Joseph P. Bartlett
Direct Dial: 310.201.7481
Direct Fax: 310.201.2380
E-Mail: jbartlett@ggfirm.com [GREENBURG GLUSKER LOGO]
File Number: 03471-00003 GREENBERG GLUSKER FIELDS CLAMAN
Document Number: 1482695 MACHTINGER & KINSELLA LLP
July 13, 2005
United States Securities
and Exchange Commission
Washington, D.C. 20549-0404
Attn: Jennifer Hardy, Branch Chief
Re: Allis-Chalmers Energy Inc.
Preliminary Proxy Statement on Schedule 14A
File No. 1-02199
Filed June 6, 2005
Ladies and Gentlemen:
This is in response to the letter of Jennifer Hardy dated July 12,
2005. We have the following responses to the comments set forth in the letter.
Proxy Statement
1. We note your response to prior comment 2 that the acquisition that was
the subject of your letter dated May 10, 2005, "is currently being
discussed" and "therefore, it is not probable." We do not necessarily
believe that because an acquisition is still being discussed and the
purchase price and the nature of the consideration have not been
finalized, it is not probable" as contemplated by Rule 3-05 of
Regulation S-X. Tell us, in reasonable detail, what specific events
have transpired regarding this potential acquisition, including:
GREENBERG GLUSKER FIELDS CLAMAN
MACHTINGER & KINSELLA LLP
United States Securities and Exchange Commission
Attention: Jennifer Hardy, Branch Chief
July 13, 2005
Page 2
o Whether a letter of intent has been signed
o What specific items are being negotiated
Provide us a detailed analysis of whether the acquisition is probable
as discussed in FRC 506.02(c)(ii). If the acquisition is determined to
be probable, provide all required disclosures, including the
disclosures we requested in our letter dated June 1, 2005 in the proxy
statement and in the current registration statement on Form S-1.
RESPONSE:
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The factual background of the proposed acquistion is as follows:
a. No letter of intent has been prepared or signed.
b. The Company first met with the potential seller approximately
three years ago to discuss acquiring casing and tubing assets.
The Company did not pursue the acquisition because it
determined that it could acquire equipment from other sources
on better terms. The Company has invested approximately
$5,200,000 in casing and tubing equipment in the last three
years which it has acquired from manufacturers, at auction, or
from other sources (not involving a bulk sale of assets such
as would be purchased from the potential seller).
c. Beginning about six months ago, delivery times for casing and
tubing equipment extended to nine to twelve months, and
equipment became unavailable at auction. At that point, the
Company approached the potential seller, to discuss acquiring
the equipment. However, as discussed in our letter to the
Securities and Exchange Commission of May 1, 2005, the seller
advised that financial statements were not available, and were
unwilling to discuss a transaction with the Company for so
long as the Company could not commit to acquire the assets
(without obtaining audited financial statements). Discussions
were discontinued.
d. In April 2005 the Company requested the undersigned to prepare
the no action request letter dated May 1, 1005.
e. Following the receipt of the no action response, the Company
had a conversation with the seller in which the Company
requested, and the seller agreed, to allow the Company to
conduct an appraisal of the assets to determine whether it
would pay the $15 million being requested by seller for the
assets. The appraisal is expected to take two to three weeks.
GREENBERG GLUSKER FIELDS CLAMAN
MACHTINGER & KINSELLA LLP
United States Securities and Exchange Commission
Attention: Jennifer Hardy, Branch Chief
July 13, 2005
Page 3
f. Any acquisition of the assets would require the Company to
amend its current credit agreements because the Company does
not have adequate financing to acquire the assets at the price
being requested by seller ($15 million) under its current
credit facility.
g. The Chairman of the Company has stated that there is no
possibility whatsoever of any of the consideration being paid
in the form of stock. The seller is a public company which has
insisted on an all cash transaction.
h. The Company and the seller have not agreed to any of the terms
of the transaction. No further discussions or negotiations are
expected until the appraisal has been completed. No other
terms of the transaction have been discussed or are
contemplated at present.
The Company believes that the proposed acquisition is not probable
because it has not completed an evaluation of the assets, made a
determination to offer any certain price for the assets, or obtained
the financing to acquire the assets. The Company has disclosed
in its Registration Statements on Form S-1 that it reviews potential
acquisitions from time to time. Because the potential acquisition of
the casing and tubing assets is still being investigated by the
Company, and is subject to the uncertainties described above, the
Company does not believe that specific disclosure regarding the assets
would be material to investors making an investment decision with
respect to a purchase of common stock, or that omission of such
disclosure from the prospectuses included in the Registration
Statements would be misleading to investors within the meaning of
FRC 506.02(c)(ii) or Regulation S-X Rule 3-05.
The Company will reconsider the issue of probability upon receiving
the appraisal of the assets.
Even if the potential acquisition of assets were deemed to be probable,
the Company does not believe that disclosure would be required in the
Proxy Statement. Because no stock will be issued in connection with
the transaction, the Company believes disclosure would not be material
to investors making a determination how to vote with respect to the
proposed amendment to the Certificate of Incorporation to increase the
Company's authorized shares, or with respect to any of the other
matters to be presented to stockholders at the annual meeting.
Very truly yours,
/s/ Joseph P. Bartlett
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Joseph P. Bartlett
JPB:ss