Mail Stop 0308
May 31, 2005
Laura L. Ozenberger
Vice President, General Counsel
and Secretary
Inergy Holdings, L.P.
Two Brush Creek Boulevard, Suite 200
Kansas City, MO 64112
Re: Inergy Holdings, L.P.
Amendment No. 3 to Registration Statement on Form S-1
Filed April 29, 2005
File No. 333-122466
Dear Ms. Ozenberger:
We have reviewed your draft pages submitted May 19, 2005 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. Feel free to call us at the
telephone
numbers listed at the end of this letter.
Cash Distribution Policy and Restrictions on Distributions, page 1
General, page 1
1. We reissue comment 4 in our letter dated April 26, 2005. As
reflected in the first bulleted paragraph of that comment, please
revise so that this section first addresses the rationale for your
and Inergy`s cash distribution policy. It appears that this
discussion as to why you have adopted the policy is contained in
the
second, third, and fourth paragraphs on page 1.
2. In this regard, however, so that the discussion about the
policy
is as clear and concise as possible, please delete nonessential
attributes of the policy or move them to elsewhere in the section.
For example, we note the following:
* In the second full sentence of the first paragraph on page 1,
you
indicate that you will pay the prorated August 19, 2005
distribution
"assuming [you] have sufficient available cash[.]" The basis for
this qualification is unclear. As reflected in comment 3 in our
letter dated April 26, 2005, you must unambiguously state the
distribution you will pay in accordance with your cash
distribution
policy. To the extent you are making assumptions about the
policy,
then the appropriate place for disclosure is in the Assumptions
and
Consideration subsection starting on page 12. See also comment 9
in
our letter dated April 26, 2005.
* Likewise, it appears that the third and fourth full sentences of
the first paragraph on page 1 contain information that is more
relevant to a discussion about limitations on your distribution
policy or your assumptions and considerations about the policy.
See
also comment 4, second bullet, and comment 9 in our letter dated
April 26, 2005.
* It appears you should integrate the last full sentence of the
first
paragraph on page 1 with the fifth paragraph on page 1. In
addition,
rather than presenting this information as a definition, as you do
in
that fifth paragraph, you should convey the information so that it
fits within the overall discussion of your cash distribution
policy.
* In the second full sentence of the second paragraph on page 1,
please do not phrase your distribution policy in terms of an
"attractive investment[.]" Rather, if the tax attributes reflect
a
rationale for adopting the policy, then revise to so clarify.
* Delete the third and sixth full sentences in the second
paragraph
on page 1. Those cross-references are not essential to the
disclosure here.
* It appears the fourth and fifth full sentences in the second
paragraph on page 1 reflect the impact of your distribution policy
on
your growth. If so, you should integrate those sentences with the
growth discussion starting at the bottom of page 2. See comment
4,
third bullet, in our letter dated April 26, 2005.
* Generally, consistent with the above guidance, it appears you
could
streamline the fourth paragraph on page 1 to more clearly and
concisely summarize Inergy`s cash distribution policy.
3. We reissue comment 4, second bullet, in our letter dated April
26,
2005. Please revise the outset of the bottom paragraph on page 1
to
clarify that that there is no guaranty that unit holders will
receive
distributions. Then, set forth a list of material factors that
may
limit your ability to pay distributions. The list should be
consistent with the type of limiting factors conveyed in that
comment
4, second bullet. In preparing the list, please take into account
the following:
* Do not draft the disclosure in a risk factor type format. For
example, delete the final sentences of each of the first five
bullets
on page 2.
* It is unclear how the first, second, fourth, and fifth bullets
on
page 2 constitute limiting factors.
* In the third bullet on page 2, rather than the fourth full
sentence, please briefly summarize here, or if appropriate in
distinct bullets, all material credit facility tests that may
limit
your ability to pay distributions.
* Integrate the bottom paragraph on page 1 and the first full
paragraph on page 2 so that you list together all material
limiting
factors.
