Mail Stop 0308
June 9, 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
Amendment No. 4 to Registration Statement on Form S-1
Filed June 2, 2005
File No. 333-122466
Dear Ms. Ozenberger:
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.
Feel free to call us at the telephone numbers listed at the end of
this letter.
Form S-1 Amendment No. 3 filed April 29, 2005
Item 15. Recent Sales of Unregistered Securities, page II-1
1. Please confirm the following information communicated to us
verbally on May 12, 2005. Inergy Holdings, LLC did not have a
Board
of Directors. Rather, Section 5.1 of the agreement provided that
"the business and affairs of the Company shall be managed by the
Voting Member Majority". The "Voting Member Majority" under the
agreement was held by John Sherman. Because there was no Board of
Directors, the terms and approval of any additional equity
issuances
were within the discretion and authority of the Voting Member
Majority, John Sherman. In the ordinary course, additional equity
issuances by the LLC were agreed to by John Sherman and reflected
in
a purchase agreement as well as an amendment to the LLC Agreement
specifying the new member`s capital contribution and resulting
membership interest. The agreement between John Sherman, the
Voting
Member Majority, and David Dehaemers to sell a 0.75% ownership
interest in Inergy Holdings, LLC was struck on October 4, 2004.
Form S-1 Amendment No. 4 filed June 2, 2005
Cash Distribution Policy and Restrictions on Distributions, page
38
Estimated Cash Available to Pay Distributions Based Upon Estimated
Consolidated Adjusted EBITDA, page 42
2. You include a $50 million reduction due to estimated
acquisition
capital expenditures in your reconciliation from Estimated
Consolidated Adjusted EBITDA to Available Cash at Inergy Holdings.
We believe that this line item should be included with a footnote
further explaining the line item however no expenditure amount,
loan
amount received or estimated interest amount paid related to
estimated acquisitions should be included in the reconciliation
from
Estimated Consolidated Adjusted EBITDA. The footnote should
disclose
your history of acquisitions, your plans for future acquisitions,
your plans for financing the future acquisitions and the fact that
your acquisition policy is that all acquisitions are accretive to
earnings. Please revise. Please make similar changes as
applicable
to the Cash Distribution Policy and Restrictions on Distributions
section of the filing.
3. Footnote (a) states that Estimated Consolidated Adjusted EBITDA
includes (i) your expectation that existing operations will
produce
approximately $121.3 million of Consolidated Adjusted EBITDA, (ii)
an
additional $4.0 million of Consolidated EBITDA will be achieved
through $10.0 million of growth capital expenditures and (iii) an
additional $8.3 million of Consolidated Adjusted EBITDA will be
achieved through the acquisition of $50.0 million in retail
propane
businesses. We do not believe that the $4.0 million and the $8.3
million should be included in your Estimated Consolidated Adjusted
EBITDA. Please revise. Please make similar changes as applicable
to
the Cash Distribution Policy and Restrictions on Distributions
section of the filing.
4. We reviewed your response to comment 5 from our letter dated
May
31, 2005 and the revised footnote (c). We would expect the
principal
maturity table to include principal payments expected to be due on
all Inergy, L.P. and Inergy Holdings, L.P. debt as of June 30,
2006.
In this regard we noted that your March 31, 2005 pro forma balance
sheet total current and non-current portion of long-term debt
totaled
$532,011 and your table in footnote (c) totals $522,378. We
understand that principal payments made during the quarter ended
June
30, 2005 would cause differences between the pro forma total debt
and
the total debt disclosed in footnote (k). Please tell us how you
reconcile from your footnote (c) to the March 31, 2005 pro forma
balance sheet total current and non-current portion of long-term
debt.
5. Please revise footnote (e) to explain the reasons for the
significant differences between forecasted maintenance capital
expenditures and the comparable maintenance capital expenditure
amounts disclosed in the Unaudited Pro Forma Consolidated
Available
Cash for the twelve months ended September 30, 2004 and March 31,
2005.
