SEC Company Response from National CineMedia, Inc. (NCMI) (CIK 0001377630) (NCMI) — Feb 7, 2007
National CineMedia, Inc. (NCMI) (CIK 0001377630)
Date: Feb. 7, 2007 · CIK: 0001377630 · Accession: 0001193125-07-021953
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-137976
Letter
Via EDGAR and Facsimile (202) 772-9205 Division of Corporation Finance Amendment No. 6 to Registration Statement on Form S-1 Filed February 6, 2007 File No. 333-137976 LOS ANGELES
Dear Mr. Spirgel:
MUNICH
This letter is being submitted in response to an oral comment received from Ms. Cheryl Grant and Mr. William Bennett of the staff of the Commission (the “Staff”) in a telephone conversation on February 6, 2007 (the “Feb. 6 Comment”).
SALT LAKE CITY
The responses and supplemental information provided herein in response to the Feb. 6 Comment are based upon information provided by representatives of the Company and the Company’s advisors. We have not independently verified the accuracy and completeness of such information.
SAN FRANCISCO
For your convenience, we have restated the Feb. 6 Comment below, followed by the Company’s response. The page numbers below refer to the Company’s Amendment No. 6 to Registration Statement filed on February 6, 2007.
Summary
1. Please explain the reason for deleting the numerical disclosure on page 6 relating to the amount of the periodic cash payments to be paid to the founding members pursuant to the tax receivable agreement and explain why the numerical disclosure is not necessary for an understanding of the risk factor on page 27.
Mr. Larry Spirgel
February 6,
Page 2
The Company has deleted the numerical disclosure on pages 6, 27, and 144 of the Registration Statement because it has concluded that the total amount of the periodic cash payments to be paid to the founding members pursuant to the tax receivable agreement is not reasonably estimable in a manner that provides helpful information to investors. The Company has reached this conclusion because numerous variables could affect the payments to be made under the tax receivable agreement and because changes in those variables would also be likely to materially affect any estimate. A description of certain of the variables that will affect the payments to be made under the tax receivable agreement has been added to the disclosure on page 144.
One factor that is of particular importance to the Company in reaching its conclusion is the Company’s belief that a primary assumption that it had used to calculate the numerical disclosure in its previous filing, namely, the redemption by the founding members of all of their common membership units in NCM LLC solely in exchange for shares of common stock in NCM Inc. in a taxable transaction at the time of closing of the initial public offering, is not likely to occur. As a result, the Company believes that the numerical disclosure was not particularly helpful to investors and, given the number of variables outside of the control of the Company, the Company was not able to compile a set of likely assumptions involving those variables.
In addition, the Company believes that the numerical disclosure is not necessary for an understanding of the tax receivable agreement and associated risks to the Company. The agreement provides for payment of 90% of the cash savings, if any, in taxes that the Company actually realizes as a result of the various transactions described in the Registration Statement. Therefore, the Company believes that the actual amounts of the payments are not key to an understanding of the potential risks to the Company. Instead, the Company believes it is important to understand what transactions give rise to the tax savings, and the percentage of the savings being paid to the founding members. Furthermore, the Company believes that the potential risk associated with the
Mr. Larry Spirgel
February 6, 2007
Page 3
founding member indemnification obligations as disclosed in the risk factor discussion on page 27 and again in the discussion of the tax receivable agreement on page 144 is the other important element of an investor’s understanding of the potential risks to the Company associated with entering into the tax receivable agreement.
If you would like to discuss any of the responses above or any other matter, please contact W. Dean Salter at (303) 866-0245, Mashenka Lundberg at (303) 866-0616, or Jennifer D’Alessandro at (303) 866-0635.
Sincerely,
/s/ Holme Roberts & Owen LLP
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Letter to the Securities & Exchange Commission
DENVER
February 6, 2007
Via EDGAR and Facsimile (202) 772-9205
BOULDER
Mr. Larry Spirgel
Assistant Director
Division of Corporation Finance
U.S. Securities and Exchange Commission
COLORADO SPRINGS
100 F Street, N.E.
Washington, D. C. 20549-3720
LONDON
Re:
National CineMedia, Inc.
Amendment No. 6
to Registration Statement on Form S-1
Filed February 6, 2007
File No. 333-137976
LOS ANGELES
Dear Mr. Spirgel:
MUNICH
This letter is being submitted in response to an oral comment received from Ms. Cheryl Grant and Mr. William Bennett of the staff of the Commission
(the “Staff”) in a telephone conversation on February 6, 2007 (the “Feb. 6 Comment”).
SALT LAKE CITY
The responses and supplemental information provided herein in response to the Feb. 6 Comment are based upon information provided by
representatives of the Company and the Company’s advisors. We have not independently verified the accuracy and completeness of such information.
SAN FRANCISCO
For your convenience, we have restated the Feb. 6 Comment below, followed by the Company’s response. The page numbers below refer to the
Company’s Amendment No. 6 to Registration Statement filed on February 6, 2007.
Summary
1. Please explain the reason for deleting the numerical disclosure on page 6 relating to the
amount of the periodic cash payments to be paid to the founding members pursuant to the tax receivable agreement and explain why the numerical disclosure is not necessary for an understanding of the risk factor on page 27.
Mr. Larry Spirgel
February 6,
2007
Page 2
The Company has deleted the numerical disclosure on pages 6, 27, and 144 of the Registration Statement because it has concluded that the total amount
of the periodic cash payments to be paid to the founding members pursuant to the tax receivable agreement is not reasonably estimable in a manner that provides helpful information to investors. The Company has reached this conclusion because
numerous variables could affect the payments to be made under the tax receivable agreement and because changes in those variables would also be likely to materially affect any estimate. A description of certain of the variables that will affect the
payments to be made under the tax receivable agreement has been added to the disclosure on page 144.
One factor that is of particular importance to the Company in reaching its conclusion is the Company’s belief that a primary assumption that it
had used to calculate the numerical disclosure in its previous filing, namely, the redemption by the founding members of all of their common membership units in NCM LLC solely in exchange for shares of common stock in NCM Inc. in a taxable
transaction at the time of closing of the initial public offering, is not likely to occur. As a result, the Company believes that the numerical disclosure was not particularly helpful to investors and, given the number of variables outside of the
control of the Company, the Company was not able to compile a set of likely assumptions involving those variables.
In addition, the Company believes that the numerical disclosure is not necessary for an understanding of the tax receivable agreement and associated
risks to the Company. The agreement provides for payment of 90% of the cash savings, if any, in taxes that the Company actually realizes as a result of the various transactions described in the Registration Statement. Therefore, the Company believes
that the actual amounts of the payments are not key to an understanding of the potential risks to the Company. Instead, the Company believes it is important to understand what transactions give rise to the tax savings, and the percentage of the
savings being paid to the founding members. Furthermore, the Company believes that the potential risk associated with the
Mr. Larry Spirgel
February 6, 2007
Page 3
founding member indemnification obligations as disclosed in the risk factor discussion on page 27 and again in the discussion of the tax receivable agreement on page 144 is the other
important element of an investor’s understanding of the potential risks to the Company associated with entering into the tax receivable agreement.
If you would like to discuss any of the responses above or any other matter, please contact W. Dean Salter at (303) 866-0245, Mashenka Lundberg at
(303) 866-0616, or Jennifer D’Alessandro at (303) 866-0635.
Sincerely,
/s/ Holme Roberts & Owen LLP
Holme Roberts & Owen LLP
cc: William Bennett
Cheryl Grant
Claire DeLabar
Carlos Pacho
Ralph E. Hardy
Mark Wehrle
Casey T. Fleck
Nicholas P. Saggese