Correspondence 0001213900-23-053588 from 10X Capital Venture Acquisition Corp. II (AAGR, AAGRW) (CIK 0001848898)
10X Capital Venture Acquisition Corp. II (AAGR, AAGRW) (CIK 0001848898)
Date: June 30, 2023 · CIK: 0001848898 · Accession: 0001213900-23-053588
AI Filing Summary & Sentiment
File numbers found in text: 333-269342
Referenced dates: February 16, 2023
Letter
June 30, 2023
VIA EDGAR
United States Securities and Exchange Commission
Division of Corporation Finance
Office of Energy & Transportation
100 F Street, N.E.
Washington, DC 20549
Attention: Jeanne Baker
Brian Cascio
Jordan Nimitz
Jason Drory
Re: 10X Capital Venture Acquisition Corp. II
Registration Statement on Form S-4
Filed January 20, 2023
File No. 333-269342
To the addressees set forth above:
On behalf of 10X Capital Venture Acquisition Corp. II (the “Company”), set forth below are the Company’s responses to the comments of the Staff (the “Staff”) of the Division of Corporation Finance of the Securities and Exchange Commission (the “Commission”) relating to the Company’s Registration Statement on Form S-4 (the “Form S-4”), filed on January 20, 2023. Concurrently with its submission of this letter to the Staff, the Company has filed an amendment to the Form S-4 (the “Amended Form S-4”) with the Commission through its EDGAR system.
Set forth below are the responses of the Company to the comments in the Staff’s letter to the Company, dated February 16, 2023, relating to the Form S-4. For convenience of reference, the text of the comments in the Staff’s letter has been reproduced in bold and italics herein. The Company has also provided its response immediately after each numbered comment. Capitalized terms used but not otherwise defined herein have the meanings assigned to such terms in the Amended Form S-4.
Registration Statement on Form S-4
Cover Page
1. We note your risk factor disclosure on page 63 that Global Commodities & Investments Ltd. currently controls approximately 84.16% of the voting power of AFRAG’s capital stock and will control approximately 56.95% of the combined voting power of AFRAG PubCo Common Stock following the consummation of the Business Combination. Please disclose on your cover page that following the business combination you will be a “controlled company” within the meaning of NASDAQ rules and the controlling shareholders’ anticipated total voting power.
Response: In response to the Staff’s comment, the Company has revised the disclosure on the cover page of the Amended Form S-4.
June 30, 2023
Page 2
Questions and Answers for Shareholders of 10X II, page ix
2. Given that the Nasdaq listing condition is waivable, please revise your questions and answers section, consistent with your risk factor disclosure on page 66, to prominently disclose that shareholders will not have certainty at the time that they vote regarding whether the AFRAG PubCo Common Stock and warrants will be listed on a national securities exchange following the business combination.
Response: In response to the Staff’s comment, the Company has revised the disclosure on page xxvii of the Amended Form S-4.
Q. Did the 10X II Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with..., page xii
3. We note your disclosure that Canaccord Genuity’s Opinion to the 10X II Board stated in part that the Business Combination is fair, from a financial point of view, to 10X II. Please include cautionary language noting, if true, that the fairness opinion addresses the fairness to all shareholders of 10X II as a group as opposed to only those shareholders of 10X II unaffiliated with the sponsor or its affiliates.
Response: The Company respectfully advises the Staff that Canaccord Genuity’s opinion only addressed fairness from a financial point of view to the Company of the consideration to be paid in the transaction, as the Company is the entity paying such consideration, and not to shareholders or a group of shareholders of the Company, individually or in the aggregate, because shareholders of the Company are not paying or receiving any consideration in the transaction. Canaccord Genuity’s opinion specifically states that it is not expressing any opinion as to the fairness of the transaction to the holders of any class of securities, creditors or other constituencies of the Company or AFRAG.