6. Please revise footnote (f) to provide a detailed explanation of
significant differences between forecasted growth capital
expenditures and comparable growth capital expenditure amounts
disclosed in the Unaudited Pro Forma Consolidated Available Cash
for
the twelve months ended September 30, 2004 and March 31, 2005. We
noted that footnote (g) of the Unaudited Pro Forma Consolidated
Available Cash for the years ended September 30, 2004 and March
31,
2005 table includes some explanation. It does not however state,
for
example, what total growth capital expenditures associated with
capital improvement projects at your West Coast NGL facility were
for
the twelve months ended March 31, 2005. Please also consider the
pro
forma adjustment for maintenance and growth capital expenditures
of
acquisitions and related footnote (h) of the Unaudited Pro Forma
Consolidated Available Cash for the years ended September 30, 2004
and March 31, 2005 in your revision.
7. We noted per footnote (j) that you anticipate borrowing $62.7
million necessary for projected $60 million of acquisition and
growth
capital expenditures and principal payments due of $2.7 million.
It
appears that only $2.7 million is included in the footnote (c)
table.
Please tell us whether the $10 million of debt associated with
growth
capital expenditures is included in the footnote (c) table and, if
not, why not. As is stated above, please revise to exclude $50
million of projected acquisition related debt or advise.
Unaudited Pro Forma Consolidated Available Cash, page 46
8. Excluding the effects of acquisition and growth capital
expenditures your estimated Consolidated Adjusted EBITDA is $121.3
million for the twelve months ended June 30, 2006. This twelve
months ended June 30, 2006 estimate is based on assumptions such
as
increased retail gross profit and decreased operating and
administrative expenses due to acquisitions as compared to the pro
forma twelve months ended September 30, 2004 and March 31, 2005.
Your Pro Forma Adjusted EBITDA for the twelve months ended
September
30, 2004 and March 31, 2005 totaled $106,419 and $95,666,
respectively. Star Gas was consolidated for the entire quarter
ended
March 31, 2005. Given the expected increase in estimated
Consolidated Adjusted EBITDA for the twelve months ended June 30,
2006 please tell us and revise to explain why your Pro Forma
Adjusted
EBITDA decreased from the twelve months ended September 30, 2004
to
the twelve months ended March 31, 2005 considering the fact that
Star
Gas was consolidated for the entire quarter ended March 31, 2005.
9. We reviewed your response to comment 5 from our letter dated
May
31, 2005 and the revised footnote (k). We would expect the
principal
maturity table to include principal payments expected to be due on
all Inergy, L.P. and Inergy Holdings, L.P. debt as of March 31,
2005.
In this regard we noted that your March 31, 2005 pro forma balance
sheet total current and non-current portion of long-term debt
totaled
$532,011 and your table in footnote (k) totals $522,378. We
understand that principal payments made during the quarter ended
June
30, 2005 would cause differences between the pro forma total debt
and
the total debt disclosed in footnote (k). Please tell us how you
reconcile from your footnote (k) to the March 31, 2005 pro forma
balance sheet total current and non-current portion of long-term
debt.
Assumptions and Considerations, page 50
10. Please revise to quantify assumptions. For example, quantify
the
expected reduction in operating expenses as a result of
consolidating
certain general and administrative functions, replacing your
casualty
and health insurance contracts and consolidating certain
overlapping
territories.
11. Please add the assumption that you will be able to finance
expected growth capital expenditures.
12. Please add the assumption that you will be able to refinance
any
debt obligations that come due.
Business, page 80
Recent Developments, page 86
Acquisition Activity, page 86
13. Inergy, L.P. is currently negotiating a purchase and sale
agreement with the owners of a natural gas storage facility.
Please
explain your consideration for inclusion of the financial
statements
of the potential acquiree. Please explain your analysis of the
probability of acquisition. If the acquisition is determined to
be
probable please provide a summary of your materiality analysis
used
in the consideration. Refer to Rule 3-05 of Regulation S-X.
Please
also explain your consideration of this transaction in your
"Estimated Cash Available to Pay Distributions Based Upon
Estimated
Consolidated Adjusted EBITDA" table on page 42.
Financial Statements
Inergy Holdings, L.P. and Subsidiaries Consolidated Financial
Statements
Report of Independent Registered Accounting Firm, page F-24
14. Please have your auditors update the date of the auditors`
report
to reflect the restatement as is described in Note 8, or tell us
why
no such revision is necessary. Refer to AU 561.06a of the AICPA
Professional Standards.
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.
June 9, 2005
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