1.

Please confirm that any preliminary prospectus you circulate will include all non-Rule 430A information. This includes the price range and related information based on a bona fide estimate of the public offering within that range. When you complete the filing by filling in the numerous blanks, note that we may have additional comments.

 

 

2.	Prior to the effectiveness of your registration statement, please provide us with a copy of the letter or call from the NASD indicating that the NASD has no objection to the underwriting compensation described in the filing.

 

 

3.	We note that you have yet to file several exhibits. Please file these exhibits as soon as possible in order to give the staff adequate time to review them. Note that we may have comments after we review these materials.

 

 

4.	Please provide us with copies of any graphics or photos you intend to include in your prospectus. Understand that we will review these materials and may have comments on them.

 

 

5.	We note your recent release of financial results for the period ended September 30, 2006. Please update your filing to include these recent results.

 

 

6.

We note that you refer to independent and/or other specialists throughout the filing, including the notes to your financial statements. It appears to us that you should either identify each expert you refer to or delete your reference to them. We remind you that if you identify and refer to an expert, you must file their consent as an exhibit. Refer to Section 436(b) of Regulation C.

 

 

 

7.

Please include a price range as soon as practicable and allow us adequate time to review the filing with the price range before requesting effectiveness. Also, please indicate the number of shares offered and other information left blank in your prospectus. Please refer to Instruction 1 to Item 501(b)(3) of Regulation S-K. In addition, please be advised that you may not circulate copies of your prospectus until you have included an estimated price range and all other information required by the federal securities laws, except information you may exclude in reliance upon Rule 430A of Regulation C.

 

 

 

8.	Ensure that the information you include in your summary and elsewhere is balanced. To the extent that you continue to cite competitive strengths, please review each one and revise as necessary to provide balancing information.

 

 

9.	Please revise to explain here what “special bar quality” means.

 

 

 

10.

We note that you have translated peso amounts into U.S. dollars for the convenience of the reader using exchange rates as of June 30, 2006 and December 31, 2005. It appears to us all convenience translations should be based on the exchange rate as of the most recent balance sheet date included in your filing pursuant to Rule 3-20(b) of Regulation S-X. Please advise or revise here and throughout your filing.

 

 

11.

We note that you present EBITDA as a key financial measure here and on pages 12, 38 and 42. It is not clear to us that your current presentation complies with the guidance in SEC Release No. 33-8176. In this regard, it is unclear to us why you believe that the presentation of EBITDA provides useful information to investors regarding your financial condition and results of operations. In addition, we note that you have reconciled EBITDA to operating income under Mexican GAAP. However, we also note your references to net income, net cash flow from operating activities and net cash flow from investing and financing activities. It is therefore unclear to us what you view to be the most directly comparable financial measure to EBITDA. Please revise as appropriate. If you continue to include EBITDA, please ensure that your revised disclosures:

 

·	include a reconciliation to the most directly comparable financial measure, which appears to be net income;

·	exclude any items that are not inherent in the definition of EBITDA or re-name the measure you present; and

·	specifically address the limits involved in excluding recurring items from a measure that is presented as a performance measure.

 

 

12.	Please include a risk factor that addresses the risks related to the disclosure requirements applicable to foreign private issuers versus domestic issuers. For instance, address the fact that you are not required to file quarterly reports.

 

 

 

13.	In order to make this risk factor more currently material, please briefly disclose any recent significant labor disruptions.

 

 

 

14.

We note that all of the facilities that sell to automotive parts customers are currently ISO 9001 or 14001 certified, as required and that you are currently in compliance with the new certification standards. Please revise to elaborate on the reasons that this risk factor is currently material or delete it.

 

 

 

15.	Since all companies rely on their key personnel, clearly explain how this specific risk applies to your company.

 

 

 

16.	We note that you plan to use the proceeds for general corporate purposes, including investments in fixed assets and potential acquisitions. As applicable, please disclose the information required by Item 3.C.l, 2, and 3 of Form 20-F.

 

 

 

17.	Please remove “cash and cash equivalents” from the capitalization table.

 

 

 

 

18.

Please revise this section to provide discussion and analysis of known trends, demands, commitments, events and uncertainties that management views as most critical to the company’s revenues, financial position, liquidity, plan of operations and results of operations; rather than a mere narrative recitation of the financial statements. Please refer to the Commission Guidance Regarding Management’s Discussion and Analysis of Financial Condition and Results of Operations, Release Nos. 33-8350 (December 19, 2003).

 

 

 

19.	Disclose the difference between the average labor costs and raw materials costs in your Mexican versus your U.S. operations.

 

 

 

20.	Please discuss in greater detail the reasons for the higher prices prevailing in the Mexican steel markets.

 

 

 

21.	Please state with more specificity what the additional expenses from your Republic facilities were.

 

 

 

22.	Please disclose what your other income reflected in the six months ended June 30, 2006 versus the same period in 2005 as well as the reasons for the changes from period to period.

 

 

 

23.	Please discus the extent to which you were able to pass on your raw materials costs to customers. We note that a portion of your marginal profit was negatively impacted by these increases.

 

 

 

24.	Please update your capitalization table as of a date no earlier than 60 days prior to the date of the registration statement. Please refer to Item 3.B of Form 20-F.

 

 

 

25.	Please disclose the material restrictive covenants in the GE Facility.

 

 

 

 

26.

We note that you believe that the geographic locations of your various facilities throughout Mexico and product variety helps you to maintain a competitive market position in Mexico and in the southwestern United States and that you believe your Mexicali mini-mill is one of the closest mini-mills to the southern California market, which provides a production and transportation cost advantage in northwestern Mexico and southern California. Please place this fact in context by disclosing, to the extent known, the other steel producers that are similarly situated geographically. Among your competitors, how unique is your position?

