SEC Comment Letter for RENTECH — May 25, 2005
RENTECH INC /CO/ (CIK 0000868725)
Date: May 25, 2005 · CIK: 0000868725 · Accession: 0000000000-05-025966
AI Filing Summary & Sentiment
Referenced dates: April 4, 2005
Letter
April 20, 2005 via U.S. mail and facsimile Mr. Geoffrey S. Flagg Chief Financial Officer Rentech, Inc. 1331 17th Street, Suite 720 Denver, Colorado 80202-1557
RE: Form 10-K for the fiscal year ended September 30, 2004 Form 10-Q for the quarter December 31, 2004 File No. 0-19260
Dear Mr. Flagg:
We have reviewed your response letter dated April 4, and have the following additional comments. If you disagree with our comment, 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.
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 10-K FOR YEAR ENDED SEPTEMBER 30, 2004
Comment applicable to your overall filing 1. Where a comment below requests additional disclosures or other revisions, please show us in your supplemental response what the revisions will look like. These revisions should be included in your future filings.
Liquidity and Capital Resources, page 50
2. We have reviewed your response to comment 6. Please revise your disclosure to quantify the historical cash flows associated with OKON.
Contractual Obligations, page 63
3. Please disclose the interest rate assumptions used to determined the estimated interest payments.
Note 1 - Description of Business and Summary of Significant Accounting Policies
Management`s Plans, page F-10
4. Please tell us how you intend to account for the deferred acquisition cost associated with the purchase of Royster-Clark Nitrogen. Please note that paragraph A8 of SFAS 141 requires that costs related to unsuccessful negotiations be expensed as incurred. If you do not intend to expense all such costs, please provide us with additional information to help us understand the appropriateness of such accounting, including references to specific authoritative accounting literature supporting your accounting.
Note 4 - Investment in Advanced Technology Companies, page F-19
5. We have reviewed your response to comment 20. Given your statements that there were significant differences between previously projected revenues and cash flows for fiscal 2004 and current projections and that the value of your investment is based on a transaction, please tell us why you continue to believe that the transaction is a reasonable basis on which to estimate the fair value of your investment in Global Star Energy.
Note 10 - Stockholder`s Equity, page F-23
6. We have reviewed your responses to comments 24 and 25. Please tell us why you have assumed a dividend yield in valuing your warrants and stock options given that you have not paid common stock dividends over the last three years.
7. Please also tell us the risk free rate used in valuing the instruments covered by comments 24 and 25.
8. We assume that the warrants were issued to non-employees and were initially accounted for under SFAS 123. If true, please confirm this is also true with respect to the options for which you extended the expiration date.
FORM 10-Q FOR PERIOD ENDED DECEMBER 31, 2004
Comment applicable to your interim filing
9. Please address the comments above in your interim filings as well.
FORM 8-K REPORT FILED ON APRIL 4, 2005
10. Please tell us why the $300,000 amount to be received from the sale of the OKON subsidiary in monthly installments based on sales has been classified as a current asset. Based on OKON`s most recent sales of $2,265,567, it appears that a portion of this receivable should be classified as a long term asset in your pro forma balance sheet.
11. Please tell us more to help us understand the activity leading from the net assets sold per the pro forma balance sheet of $1.2 million to the net book value as of March 8, 2005 of $1.4 million.
12. Please revise the title of the pro forma balance sheet to clarify that it is as of December 31, 2004, rather than "for the three months ended December 31, 2004."
* * * *
Please respond to these comments within 10 business days, or tell us when you will provide us with a response. Please provide us with a supplemental response letter that keys your responses to our comments and provides any requested supplemental information. Detailed letters greatly facilitate our review. Please file your supplemental response on EDGAR as a correspondence file. Please understand that we may have additional comments after reviewing your responses to our comments.
If you have any questions regarding these comments, please direct them to Gus Rodriguez, Staff Accountant, at (202) 824-5524 or, in his absence, Scott Watkinson, Staff Accountant, at (202) 942- or, to the undersigned, at (202) 942-1774.
