SecProbe.io

CORRESP
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filename1.htm

  Veronica
Lah

Manatt,
Phelps & Phillips, LLP

Direct
Dial: (310) 312-4130

VLah@manatt.com

August 1, 2022

Via
EDGAR

Mr. Michael
Killoy

Division of Corporation Finance, Office of Mergers & Acquisitions

U.S. Securities & Exchange Commission

100 F Street, NE

Washington, D.C. 20549

 Re: Impac
                                            Mortgage Holdings, Inc.

                                            Form S-4

                                            Filed July 15, 2022

                                            File No. 333-266167

Dear
 Mr. Killoy:

This
letter sets forth the response of Impac Mortgage Holdings, Inc., a Maryland corporation (“we,” “us,” “our”
or the “Company”), to the comment letter dated July 27, 2022 from the Division of Corporation Finance, Office of Mergers &
Acquisitions (the “Staff”) of the United States Securities and Exchange Commission (“SEC”) providing comments (the “Comments”)
on the Company’s Registration Statement on Form S-4, File No. 333-266167 (the “Form S-4” or the “Registration
Statement”). For convenience of reference, the Staff’s Comments are reprinted below in bold, and are followed by the response
of the Company. We are also separately providing to you a copy of Amendment No. 1 to the Form S-4, filed with the Securities
and Exchange Commission on August 1, 2022 (the “Amendment”), together with a redline showing all changes made from the
Form S-4 filed on July 15, 2022.

Manatt,
Phelps & Phillips, LLP 2049 Century Park East, Suite 1700, Los Angeles, California 90067 Tel: 310.312.4000 Fax: 310.312.4224

Albany
| Boston | Chicago | Los Angeles | New York | Orange County | Sacramento | San Francisco | Silicon Valley | Washington, D.C.

Michael
Killoy

August 1,
2022

Page 2

Form S-4
filed on July 15, 2022

 General

 1. COMMENT:
                                            You state that tendering security holders will receive cash, except if the issuance of cash
                                            would violate the Cash Consideration Restrictions, which you state later in the offer materials
                                            is likely to be the case. We have concerns about an offer structure in which tendering security
                                            holders will not know the form of consideration they will receive when making their tender
                                            decision. We note that this is not a cash/stock election offer, where tendering holders can
                                            opt to receive one form of consideration versus another. Even where their ability to receive
                                            either form of offer consideration will be pro rated based on the elections of other tendering
                                            holders, a cash/stock election offer provides some ability for tendering holders to influence
                                            what they will receive. We have concerns that the structure of your offer is inconsistent
                                            with your basic disclosure obligations under Item 4 of Schedule TO and Item 1004(a) of
                                            Regulation M-A. Please revise or advise. Your analysis should explain why you are including
                                            the possibility of receiving cash in the offer, when you state in the prospectus that you
                                            believe the Company will be prevented from issuing cash due to the Cash Consideration Restrictions.

RESPONSE:
The Company acknowledges the Staff’s comment.

History
of the Negotiation of the Exchange Consideration

Both
the Company and the major holders of its 9.375% Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series B
Preferred Stock”), and 9.125% Series C Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series C
Preferred Stock” and, together with the Series B Preferred Stock, the “Preferred Stock”), with whom the Company
negotiated the terms of the proposed Exchange Offers, would strongly prefer that the Company complete the proposed Exchange Offers by
paying a portion of the exchange consideration in cash, rather than substituting for any cash consideration shares of 8.25%
Series D Cumulative Redeemable Preferred Stock, $0.01 par value per share (the “New Preferred Stock”). Indeed,
the original negotiated terms of the Voting Agreements contemplated Exchange Offers that would require the payment of cash as a component
of the total exchange consideration.

However,
as of March 31, 2022, the Company’s total assets, calculated in accordance with GAAP, exceeded its total liabilities by only
$6.745 million, following operating losses during the first quarter of 2022 of $12 million, or approximately $4 million per month. If
all outstanding shares of Preferred Stock participate in the Exchange Offers, the total amount of cash payable in exchange for tendered
shares of Preferred Stock would be approximately $3.47 million, and if the minimum two-thirds of the outstanding shares of each series
of Preferred Stock participate in the Exchange Offers, the total amount of cash payable in exchange for tendered shares of Preferred
Stock would be approximately $2.31 million.