 

 

27.

We note that you believe that you are the sole Mexican producer of 5 inch, 6 inch and 200 mm I-beams and that there is one other small producer of 4-inch I-beams and that these products accounted for approximately 10%, and 5% of your total finished product sales in 2004 and 2005, respectively. Please disclose the percentage of revenue derived from these products and the extent to which you face international competition for these products.

 

 

 

28.	Please disclose any material expenditure made for environmental compliance or other governmental regulation. Refer to Item 4.B.8 of Form 20-F.

 

 

 

29.

Please revise to explain more fully the shareholders’ rights to bring actions against the directors. For example, is there a length of time that the shareholder must have held shares prior to instituting an action? Also, please revise to give more details as to notification requirements. We note the statute of limitation disclosure.

 

 

 

30.	Please state the address for your underwriter. Refer to Item 9.B.1 of Form 20-F.

 

 

31.	Please disclose the circumstances under which Citigroup would consent to release the lockups.

 

 

32.	Please tell us how and when the underwriter may decide to change the offering price after the offering. We may have further comment.

 

 

33.

We note your statement that each statement in this prospectus relating to a document filed as an exhibit is qualified in all respects by the filed exhibit and that each statement regarding a contract, agreement or other document is qualified in its entirety by reference to the actual document. Please disclose that all material provisions of the contract or other documents are discussed in the prospectus.

 

 

 

 

34.	Please disclose any payments from the depositary bank to Grupo Simec, including whether any of the fees collected by the depositary bank will be forwarded to the issuer. Also, explain how the fees will be collected and any consequence of non-payment.

 

 

 

 

35.	Please tell us how you determined that SimRep is a foreign entity for translation purposes while Pacific Steel and Undershaft Investments are considered an integral part of operations.

 

 

36.	Please provide us a more comprehensive and specific explanation of the adjustments to income tax expense resulting from the treatment of your inventory and the reference to note 13c.

 

 

37.

We note that you acquired 50.2% of SimRep Corporation and that your controlling shareholder acquired the remaining 49.8%. Please explain your rights and your controlling shareholder’s rights regarding your interest and their interest. Please disclose why you and your controlling shareholder structured the acquisition in this manner and address the impact of this structure on your accounting. In addition, please tell us the amount of negative goodwill that was allocated proportionately to all non-current assets and explain the facts and circumstances that resulted in the negative goodwill.

 

38.

We note that, under Mexican GAAP, you deduct freight expenses from net sales. Please clarify how you have considered paragraphs 6 and 7 of EITF 00-10 which would require shipping and handling costs to be classified as an expense and provide any additional disclosures that are necessary to comply with U.S. GAAP.

 

39.

We note from your disclosure on page 74 that customer orders are generally cancelable without penalty. Please tell us what, if any, impact this arrangement has on your revenue recognition policy. In addition, please tell us what impact cancelled orders may have on the valuation of the associated inventory.

 

40.	We note from your disclosure on page F-36 that, if you fail to comply with your supply agreements, customers have the right to reject and/or return the merchandise. Please tell us what consideration you have given to how this right of return should be accounted for under U.S. GAAP.

 

41.	Please tell us what consideration you gave to how the items included in your other income/expense would be classified for under U.S. GAAP.

 

42.

We note from your disclosure on page F-19 that you have contingent revenues, earnings and assets. Please provide us with a specific and comprehensive description of the nature of these balances. In addition, please tell us what consideration you have given to how these balances should be accounted for under U.S. GAAP.

 

43.

Please tell us if, for U.S. GAAP purposes, the geographic regions of Mexico and the United States represent separate operating segments that you aggregate into one reportable segment. If they do, please provide us an analysis of how you considered paragraph 17 of SFAS 131 when you determined it was appropriate to aggregate your operating segments. In this regard, please ensure that you address the different economic characteristics of each region. To help us better understand this matter, please provide us with copies of the internal reports that are reviewed by your Chief Operating Decision Maker (CODM).

44.	Tell us how you have considered paragraph 37 of SFAS 131 in determining whether you should provide specific disclosures about your product lines.

 

 

45.	Please revise to more specifically disclose the nature of your adjustment for other non-cash investing activities in your reconciliation of net resources used under Mexican GAAP to U.S. GAAP.

 

 

 

46.	Please explain to us how you determined that comparative financial statements for the interim period ended June 30, 2005 should not be included in your filing. Refer to Rule 3-05 of Regulation S-X.

 

 

47.

Please provide us a more comprehensive explanation of why you believe it is appropriate to eliminate the expenses associated with the PAV Republic stock option plan. In this regard, please tell us how you considered whether other forms of compensation would have been required in those time periods in order to retain the relevant employees of PAV Republic.

 

 

 

48.

We note your statement that your disclosure controls and procedures were designed to ensure that you record, process, summarize and report the information required to be disclosed in reports filed under the Exchange Act within the specified time periods. Please confirm to us, and revise future filings to clarify, if true, that your disclosure controls and procedures are also designed for the purpose of ensuring that material information required to be in this report is made known to management and others, as appropriate, to allow timely decisions regarding required disclosures. Alternatively, in future filings you may omit your definition of disclosure controls and procedures and simply conclude that your disclosure controls and procedures are effective or ineffective, whichever the case may be. See Exchange Act Rule 13a-15(e).

 

 

 

 

 

/s/ Walter G. Van Dorn, Jr.