Sincerely,
Rufus Decker
Accounting Branch Chief
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<TEXT>
Mail Stop 0510
April 20, 2005
via U.S. mail and facsimile
Mr. Geoffrey S. Flagg
Chief Financial Officer
Rentech, Inc.
1331 17th Street, Suite 720
Denver, Colorado 80202-1557
RE: Form 10-K for the fiscal year ended September 30, 2004
Form 10-Q for the quarter December 31, 2004
File No. 0-19260
Dear Mr. Flagg:
We have reviewed your response letter dated April 4,
2005
and have the following additional comments. If you disagree with
our
comment, 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.
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 10-K FOR YEAR ENDED SEPTEMBER 30, 2004
Comment applicable to your overall filing
1. Where a comment below requests additional disclosures or other
revisions, please show us in your supplemental response what the
revisions will look like. These revisions should be included in
your
future filings.
Liquidity and Capital Resources, page 50
2. We have reviewed your response to comment 6. Please revise
your
disclosure to quantify the historical cash flows associated with
OKON.
Contractual Obligations, page 63
3. Please disclose the interest rate assumptions used to
determined
the estimated interest payments.
Note 1 - Description of Business and Summary of Significant
Accounting Policies
Management`s Plans, page F-10
4. Please tell us how you intend to account for the deferred
acquisition cost associated with the purchase of Royster-Clark
Nitrogen. Please note that paragraph A8 of SFAS 141 requires that
costs related to unsuccessful negotiations be expensed as
incurred.
If you do not intend to expense all such costs, please provide us
with additional information to help us understand the
appropriateness
of such accounting, including references to specific authoritative
accounting literature supporting your accounting.
Note 4 - Investment in Advanced Technology Companies, page F-19
5. We have reviewed your response to comment 20. Given your
statements that there were significant differences between
previously
projected revenues and cash flows for fiscal 2004 and current
projections and that the value of your investment is based on a
2003
transaction, please tell us why you continue to believe that the
2003
transaction is a reasonable basis on which to estimate the fair
value
of your investment in Global Star Energy.
Note 10 - Stockholder`s Equity, page F-23
6. We have reviewed your responses to comments 24 and 25. Please
tell us why you have assumed a dividend yield in valuing your
warrants and stock options given that you have not paid common
stock
dividends over the last three years.
7. Please also tell us the risk free rate used in valuing the
instruments covered by comments 24 and 25.
8. We assume that the warrants were issued to non-employees and
were
initially accounted for under SFAS 123. If true, please confirm
this
is also true with respect to the options for which you extended
the
expiration date.
FORM 10-Q FOR PERIOD ENDED DECEMBER 31, 2004
Comment applicable to your interim filing
9. Please address the comments above in your interim filings as
well.
FORM 8-K REPORT FILED ON APRIL 4, 2005
10. Please tell us why the $300,000 amount to be received from the
sale of the OKON subsidiary in monthly installments based on sales
has been classified as a current asset. Based on OKON`s most
recent
sales of $2,265,567, it appears that a portion of this receivable
should be classified as a long term asset in your pro forma
balance
sheet.
11. Please tell us more to help us understand the activity leading
from the net assets sold per the pro forma balance sheet of $1.2
million to the net book value as of March 8, 2005 of $1.4 million.
12. Please revise the title of the pro forma balance sheet to
clarify
that it is as of December 31, 2004, rather than "for the three
months
ended December 31, 2004."
* * * *
Please respond to these comments within 10 business
days,
or tell us when you will provide us with a response. Please
provide
us with a supplemental response letter that keys your responses to
our comments and provides any requested supplemental information.
Detailed letters greatly facilitate our review. Please file your
supplemental response on EDGAR as a correspondence file. Please
understand that we may have additional comments after reviewing
your
responses to our comments.
If you have any questions regarding these comments, please
direct them to Gus Rodriguez, Staff Accountant, at (202) 824-5524
or,
in his absence, Scott Watkinson, Staff Accountant, at (202) 942-
2926
or, to the undersigned, at (202) 942-1774.
Sincerely,
Rufus Decker
Accounting Branch Chief
??
??
??
??
Mr. Geoffrey S. Flagg
April 20, 2005
Page 1 of 3
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0510
DIVISION OF
CORPORATION FINANCE
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