Correspondence 0001213900-23-057464 from Dune Acquisition Corp (HGAS, HGASW) (CIK 0001817232) (HGAS)
Dune Acquisition Corp (HGAS, HGASW) (CIK 0001817232)
Date: July 17, 2023 · CIK: 0001817232 · Accession: 0001213900-23-057464
AI Filing Summary & Sentiment
File numbers found in text: 001-39819
Referenced dates: July 3, 2023
Letter
Sidley Austin LLP
One South Dearborn Street
Chicago, IL 60603
+1 312 853 7000
+1 312 853 7036 Fax
AMERICA ● ASIA PACIFIC ● EUROPE
MHEINZ@SIDLEY.COM
+1 312 853 2071
July 17, 2023
VIA EDGAR SUBMISSION
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Industrial Applications and Services
F Street, N.E.
Washington, D.C. 20549
Attn: Conlon Danberg
Katherine Bagley
Jeanne Bennett
Brian Cascio
Re: Dune Acquisition Corporation
Preliminary Proxy Statement on Schedule 14A
Filed June 5, 2023
File No. 001-39819
Ladies and Gentlemen:
This letter sets forth the responses of Dune Acquisition Corporation (“Dune” or the “Company”) to the comments of the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) set forth in the Staff’s letter, dated July 3, 2023, with respect to the Company’s Preliminary Proxy Statement on Schedule 14A, filed on June 5, 2023, File No. 001-39819 (the “Proxy Statement”).
Concurrently with the submission of this letter, we are publicly filing Amendment No. 1 to the Proxy Statement (the “Amended Proxy Statement”) in response to the Staff’s comments. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Amended Proxy Statement. For your convenience, each of the Staff’s comments is reprinted in bold below, followed by the Company’s responses thereto.
Preliminary Proxy Statement on Schedule 14A filed June 5, 2023
Cautionary Note Regarding Forward-Looking Statements, page ix
1. We note your reliance upon the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Because the application of the safe harbor to your initial business combination is unsettled (due in part to no definitive case law regarding its application), please condition your reliance with qualifying language that the protections of the safe harbor of the Private Securities Litigation Reform Act of 1995 may not be available.
RESPONSE:
The Company has revised the Proxy Statement in response to the Staff’s comment. Please see page x of the Amended Proxy Statement.
Sidley Austin LLP is a limited liability partnership practicing in affiliation with other Sidley Austin partnerships.
U.S. Securities and Exchange Commission
July 17, 2023
Page
Questions and Answers About the Business Combination and the Special Meeting
Q: What equity stake will current Dune stockholders and the Sellers hold . . ., page xvii
2. We note that, assuming no further redemptions, current Dune public stockholders are expected to hold an approximate 10.5% equity stake in New Global after the Business Combination. Here or elsewhere in the proxy statement, please state the aggregate and per share implied valuation of this 10.5% stake based on (i) the $57.5 million Company Equity Value under the Unit Purchase Agreement, (ii) the $99.2 million implied equity value using the Comparable Public Company Analysis from the Newbridge fairness opinion and (iii) the $114.5 million valuation from the DCF Analysis from the Newbridge fairness opinion.
RESPONSE:
The Company has revised the Proxy Statement in response to the Staff’s comment. Please see pages xviii and 6 of the Amended Proxy Statement.
3. Please disclose whether the combined company will be a “controlled company” as defined under the relevant Nasdaq listing rules and, if so, whether you intend to rely on the exemptions as a controlled company. If applicable, please include risk factor disclosure that discusses the effect, risks and uncertainties of being designated a controlled company, including but not limited to, the result that you may elect not to comply with certain corporate governance requirements.
RESPONSE:
In response to the Staff’s comment, the Company respectfully advises the Staff that it will not be deemed a “controlled company” as defined by the Nasdaq listing rules, because the holders of the New Global Common Stock do not have any agreement or arrangement to act together as a “group.” Accordingly, the Company will not avail itself of the exemptions afforded to a controlled company. The Company has revised the Proxy Statement in response to the Staff’s comment. Please see page 42 of the Amended Proxy Statement.
Q: What happens to the funds deposited in the Trust Account after consummation of the Business Combination?, page xx
4. We note your disclosure that “holders of an aggregate of 16,067,946 shares of Class A Common Stock exercised . . . their right to redeem such shares for a pro rata portion of the funds held in the Trust Account.” Please revise your disclosure in this section to provide the percentage of total shares of Class A Common Stock this number of shares represented at the time of the stockholder vote.
