United States securities and exchange commission logo
February 1, 2023
Robert McKee
Chief Executive Officer
Kodiak Gas Services, Inc.
15320 Highway 105 W, Suite 210
Montgomery, TX 77356
Re: Kodiak Gas
Services, Inc.
Amendment No. 1 to
Draft Registration
Statement on Form S-1
Submitted January
20, 2023
CIK No. 0001767042
Dear Robert McKee:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Amendment No. 1 to Draft Registration Statement on Form S-1 Submitted on
January 20, 2023
Dividend Policy, page 52
1. We note you added
disclosure to indicate that you intend to pay dividends on your
common stock and your
ability to do so depends on the receipt of cash dividends from
your operating
subsidiaries. For all periods presented, you disclosed Cash Available for
Dividends because you
view it as a useful measure in assessing your ability to pay regular
cash dividends to your
stockholders.
Robert McKee
Kodiak Gas Services, Inc.
February 1, 2023
Page 2
Please expand your disclosures under this heading to include the
following additional
information:
Clarify if you determined the percentages or range of
percentages of available cash
that i) your operating subsidiaries will pay you and ii) you will
pay your common
shareholders.
The number of common shares that will participate in the
dividends and the
corresponding per share amounts.
Disclose your estimates of future dividends to your common
shareholders for the
immediately succeeding 12 month period on both a quarterly and
annualized basis,
also quantifying the underlying key assumptions, including
volumes and prices
corresponding to the various operating metrics presented on page
17, and adhering to
Item 10(b) of Regulation S-K.
Financial Statements
Note 8. Stockholders' Equity, page F-21
2. We note your disclosure that Kodiak Holdings issued incentive awards
to certain
employees of Kodiak Gas Services, LLC known as the Class B incentive
units ( Class B
Units ). These Class B Units constitute profits interests." In
the event of employment
termination, vested Class B Units are automatically converted to Class
C units. Each
Class C Unit shall have the right to receive distribution up to the
amount equal to the fair
market value of such vested Class B Unit. Pursuant to the terms set
forth in
paragraphs 2a and 2b of Exhibit 10.5, 25% of the Class B Units are
deemed Time Vested
Units and 75% of the Class B units are deemed Performance Vested
Units. Pursuant to
paragraph 1 of Exhibit 10.5, Time Vested and Performance Vested Units
are designated
as Catch-Up Units and assigned a monetary value. Please address the
following:
Revise your disclosure to clarify how fair value accrues to the
holder of the Class B
Units including the impact of designation as Catch-Up Units. For
example, clarify if
the holder is entitled to 1) convert to common shares, 2) future
profits based on the
achievement of certain performance hurdles, or 3) some other
calculation of fair
market value.
Tell us the significance of all redemption obligations including
whether the right to
receive distribution up to the amount equal to the fair market value
of vested Class B
Units allows for cash settlement and if so, how you considered
classification as a
liability pursuant to FASB ASC 815-40.
FirstName LastNameRobert McKee
Comapany NameKodiak
Cite Gas Services,
the authoritative Inc.on which you relied regarding your
accounting for
guidance
February 1,these
2023incentive
Page 2 awards.
FirstName LastName
Robert McKee
FirstName
Kodiak GasLastNameRobert
Services, Inc. McKee
Comapany1,NameKodiak
February 2023 Gas Services, Inc.
February
Page 3 1, 2023 Page 3
FirstName LastName
You may contact Mark Wojciechowski, Staff Accountant, at (202) 551-3759
or John
Cannarella, Staff Accountant, at (202) 551-3337 if you have questions regarding
comments on
the financial statements and related matters. Please contact Cheryl Brown,
Staff Attorney, at
(202) 551-3905 or Irene Barberena-Meissner, Staff Attorney, at (202) 551-6548
with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Energy &
Transportation
cc: Matt Pacey