Mail Stop 3561
November 4, 2005
Michael B. Moneymaker
Executive Vice President, Chief Financial
Officer, Treasurer and Secretary
NTELOS Holdings Corp.
401 Spring Lane, Suite 300
P.O. Box 1990
Waynesboro, Virginia 22980
Re: NTELOS Holdings Corp.
Registration Statement on Form S-1
Filed October 6, 2005
File No. 333-128849
Dear Mr. Moneymaker:
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.
In some of our comments, we may ask you to provide us with
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 any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
General
1. We note a number of blank spaces throughout your registration
statement for information that you are not entitled to omit under
Rule 430A, such as the anticipated price range and various
recapitalization information. Please include this disclosure in
an
amendment as soon as practicable. Note that we may have
additional
comments once you have provided this disclosure. Therefore,
please
allow us sufficient time to review your complete disclosure prior
to
any distribution of preliminary prospectuses.
2. Please provide us with copies of your artwork prior to
circulating
preliminary prospectuses. Since we may have comments that could
result in material revisions to your artwork, we suggest that you
provide us with enough time to finish commenting on your artwork
prior to circulating preliminary prospectuses. In order to
expedite
this process, you may submit your artwork to us on a supplemental
basis. See Item VIII of the March 31, 2001 quarterly update to
the
Division of Corporation Finance`s "Current Issues and Rulemaking
Projects Outline."
3. Revise your disclosure throughout to remove unnecessary
capitalized terms and defined terms. For example, please delete
the
fourth sentence of the italicized paragraph on page one; once you
make your disclosure clear from the context, you will not need to
define terms such as "NTELOS," "we," "our" and "us." Similarly,
you
will not need to define terms such as "Sprint Nextel,"
"Telecommunications Act," or "GAAP." In addition, instead of
defining terms such as basic trading areas as "BTAs," consider
using
the full term. This will make the disclosure easier to
understand.
These are only a few examples.
4. Please remove or explain technical and business jargon and
acronyms such as "footprint," CLEC," "RLEC," "ILEC," and "POPS,"
in
the forepart of the prospectus and avoid relying on industry
jargon
and acronyms throughout the rest of the prospectus. Instead, use
terms that would be familiar to people outside of your industry,
such
as "rural telephone company" rather than RLEC.
5. We note your references to the use of third party valuation
advisor throughout the filing. For example, pages 61, F-8, F-21,
F-
40, F-58, and F-71. While you are not required to make references
to
the independent appraisals, when you do you should also disclose
the
name of the experts and include the consents of the experts.
Please
revise.
Market and Other Data, page i
6. If you wish to retain it, this section is more appropriate for
the
body of the prospectus. In addition, please refer to the sentence
beginning "Although we believe that these sources are
reliable...."
We note your statement that you "cannot guarantee [the
information`s]
accuracy or completeness." Delete this statement; as the
registrant,
you cannot disclaim responsibility for information contained
within
the filing.
Prospectus Summary, page 1
7. Your summary should discuss only the key aspects of the
offering
and your operations. Much of the discussion you currently include
does not appear so highly material as to merit inclusion in the
summary. Please revise to provide a brief, balanced, non-
repetitive
discussion of your company and the offering. For example:
* to provide context to the summary discussion, briefly indicate
at
the outset the significance of each operating segment to your
business by disclosing the percentage revenues generated by each
segment;
* consider eliminating, or significantly reducing, the detailed
competitive strengths discussion, which is more appropriate for
your
business section;
* when presenting information about your revenues and operating
income (loss), also disclose your net income (loss) for the same
period;
* disclose and quantify your significant indebtedness;
* briefly discuss your bankruptcy in 2003 and what led to your
bankruptcy filing; and
* when discussing the number of access lines of your wireline
business, disclose that you have experienced reductions in the
number
of access lines in each of the last few fiscal years.
8. Explain what you mean by "free cash flow" on page two and
"incremental cash flow" on page three when you discuss your
wireline
business. In addition, when discussing your wireline business,
please disclose that you have continued to experience reductions
in
your access lines in the last
9. Briefly indicate here if you choose to retain this section in
the
summary, and, if not, in your business section, the basis for your
beliefs that your brand is the "Best Value in Wireless" and that
your
services offer "The Most Minutes Across Town and Across America,"
as
you state on page two. Similarly, disclose the basis for your
statements on page two and three that "[y]our wireline business
and
its predecessor organizations have a long history of providing
exceptional telephone service in rural Virginia" and have "a
reputation for superior customer service."
Recent Developments, page 3
10. Please provide a more descriptive subtitle. In addition,
briefly
discuss the following:
* the amount of control the CVC and Quadrangle entities will have
over NTELOS after the offering; and
* that $13.4 million of the net proceeds of the offering are going
to
the CVC and Quadrangle entities to terminate advisory agreements
you
have with them.