Michael
Killoy

August 1,
2022

Page 3

Under
relevant sections of Section 2-311 of the Maryland General Corporation Law (the “MGCL”), as a Maryland corporation,
the Company legally may repurchase outstanding shares of its Preferred Stock in exchange for cash (in whole or in part) only if, after
giving effect to the repurchase, the Company would be able to pay its debts as they become due in the usual course of business and if
the Company’s total assets would exceed its total liabilities.1 Under Section 2-311 of the MGCL, the Company’s
legal ability to pay cash to repurchase shares of Preferred Stock must be tested at the time of the repurchase, rather than at
any time in advance of the repurchase.

As
a result, in May 2022, after reviewing the Company’s first quarter operating results, the Company and certain parties to
the original Voting Agreements realized that the Company would be unable to determine with any certainty before the time the
Exchange Offers close (currently anticipated to occur late in the third quarter or early in the fourth quarter of 2022),
whether Section 2-311 of the MGCL, or another legal or contractual obligation, would prohibit the Company from paying cash as a
component of the exchange consideration. As discussed on page 66 of the Amendment, the Company and certain parties to the original
Voting Agreements negotiated amendments to the Voting Agreements that would permit the Company to close the transaction and realize
the expected benefits to the Company and holders of its common stock (including former holders of Preferred Stock receiving common
stock in the Exchange Offers or subsequent “Special Redemption,” as defined in the Amendment) if, at the time of the
closing of the Exchange Offers, the Company would be legally or contractually prohibited from making a cash payment. The Company and
the Voting Agreement parties’ believed that finalization of the Exchange Offers was more imperative to the future success of
the Company than the receipt of cash at that time.

1
The MGCL would also permit the Company to pay cash to repurchase shares to the extent of net earnings during certain prior periods identified
in the statute; however, the Company does not have net earnings during any of the relevant prior periods.

Michael
Killoy

August 1,
2022

Page 4

The
amended Voting Agreements contemplate the payment of a redeemable preferred security, the New Preferred Stock, in lieu of the
originally-negotiated cash component of the exchange consideration if, but only if, the Company is legally or contractually
prohibited from paying cash as a component of the exchange consideration. The Company respectfully notes that the terms of the New
Preferred Stock, as negotiated with significant holders of Preferred Stock, provide that the New Preferred Stock must be redeemed
for cash, together with 8.25% cumulative dividends that will accrue before redemption, promptly after the Company is reasonably
able to determine that it is legally and contractually permitted to pay such cash to former holders of its New Preferred Stock. This
portion of the redemption amount, if paid, was intended to approximate the cash payment that investors would have received had the
Company been legally permitted to pay cash at the closing of the Exchange Offers plus 8.25% interest.

Regulation
M-A Requirements

Section 1004(a)(1)(ii) of
Regulation M-A requires, in relevant part, that an issuer disclose the type and amount of consideration offered. We respectfully note
that business combination transactions commonly involve consideration payable as a number of securities in an amount to be determined
at the time of closing, frequently based on financial metrics, including the value of such securities, at the time of closing.2
The Company believes that the contingent nature of the type of consideration offered in the Exchange Offers should be viewed similarly,
and respectfully believes that it has described both potential outcomes clearly throughout the  Amendment as well
as its current reasonable belief as to which form of consideration will be paid in the Exchange Offers. As required by Exchange Act Rule 13e-4(c)(4),
the Company will file an amendment to its Schedule TO promptly after the closing to report the final results of the Exchange Offers,
including whether cash or New Preferred Stock will be issued in the Exchange Offers.

2
See, e.g., 424(b)(3) prospectus filed in connection with Walt Disney’s acquisition of 21st Century Fox, June 28,
2018; https://www.sec.gov/Archives/edgar/data/1744489/000119312518207599/d770960d424b3.htm. See also, SEC No Action Letter, May 22, 2013,
Pfizer, Inc., (2013 WL 2252954) (where the SEC affirmed the use of pricing formulas in exchange offers).

