MAIL STOP 3561
February 10, 2006
Mr. Bruce Lederman
HD Partners Acquisition Corporation
2601 Ocean Park Blvd. Suite 320
Santa Monica, CA 90405
Re: HD Partners Acquisition Corporation
Amendment No. 1 to Registration Statement on Form S-1
File No. 333-130531
Amendment Filed January 24, 2006
Dear Mr. Lederman:
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
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. We reissue prior comment three from our letter dated January
18,
2006. We continue to note the disclosure that you will be
required
to convert to cash up to 19.99% of the common stock sold in this
offering. Please clarify whether the company may structure or
consummate a business combination in which less than 19.99% of the
IPO shareholders will be able to convert and the business
combination
still go forward.
Risk Factors, page 9
2. We reissue prior comment 11 from our letter dated January 18,
2006. It appears that management may obtain employment or
consulting
agreements at the same time as the business combination. Discuss
the
potential compensation of members of management that may occur
following a business combination and the conflicts of interest
that
may arise from negotiating the employment or consulting
arrangements
at the same time as the negotiations for the business merger
agreement. State whether this will be a term of the business
combination agreement. This should be discussed in greater
detail.
Add disclosure in the business section and in the conflicts of
interest section.
3. Please revise the subheading to risk factor 13 to clarify that
you
may seek a business combination with a business affiliated with
existing stockholders. We also reissue prior comment 13 from our
letter dated January 18, 2006. We continue to note the disclosure
that you may seek a business combination with an entity that is
affiliated with existing stockholders. Please name any affiliated
companies that may be considered in seeking a business
combination.
Disclose those circumstances that may result in the company
seeking a
business combination with an affiliated entity. Given the
detailed
knowledge of management of affiliated companies, it would appear
management would be aware of any interest in affecting a business
combination with an affiliated entity. We may have further
comment.
Proposed Business, page 33
4. We partially reissue prior comment 17 from our letter dated
January 18, 2006. Please disclose whether management has made any
investigations into the industry and/or businesses in the
industry.
5. We continue to note the statement that you may seek to
consummate
a business combination with a company that is financially unstable
or
in the early stages of development or growth. Clarify whether you
will specifically target these types of companies. If so, please
revise the prospectus to discuss the additional risks and
uncertainties associated with these types of businesses.
Certain Relationships and Related Transactions, page 52
6. We note that you response to our prior comment 26 indicates
that
the Warrant Purchase Agreement between your officers and your
underwriter is intended to comply with the requirements for a Rule
10b5-1(c) plan. However, we also note that Morgan Joseph has been
granted the right to have a representative at board meetings.
Please
provide a detailed analysis as to how this plan will comply with
Rule
10b5-1. We may have further comment.
Exhibits
7. We note the following language from Article Six of your Amended
and restated Articles of Incorporation: "The following provisions
(A) through (E) shall apply during the period commencing upon the
filing of this Certificate of Incorporation and terminating upon
the
consummation of any `Business Combination,` and may not be amended
prior to the consummation of any Business Combination." Please
provide us with a legal analysis as to whether or not an amendment
to
this provision would be valid under applicable state law.
Additionally, please revise the prospectus to disclose this
provision
and explain the impact or potential impact of this provision on
investors in the offering. For example, disclose: (i) whether the
provision can be amended and if so on what basis despite any
proposed
limitations to so amend; and (ii) whether the company views the
business combination procedures as stated in the provision and the
prospectus as obligations to investors that the company will not
propose to amend, or alternatively, if the company reserves the
right
to amend this provision and change the procedures, disclose the
extent of that authority and the circumstances under which changes
would or may be proposed.
Financial Statements
Note 2 - Proposed Public Offering, page F-8
8. In response to prior comment 35, you state you used an expected
life of four years because the option is not exercisable for a
period
of at least one year from the date of the offering. Please
explain
your basis for excluding the one year vesting period. Please note
analogous guidance on the expected term of employee share options
and
similar instruments included in paragraph A28(a) of SFAS 123R.
This
guidance, carried over from paragraph 280(a) of SFAS 123 states an
option`s expected term must at least include the vesting period.
In
general, we believe this concept applies to options issued to
third
parties and, in this case, it appears the option issued to the
underwriter should be valued considering an expected life equal to
the full contractual term, five years.
9. In your response to our previous comment 36, we note that 23 of
the 27 companies on the list in Exhibit A have market
capitalizations
in the billions. Please explain why you believe the volatility on
a
diversified index of companies with market capitalizations in the
billions provides a reasonable estimate of your company`s
volatility.
Tell us whether you considered developing an estimate based on a
basket of companies in your industry with relatively similar
market
capitalizations.
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 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 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.
Any questions regarding the accounting comments may be
directed
to Babette Cooper at (202) 551-3396. Questions on other
disclosure
issues may be directed to Jay Williamson at (202) 551-3393.
Sincerely,
John Reynolds
Assistant Director
cc: Jody Samuels
Fax: (212) 370-7889
Mr. Bruce Lederman
HD Partners Acquisition Corp.
February 10, 2006
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