Mail Stop 3561
April 6, 2006
Marian M. Durkin
Senior Vice President and General Counsel
AVA Formation Corp.
1411 East Mission Avenue
Spokane, Washington 99202
Re: AVA Formation Corp.
Amendment No. 1 to Registration Statement on Form S-4
Filed March 23, 2006
File No. 333-131872
Avista Corporation
Form 10-K for Fiscal Year Ended December 31, 2005
Filed March 7, 2006
File No. 1-03701
Dear Ms. Durkin:
We have reviewed your amendment 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
filings.
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.
Please note that the page numbers refer to the marked
courtesy
copy of the registration statement that you provided to us.
Form S-4
General
1. We note your responses to comments 1 and 28 in our letter dated
March 16, 2006; however, we reissue our previous comments.
Although
prior to the share exchange, AVA had no assets, liabilities,
revenues
or operations, please revise your disclosure to clarify that after
the share exchange, AVA will continue the existing operations and
business of Avista. We note that on page 40 you state that the
holding company structure will make it easier to enter into new
businesses. Please describe any new business or plan of
operations
for AVA after the share exchange and any material differences in
the
businesses or operations that may occur after the share exchange.
Form of Proxy
2. We note your response to comment 4 in our letter dated March
16,
2006; however, we reissue our comment because the proxy card does
not
appear to be revised.
Summary, page 5
3. Please refrain from using defined terms in the summary. Please
use
abbreviated names or revise so that the terms are clear from their
context. Refer to Rule 421(d) of Regulation C.
4. We note your response to comment 25 in our letter dated March
16,
2006; however, your organizational charts remain unclear. For
example, please refer to the last chart on page 8 and revise
footnote
(1) since Avista Formation Corp. does not appear in the last
chart.
In addition, please revise to clarify whether by "business
segment"
you are referring to subsidiaries. Please revise to identify
subsidiaries and include ownership percentage information.
5. Please further describe the Avista capital dividend and discuss
the reasons for the dividend.
Risk Factors, page 13
6. We note your response to comment 14 in our letter dated March
16,
2006. Further, we note that it appears that you are discussing
two
risks under one heading: dependence on the receipt of dividends
from
subsidiaries and the risk of increased leverage. Please revise to
discuss each risk under a separate, appropriate heading.
Voting Procedures, page 18
7. We note your response to comment 16 in our letter dated March
16,
2006; however, we reissue our previous comment. Please revise to
clearly state that proxies voting against the proposals may not be
used by management to vote for adjournment or postponement
pursuant
to its discretionary authority to permit further solicitation.
See
Rule 14a-4(b).
Proposal 1 - Election of Directors, page 19
8. Please refer to comment 17 in our letter dated March 16, 2006.
We
note your revised disclosure in the biographical information for
Ms.
Blake and Mr. Knight indicating that they have been in their
current
positions "for over five years." Please revise each biography to
disclose the specific dates of employment for the past five years.
Material United States Income Tax Consequences, page 51
9. We note your response to comment 31 in our letter dated March
16,
2006. Please provide us with a copy of the revised tax opinion
for
our review.
Class Action Securities Litigation, page 40
10. Please refer to comment 22 in our letter dated March 16, 2006.
We note your response indicating that the defendant`s motion to
dismiss is fully briefed and set for oral hearing on April 14,
2006.
Please include this updated disclosure in the filing. We also
note
your explanation as to why you do not expect that this lawsuit
will
have a material adverse effect on your financial condition,
results
of operations or cash flows. Disclosure in this section indicates
that a change in your estimates of the probability or amount of
liability being incurred could be "significant." Please explain
to
us, with a view towards disclosure, your potential liability and
how
an adverse ruling would affect you.
Listing of AVA Common Stock, page 59
11. We note your response to comment 32; however, we reissue that
part of our comment asking about the timing of the listing of
AVA`s
common stock. Specifically, disclose the length of time that
shareholders may be holding illiquid common stock. If applicable,
discuss this potential illiquidity in the risk factor section.
Form 10-K for the fiscal year ended December 31, 2005
Financial Statements
Note 18. Interest Rate Swap Agreements, page 94
12. Please tell us in greater detail the reasons why you consider
the
forward-starting interest rate swap to be a hedge of anticipated
proceeds from the forecasted debt issuance. Please help us to
understand why it is not a hedge of the ongoing interest expense
of
the forecasted debt issue. In this regard, please explain to us
in
detail how the forward-starting interest rate swap operates.
Please
tell us when mandatory settlement was required to occur and
whether
the termination upon issuance was an early settlement. We may
have
further comment.
* * * *
As appropriate, please amend your filing 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.
You may contact Sondra Snyder, Staff Accountant, at (202)
551-
3332 or James Allegretto, Senior Assistant Chief Accountant, at
(202)
551-3849 if you have questions on the financial statements and
related matters. Please contact Matthew Benson, Attorney-Advisor,
at
(202) 551-3335 or Peggy Kim, Senior Staff Attorney, at (202) 551-
3411
with any other questions.
Sincerely,
H. Christopher Owings
Assistant Director
cc: J. Anthony Terrell, Esq.
Dewey Ballantine LLP
Fax: (212) 259-6333
Marian M. Durkin
AVA Formation Corp.
April 6, 2006
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