Mail Stop 0308
April 5, 2005
VIA U.S. MAIL AND FACSIMILE
Mr. John J. Sherman
President, Chief Executive Officer
Inergy Holdings, LLC
Two Brush Creek Boulevard, Suite 200
Kansas City, MO 64112
Re: Inergy Holdings, LLC
Amendment No. 1 to Registration Statement on
Form
S-1
File No. 333-122466
Filed March 14, 2005
Inergy, L.P.
Registration Statement on Form S-4
File No. 333-123399
Filed March 17, 2005
Inergy, L.P.
Form 10-K for the fiscal year ended September 30, 2004
File No. 000-32453
Filed December 7, 2004
Dear Mr. Sherman:
We have reviewed your filings and have the following
comments. Please be aware that we performed only a limited review
of
Inergy, L.P.`s Form S-4 and Form 10-K to ensure compliance with
applicable comments with respect to Inergy Holdings, LLC`s
registration statement.
Where indicated, we think you should revise your documents
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.
* * * * * * * * * * *
Inergy Holdings, LLC
Form S-1
1. We still are considering your response to our prior comment 1.
Capitalization, page 35
2. Please supplementally provide a reconciliation of the total
cash
per the pro forma balance sheet columns labeled "Inergy Holdings,
LLC
Pro Forma" and "Inergy Holdings, L.P. As Adjusted" disclosed on
page
F-4 to the total cash per the capitalization table in the columns
labeled "As Adjusted" and "As Further Adjusted."
Management`s Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Sources of Capital, page 56
3. The paragraph preceding your contractual obligations table
indicates that the information is as of December 31, 2004. Item
303(a)(5) of Regulation S-K requires that the contractual
obligations
table reflect obligations as of the most recent fiscal year-end
date.
Please revise your filing to provide a table as of September 30,
2004. The narrative following the table should discuss any
significant changes in contractual obligations occurring
subsequent
to September 30, 2004.
Inergy Holdings, LLC and Subsidiaries September 20, 2004
Consolidated
Financial Statements
Report of Independent Registered Public Accounting Firm, page F-23
4. It appears that the scope paragraph to the audit report has
been
revised to include the suggested language from AU Section 9508.17.
To further clarify this matter, please revise to also include the
following sentence from AU 9508.18 "The Company is not required to
have, nor were we engaged to perform, an audit of its internal
control over financial reporting." prior the suggested language
from
AU Section 9508.17.
5. We understand that the auditor`s opinion has been modified to
include a legend to indicate the form of opinion that will be
issued
upon the completion of the conversion to a limited partnership.
Please ensure that the draft report is removed and a signed report
included prior to the registration statement being declared
effective. A similar comment applies for the consent of
independent
registered public accounting firm.
Notes to Consolidated Financial Statements
Note 1. Accounting Policies
Conversion Transaction, page F-29
6. Please revise your disclosure to provide a reconciliation of
pro
forma unaudited net income per limited partner unit consistent
with
the requirements of paragraph 40 of SFAS 128. Please clarify how
the
$45 million excess distribution in 2004 was reflected in the per
unit
calculation.
Note 12. Segments, page F-48
7. Please supplementally explain why the propane revenues totals
per
Note 12 agree to the statements of income for the fiscal years
ended
2002 and 2003 however the propane revenues total per Note 12 does
not
agree to the statements of income for the fiscal year 2004.
Please
also consider your December 31, 2004 interim financial statements
and
notes thereto in your response as the propane revenues do not
agree.
Inergy Holdings, LLC and Subsidiaries December 31, 2004
Consolidated
Interim Financial Statements
Notes to Consolidated Financial Statements
Note 3. Long-Term Debt, page F-18
8. On November 5, 2004, you declared a distribution to members,
and
in lieu of cash, distributed promissory notes to members in the
aggregate amount of $15.0 million. On pages 57 and 97 you
indicate
that the promissory notes were issued in order to reduce the
strike
price of equity options that were held by key members of
management
enabling these officers to more readily exercise their options.