Summary Historical and Pro Forma Consolidated Financial and
Operating
Data, page 6
11. Please present the summary historical data for the year ended
December 31, 2004 for NTELOS Inc. and for the period from January
14
through June 30, 2005 for NTELOS Holdings Corp. or tell us why
this
information is not required.
12. Please refer to footnote (1)-(3) on page 7. Since the
information is not presented, delete these footnotes.
Risk Factors, page 8
General
13. Some of your risk factors are generic in that they could apply
to
any company in your industry. We cite as examples the following:
* "We cannot predict the effect of technological changes on our
business" on page 15;
* "The possible health effects of radio frequency emission may
adversely affect the demand for wireless telephone services" on
page
16; and
* "The risks associated with using wireless telephones while
driving..." on page 16.
These are just a few examples. Please revise to convey in the
risk
factor captions and in the accompany text the discrete material
risk
to you.
14. In highlighting material risks, consider eliminating
additional
detail that is not necessary to convey the material risk and
reserve
the additional detail for your business section, management`s
discussion and analysis, or other appropriate section. Also,
describe
the risk succinctly and as early in the accompanying text as
possible. In this regard, please revise, for example, the risk
factor beginning "Regulatory developments that we cannot predict
could increase our costs or reduce our revenues..." on page 17.
We will require a significant amount of cash..., page 8
15. To provide context, please disclose the amount of your debt
service obligations and planned capital expenditures over the next
fiscal year.
Our largest competitors and Sprint Nextel may build networks in
our
markets..., page 13
16. To assist investors in assessing the likelihood and imminence
of
the risk, please state here the termination date of your Strategic
Network Alliance with Sprint Nextel.
Our failure to comply with regulatory mandates could adversely
affect
our ability..., page 14
17. Please refer to your E911 discussion. Revise your
management`s
discussion and analysis to discuss the impact the E911
requirements
will have on your operations.
Use of Proceeds, page 28
18. Please indicate here the amount of the fee to be paid to the
CVC
Entities and the Quadrangle Entities for terminating the advisory
agreements.
19. Please indicate how you expect to allocate the net proceeds of
the offering for each general purpose and also if the underwriters
exercise their over-allotment option. To the extent that you
intend
to apply a significant amount of the net proceeds to "general
corporate purposes," revise to more specifically identify the
purposes for which this balance of the net proceeds is expected to
be
used and then quantify the amount intended to be allocated to each
of
those purposes. See Item 504 of Regulation S-K.
Dilution, page 31
20. Quantify the dilution to new investors if the underwriters
fully
exercise their over-allotment option.
21. Quantify the further dilution to new investors that will occur
upon exercise of your outstanding stock options.
Notes to Unaudited Pro Forma Condensed Consolidated Statements of
Operations, page 35
22. Please refer to notes (d) and (f). Please delete these
adjustments but you may disclose the information in the notes.
Management`s Discussion and Analysis, page 44
General
23. Please specifically address what changes in your results of
operations, liquidity and capital resources, and trends you expect
as
a result of your reorganization from a private company to a public
company. It is important for investors to understand your
historical
financial information when you were a private company and whether
and
the extent to which management expects the trends and results of
operations to continue or change as a public company. In this
regard, we note your risk factor on page 25 regarding the increase
in
costs as a result of becoming a public company.
Overview, page 44
24. Please expand your description on page 45 of how the CVC and
Quadrangle entities acquired NTELOS Inc. Describe by what means
the
entities acquired the company and business, whether it was a
leveraged buyout, and how the acquisition has impacted your
liquidity
and capital resources.
25. Please expand your discussion on page 45 of your chapter 11
reorganization, including a description of the circumstances,
business or financial, that led to the chapter 11 filing and how
you
have addressed those circumstances since you reorganized and
emerged
from bankruptcy.
Other Overview Discussion, page 45
26. We note your statement on page 46 that you "believe that ARPU
provides useful information concerning the appeal of [y]our rate
plans and service offerings and [y]our performance in attracting
and
retaining high value customers." Briefly further explain the
substantive reasons why management believes that presentation of
the
non-GAAP financial measures provides useful information to
investors
regarding your financial condition and results of operations. In
addition, please discuss how management uses each of the financial
measures to evaluate operating performance and/or liquidity.
Please
avoid generic conclusions.
Year Ended December 31, 2004 Compared to Year Ended December 31,
2003, page 53
Overview, page 53
27. Please refer to the third paragraph. Revise the reference to
Note 4 instead of Note 2.