Q. What equity stake will current 10X II shareholders and current equity holders of AFRAG hold in AFRAG PubCo immediately..., page xiii
4. We note your disclosure here notes that the table below on page xiii assumes “that all the AFRAG PubCo warrants to purchase AFRAG PubCo Common Stock that will be outstanding immediately following Closing have been exercised for cash.” However, we note that your table does not appear to include all of the AFRAG PubCo warrants. For example only, your table depicts that Cantor will hold 200,000 shares while your disclosure elsewhere appears to indicate that Cantor owns 200,000 private placement units and that each private placement unit consists of one private placement share and one-third of one private placement warrant. Please revise to disclose all possible sources and extent of dilution that shareholders who elect not to redeem their shares may experience in connection with the business combination. Provide disclosure of the impact of each significant source of dilution, including the amount of equity held by founders, convertible securities, including warrants retained by redeeming shareholders, at each of the redemption levels detailed in your sensitivity analysis, including any needed assumptions.
Response: In response to the Staff’s comment, the Company has revised the disclosure on pages xiv, xv, 10, 11, 103 and 104 of the Amended Form S-4.
June 30, 2023
Page 3
5. Quantify the value of warrants, based on recent trading prices, that may be retained by redeeming stockholders assuming maximum redemptions and identify any material resulting risks.
Response: In response to the Staff’s comment, the Company has revised the disclosure on pages xxiii and 79 of the Amended Form S-4.
Q. What are the U.S. federal income tax consequences of the Domestication?, page xviii
6. We note that the Domestication is intended to qualify as an F Reorganization. Please provide a tax opinion covering the material federal tax consequences of the transaction to investors and revise your disclosure accordingly. Please refer to Item 601(b)(8) of Regulation S-K and Items 4(a)(6) and 21(a) of Form S-4. For guidance in preparing the opinion and related disclosure, please refer to Section III of Staff Legal Bulletin No. 19.
Response: The Company respectfully acknowledges the Staff’s comment and is filing as Exhibit 8.1 of the Amended Form S-4 an opinion of counsel. The disclosure on pages xx, 74 and 153 of the Amended Form S-4 has been updated to reflect the existence of such opinion.
Forward Purchase Agreement, page 9
7. We note that 10X II has entered into a forward purchase agreement with Vellar for Vellar to purchase 10X II’s Class A ordinary shares on the open market to reduce redemption rates. Please provide your analysis demonstrating how this agreement complies with Rule 14e-5.
Response: The Company respectfully acknowledges the Staff’s comment. The Company entered into the Forward Purchase Agreement on November 2, 2022, prior to the announcement of the AA Merger Agreement. Pursuant to Rule 14e-5 of the Exchange Act, the prohibition on purchases outside of a tender offer applies “from the time of public announcement of the tender offer until the tender offer expires.” The relevant tender offer commenced on November 3, 2022, the date the Company and AFRAG announced the AA Merger Agreement. The relevant tender offer shall expire on the date which is the deadline for shareholders of the Company to request that their respective public shares may be redeemed in connection with a shareholder vote to approve the Business Combination (the “Redemption Deadline”). Pursuant to the terms of the Forward Purchase Agreement, Vellar will not purchase any shares at any time on or before the Redemption Deadline.
8. We note your disclosure on page 62 that “200,000 shares are issued to Vellar as the share consideration under the Forward Purchase Agreement.” However, on page 165 you disclose that “Vellar is to receive a $2.0 million fee payable in shares. To realize this, Vellar will purchase the shares in the open market.” Furthermore, it appears that your Forward Purchase Agreement filed as Exhibit 10.4 defines Share Consideration as “an amount equal to the product of (x) such number that is the greater of (a) 5% of the Maximum Number of Shares and (b) 200,000 (provided that if Counterparty has requested and the Seller has paid the Prepayment Shortfall such number will be increased to the greater of (a) 10% of the Maximum Number of Shares and (b) 400,000) and (y) the Initial Price.” Please correct for this apparent inconsistency or otherwise advise. In addition, please amend your disclosure here and in the “Questions and Answers” section to discuss all the material terms of the Forward Purchase Agreement, including any fees or other consideration payable to Vellar. Your disclosure should prominently highlight the material terms of the agreement as well as highlight the risks consistent with your risk factor disclosure on pages 47 and 48.
Response: In response to the Staff’s comment, the Company has revised the disclosure on pages xxxi, 168 and 169 of the Amended Form S-4.