RESPONSE:
The Company has revised the Proxy Statement in response to the Staff’s comment. Please see page xxi of the Amended Proxy Statement.
U.S. Securities and Exchange Commission
July 17, 2023
Page
Q: What is an “Up-C” Structure?, page xx
5. We note your disclosure that the Business Combination will result in an Up-C structure. Please disclose whether you have entered or intend to enter into a Tax Receivable Agreement or any similar tax agreement or arrangement with the Sellers. Please include such tax agreement in your proxy statement and describe its material terms.
RESPONSE:
In response to the Staff’s comment, the Company respectfully advises the Staff that the Company does not have any tax receivable agreements or any similar tax agreements or arrangements with the Sellers, and it will not be entering into a tax receivable agreement or any similar tax agreement or arrangement with the Sellers. The Company has revised the Proxy Statement in response to the Staff’s comment. Please see page xxi of the Amended Proxy Statement.
Q: Why is the NTA Proposal being proposed?, page xxii
6. We note your disclosure that the NTA Proposal would “remove from the Current charter requirements limiting Dune’s ability to redeem shares of Dune Class A Common Stock and consummate an initial business combination if the amount of Dune Stockholder Redemptions would cause Dune to have less than $5,000,0001 in net tangible assets,” and that the NTA Proposal is conditioned upon the approval of the Business Combination Proposal. We also note your disclosure that you will not be required to meet the $5,000,001 in net tangible assets to avoid the definition of penny stock because securities of the combined company are or will be listed on a national securities exchange upon the Closing. However, if the amount in the trust falls below $5,000,001 as a result of redemptions, you would likely no longer meet the Nasdaq listing standards. At that point, it is possible you would become a penny stock. Please revise here and elsewhere as appropriate to clearly discuss the impact that the trust falling below $5,000,001 would have upon your listing on Nasdaq and discuss the consideration given to this possibility in your determination to propose to remove this provision from your charter. Please provide clear disclosure that removal of this provision could result in your securities falling within the definition of penny stock and clearly discuss the risk to you and investors if your securities were to fall within the definition of penny stock. In your discussion, please clarify whether the NTA Proposal is conditioned solely upon the approval of the business combination or the business combination’s closing.
RESPONSE:
The Company has revised the Proxy Statement in response to the Staff’s comment. Please see pages xxii, xxiii, 41 and 126 of the Amended Proxy Statement.
Summary of the Proxy Statement, page 1
7. We note that the audit opinions for Dune and Global Hydrogen includes paragraphs related to substantial doubt about the ability of Dune and Global Hydrogen, respectively, to continue as going concerns. Please include prominent disclosure regarding this point in the Summary section. As a related matter, please prominently disclose, where you provide information about the parties to the business combination, that Global Hydrogen has not yet commenced operations or developed plans to execute its anticipated business lines.
RESPONSE:
The Company has revised the Proxy Statement in response to the Staff’s comment. Please see pages 1, 13, 147 and 157 of the Amended Proxy Statement.
U.S. Securities and Exchange Commission
July 17, 2023
Page
Risk Factors
Risks Related to Global Hydrogen
Our business model has yet to be tested . . ., page 24
8. We note your statement that “as a result of the capital-intensive nature of our business, we can be expected to continue to sustain substantial operating expenses without generating sufficient revenues to cover expenditures.” Please reconcile this statement with management’s projections for 2023 and 2024 and the discounted cash flow analysis included in the proxy statement which show positive free cash flow and stable free cash flow margins from 2023 through 2032.
RESPONSE:
The Company has revised the Proxy Statement in response to the Staff’s comment. Please see page 25 of the Amended Proxy Statement.
Our potential international expansion . . ., page 25
9. Given that Global Hydrogen has yet to commence operations, please clarify when you expect to expand internationally. Alternatively, remove this and any similar or related disclosure from your filing.
RESPONSE:
The Company has revised the Proxy Statement in response to the Staff’s comment. Please see pages 26, 27, 28 and 64 of the Amended Proxy Statement.
