UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE
May 10, 2006
via U.S. mail
Matthew L. Jesch
Chief Financial Officer
Newpage Holding Corporation
Courthouse Plaza, NE
Dayton, Ohio 45463
Re: Newpage Holding Corporation
Amendment No. 3 to Registration Statement on
Form S-4
File No. 333-129343
Filed April 18, 2006
Registration Statement on Form S-1
File No. 333-133367
Filed April 18, 2006
Dear Mr. Jesch:
We have reviewed your 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 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.
Form S-4/A
General
1. Contemporaneous with the filing of the current amendment, you
have
also filed a Form
S-1 registration statement relating to an initial public offering
of
your common stock. The amended S-4 disclosure should be revised
where appropriate to reflect this offering. For example, the
disclosure in the S-1 regarding your anticipated use of proceeds
following the initial public offering is currently omitted from
the
S-4 prospectus. Revise the disclosure throughout the S-4 to
reference material information regarding the initial public
offering
and the impact of such on your financial condition for the
upcoming
12 months. As appropriate, please make parallel changes to
affected
disclosure in the S-1 based on revisions made to the S-4.
2. We expect that you will need to update your financial
statements
to comply with Rule 3-12 of Regulation S-X.
3. Include a Recent Developments Section that discloses the recent
divestiture of your carbonless paper business segment and the
decision to commence an initial public offering of common stock of
the company.
4. We remind you of prior comment 11 of our letter dated December
1,
2005 in which we requested you provide objective support for the
statements made in the prospectus. On page 5, you disclose your
belief in your ability to reduce or avoid market down-time and to
participate in improving industry pricing in 2006. You state this
belief is based in part, on assumptions relating to demand for
coated
paper products remaining stable or increasing. However, on page
49,
you disclose that in the second quarter of fiscal 2005, you
experienced a reduction in sales volume caused largely by "a
slowdown
in industry demand". You further state that this led to market
related down-time which reduced your production by approximately
30,000 tons more of coated paper in the fiscal year 2005 as
compared
to the fiscal year 2004. In light of the recent industry
downturn
in demand, please provide support and clarify the reasons for your
belief that demand will in fact, stabilize or increase in 2006.
Further, rather than defining "RISI" on page 32, revise your
disclosure to define the term when first used in the prospectus.
Additionally, please confirm that the studies referenced in the
prospectus are available to the public free of charge or for a de
minimis amount.
Prospectus Summary, page 1
Summary Terms of New Notes, page 11
5. Revise the second sentence in footnote 1 to clarify that the
paper
series also now includes Class C common percentage interests.
Please
also note our subsequent comment requesting clarification of the
circumstances surrounding the issuance of such interests.
6. Update the disclosure in this section and in the disclosure
under
"Description of the New Notes" on page 102 to reference the newly
announced public offering of securities and your intention to
fully
redeem the PIK Notes with the proceeds raised from such an
offering.
Summary Historical and Pro Forma Combined Financial Data, page 15
7. You state that you present EBITDA in the prospectus because "it
is
a primary component of certain covenants..." However, we note
from
your discussion of covenants within the Description of Certain
Indebtedness on page 98 and 99, that the covenants are based on an
amount identified as adjusted EBITDA, which has a different
meaning
than EBITDA. As such, the relevance of your presentation and
discussion of EBITDA as a factor in your covenant calculations is
somewhat illusive, and may require further revision to clarify.
Risk Factors, page 18
Risks Relating to the New Notes, page 18
"A substantial portion of our debt...," page 19
8. Remove the mitigating language that appears in the last
sentence
of this risk factor.
Risks Relating to Our Business, page 23
"If we are unable to obtain raw materials...," page 25
9. On page 52 you provide an estimate of the impact to your
financial
condition and results of operations resulting from a $1 increase
in
the cost of a barrel of crude oil. Further supplement this risk
factor to delineate, as done on page 52, the dollar impact
resulting
from inflation related to recent increases in energy costs.