June 30, 2023
Page 4
Interests of 10X II’s Directors and Executive Officers in the Business Combination, page 13
9. Please disclose the out-of-pocket expenses for which the Sponsor and its affiliates are awaiting reimbursement. We note your statements that “[y]our Sponsor, executive officers and directors, or any of their respective affiliates are reimbursed for any out-of-pocket expenses incurred in connection with activities on [y]our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations” and that “[a]fter the completion of the Business Combination, directors or members of [y]our management team who remain with [you] may be paid consulting or management fees from AFRAG PubCo.” We also note the $20,000 monthly payments owed to the Sponsor pursuant to the administrative support agreement. Please also include those expenses in the quantified, aggregate dollar amount that the sponsor and its affiliates have at risk if the business combination is not completed or advise.
Response: In response to the Staff’s comment, the Company has revised the disclosure on pages xxxiii, 16, 47 and 130 of the Amended Form S-4.
Sources & Uses of Funds for the Business Combination, page 17
10. Please explain how the cash transferred to “Forward Purchase Agreement Escrow” is reflected in your pro forma balance sheet on page 159. Explain the offset to the related cash pro forma adjustments. Specifically clarify how the Escrow is reflected on your pro forma balance sheet. In addition, see our comments below on negative cash and address the appropriateness of your presentation herein under the maximum redemption scenario.
Response: In response to the Staff’s comment, the Company has revised the disclosure on page 18 and 19 of the Amended Form S-4.
Risk Factors - AFRAG, page 30
11. Please provide a risk factor that addresses the error identified in AFRAG’s historical restated financial statements. Discuss the future obligations to provide an assessment of AFRAG’s disclosure controls and procedures and internal control over financial reporting pursuant to Items 307 and 308 of Regulation S-X. Ensure you discuss the fact that AFRAG’s disclosure controls and procedures and internal control over financial reporting may not be effective, and the implication of this assessment.
Response: In response to the Staff’s comment, the Company has revised the disclosure on pages 44 and 45 of the Amended Form S-4.
June 30, 2023
Page 5
Background to the Business Combination, page 103
12. Please revise the Background section so that it is clear where each party stood with respect to material transaction terms during the course of the negotiations. For instance, when discussing meetings between the parties or their advisers, identify the party that proposed a material transaction term and indicate whether the other party agreed and/or proffered a counter proposal. The disclosure should provide shareholders with an understanding of ho
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CORRESP
1
filename1.htm
June
30, 2023
VIA
EDGAR
United
States Securities and Exchange Commission
Division of Corporation Finance
Office
of Energy & Transportation
100 F Street, N.E.
Washington, DC 20549
Attention:
Jeanne Baker
Brian Cascio
Jordan Nimitz
Jason Drory
Re:
10X Capital Venture Acquisition Corp. II
Registration Statement on Form S-4
Filed January 20, 2023
File No. 333-269342
To
the addressees set forth above:
On behalf of 10X Capital Venture Acquisition Corp.
II (the “Company”), set forth below are the Company’s responses to the comments of the Staff (the “Staff”)
of the Division of Corporation Finance of the Securities and Exchange Commission (the “Commission”) relating
to the Company’s Registration Statement on Form S-4 (the “Form S-4”), filed on January 20, 2023. Concurrently
with its submission of this letter to the Staff, the Company has filed an amendment to the Form S-4 (the “Amended Form S-4”)
with the Commission through its EDGAR system.
Set
forth below are the responses of the Company to the comments in the Staff’s letter to the Company, dated February 16, 2023, relating
to the Form S-4. For convenience of reference, the text of the comments in the Staff’s letter has been reproduced in bold and italics
herein. The Company has also provided its response immediately after each numbered comment. Capitalized terms used but not otherwise
defined herein have the meanings assigned to such terms in the Amended Form S-4.
Registration
Statement on Form S-4
Cover
Page
1. We
note your risk factor disclosure on page 63 that Global Commodities & Investments
Ltd. currently controls approximately 84.16% of the voting power of AFRAG’s capital
stock and will control approximately 56.95% of the combined voting power of AFRAG PubCo Common
Stock following the consummation of the Business Combination. Please disclose on your
cover page that following the business combination you will be a “controlled company”
within the meaning of NASDAQ rules and the controlling shareholders’ anticipated total
voting power.
Response:
In response to the Staff’s comment, the Company has revised the disclosure on the cover page of the Amended Form S-4.
