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300 North LaSalle |
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Chicago, Illinois 60654 |
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Gerald T. Nowak, P.C. |
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To Call Writer Directly: |
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(312) 862-2000 |
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Facsimile: |
(312) 862-2075 |
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(312) 862-2200 |
gerald.nowak@kirkland.com |
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www.kirkland.com |
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November 23, 2011 |
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Via EDGAR Submission and Overnight Delivery
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Attn: Pamela Long
Dietrich King
Jessica Dickerson
Nudrat Salik
Rufus Decker
Re: GSE Holding, Inc.
Amendment No. 2 to Registration Statement on Form S-1
(SEC File No. 333-175475), filed November 10, 2011
Ladies and Gentlemen:
GSE Holding, Inc., a Delaware corporation (the Company), has today filed with the Securities and Exchange Commission, pursuant to the requirements of the Securities Act of 1933, as amended, and Regulation S-T thereunder, an Amendment No. 3 (the Amendment) to its Registration Statement on Form S-1 (the Registration Statement).
On behalf of the Company, we are writing to respond to the comments raised in the letter to the Company, dated November 21, 2011, from the staff of the Securities and Exchange Commission (the Staff). The Companys responses below correspond to the captions and numbers of those comments (which are reproduced below in italics). For your convenience, copies of the Amendment are enclosed and have been marked to show changes from Amendment No. 2 to the Registration Statement filed November 10, 2011. Where applicable, we have referenced in the Companys responses the appropriate page number of the Amendment. Capitalized terms used in this letter but not otherwise defined have the meanings assigned to them in the Amendment.
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General
1. Please update your financial statements and corresponding financial information throughout the filing to comply with Rule 3-12 of Regulation S-X.
Response: In response to the Staffs comment, the Company has updated its financial statements and corresponding financial information to comply with Rule 3-12 of Regulation S-X and has filed as Exhibit 23.2 an updated consent for the independent registered public accounting firms report.
Unaudited Pro Forma Condensed Consolidated Financial Statements, page 38
2. We note your response to comment eight of our letter dated October 31, 2011. Please help us understand the nature of the services provided under the management services agreement and correspondingly why you would not need to replace these services.
Response: Under the management services agreement, CHS Management IV LP (CHS) has provided consulting services to the Company with respect to its business strategy, budgeting of future business investments, acquisition and divestiture strategies, debt and equity financings and other corporate matters. These consulting services were not provided on a continual basis, but rather as needed from time to time with respect to specific issues. The Company has sufficient internal personnel to undertake this work when required. Furthermore, in terms of expertise with respect to the aforementioned matters, the Company believes that the Companys current board of directors, including the recently appointed Messrs. Griffin and Sorrentino who have significant investment banking, managerial and finance-related experience, offers similar expertise to that provided by CHS under the management services agreement. In addition, Mr. George is a partner of an affiliate of CHS, will remain as a director on the Companys board and will continue to offer his expertise to the Company through that position. The Company has augmented the disclosure on page 49 of the Amendment to clarify this.
Critical Accounting Policies and Estimates
Stock-Based Compensation, page 76
3. Please also disclose the estimated fair value of your common stock as of each grant date.
Response: In response to the Staffs comment, the Company has revised its disclosure on pages 86 and 87 of the Amendment.
Principal and Selling Stockholders, page 131
4. Please disclose the natural person or persons who exercise the sole or shared voting and/or dispositive powers over the shares offered by Randolph Street Partners VI. Additionally, please tell us whether Randolph Street Partners VI is a broker-dealer or an affiliate of a broker-dealer.
Response: In response to the Staffs comment, the Company has revised its disclosure on page 146 of the Amendment. The Company supplementally confirms to the Staff that Randolph Street Partners VI is not a broker-dealer or an affiliate of a broker-dealer.
Financial Statements
Notes to Financial Statements
Note 18, Segment Information, page F-39
5. In your previous filings, you indicated that management evaluates the performance of your segments and allocates resources based on sales, gross margin, and Adjusted EBITDA. Your current disclosures indicate that you only use sales and gross margin. Please help us understand what resulted in this change. In this regard, we also note that you continue to present and discuss Adjusted EBITDA on a consolidated basis throughout the filing.
Response: The Company supplementally confirms to the Staff that the Companys Chief Operating Decision Maker (CODM) does not regularly receive or review financial reporting packages which present Adjusted EBITDA by the Companys five operating segments: North America, Europe Africa, Asia Pacific, Latin America and Middle East. This is supported by the material reviewed by the CODM and submitted to the Staff supplementally under separate cover in connection with the Companys response to Comment 25 in the Staffs letter dated October 31, 2011. In addition, the Company confirms to the Staff that it only reviews EBITDA results on a consolidated basis.
6. Please provide a separate discussion of each segments results in MD&A, including sales and gross margin. Please discuss the factors that contributed to changes in these amounts. When more than one factor contributes to the change between periods, please quantify the impact of each factor separately.
Response: In response to the Staffs comment, the Company has revised its disclosure on pages 58 through 61 of the Amendment.
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Finally, the Company will furnish a letter at the time it requests acceleration of the effective date of the Registration Statement acknowledging the statements set forth in the Staffs comment letter.
We hope that the foregoing has been responsive to the Staffs comments. Should you have any questions relating to any of the foregoing, please feel free to contact the undersigned at (312) 862-2075.
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Sincerely, |
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/s/ Gerald T. Nowak, P.C. |
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Gerald T. Nowak, P.C. |
cc: Mark C. Arnold
GSE Holding, Inc.
Theodore A. Peto
Kirkland & Ellis LLP
Colin J. Diamond
White & Case LLP
Jim Westerman
BDO USA, LLP