All
of these options were subsequently exercised during October and
November 2004. No cash was contributed to you in exchange for
their
issuance. Given the fact that no cash was contributed to you in
exchange for the option issuance we are assuming that the issuance
of
the promissory notes effectively converted the strike price of the
equity options to $0. Please tell us how you accounted for the
option exercise. Also, it is unclear to us why the company
reflected
the issuance of the promissory notes as a distribution of members`
equity. Please advise. Tell us what consideration, if any, was
given to accounting for the issuance of the promissory notes as a
modification to the exercise price of the stock options requiring
variable plan accounting under FIN 44 from the date of
modification
to the date of exercise. Please revise your filing, to the extent
necessary, to better explain these transactions.
Item 15. Recent Sales of Unregistered Securities, page II-I
9. Please provide us the following information regarding each
issuance of unregistered securities from November 2004 to the most
recent practicable date. Tell us the date of each issuance, the
security issued, the fair value of an underlying security on each
issuance date, how you determined the fair value on each date, and
the amount of any compensation expense, interest expense, or other
charges recorded in your financial statements associated with each
equity issuance. If any amounts are being amortized rather than
expensed immediately, also tell us how you determined the
amortization period. You should demonstrate fair value with arms
length sales at the date closest to issuance, if applicable. You
may
also provide any independent appraisals. If applicable, please
describe any intervening events which occurred between the sale
date
and the date you filed your registration statement that
significantly
increased the fair value of your securities. Please provide us
with
the first date you began discussions with any underwriter in which
possible ranges of company value were discussed. Please provide
us
those ranges and the related dates. Finally, please reconcile the
amounts of compensation expense and other expenses recorded in
your
financial statements to the analysis you provide us. We may have
further comments after we review your response.
Appendix B, Estimated Available Cash From Operating Surplus, page
B-1
10. Please supplementally provide us with a schedule supporting
your
disclosed interest expense of $176,000 for the three months ended
March 31, 2005 and annualized interest expense of $703,000.
Inergy, L.P.
General
11. Please amend the Form S-4 and the Form 10-K of Inergy, L.P.
for
the fiscal year ended September 30, 2004 and subsequent periodic
reports, to the extent necessary, to reflect the substantive
revisions made in response to our prior comments. To the extent
that
you make further substantive revisions to the Form S-1 of Inergy
Holdings, LLC, please consider the need to make similar revisions
to
the Form 10-K of Inergy, LP for consistency.
* * * * * * * * * * *
As appropriate, please amend your registration statements in
response to these comments. You may wish to provide us with
marked
copies of the amendments to expedite our review. Please furnish a
cover letter with your amendments 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
amendments 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.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statements, it should furnish a letter, at the time of such
request,
acknowledging that:
? should the Commission or the staff, acting pursuant to
delegated
authority, declare the filings effective, it does not foreclose
the
Commission from taking any action with respect to the filings;
? the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filings effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filings; and
? the company may not assert staff comments and the declaration
of
effectiveness 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 connection with our review of
your
filings or in response to our comments on your filings.
We will consider a written request for acceleration of the
effective date of the registration statements as a confirmation of
the fact that those requesting acceleration are aware of their
respective responsibilities under the Securities Act of 1933 and
the
Securities Exchange Act of 1934 as they relate to the proposed
public
offering of the securities specified in the above registration
statements. We will act on the request and, pursuant to delegated
authority, grant acceleration of the effective date.
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 amendments 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 Adam Phippen, Accountant at (202) 824-5649 or
in
his absence, George Ohsiek, Accounting Branch Chief at (202) 942-
2905
if you have questions regarding comments on the financial
statements
and related matters. Please contact Scott Anderegg, Attorney at
(202) 942-2868, David Mittleman, Legal Branch Chief at (202) 942-
1921
or me at (202) 942-1900 with any other questions.
Sincerely,
H. Christopher Owings
Assistant Director
cc: David P. Oelman
Vinson & Elkins, LLP
VIA FAX
??
??
??
??
Mr. John J. Sherman
Inergy Holdings, LLC
Page 1