June 30, 2023
Page 2
Questions
and Answers for Shareholders of 10X II, page ix
2. Given
that the Nasdaq listing condition is waivable, please revise your questions and answers section,
consistent with your risk factor disclosure on page 66, to prominently disclose that shareholders
will not have certainty at the time that they vote regarding whether the AFRAG PubCo
Common Stock and warrants will be listed on a national securities exchange following the
business combination.
Response:
In response to the Staff’s comment, the Company has revised the disclosure on page xxvii of the Amended Form S-4.
Q.
Did the 10X II Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with..., page
xii
3. We
note your disclosure that Canaccord Genuity’s Opinion to the 10X II Board stated
in part that the Business Combination is fair, from a financial point of view, to 10X II.
Please include cautionary language noting, if true, that the fairness opinion addresses
the fairness to all shareholders of 10X II as a group as opposed to only those shareholders
of 10X II unaffiliated with the sponsor or its affiliates.
Response:
The Company respectfully advises the Staff that Canaccord Genuity’s opinion only addressed fairness from a financial point
of view to the Company of the consideration to be paid in the transaction, as the Company is the entity paying such consideration, and
not to shareholders or a group of shareholders of the Company, individually or in the aggregate, because shareholders of the Company
are not paying or receiving any consideration in the transaction. Canaccord Genuity’s opinion specifically states that it is not
expressing any opinion as to the fairness of the transaction to the holders of any class of securities, creditors or other constituencies
of the Company or AFRAG.
Q.
What equity stake will current 10X II shareholders and current equity holders of AFRAG hold in AFRAG PubCo immediately..., page xiii
4. We
note your disclosure here notes that the table below on page xiii assumes “that all
the AFRAG PubCo warrants to purchase AFRAG PubCo Common Stock that will be outstanding immediately
following Closing have been exercised for cash.” However, we note that your table does
not appear to include all of the AFRAG PubCo warrants. For example only, your table
depicts that Cantor will hold 200,000 shares while your disclosure elsewhere appears to indicate
that Cantor owns 200,000 private placement units and that each private placement
unit consists of one private placement share and one-third of one private placement
warrant. Please revise to disclose all possible sources and extent of dilution that
shareholders who elect not to redeem their shares may experience in connection with the business
combination. Provide disclosure of the impact of each significant source of dilution, including
the amount of equity held by founders, convertible securities, including warrants retained
by redeeming shareholders, at each of the redemption levels detailed in your sensitivity
analysis, including any needed assumptions.
Response:
In response to the Staff’s comment, the Company has revised the disclosure on pages xiv, xv, 10, 11, 103 and 104 of the
Amended Form S-4.
June 30, 2023
Page 3
5. Quantify
the value of warrants, based on recent trading prices, that may be retained by redeeming
stockholders assuming maximum redemptions and identify any material resulting risks.
Response:
In response to the Staff’s comment, the Company has revised the disclosure on pages xxiii and 79 of the Amended Form S-4.
Q.
What are the U.S. federal income tax consequences of the Domestication?, page xviii
6. We
note that the Domestication is intended to qualify as an F Reorganization. Please provide a tax opinion covering
the material federal tax consequences of the transaction to investors and revise
your disclosure accordingly. Please refer to Item 601(b)(8) of Regulation S-K and Items 4(a)(6)
and 21(a) of Form S-4. For guidance in preparing the opinion and related disclosure,
please refer to Section III of Staff Legal Bulletin No. 19.
Response:
The Company respectfully acknowledges the Staff’s comment and is filing as Exhibit 8.1 of the Amended Form S-4 an opinion
of counsel. The disclosure on pages xx, 74 and 153 of the Amended Form S-4 has been updated to reflect the existence of such opinion.
Forward
Purchase Agreement, page 9
7. We
note that 10X II has entered into a forward purchase agreement with Vellar for
Vellar to purchase 10X II’s Class A ordinary shares on the open
market to reduce redemption rates. Please provide your analysis demonstrating how this
agreement complies with Rule 14e-5.
Response:
The Company respectfully acknowledges the Staff’s comment. The Company entered into the Forward Purchase Agreement on November
2, 2022, prior to the announcement of the AA Merger Agreement. Pursuant to Rule 14e-5 of the Exchange Act, the prohibition on purchases
outside of a tender offer applies “from the time of public announcement of the tender offer until the tender offer expires.”