Risks Related to New Global’s Shares Following the Transactions
Dune’s Sponsor, directors, officers, advisors or their affiliates may enter into certain transactions, including purchasing . . ., page 37
10. We note your disclosure on page 37 and 86 indicating that Dune’s Sponsor, directors, officers, advisors or their affiliates may enter into transactions with investors and others to provide them with incentives to acquire public shares or vote their public shares in favor of the Business Combination. Please provide your analysis on how such purchases will comply with Rule 14e-5, including whether the price offered in such purchases may be higher than the redemption price. To the extent you are relying on Tender Offer Rules and Schedules Compliance and Disclosure Interpretation 166.01 (March 22, 2022), please provide an analysis regarding how it applies to your circumstances.
RESPONSE:
The Company has revised the Proxy Statement in response to the Staff’s comment. Please see pages xxviii, 38, 88 and 89 of the Amended Proxy Statement.
Nasdaq may delist New Global’s securities . . ., page 40
11. We note your disclosure that “Dune cannot assure you that . . . New Global’s securities will be listed on Nasdaq following the Business Combination.” However, you disclose elsewhere that Nasdaq listing is a condition to closing of the business combination. Please revise for consistency.
RESPONSE:
The Company has revised the Proxy Statement in response to the Staff’s comment. Please see page 41 of the Amended Proxy Statement.
U.S. Securities and Exchange Commission
July 17, 2023
Page
Involvement of members of our management . . ., page 44
12. You disclose that members of your management team and companies with which they are affiliated maybe involved in litigation relating to their business affairs unrelated to your company, and that no claims were asserted against you or your Sponsor. However, you also disclose that, on December 8, 2020, your Sponsor filed amended counterclaims in certain litigation. Please clarify the extent of your Sponsor’s involvement in these proceedings, and how its involvement could impact your business.
RESPONSE:
The Company has revised the Proxy Statement in response to the Staff’s comment. Please see page 46 of the Amended Proxy Statement.
Risks Related to Dune and the Business Combination
Our Sponsor, directors, executive officers, advisors and their affiliates may elect to purchase shares or public warrants . . ., page 45
13. We note your statement that “purchases of public shares could be to vote such shares in favor of the Business Combination and thereby increase the likelihood of o
Show Raw Text
CORRESP
1
filename1.htm
Sidley
Austin LLP
One
South Dearborn Street
Chicago,
IL 60603
+1
312 853 7000
+1
312 853 7036 Fax
AMERICA
● ASIA PACIFIC ● EUROPE
MHEINZ@SIDLEY.COM
+1
312 853 2071
July
17, 2023
VIA
EDGAR SUBMISSION
U.S.
Securities and Exchange Commission
Division
of Corporation Finance
Office
of Industrial Applications and Services
100
F Street, N.E.
Washington,
D.C. 20549
Attn:
Conlon Danberg
Katherine Bagley
Jeanne Bennett
Brian Cascio
Re:
Dune Acquisition Corporation
Preliminary Proxy Statement on Schedule 14A
Filed June 5, 2023
File No. 001-39819
Ladies
and Gentlemen:
This
letter sets forth the responses of Dune Acquisition Corporation (“Dune” or the “Company”)
to the comments of the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”)
set forth in the Staff’s letter, dated July 3, 2023, with respect to the Company’s Preliminary Proxy Statement on Schedule
14A, filed on June 5, 2023, File No. 001-39819 (the “Proxy Statement”).
Concurrently
with the submission of this letter, we are publicly filing Amendment No. 1 to the Proxy Statement (the “Amended Proxy Statement”)
in response to the Staff’s comments. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto
in the Amended Proxy Statement. For your convenience, each of the Staff’s comments is reprinted in bold below, followed by the
Company’s responses thereto.
Preliminary
Proxy Statement on Schedule 14A filed June 5, 2023
Cautionary
Note Regarding Forward-Looking Statements, page ix
1. We
note your reliance upon the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. Because the application of the safe harbor to your
initial business combination is unsettled (due in part to no definitive case law regarding
its application), please condition your reliance with qualifying language that the protections
of the safe harbor of the Private Securities Litigation Reform Act of 1995 may not be available.
RESPONSE:
The Company has revised the
Proxy Statement in response to the Staff’s comment. Please see page x of the Amended Proxy Statement.
Sidley
Austin LLP is a limited liability partnership practicing in affiliation with other Sidley Austin partnerships.
U.S.