Liquidity and Capital Resources, page 65
28. Given the significant amount of your debt, tell us what
consideration you have given to providing more detailed disclosure
regarding your debt covenants, including historical and pro forma
calculations of the measures. See Part IV.C. of Interpretation
Release No. 33-8350 Commission Guidance Regarding Management`s
Discussion and Analysis of Financial Condition and Results of
Operations available on our website.
29. We note your statement on page 69 that you will be able to
meet
your anticipated cash needs "for the foreseeable future." Please
provide a more detailed discussion of your ability to meet both
your
short-term and long-term liquidity needs. We consider "long-term"
to
be the period in excess of the next twelve months. See Section
III.C. of Release no. 33-6835 and footnote 43 of Release no. 33-
8350.
Clarify whether management believes the company will have
sufficient
cash and other financial resources to fund operations and meet its
debt and other obligations beyond the next twelve months.
30. Please refer to your "timing" discussions on pages 66 and 67
of
2004 and 2005 cash flows from operating activities. Revise to
discuss in more detail how the timing each item affected your cash
flows form operating activities.
Contractual Obligations and Commercial Commitments, page 69
31. Please include the estimated obligations relating to interest
payments and discuss how you calculated these amounts.
Management, page 97
Executive Officers and Directors, page 97
32. Please account for the past five years in your business
experience descriptions for directors Christopher Bloise and
Andrew
Gesell, or include dates in the existing biographies to show that
you
have done so. See Item 401(e) of Regulation S-K.
Executive and Director Compensation, page 101
33. We note your reference on page 107 to options that may be
granted
prior to the initial public offering. To the extent that you
grant a
material amount of options to named executive officers prior to
the
offering, please consider disclosing the amount and material terms
of
the options.
Employment Agreements, page 107
34. Much of the disclosure about your executive officers`
employment
agreements appears to have been taken directly from the employment
contracts, using the same legalistic language and presentation.
Please revise to make this disclosure more readable and easier to
understand.
Certain Relationships and Related Transactions, page 114
Advisory Agreements, page 114
35. Describe briefly the advisory services that the CVC Entities
and
the Quadrangle Entities have provided to you. Discuss how
transaction prices were determined by the parties. Disclose the
amount of out-of-pocket expenses you have paid to the CVC Entities
and the Quadrangle Entities under the advisory agreement.
Disclose
how you calculated the $13.4 termination fee that you intend to
pay
using net proceeds from the offering. File the advisory
agreements
as exhibits. Lastly, disclose whether you believe the terms of
the
agreements were comparable to terms you could obtain from
independent
third parties.
Stock Subscription Agreements, page 115
36. You provide a cross-reference to "Principal Stockholders" for
a
description of the stock subscription agreements; however, there
is
no disclosure regarding the stock subscription agreements in that
section. Please disclose the purchase price and amount of Class L
and Class A common stock purchased by each named executive officer
or
director. In addition, describe the material differences between
the
Class L and Class A common stock and whether the Class L and Class
A
common stock will be reclassified as common stock on a one-to-one
basis in connection with the offering.
Purchase of Notes, page 115
37. Please disclose the amount of 10% notes held by each person.
Underwriting, page 126
38. As soon as practicable, please furnish us with a statement as
to
whether or not the amount of compensation to be allowed or paid to
the underwriters has been cleared with the NASD. Prior to the
effectiveness of this registration statement, please provide us
with
a copy of the letter or a call from the NASD informing us that the
NASD has no additional concerns.
39. In your indemnification subsection on page 127, you briefly
mention a directed share program. Please provide more detailed
disclosure about your directed share program. In addition,
explain
to us in your response letter the mechanics of the directed share
program, and provide us with copies of all materials that you will
provide to potential purchasers of any shares in the directed
share
program, and any communications you will have with potential
purchasers, including emails. Your explanation to us in your
response letter should include, but not be limited to, the
following
details:
* How the prospective recipients and number of reserved shares are
determined;
* How and when the issuer and underwriter notified or will notify
the
directed share investors, including the types of communications
used;
* The procedures investors must follow in order to purchase the
offered securities, including how and when any communications or
funds are to be received by the underwriter or the company;
* The process for confirmation and settlement of sales to directed
share purchasers;
* Whether directed share purchasers are required to establish
accounts before the effective time, and, if so, what if any funds
are
put in newly-established brokerage accounts before the effective
date;
* The relationship between the funds deposited into new accounts
and
the expected price for the shares allocated to the directed share
purchaser; and
* Whether and how the procedures for the directed share program
differ from the procedures for the general offering to the public.
Provide us with copies of all written communications with
prospective
purchasers about the directed share program. Alternatively, to
the
extent that our Division has reviewed your procedures, please
confirm
this and tell us if you have changed or revised your procedures
subsequent to our clearance.