The relevant tender offer commenced on November 3, 2022, the date the Company and AFRAG announced the AA Merger Agreement. The relevant
tender offer shall expire on the date which is the deadline for shareholders of the Company to request that their respective public shares
may be redeemed in connection with a shareholder vote to approve the Business Combination (the “Redemption Deadline”).
Pursuant to the terms of the Forward Purchase Agreement, Vellar will not purchase any shares at any time on or before the Redemption
Deadline.
8. We
note your disclosure on page 62 that “200,000 shares are issued to Vellar as the
share consideration under the Forward Purchase Agreement.” However, on page 165 you
disclose that “Vellar is to receive a $2.0 million fee payable in shares. To
realize this, Vellar will purchase the shares in the open market.” Furthermore, it
appears that your Forward Purchase Agreement filed as Exhibit 10.4 defines Share Consideration
as “an amount equal to the product of (x) such number that is the greater of (a)
5% of the Maximum Number of Shares and (b) 200,000 (provided that if Counterparty has requested
and the Seller has paid the Prepayment Shortfall such number will be increased to the greater
of (a) 10% of the Maximum Number of Shares and (b) 400,000) and (y) the Initial Price.” Please
correct for this apparent inconsistency or otherwise advise. In addition, please amend your
disclosure here and in the “Questions and Answers” section to discuss all the
material terms of the Forward Purchase Agreement, including any fees or other consideration payable
to Vellar. Your disclosure should prominently highlight the material terms of the agreement
as well as highlight the risks consistent with your risk factor disclosure on pages 47 and
48.
Response:
In response to the Staff’s comment, the Company has revised the disclosure on pages xxxi, 168 and 169 of the Amended Form
S-4.
June 30, 2023
Page 4
Interests
of 10X II’s Directors and Executive Officers in the Business Combination, page 13
9. Please
disclose the out-of-pocket expenses for which the Sponsor and its affiliates are awaiting
reimbursement. We note your statements that “[y]our Sponsor, executive officers and
directors, or any of their respective affiliates are reimbursed for any out-of-pocket expenses
incurred in connection with activities on [y]our behalf such as identifying potential target
businesses and performing due diligence on suitable business combinations” and that
“[a]fter the completion of the Business Combination, directors or members of [y]our
management team who remain with [you] may be paid consulting or management fees from AFRAG
PubCo.” We also note the $20,000 monthly payments owed to the Sponsor pursuant
to the administrative support agreement. Please also include those expenses in the quantified,
aggregate dollar amount that the sponsor and its affiliates have at risk if the business
combination is not completed or advise.
Response:
In response to the Staff’s comment, the Company has revised the disclosure on pages xxxiii, 16, 47 and 130 of the Amended
Form S-4.
Sources
& Uses of Funds for the Business Combination, page 17
10. Please
explain how the cash transferred to “Forward Purchase Agreement Escrow” is reflected
in your pro forma balance sheet on page 159. Explain the offset to the related cash
pro forma adjustments. Specifically clarify how the Escrow is reflected on your pro
forma balance sheet. In addition, see our comments below on negative cash and address
the appropriateness of your presentation herein under the maximum redemption scenario.
Response: In response to the Staff’s
comment, the Company has revised the disclosure on page 18 and 19 of the Amended Form S-4.
Risk
Factors - AFRAG, page 30
11. Please
provide a risk factor that addresses the error identified in AFRAG’s historical restated
financial statements. Discuss the future obligations to provide an assessment of AFRAG’s
disclosure controls and procedures and internal control over financial reporting pursuant
to Items 307 and 308 of Regulation S-X. Ensure you discuss the fact that AFRAG’s disclosure
controls and procedures and internal control over financial reporting may not be effective,
and the implication of this assessment.
Response:
In response to the Staff’s comment, the Company has revised the disclosure on pages 44 and 45 of the Amended Form S-4.
June 30, 2023
Page 5
Background
to the Business Combination, page 103
12. Please
revise the Background section so that it is clear where each party stood
with respect to material transaction terms during the course of the negotiations. For
instance, when discussing meetings between the parties or their advisers, identify the
party that proposed a material transaction term and indicate whether the other party agreed
and/or proffered a counter proposal. The disclosure should provide shareholders with an understanding
of ho