Michael
Killoy

August 1,
2022

Page 5

The
Company cannot currently determine whether it will (or will not) be legally and contractually permitted to pay cash at the closing
of the Exchange Offers, despite the fact that it had unrestricted cash of $71 million at March 31, 2022. As noted above, as of
March 31, 2022, the Company had total assets in excess of total liabilities of $6.745 million, and the total cash payable in
the Exchange Offers would be $2.31 million, at the minimum required participation level, or $3.47 million, if all outstanding shares
of Preferred Stock are tendered.

During
fiscal year 2021, the Company was able to take advantage of historically low interest rates and the growth in its wholesale lending
channel to close fiscal year 2021 with approximately $3.9 million in net losses, albeit with only $30 million in unrestricted cash.
During the first quarter of 2022, mortgage interest rates, which had been at historical lows since the second quarter of 2020, began
to increase rapidly, presenting new challenges to the Company’s lending operations. As a result of efforts to monetize assets
to generate operating capital, the Company ended the first quarter of 2022 with unrestricted cash of $71 million, notwithstanding a
net loss for the same quarter of approximately $12 million.

Market
conditions during the second and third quarters of 2022 have continued to be volatile. Therefore, after considering the amount of
cash potentially payable in the Exchange Offers, both its Q1 2022 operating results and its current, preliminary analysis of its Q2
2022 operating results, and its preliminary analysis and expectations of its prospective performance during the third quarter of
2022 through the anticipated closing date of the Exchange Offers, as well as the relatively small change in operating results that
will determine whether the Company is legally permitted to pay cash in the Exchange Offers, the Company respectfully believes that
it is not misleading  to conduct an Exchange Offer
that contains a potential for a cash payment at closing, especially in light of its disclosure regarding the factors that would
permit it to make such a payment and its disclosure of what it currently anticipates to be the most likely result.

Michael
Killoy

August 1,
2022

Page 6

However,
if current trends continue, the Company currently believes that the most likely result is that, at the time the Exchange Offers close,
it will not be legally permitted to pay cash as consideration for the repurchase of its Preferred Stock in the Exchange Offers. Further,
because Maryland law requires that the Company determine whether it is legally permitted to pay cash in the Exchange Offers as of the
closing date, it is not able to provide certainty to investors as to the type of consideration in advance of closing. As a result, the
Company respectfully believes that it is appropriate, and necessary to an investor’s understanding of the transaction, for the
Company to disclose, as stated in the Amendment, that it currently anticipates that it will be prohibited from
paying cash at the closing of the transaction and will, instead, issue New Preferred Stock as exchange consideration.

The
Company has added the following language on the cover page and on pages  5,  37 and 73 of the Amendment to enhance
the disclosure for the benefit of the Company’s investors:

 As of March 31,
2022, the Company’s total assets, calculated in accordance with GAAP, exceeded its total liabilities by $6.745 million, following
operating losses during the first quarter of 2022 of $12 million, or approximately $4 million per month. If all outstanding shares
of Preferred Stock participate in the Exchange Offers, the total amount of cash payable in exchange for tendered shares of Preferred
Stock would be approximately $3.47 million, and if the minimum two-thirds of the outstanding shares of each series of Preferred Stock
participate in the Exchange Offers, the total amount of cash payable in exchange for tendered shares of Preferred Stock would be approximately
$2.31 million. Although a final determination will be made by the Company’s Board
of Directors upon the expiration of the Exchange Offers, based on the value of the Company’s assets and liabilities and the
Company’s financial condition at the time of closing of the Exchange Offers, we currently anticipate that, at the time
of closing of the Exchange Offers, the payment of cash in the Exchange Offers would cause us to violate the Cash Consideration Restrictions
and that we will issue New Preferred Stock in lieu of cash in the Exchange Offers.

Michael
Killoy

August 1,
2022

Page 7

 2. COMMENT:
                                            We note that motions for class certification are currently pending before a court and if
                                            granted, will result in an award of attorneys fees and costs. The consideration to be paid
                                            for tendered shares would be reduced by the amount of any attorneys fees and costs awarded.
                                            You state that where a motion has been filed but is not decided before the closing of the
                                            Exchange Offers, you may pay a portion of the Series B Consideration and Series B
                                            Remainder Consideration into an escrow account until all claims relating to the fees and
                                            costs motion have been adjudicated, at which point the amounts in escrow will be released
                                            on a pro rata basis to tendering security holders. Please provide your analysis as to how
                                            such a delay of payment for tendered shares is consistent with your prompt pay