Great Wolf Resorts, yet the diagram on page 9 depicting the
ownership
structure upon completion of the offering and formation
transaction
does not indicate any ownership by the Great Lakes Companies.
Please
advise.
19. Please expand to show the purchase price consideration for
each
entity including the form of the consideration and the amount of
that
consideration. Provide similar disclosure in the body of the
prospectus.
Notes to the Consolidated Financial Statements-Great Wolf
Predecessor
Commitments and Contingencies, page F-28
20. We note your response to comment 84. With respect to the 10-
year
ground lease on the Kansas City, Kansas property, please disclose
the
following information:
* a more detailed discussion of the business reasons for the
transaction, including a more specific discussion of the future
sales
tax benefits;
* the definitive terms of both the ground lease agreement (e.g.
payment amounts and dates) and the industrial revenue bonds (e.g.
interest rate, payment dates, maturity date);
* whether the right to offset is enforceable by law (for example,
if
the registrant fails to make lease payments under the ground
lease,
is the local government agency still obligation to pay interest on
the revenue bonds); and
* the impact on the financial statements indicating the items not
reflected in the financial statements, as well as the original
entry
you recorded upon issuance of the revenue bonds.
* * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our 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
for
an informed decision. 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.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Jay Spinella at (202) 942-7323 or Donna Di
Silvio at (202) 942-1852 if you have questions regarding comments
on
the financial statements and related matters. Please contact Neil
Miller at (202) 942-1851 or me at (202) 942-1960 with any other
questions.
Sincerely,
Karen J. Garnett
Assistant Director
cc: Alan J. Prince, Esq. (via facsimile)
King & Spalding LLP
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Great Wolf Resorts, Inc.
October 18, 2004
Page 1