Unaudited Pro Forma Combined Financial Data and Other Pro Forma
Information, page 37
10. Please expand your introductory paragraphs to describe the
transactions that underlie the presentation of the pro forma
financial information, including the dates of the transactions and
consideration paid. We expect the discussion would be similar to
that provided within Management`s Discussion and Analysis on page
44
and 45, and responsive to the requirements set forth in Rule 11-
02(b)(2) of Regulation S-X.
11. We note that you have not reflected the sale of your
carbonless
paper business or hydroelectric facilities in the pro forma
statements. On a combined basis, the sales of the carbonless
paper
business and hydroelectric facilities appear to meet the
definition
of a significant subsidiary in Rule 1-02(w) of Regulation S-X. In
addition, as the carbonless paper business was considered a
separate
segment under the provisions of SFAS 131, it would seem that the
sale
of such segment would be material to investors. As such, it
appears
you may need to revise the pro-forma financial information to show
the effects of the pending disposition of the carbonless paper
segment and the hydroelectric facilities to comply with Rule 11-
01(a)(4) of Regulation S-X. We would not object if you wish to
utilize separate columns for subtotals and differentiating these
pro
forma adjustments.
12. Since you have filed a Form S-1 for an initial public offering
of
your common shares, with the intention of using proceeds to redeem
various notes, pay premiums on note redemptions, restructure
credit
facilities, and pay a distribution to your parent company, we
believe
that you should revise the pro forma financial information in the
Form S-4 to also show the effects of the initial public offering
and
your intended use of proceeds. Please utilize subtotals in your
pro
forma financial statements, before these adjustments.
13. In Note 3 to the pro forma consolidated statement of
operations
you explain that the reduction in selling, general and
administrative
costs includes stand-alone costs that have been incurred under
"other
contractual arrangements" subsequent to the acquisition. Please
clarify in your disclosure whether the "other contractual
arrangements" includes the costs associated with the information
technology and human resources services agreement with Accenture,
which you discuss on page F-47 and in various other locations
within
the document. Please explain your position if this is not the
case.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations, page 44
Liquidity and Capital Resources, page 44
14. Revise to clarify whether your estimated budget includes
anticipated net proceeds available following the initial public
offering or whether the estimated budget is based solely on
current
cash and credit available. Supplement your discussion to reference
expenditures to be made in connection with the redemption of the
New
Notes in the event your initial public offering is completed.
Sale of Carbonless Paper Business and Hydroelectric Generating
Facilities, page 45
15. Supplement your disclosure by providing an explanation of the
reasons for the divestiture of the carbonless paper business
segment.
Cost of Sales, page 46
16. In light of recent volatility in the price of crude oil, and
therefore, petroleum-based products, rather than state the price
of
latex increased "significantly", quantify the dollar amount by
which
such prices increased in 2005 in comparison to 2004.
Liquidity and Capital Resources, page 53
17. In Note R to your audited financial statements, you explain
that
your operating subsidiaries existing indebtedness prevents it from
making distributions to you, that you have no independent assets
or
operations, and therefore, your ability to repay the PIK notes is
dependent on your ability to raise funds from issuing capital
stock.
The guidance in Instruction 6 to Item 303(a) of Regulation S-K
explains that in situations where distributions from subsidiaries
are
restricted, the discussion of liquidity should describe the nature
and extent of such restrictions and the impact such restrictions
have
had and are expected to have on the ability of the parent to meet
its
cash obligations. Please revise your disclosure to provide this
discussion.
Capital Expenditures, page 54
18. Although you specify how approximately $21 million of the $90
million 2006 capital expenditure budget will be spent, you have
not
delineated how you intend to spend the remaining $69 million.
Please
revise your disclosure accordingly.
19. We note the recent sale of the carbonless paper business and
the
revised disclosure in the Business section that states a business
strategy of the company`s will be to "enhance scale through
opportunistic acquisitions and strategic partnerships." Please
advise us of your intentions with respect to future acquisitions
that
would be consummated in the next 12 months and specify the
limitations imposed on you with respect to the types of business
acquisitions you may make generally. In this regard, we refer you
to
Section 5.06 of the Asset Purchase Agreement dated February 21,
2006
in which you agree to refrain from directly or indirectly engaging
in
business of the kind done by the carbonless business segment sold
during a restricted period. We may have further comment.