40. We note your disclosure on page 129. Identify any members of
the
underwriting syndicate that will engage in any electronic offer,
sale
or distribution of the shares and describe in your response letter
to
us their procedures. If you become aware of any additional
members
of the underwriting syndicate that may engage in electronic
offers,
sales or distributions after you respond to this comment, promptly
supplement your response to identify those members, and provide us
with a description of their procedures.
Briefly describe any electronic distribution in the filing.
Also, tell us how the procedures ensure that the distribution
complies with Section 5 of the Securities Act. In particular,
please
address:
* the communications used;
* the availability of the preliminary prospectus;
* the manner of conducting the distribution and sale, such as the
use
of indications of interest or conditional offers; and
* the funding of an account and payment of the purchase
price.
Alternatively, to the extent that our Division has reviewed the
procedures, please confirm this, and tell us if the procedures
have
been changed or revised subsequent to our clearance.
Further, tell us whether you or the underwriters have any
arrangements with a third party to host or access your preliminary
prospectus on the Internet. If so, identify the party and the
website, describe the material terms of your agreement, and
provide
us with a copy of any written agreement. Provide us also with
copies
of all information concerning your company or prospectus that have
appeared on their website. Again, if you subsequently enter into
any
such arrangements, promptly supplement your response.
Finally, tell us whether any members of the selling group have
made
copies of the preliminary prospectus available over the Internet.
If
so, tell us when. If not, tell us if they intend to do so. In
this
regard, note that we would consider this posting a circulation of
the
preliminary prospectus.
We may have further comments.
Available Information, page 130
41. Please revise to include our current location at 100 F Street,
N.E., Washington, D.C. 20549.
NTELOS Holdings Corp. Financial Statements
Consolidated Statements of Operations, page F-5
42. Please present loss per share and the weighted average common
shares outstanding under FAS 128 or tell us why the presentation
is
not required. Also, revise all applicable sections in the filing.
Note 4. Property, Plant and Equipment and Other Long-lived Assets,
page F-13
43. Please tell us how you evaluated the factors in FAS 142 in
evaluating the useful life of your customer relationships
intangible
assets.
Note 3. Investment in NTELOS Inc., page F-10
44. Please provide the disclosures required under paragraph 58 of
FAS
141.
Note 4. Accounting for Asset Retirement Obligations, page F-13
45. Please tell us how you considered "the demand of the other
party
to these agreements" in determining your asset retirement
obligations.
Note 14. Stock Plans, page F-27
46. Please tell us the estimated fair value of your common stock
used
to determine the fair value of each grant under the Black-Scholes
option-pricing model. Also, tell us your expected IPO price
range.
47. We understand that these options will convert into options to
purchase your "Common Stock." Please tell us whether or not the
conversion of these options will result in a new measurement date.
Include in your response references to the appropriate accounting
literature.
NTELOS Inc. and Subsidiaries Financial Statements
Consolidated Balance Sheets, page F-32
Consolidated Statement of Operations, page F-33
48. Please refer to the "Successor Company" financial statements.
It
appears to us that NTELOS Inc. is considered to be your
predecessor.
Revise to delete the "Successor Company" financial statements. If
you believe that your presentation is appropriate, please provide
us
with your basis for citing the appropriate accounting literature.
Consolidated Statements of Operations, page F-33
49. Please present income (loss) per share and the weighted
average
common shares outstanding under FAS 128 or tell us why the
presentation is not required. Also, revise all applicable
sections
in the filing.
Note 4. Reorganization and Fresh Start Accounting, page F-41
50. Please tell us why these condensed consolidated financial
statements are not required to be audited.
Exhibits
51. On page 119, you state that "[p]rior to the completion of this
offering, [you] will amend and restate [y]our certificate of
incorporation to reclassify [y]our Class A common stock and Class
L
common stock as common stock." Please provide us with a copy of
your
amended and restated certificate of incorporation as soon as
practicable if you do not file it with your next amendment.
52. Please file the material agreements relating to your formation
and the acquisition of NTELOS by the CVC Entities and the
Quadrangle
Entities.
53. Please file your remaining exhibits as soon as practicable.
With
your next amendment, provide us with at least draft copies of the
legality opinion. We will need adequate time to review and
comment
upon it and the other exhibits.
* * *
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.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities Act
of
1933 and that they have provided all information investors require
for an informed investment 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 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 Nicole Holden, Staff Accountant, at 202-551-
3374, or Dean Suehiro, Senior Staff Accountant, at 202-551-3384,
if
you have questions regarding comments on the financial statements
and
related matters. Please contact Cheryl Grant, Staff Attorney, at
202-551-3359, or Kathleen Krebs, Special Counsel, at 202-551-3350,
with any other questions.
Sincerely,
Larry Spirgel
Assistant Director
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Mr. Moneymaker
NTELOS Holdings Corp.
November 4, 2005
Page 12