June 20, 2005
Via U.S. Mail and Facsimile
Graham Packaging Company, L.P.
Philip R. Yates
2401 Pleasant Valley Road
York, Pennsylvania 17402
Re: Graham Packaging Company, L.P.
Registration Statement on Form S-4
File No. 333-125173
Filed: May 24, 2005
Graham Packaging Holdings Company
Form 10-K for the Year Ended December 31, 2004
File No. 333-53603-03
Filed: March 31, 2005
Dear Mr. Yates:
We have reviewed your filings 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.
General
1. Prior to effectiveness, please provide us with a supplemental
letter stating that you are registering the exchange offer in
reliance on the staff`s position enunciated in the Exxon Capital
Holdings Corporation (May 13, 1988), Shearman & Sterling (July 2,
1993) and Morgan Stanley & Co. Incorporated (June 5, 1991) no-
action
letters. Also include the supplemental representations from
Shearman
& Sterling and Morgan Stanley & Co. Incorporated.
2. Disclose whether the guarantors will wholly and unconditionally
guarantee the notes.
3. As currently represented, the offer could be open for less than
20
full business days due to the 5:00 p.m. expiration time instead of
an
expiration time of midnight on what ultimately may be the
twentieth
business day following commencement. See Question and Answer
Eight
in Exchange Act Release No. 16623 (March 5, 1980). Please confirm
that the offer will be open at least through midnight on the
twentieth business day. See Rule 14d-1(g)(3).
4. Please confirm supplementally that the expiration date will be
included in the final prospectus disseminated to security holders
and
filed pursuant to the applicable provisions of Rule 424.
Forward-Looking Statements, page ii
5. Please relocate this section to follow the Risk Factors.
Summary, page 1
6. We note your summary contains a lengthy description of the
company`s business, competitive strengths and business strategy.
Further, we note the identical disclosure appears later in your
prospectus. In the summary, you should carefully consider and
identify those aspects of the offering that are the most
significant
and determine how to best highlight those points in clear, plain
language. The summary should not include a lengthy description of
the
company`s business and business strategy. This detailed
information
is better suited for the body of the prospectus. Please revise
accordingly. Please consider limiting your discussion in the "Our
Strengths" and "Our Strategy" sections to the captions only. If
you
want to highlight key aspects of your business strategy and
competitive strengths, consider listing these in a bullet-point
format, with one sentence per bullet point. See Item 503(a) of
Regulation S-K and part IV.C. of SEC No. 33-7497.
7. Ensure that the information you include in your summary is
balanced. To the extent that you continue to cite competitive
strengths in your summary, please review each one and revise as
necessary to provide balancing information.
Our Company, page 1
8. We note the statement that you believe that you are a worldwide
leader in the design, manufacture and sale of technology-based,
value-added custom blow molded plastic containers for branded
consumer products. Please revise these disclosures to specify the
measure upon which you base these statements. Please also comply
with
this comment with respect to your statements in MD &A that you
have
established yourself as a leader in the value-added segment.... ,
that recently, you have been a leading participant in the rapid
growth of yogurt drinks... and that you are a leading supplier in
the
personal care/specialty product cateogry.
Risk Factors, page 16
9. With respect to the following risk factors, please clearly
explain
how each specific risk applies to your company. For example, you
have previously experienced difficulty servicing your debt,
experienced labor strife that have disrupted your operations, or
are
any of the key people planning to retire or nearing retirement age
or
do you lack employment contracts with these individuals? Please
refer to the following:
* Our debt agreements contain restrictions that limit our
flexibility
in operating our business
* Our international operations are subject to a variety of risks
related to foreign currencies and local law in several countries
* Our operations and profitability could suffer if we experience
labor relation problems. and
* Our ability to operate the Company effectively could be impaired
if
we lost key personnel.
10. Please include a risk factor that addresses the potential for
material adjustments to the purchase price of O-I Plastic
resulting
from the net operating loss carryforwards allocated to you from
the
seller and the finalization of the purchase price.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations, page 35
2004 Compared to 2003, page 39
11. Please disclose which product categories contributed to the
net
sales increases in Europe and South America. Please provide the
same
disclosure for the 2003 and 2002 period comparison.
Liquidity and Capital Resources, page 43
12. Please disclose whether you anticipate being able to satisfy
the
specified financial ratios and tests in your credit facilities.
13. We note your discussion regarding the non-GAAP measure
"covenant
compliance EBITDA." In a schedule, please provide your
reconciliation of covenant compliance EBITDA to net income as
required in Item 10(e) of Regulation S-K.
Contractual Obligations and Commitments, page 46
14. Please revise your table of contractual cash obligations to
include estimated payments under your interest rate swap
agreements.
Because the table is aimed at increasing transparency of cash
flow,
we believe these payments should be included in the table. Please
also disclose any assumptions you made to derive these amounts.
If
you choose not to include these payments, a footnote to the table
should clearly identify the excluded items and provide any
additional
information that is material to an understanding of your cash
requirements.
Transactions with Affiliates, page 46
15. Please disclose what recourse Graham Engineering has against
you
should you decide to buy certain high output extrusion blow
molding
equipment from another supplier.
Business, page 50
16. Please provide a basis for your statement that you are
strategically positioned to benefit from the 60% of the domestic
hot-
fill food and beverage market that has yet to convert to plastic.
17. Please provide a basis for your projection of a $100 million
cost
savings resulting from your integration of O-I Plastics.
18. You cite Datamonitor and Plastics News as the source of some
of
the statistics. Please tell us supplementally whether Datamonitor
and Plastics News` information was prepared for you or for use in
this prospectus, or whether it is widely and publicly available.