20. Revise your disclosure to reference the sources of capital you
intend to use to accomplish your business strategy with respect to
the acquisitions and strategic partnerships you reference on page
72.
Legal Proceedings, page 82
21. We note the updated disclosure under Legal Proceedings with
respect to the pending case in the Federal District Court of
Maryland. Clarify your disclosure to indicate whether you
anticipate
being able to receive indemnification from MeadWestco in the event
the court rules in favor of the Environmental Protection Agency.
Specifically, clarify whether the issues involved in the case
relate
to the design, installation or construction of scrubber-compliant
baghouse that would be considered capital spending as defined in
the
purchase agreement. In this regard, we note that MeadWestCo would
not indemnify you for litigation losses stemming from such design,
installation or construction. We may have further comment.
Management, page 83
22. Please revise the biographical information of the directors
and
officers so that it complies with Item 401 of Regulation S-K. For
example, revise the biographies to ensure that you completely
describe each individual`s business experience for the past five
years and disclose the dates of experience by month and year.
Also,
ensure that there are no gaps or ambiguities regarding time in the
five-year business sketches you provide. For example, we note
gaps
in the biographies of Messrs. Suwyn, Clark, Cooper, Armstrong,
Prystash, and Strong.
Summary Compensation Table, page 87
23. It would appear based on the salary and bonus received by Mr.
Martin that he should be amongst the officers included in the
summary
compensation table. Please revise or advise.
Termination Provisions, page 89
24. Revise to specify here and in the disclosure regarding Mr.
Vogel,
the welfare benefits and value thereof that the named executives
are
entitled to receive.
Former Chief Executive Officer, page 89
25. Revise to specify the "certain conditions" that must be
satisfied
in order for Mr. Vogel to receive the repurchase consideration of
$7
million. Additionally, please provide us with the repurchase
agreement dated April 5, 2006 that you reference in the
disclosure.
Management Restricted Participation Interests, page 90
26. We note that a portion of the Class A, B and C Common
Percentage
Interests will automatically vest upon an "initial public
offering."
Revise the disclosure to clarify whether the "initial public
offering" must be made by you or by Maple Timber Acquisition. If
the
"initial public offering" must be made by you, update the
discussion
to explain that you filed a Form S-1 for such an offering, and
include the impact of the vesting on the consolidated financial
statements within a footnote to the pro forma financial
information.
27. It appears that Class C Common Percentage interests were
recently issued to Mr. Willet. Explain to us why Class C Common
Percentage interests were exclusively issued to Mr. Willet and
generally inform us of the circumstances under which new classes
of
Common Percentage interests can be issued. For example, explain
whether additional series of Common Percentage interests in Maple
Timber Acquisition will be issued upon the engagement of new or
additional executive officers or directors. Finally, in light of
the
pending initial public offering, revise to delineate the impact,
if
any, on the investors in the initial public offering resulting
from
additional issuances and distributions to current percentage
interest
holders.
Certain Material U.S. Federal Income and Estate Tax
Considerations,
page 140
28. Please revise the discussion included in this section to
specifically state that the discussion constitutes the opinion of
counsel. In addition, identify tax counsel who is issuing the
opinion.
Financial Statements - NewPage Holding Corporation and
Subsidiaries,
page F-24
Note B - Summary of Significant Accounting Policies, page F-30
Derivative financial instruments, page F-30
29. You disclose that the fair value of purchased derivative
instruments is based on the amount you could receive from the
counterparty. However, in the next paragraph regarding the fair
value of financial instruments you explain that the fair values of
the interest rate swaps and cap, and the basket option contract is
based on quotes from brokers. These two disclosures do not appear
to
be consistent with one another. Please clarify within the
disclosures how the fair values of the instruments are determined.
Note C - Acquisition and Related Transactions, page F-32
30. Revise the discussion to clearly indicate whether you had any
operations and/or activity prior to the acquisition of the
predecessor. In other words, it should be clear from the
disclosure
what your date of inception is, and why you are only presenting
the
results of operations for the eight months ended December 31,
2005.
