June 28, 2005
Via U.S. Mail and Facsimile
George B. Gregory
Polymer Holdings, LLC
700 Milam Street, 13th Floor
North Tower
Houston, TX 77002
Re: Polymer Holdings, LLC
Registration Statement on Form S-4
File No. 333-123749
Amended: June 9, 2005
Kraton Polymers, LLC
Registration Statement on Form S-4
File No. 333-123747
Amended: June 9, 2005
Dear Mr. Gregory
We have reviewed your amended 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.
KRATON POLYMERS, LLC FORM S-4
General
1. Please comply with these comments in the Polymer Holdings LLC
Form
S-4 to the extent applicable.
Prospectus Summary, page 2
Our Company
2. In your statements throughout the prospectus where you state
you
believe you are the world`s leading producer of styrenic block
copolymers, please specify the measure upon which you base these
statements.
Supply Disruption Issues, page 7
3. Please avoid legal terms like "force majeure."
Restatement of Prior Financial Statements, page 8
4. Please consider risk factor disclosure regarding reliance on
current and future financial statements and other risks relating
to
restatement of your financial statements.
Aggregated Options/SAR Exercises..., page 100
5. We note the last column. Please confirm that none of the
options
held by the named officers were in-the-money as of your fiscal
year
end.
Expiration Date; Extensions; Amendments; Termination, page 41
6. Please confirm that any delay in acceptance will be consistent
with Rule 14e-1(c).
Raw Materials, page 57
7. Please disclose whether the operational problems of key
isoprene
producers, which led to the 2005 price increases, are likely to
reoccur.
Liquidity and Capital Resource, page 68
8. Please disclose whether payment on your senior secured credit
facility would be accelerated upon the exercise of the repurchase
option by holders of the exchange notes.
Financial Statements and notes thereto
9. We reviewed your response to prior comment 44 of our letter
dated
April 1, 2004 and appreciate the additional information. Based on
that information we recognize that your end-use markets do not
appear
to be operating segments based on the criteria set forth in
paragraph
10 of SFAS 131. We note on page 52 of your amended filing that
you
generate most of your product sales and gross margin from two
primary
product lines. We also note that on page 4 of your amended filing
you indicate that your KRATON G product has higher performance
characteristics as well as significantly higher margins than your
KRATON D product. Based on this information it appears that these
two principal product lines may qualify as multiple operating
segments as defined by paragraph 10 of SFAS 131. If true, please
explain to us why you believe the aggregation of these operating
segments is appropriate based on the guidance provided in
paragraph
17 of SFAS 131.
Note 1(f) - Summary of Significant Accounting Policies -
Inventories,
page F-12
Schedule II - Valuation and Qualifying Accounts
10. We note that Schedule II indicates a net increase in your
inventory reserve of $2 million for the year ended December 31,
2004;
however, Note 1(f) of your financial statements indicates you had
a
$3.8 million increase in your reserve. Additionally, the notes to
your financial statements indicates there was a $1.6 million
reduction to that reserve during the period January 1, 2003 to
December 22, 2003 while your schedule II indicates a $3.6 million
decrease. Please advise or revise.
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.
You may contact Mindy Hooker at (202) 824-5459 or John Cash at
(202) 824-5373 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 at (202)
551-3742 with any other questions.
Sincerely,
Jennifer Hardy
Branch Chief
cc: Stephen H. Shalen, Esq.
(212) 225-3999
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0404
DIVISION OF
CORPORATION FINANCE