Our Initial Distribution Rate, page 3
Basis for Initial Distribution Rate, page 3
4. Please refer to the bottom paragraph on page 3. It appears
that
the factors you list there more appropriately reflect assumptions
and
considerations, as the disclosure itself reflects in the first
full
paragraph on page 4. Accordingly, please integrate the bulleted
points in that bottom carryover paragraph on page 3 with the
Assumptions and Considerations subsection. As a result, you
should
delete the Basis for Initial Distribution Rate heading and also
delete the second full paragraph on page 4 as unnecessary. The
result will have the three bold-type sentences and corresponding
discussion become appended to the Our Initial Distribution Rate
subsection.
Estimated Cash Available to Pay Distributions . . . , page 5
5. Please refer to footnote (c) on page 7. Please revise to
provide
a brief summary of when principal amounts will be due. Also, if
you
and Inergy plan to finance all capital expenditures and plan to
refinance debt as it comes due such that no principal repayments
are
reflected as reductions in the table please revise to clearly
state
these assumptions. This revision should be reflected in the
Unaudited Pro Forma Consolidated Available Cash table as well.
Unaudited Pro Forma Consolidated Available Cash, page 9
6. Your definition of Consolidated Adjusted EBITDA in the last
paragraph on page 4 does not appear to contemplate adjustments
made
for gain (loss) on sale of property, plant and equipment,
provision
for doubtful accounts, and changes in working capital items. It
appears that these adjustments are necessary to reconcile from
cash
flows from operating activities to EBITDA. Please provide a more
clear explanation of the need for these adjustments.
7. Your adjustment to add back the impact of net increases in
working
capital to arrive at Consolidated Adjusted EBITDA is not
subsequently
reflected as a reduction in arriving at cash available for
distributions. If you assume that working capital does not
require,
or generate, cash over time, or that management can otherwise
avoid
the use of cash through discretionary management of working
capital,
please revise to clarify.
8. Please refer to footnote (c) on page 11. Please revise to use
current interest rates rather than interest rates prevailing
during
the period covered by the pro forma information. If current
interest
rates have been reflected in the table please revise to clearly
disclose.
Assumptions and Considerations, page 12
9. Your assumptions and considerations include, among others, the
assumption that Inergy will sell a minimum of 350 million retail
gallons of propane and achieve a retail gross profit of at least
$305
million for the twelve months ending June 30, 2006. Please revise
to
provide comparable pro forma retail gallons sold and retail gross
profit for the twelve months ended September 30, 2004 and March
31,
2005. To the extent that there are material differences between
the
volumes and dollar amounts reflected in the pro forma historical
periods and the forecasted period please explain. Our comment
applies to your assumptions regarding your wholesale operations
and
the overall levels of operating expenses.
Sources of Distributable Cash and Incentive Distribution Rights,
page
14
Incentive Distribution Rights - Hypothetical Allocations of
Distributions . . . , page 14
10. You disclose that Inergy`s dividends are subject to cumulative
arrearages. On page 3 you disclose that Holdings dividends are
not
cumulative. Please clarify for the reader that the reference to
cumulative arrearages at Inergy does not apply to unit holders of
Holdings.
*****
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 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.
You may contact Adam Phippen, Staff Accountant at (202) 551-3336
or
in his absence, George Ohsiek, Accounting Branch Chief at (202)
551-
3843 if you have questions regarding comments on the financial
statements and related matters. Please contact Scott Anderegg,
Staff
Attorney at (202) 551-3342, David Mittelman, Legal Branch Chief at
(202) 551-3214 or me at (202) 551-3720 with any other questions.
Sincerely,
H. Christopher Owings
Assistant Director
cc: David P. Oelman
Vinson & Elkins, LLP
Fax: (713) 615-5861
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Laura L. Ozenberger,
Inergy Holdings, L.P.
May 31, 2005
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