Note P - Subsequent Events, page F-49
31. You explain that the assets sold related to the hydroelectric
generating facilities and the carbonless paper business were not
classified as held for sale because approval for the sales did not
occur prior to December 31, 2005. Please address all the points
identified in paragraph 30 of SFAS 144 in making your
determination.
We anticipate that you will be reclassifying activity associated
with
these operations to comply with the guidance in paragraph 42 of
SFAS
144 when updating your financial statements.
Exhibit 12.1
32. The entire schedule is labeled as that of NewPage Holding
Corporation and Consolidated Subsidiaries without giving any
indication that the periods from 2001 through April 30, 2005
relate
to the predecessor. Please revise to clearly indicate the periods
related to the predecessor and include a line separating the
predecessor from successor, similar to the presentation in the
Selected Financial Information on page 41.
Form S-1
General
33. Provide updated disclosure in each amendment. For example,
please include information regarding the stock-split you intend to
effect prior to the closing of the initial public offering. We
will
need time to review all new disclosure, any additional proposed
artwork or graphics and all omitted exhibits. You can expedite the
review process by providing all this information and all these
documents promptly. We may have additional comments.
Cover Page
34. Please provide disclosure regarding the number of shares being
offered and the estimated price range of the shares as required by
Item 501(b) of Regulation S-K.
35. Your current disclosure states your intention to apply for
listing on the New York Stock Exchange. Please clarify whether
you
have in fact applied for listing on the New York Stock Exchange
and
if not, specify the reasons why you have not yet applied.
Dividend Policy, page 27
36. Please revise to explain why you believe you will be capable
of
distributing dividends given the net loss you incurred during the
last fiscal year on a pro forma basis. Further, disclose the
percentage of available cash for distribution that you intend on
distributing. We may have further comment.
Unaudited Pro Forma Consolidated Statement of Operations, page 32
37. Revise the pro forma information to include a measure of
earnings
(loss) per share in accordance with Rule 11-02 of Regulation S-X.
38. Please note that it is our expectation that the pro forma
financial information presented in the S-1 should be the same as
that
presented in the Form S-4. Please advise us of any additional
information that you believe should be considered.
Financial Statements of Printing and Writing Papers Business, page
F-
2
Report of Independent Registered Public Accounting Firm, page F-2
39. We note that your auditors have issued an audit report opining
on
the accompanying combined financial position at December 31, 2004
and
2003. However, the December 31, 2003 balance sheet is not
included
in your filing. As we believe that financial statements
referenced
in an audit opinion should correspond precisely with those that
are
included in the filing, it will be necessary to either have your
independent auditors remove the reference to the December 31, 2003
combined statement of financial position, or to revise the
document
to include the statement.
Combined Statements of Operations, page F-3
40. We note you present loss per share for the predecessor based
on
the capital structure of the successor, although you have
refrained
from reporting share activity in the Statements of Changes in
Combined Equity on page F-5. Please explain your rationale in
utilizing the capital structure of the successor entity in
deriving
per share results for your predecessor entity, describe the
character
of the measures that you believe this procedure yields, and also
tell
us the reasons you believe presenting the measures in the Form S-1
is
appropriate, while leaving them out of the Form S-4.
41. We note that while the net losses for the periods are
presented
in millions, your disclosure on page F-25 suggests that the number
of
common shares outstanding is not. Please revisit your EPS
calculations and related disclosures throughout the document, and
revise as necessary to correctly present the measures of loss per
share.
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 information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your response 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.
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 an 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 Mark Wojciechowski, Staff Accountant at (202)
551-3759 or Karl Hiller, Accounting Branch Chief at (202) 551-3686
if
you have questions regarding comments on the financials statements
and related matters. Please contact Mellissa Campbell Duru, at
(202)
551-3757 or Tangela Richter, Branch Chief at (202) 551-3645 with
any
other questions. Direct all correspondence to the following ZIP
code:
20549-7010.
Sincerely,
H. Roger Schwall
Assistant Director
cc: Michael Littenberg, Esq.
Schulte Roth & Zabel
(212) 593-5955 (via facsimile)
Mr. Jesch
Newpage Holding Corporation
May 10, 2006
page 10