Securities and Exchange Commission
July
17, 2023
Page
2
Questions
and Answers About the Business Combination and the Special Meeting
Q:
What equity stake will current Dune stockholders and the Sellers hold . . ., page xvii
2. We
note that, assuming no further redemptions, current Dune public stockholders are expected
to hold an approximate 10.5% equity stake in New Global after the Business Combination. Here
or elsewhere in the proxy statement, please state the aggregate and per share implied valuation
of this 10.5% stake based on (i) the $57.5 million Company Equity Value under the Unit Purchase
Agreement, (ii) the $99.2 million implied equity value using the Comparable Public Company
Analysis from the Newbridge fairness opinion and (iii) the $114.5 million valuation from
the DCF Analysis from the Newbridge fairness opinion.
RESPONSE:
The Company has revised the
Proxy Statement in response to the Staff’s comment. Please see pages xviii and 6 of the Amended Proxy Statement.
3. Please
disclose whether the combined company will be a “controlled company” as defined
under the relevant Nasdaq listing rules and, if so, whether you intend to rely on the exemptions
as a controlled company. If applicable, please include risk factor disclosure that discusses
the effect, risks and uncertainties of being designated a controlled company, including but
not limited to, the result that you may elect not to comply with certain corporate governance
requirements.
RESPONSE:
In response to the Staff’s
comment, the Company respectfully advises the Staff that it will not be deemed a “controlled company” as defined by the Nasdaq
listing rules, because the holders of the New Global Common Stock do not have any agreement or arrangement to act together as a “group.”
Accordingly, the Company will not avail itself of the exemptions afforded to a controlled company. The Company has revised the Proxy Statement
in response to the Staff’s comment. Please see page 42 of the Amended Proxy Statement.
Q:
What happens to the funds deposited in the Trust Account after consummation of the Business Combination?, page xx
4. We
note your disclosure that “holders of an aggregate of 16,067,946 shares of Class A
Common Stock exercised . . . their right to redeem such shares for a pro rata portion of
the funds held in the Trust Account.” Please revise your disclosure in this section
to provide the percentage of total shares of Class A Common Stock this number of shares represented
at the time of the stockholder vote.
RESPONSE:
The Company has revised the
Proxy Statement in response to the Staff’s comment. Please see page xxi of the Amended Proxy Statement.
U.S.
Securities and Exchange Commission
July
17, 2023
Page
3
Q:
What is an “Up-C” Structure?, page xx
5. We
note your disclosure that the Business Combination will result in an Up-C structure. Please
disclose whether you have entered or intend to enter into a Tax Receivable Agreement or any
similar tax agreement or arrangement with the Sellers. Please include such tax agreement
in your proxy statement and describe its material terms.
RESPONSE:
In response to the Staff’s
comment, the Company respectfully advises the Staff that the Company does not have any tax receivable agreements or any similar tax agreements
or arrangements with the Sellers, and it will not be entering into a tax receivable agreement or any similar tax agreement or arrangement
with the Sellers. The Company has revised the Proxy Statement in response to the Staff’s comment. Please see page xxi of the Amended
Proxy Statement.
Q:
Why is the NTA Proposal being proposed?, page xxii
6. We
note your disclosure that the NTA Proposal would “remove from the Current charter requirements
limiting Dune’s ability to redeem shares of Dune Class A Common Stock and consummate
an initial business combination if the amount of Dune Stockholder Redemptions would cause
Dune to have less than $5,000,0001 in net tangible assets,” and that the NTA Proposal
is conditioned upon the approval of the Business Combination Proposal. We also note your
disclosure that you will not be required to meet the $5,000,001 in net tangible assets to
avoid the definition of penny stock because securities of the combined company are or will
be listed on a national securities exchange upon the Closing. However, if the amount in the
trust falls below $5,000,001 as a result of redemptions, you would likely no longer meet
the Nasdaq listing standards. At that point, it is possible you would become a penny stock.
Please revise here and elsewhere as appropriate to clearly discuss the impact that the trust
falling below $5,000,001 would have upon your listing on Nasdaq and discuss the consideration
given to this possibility in your determination to propose to remove this provision from
your charter. Please provide clear disclosure that removal of this provision could result
in your securities falling within the definition of penny stock and clearly discuss the risk
to you and investors if your securities were to fall within the definition of penny stock.