Tell us whether Datamonitor and Plastics News consented to your
use
of their information in this prospectus. We may have additional
comments upon review of your response.
19. We note your statement that a considerable portion of industry
capacity comes from in-house packaging operations of major
beverage
companies. Please discuss the effect, if any, this state of
affairs
may have on your competitive position.
Competition, page 57
20. Please place your competitive position in context by
disclosing
the market share percentage you have of each market in which you
participate to the extent known.
Intellectual Property, page 60
21. Please disclose the duration and status of your most important
patents. Disclose the extent to which your manufacturing
equipment
designs can be legally copied by your competitors.
Management, page 64
22. Please identify the directors pursuant to Item 401 of
Regulation
S-K and clarify the function of the advisory committee.
23. Please disclose whether or not you or Holdings have an audit
committee and if not, when you plan to implement one. If you have
an
audit committee, please identify the members. We note disclosure
regarding your compensation committee on page 66. Please identify
its members.
Option/SAR Grants in the Last Fiscal Year, page 69
24. Please provide this information in tabular format as required
by
Item 402(c) of Regulation S-K.
Certain Relationships and Related Party Transactions, page 73
25. For each of the agreements listed, please disclose the amount
of
consideration paid under the agreement during your last three
fiscal
years pursuant to Instruction 2 of Item 404 of Regulation S-K.
Terms of the Exchange Offer, page 81
26. Please revise your letter of transmittal to comply with the
following comments.
27. We note your reservation of the right to amend the terms of
the
offer. Please revise to indicate that, in the event of a material
change in the offer, including the waiver of a material condition,
you will extend the offer period if necessary so that at least
five
business days remain in the offer following notice of the material
change. Provide us your views on whether waiver of any condition
will constitute a material change requiring that at least five
business days remain in the offer after the waiver`s notice.
Also,
disclose that the notice will disclose the number of securities
tendered as of the notice`s date as required by Rule 14e-1(d)
under
the Exchange Act.
Certain Conditions to the Exchange Offer, page 83
28. You reserve the right "to delay the acceptance of any old
notes."
Clarify in what circumstances you will delay acceptance and
confirm
that any such delay will be consistent with Rule 14e-1(c). For
example, if you are referring to the right to delay acceptance
only
due to an extension of the exchange offer, so state.
29. Please advise us as to how oral notice of any extension is
reasonably calculated to reach registered holders of the
outstanding
notes or otherwise satisfies the requirements of Rule 14e-1(d).
30. Please disclose the basis upon which you will determine
whether
material conditions have been satisfied and note that you must
include an objective standard for the determination of whether a
condition has been satisfied.
31. An exchange offer may be conditioned on a variety of events
and
circumstances, provided that they are not within the direct or
indirect control of the bidder, and are drafted with sufficient
specificity to allow for objective verification that the
conditions
have been satisfied. With this in mind, please revise the
condition
in the third bullet, which states: "any action or proceeding ...
that, in our judgment, would reasonably be expected to impair our
ability to proceed with the exchange offer."
Description of the Notes, page 90
32. Under Rule 421(b) of Regulation C, you must avoid copying
complex
information directly from the underlying indenture without any
clear
and concise explanation of this information. It appears that you
took much of the language in the body of the prospectus directly
from
the underlying indenture. Please rewrite this disclosure to
comply
with Rule 421(b) of Regulation C.
Certain Definitions, page 123
33. Please eliminate definitions of terms that you do not use in
the
prospectus or whose meanings are apparent or commonly understood.
Examples of these terms include, but are not necessarily limited
to:
Board of Directors, Equity Offering, GAAP, Government Securities,
and
Investments.
Certain U.S. Federal Income Tax Considerations, page 151
34. Please remove the word "certain" here and elsewhere, as
appropriate. Rule 601(b)(8) of Regulation S-K requires you to
disclose all material U.S. federal income tax considerations.
35. Did you receive an opinion of tax counsel with respect to
these
federal income tax considerations? If so, please file with your
next
amendment. If not, please disclose this.
Financial Statements
Note 22. Condensed Guarantor Data, page F-36
36. If true, please disclose whether the guarantees are joint and
several. If that statement is not true, demonstrate how you
comply
with Rule 3-10 (d) of Regulation S-X and clarify for us why Graham
Packaging Company, L.P. financial statements are not filed. We
note
that Graham Packaging Company, L.P. is the issuer of the
securities
being registered.
Form of Letter of Transmittal
37. Delete the language in the letter of transmittal requiring the
note holder to acknowledge or certify that he/she has read, all of
the terms of the exchange offer.
Graham Packaging Holdings Company
Form 10-K for the Year Ended December 31, 2004
General
38. Please address the comments above in your future periodic
filings
as applicable.
Item 9A. Controls and Procedures, page 74
39. Disclosure controls and procedures are now defined in Exchange
Act Rules 13a-15(e) and 15d-15(e). Please revise this Item if
future
filings to refer to the current Exchange Act Rules. See SEC
Release
No. 33-8238, which became effective August 14, 2003.
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 that is filed on EDGAR 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.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, 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 filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; 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
filing or in response to our comments on your filing.
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 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.
Please contact Marie Trimeloni at (202) 551- 3734 or Nathan
Cheney
at (202) 551-3714 if you have questions regarding comments on the
financial statements and related matters. Please contact Craig
Slivka at (202) 942-7470 or the undersigned branch Chief who
supervised review of this filing at (202) 551-3767 with any other
questions.
Sincerely,
Jennifer Hardy
Branch Chief
cc: Mark C. Smith, Esq.
(212) 735-2000
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0404
DIVISION OF
CORPORATION FINANCE