June 17, 2005
via U.S. Mail
Michael P. Sage
Chief Executive Officer
Orchids Paper Products Company
4826 Hunt Street
Pryor, Oklahoma 74361
Re: Orchids Paper Products Company
Amendment No. 1 to Registration Statement on
Form S-1
Filed June 1, 2005
File No. 333-124173
Dear Mr. Sage:
We have reviewed your amended filing and limited our review
to
those issues addressed in our 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
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.
Form S-1
General
1. We remind you of prior comments 1, 3 and 4. For example, file
as
exhibits to the registration statement the final executed copy of
material agreements. In this regard, please file the executed
copy
of the Revolving Credit and Term Facility agreement between the
Company and the Bank of Oklahoma.
2. Your response to comment 5 from our letter dated May 18, 2005
states your only significant exposure to market risk is adequately
disclosed in Management`s Discussion and Analysis of Financial
Condition and Results of Operations and within the discussion of
risk
factors. Note that Item 305 of Regulation S-K requires disclosure
of
both quantitative and qualitative information about market risk.
Please revise your disclosure to include quantitative information
about your variable interest rate risk, in accordance with one of
the
three disclosure alternatives.
3. We reissue prior comments 6 and 26 insofar as some of the
disclosure at pages 69 and 73 remains inappropriate.
Prospectus Summary, page 1
4. We reissue prior comment 7. For example, you have not
specified,
as noted in our prior comment, the impact competition has had on
your
operations recently nor the fact that financing has not been
obtained
for your new paper machine. In this regard, we note that you must
raise at least $11.5 million in this offering in order to obtain
the
new credit facility you anticipate using to finance the new
machine.
Revise your disclosure in your summary to address salient and
material facts that will provide an investor with a more balanced
understanding of your business
5. It appears that there is no minimum price or size condition to
your completion of the initial public offering. Therefore, you
could
complete the offering at a size that would yield less than the
$11.5
million in net proceeds necessary for you to obtain the new credit
facility necessary to finance the new machine. Confirm to us that
in
the event that the net proceeds would be less than the $11.5
million
necessary for the financing, you will recirculate -- prior to any
confirmations of sale -- an appropriately revised prospectus to
reflect the status of the financing, the size of the offering,
your
planned use of the net proceeds and the additional uncertainty
regarding your ability to obtain the new machine, as well as any
other material changes.
6. We note your response to prior comment 8. It appears that some
of
the statistics you use in your document are derived by analogy and
indirect means from various unrelated sources; therefore, some
statistical information you provide appears to be at best informed
speculation. Ensure that as revised your document provides
accurate
and conservative disclosure, and make clear the nature of the
statistics or assertions when they are not based on hard data
obtained from independent sources. You are responsible for the
accuracy and completeness of all disclosure that appears in your
filings.
Risk Factors, page 8
Risks Related to Our Business, page 8
"Our commitment for the anticipate debt financing..., page 9"
7. It appears incomplete to refer to having executed the
commitment
letter without mentioning the minimum IPO term. Make clear that
the
raising of $11.5 million net equity is a pre-condition to the
effectiveness of the credit facility. Also revise the caption,
and
move the risk factor closer to the front of the Risk Factors
section.
Non-GAAP Discussion, page 36
8. Your response to comment 18 from our letter dated May 18, 2005
states that you include the calculation of adjusted EBITDA to
provide
the investor additional information from a forward looking
perspective. Since you determined it beneficial to disclose
adjusted
EBITDA, revise your disclosure to include a discussion of the
following items:
* the manner in which management uses the non-GAAP measure to
conduct
or evaluate its business;
* the economic substance behind management`s decision to use such
a
measure;
* the material limitations associated with use of the non-GAAP
financial measure as compared to the use of the most directly
comparable GAAP financial measure;
* the manner in which management compensates for these limitations
when using the non-GAAP financial measure; and
* the substantive reasons why management believes the non-GAAP
financial measure provides useful information to investors.
Please refer to Question 8 of the Frequently Asked Questions
Regarding the Use of Non-GAAP Financial Measures for further
guidance
on this matter.
Underwriting, page 70
9. We note your response to prior comment 25. Disclose at an
appropriate location in your document the second sentence of that
response.
Notes to Financial Statements, page F-13
Note 1 - Summary of Significant Accounting Policies, page F-13
Stock Split, page F-14
10. You indicate all common and per share amounts of the successor
have been restated to reflect the 2.744 for 1 stock split.
However,
in the first paragraph of page F-19, you state that you sold
728,751
shares of common stock and 2,150 units which contain a warrant to
purchase 38 shares of common stock at $3.64 per share. The
purchase
price of the shares attached to the warrant appears to be adjusted
to
reflect the effect of the stock split; however, it is not clear if
the shares of common stock sold and those attached to the units
have
been adjusted for the stock split. Please revise your disclosure
to
clearly reflect the 2.744 for 1 stock split impact on the number
of
shares sold related to the Orchids acquisition, and ensure all
common
and price per share references in the remainder of document
clearly
indicate that they have been restated to reflect the stock split.
Closing Comments
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. Detailed cover letters greatly facilitate our review.
Please understand that we may have additional comments after
reviewing your response 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 will consider a written request for acceleration of the
effective date of the registration statement 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 statement.
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 an 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 Mark Wojciechowski at (202) 551-3759 or April
Sifford, Accounting Branch Chief at (202) 551-3684 if you have
questions regarding comments on the financial statements and
related
matters. Please contact Mellissa Campbell Duru at (202) 551-3757
or
me at (202) 551-3745 with any other questions.
Sincerely,
H. Roger Schwall
Assistant Director
cc: Donald Figliulo, Esq.
Bryan Cave LLP
(312) 602-5050 (via facsimile)
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Michael P. Sage
Orchids Paper Products Company
June 17, 2005
page 5
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0405
DIVISION OF
CORPORATION FINANCE