In your discussion, please clarify whether the NTA Proposal is conditioned solely upon the
approval of the business combination or the business combination’s closing.
RESPONSE:
The Company has revised
the Proxy Statement in response to the Staff’s comment. Please see pages xxii, xxiii, 41 and 126 of the Amended Proxy
Statement.
Summary
of the Proxy Statement, page 1
7. We
note that the audit opinions for Dune and Global Hydrogen includes paragraphs related to
substantial doubt about the ability of Dune and Global Hydrogen, respectively, to continue
as going concerns. Please include prominent disclosure regarding this point in the Summary
section. As a related matter, please prominently disclose, where you provide information
about the parties to the business combination, that Global Hydrogen has not yet commenced
operations or developed plans to execute its anticipated business lines.
RESPONSE:
The Company has revised the
Proxy Statement in response to the Staff’s comment. Please see pages 1, 13, 147 and 157 of the Amended Proxy Statement.
U.S.
Securities and Exchange Commission
July
17, 2023
Page
4
Risk
Factors
Risks
Related to Global Hydrogen
Our
business model has yet to be tested . . ., page 24
8. We
note your statement that “as a result of the capital-intensive nature of our business,
we can be expected to continue to sustain substantial operating expenses without generating
sufficient revenues to cover expenditures.” Please reconcile this statement with management’s
projections for 2023 and 2024 and the discounted cash flow analysis included in the proxy
statement which show positive free cash flow and stable free cash flow margins from 2023
through 2032.
RESPONSE:
The Company has revised the
Proxy Statement in response to the Staff’s comment. Please see page 25 of the Amended Proxy Statement.
Our
potential international expansion . . ., page 25
9. Given
that Global Hydrogen has yet to commence operations, please clarify when you expect to expand
internationally. Alternatively, remove this and any similar or related disclosure from your
filing.
RESPONSE:
The Company has revised the
Proxy Statement in response to the Staff’s comment. Please see pages 26, 27, 28 and 64 of the Amended Proxy Statement.
Risks
Related to New Global’s Shares Following the Transactions
Dune’s
Sponsor, directors, officers, advisors or their affiliates may enter into certain transactions, including purchasing . . ., page 37
10. We
note your disclosure on page 37 and 86 indicating that Dune’s Sponsor, directors, officers,
advisors or their affiliates may enter into transactions with investors and others to provide
them with incentives to acquire public shares or vote their public shares in favor of the
Business Combination. Please provide your analysis on how such purchases will comply with
Rule 14e-5, including whether the price offered in such purchases may be higher than the
redemption price. To the extent you are relying on Tender Offer Rules and Schedules Compliance
and Disclosure Interpretation 166.01 (March 22, 2022), please provide an analysis regarding
how it applies to your circumstances.
RESPONSE:
The Company has revised the
Proxy Statement in response to the Staff’s comment. Please see pages xxviii, 38, 88 and 89 of the Amended Proxy Statement.
Nasdaq
may delist New Global’s securities . . ., page 40
11. We
note your disclosure that “Dune cannot assure you that . . . New Global’s securities
will be listed on Nasdaq following the Business Combination.” However, you disclose
elsewhere that Nasdaq listing is a condition to closing of the business combination. Please
revise for consistency.
RESPONSE:
The Company has revised the Proxy Statement in
response to the Staff’s comment. Please see page 41 of the Amended Proxy Statement.
U.S.
Securities and Exchange Commission
July
17, 2023
Page
5
Involvement
of members of our management . . ., page 44
12. You
disclose that members of your management team and companies with which they are affiliated
maybe involved in litigation relating to their business affairs unrelated to your company,
and that no claims were asserted against you or your Sponsor. However, you also disclose
that, on December 8, 2020, your Sponsor filed amended counterclaims in certain litigation.
Please clarify the extent of your Sponsor’s involvement in these proceedings, and how
its involvement could impact your business.
RESPONSE:
The Company has revised the
Proxy Statement in response to the Staff’s comment. Please see page 46 of the Amended Proxy Statement.
Risks
Related to Dune and the Business Combination
Our
Sponsor, directors, executive officers, advisors and their affiliates may elect to purchase shares or public warrants . . ., page 45
13. We
note your statement that “purchases of public shares could be to vote such shares in
favor of the Business Combination and thereby increase the likelihood of o