Mail Stop 4561
November 18, 2005
Ralph M. Davisson, Esq.
Vice President and General Counsel
Potlatch Corporation
601 West Riverside Avenue, Suite 1100
Spokane, Washington 99201
Re: Potlatch Holdings, Inc.
Amendment No. 1 to Form S-4
Filed October 31, 2005
File No. 333-128403
Potlatch Corporation
Annual Report on Form 10-K
Filed February 25, 2005
File No. 1-05313
Dear Mr. Davisson:
We have reviewed your filings and have the following
comments.
Where indicated, we think you should revise your documents 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.
Registration Statement on Form S-4
General
1. We note your response to comment no. 3 that the registrant
expects
to fund its distributions on an annual basis "exclusively or
predominantly" from the registrant`s REIT operations. If you do
not
expect to fund all distributions from your REIT operations, please
quantify the portion that will not be from REIT operations and
briefly describe any other sources of funding for the
distributions.
2. We note your response to comment no. 4 and the revised
disclosure
that you believe that the value of the securities of Potlatch TRS
will be determined to be substantially less than 20% of the value
of
the REIT`s total assets. Please tell us the basis for your belief
and provide copies of the analyses of the value of Potlatch TRS
securities relative to analyses of the value of its REIT-
qualifying
assets that have been reviewed by the board.
Questions and Answers about the REIT Conversion
What is Potlatch planning to do?, page 1
3. We note that the REIT conversion is not conditioned upon
stockholder approval of the merger. Please disclose whether the
merger is conditioned upon the REIT conversion. Also, please
disclose whether Potlatch Corporation will pursue a REIT
conversion
if stockholders fail to approve the merger.
What is a taxable REIT subsidiary?, page 2
4. We note your response to comment no. 8 and the revised
disclosure.
We continue to believe that you should discuss how these asset and
income limitations will impact your business operations going
forward, and we reissue that portion of the comment.
Why do we intend to become a REIT?, page 3
5. We note your response to comment no. 10 and the revised
disclosure. We continue to believe that you should expand your
disclosure to briefly discuss the basis for your belief that these
benefits will occur, and we reissue the comment. In particular,
please provide support for your statement on page 3 that "the
market
tends to value highly the benefits of the REIT structure, together
with the discipline of a higher distribution rate, as reflected in
the higher valuations generally accorded to REITs by investors."
Risk Factors
The extent of our proposed use of Potlatch TRS may affect the
price
of our common stock relative to the share price of other REITs,
page
24
6. Please expand the last paragraph of this risk factor to explain
why the market may value your stock differently compared to shares
of
other REITS that may not make extensive use of TRSs. Also, please
clarify if true that the market may place less value on your stock
as
a result of your structure.
Background of the REIT Conversion and the Merger, page 38
7. We note your response to prior comment 30. Please provide to
us
copies of the materials prepared by Goldman Sachs or any other
advisers in connection with the REIT conversion. We may have
further
comments after we review these materials. Also, please tell us
why
you removed the references to Deloitte Touche Thomatsu from your
disclosure.
Our Reasons for the REIT Conversion and the Merger, page 40
8. We note your response to prior comment 35. Please further
revise
the second bullet point under this heading to clarify the measure
against which REIT valuations are "higher." The basis for
comparison
of investor valuations is not clear from the current disclosure.
REIT Restructuring Transactions; Formation of the Taxable REIT
Subsidiary, page 46
9. Refer to the third paragraph under this heading. Please revise
to
disclose the percentage of total gross income for the fiscal year
ended December 31, 2004 and your most recent interim period
represented by the Wood Products segment, Pulp and Paperboard
segment, and Consumer Products segment. We note the disclosure
about
net sales on page 50. Clearly discuss how you will meet the 75%
income test for REIT qualification considering that a substantial
portion of your revenues are derived from assets that will be
transferred to the TRS. Provide conforming disclosure in your
MD&A
section (page 74).
Distribution Policy, page 47
10. We note your disclosure discussing the fact that the actual
quarterly distribution amounts per share will be proportionately
reduced after additional shares are issued in connection with the
special E&P distribution. Please revise to estimate the shares
that
will be outstanding after additional shares are issued and
disclose
the estimated distributions per share.
11. We have reviewed your responses to comments 2, 42 and 59.
Given
your stated intention to distribute a quarterly cash dividend of
$0.65 per share ($76 million per year), we believe that you should
provide a more detailed discussion about the policy and provide
support for the stated dividend amount in your filing. In your
response to comment 2 you show operating income and add back
depreciation, depletion and amortization to arrive at what we
believe
to be what you consider cash available for distribution for the
Resources segment. It does not appear that you have taken into
account investing and financing activities such as principal and
interest payments related to your outstanding debt obligations.
Please revise to provide a tabular presentation delineating the
cash
available for distribution for the twelve month period following
the
date of the most recent financial statements included in the
filing.
The presentation of cash available for distribution is
accomplished
by adding pro forma net income for the most recently completed
interim period to pro forma net income for the most recent year
and
subtracting pro forma net income for the comparable interim period
of
the prior year. This resulting pro forma net income for the most
recent 12 month period is then adjusted for sources and uses of
cash
that are reasonable and supportable from operating, investing and
financing activities to arrive at estimated cash available for
distribution for the twelve month period following the date of the
most recent financial statements included in the filing. The
disclosure should include reference to all assumptions and
considerations related to the tabular presentation. To the extent
that distributions are only able to be made from REIT qualifying
timberland operations please include an adjustment to remove the
cash
related to non-REIT operations.
We may have further comments upon our review of the proposed
disclosure.
Our Business, page 50
12. We are continuing to review your response to prior comment 50
and
we may have additional comments.
Taxation of the Special E&P Distribution, page 105
13. We note that you have requested a revenue ruling from the IRS
regarding taxation of the special E&P distribution. Please tell
us
why you are requesting a ruling that the distribution will be
taxable. Also, please tell us whether you intend to file the
revenue
ruling in a pre- or post-effective amendment to the registration
statement, pursuant to Item 601(b)(8) of Regulation S-K.
Exhibit 99(j)
Completing the Election Certificate, page 1
14. Please revise here and on the election form to clarify whether
stockholders may revoke or change their election and, explain how
that may be done.
Exhibit A-2 - Form of Tax Opinion
15. Refer to the last paragraph of the opinion. Counsel`s
statement
that the opinion may not be relied upon by anyone else is not
appropriate because it suggests that stockholders voting on the
proposed transactions may not be entitled to rely on the opinion.
Please provide a revised opinion that omits this limitation on
reliance. This comment also applies to the Form of Tax Opinion
submitted as Exhibit A-3.
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.
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 Kristina Beshears at 202-551-3429 or Daniel
Gordon, Accounting Branch Chief, at 202-551-3780 if you have
questions regarding comments on the financial statements and
related
matters. Please contact Jennifer Gowetski at 202-551-3401 or me
at
202-551-3785 with any other questions.
Sincerely,
Karen J. Garnett
Assistant Director
cc: Blair W. White, Esq. (via facsimile)
Pillsbury Winthrop Shaw Pittman LLP
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Ralph M. Davisson, Esq.
Potlatch Holdings, Inc.
November 18, 2005
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