Correspondence 0001213900-23-085399 from Critical Metals Corp. (CRML)
Critical Metals Corp.
Date: Nov. 9, 2023 · CIK: 0001951089 · Accession: 0001213900-23-085399
AI Filing Summary & Sentiment
File numbers found in text: 333-268970
Show Raw Text
CORRESP
1
filename1.htm
Critical
Metals Corp.
c/o
Maples Corporate Services (BVI) Limited
Kingston
Chambers, PO Box 173, Road Town
Tortola,
British Virgin Islands
VIA
EDGAR
November 9,
2023
U.S.
Securities & Exchange Commission
Division
of Corporation Finance
Office
of Energy & Transportation
100
F Street, NE
Washington,
D.C. 20549
Attn:
Timothy S. Levenberg
Re:
Critical
Metals Corp.
Amendment
No. 4 to Registration Statement on Form F-4
Filed
August 7, 2023
File
No. 333-268970
Dear
Mr. Levenberg:
Critical
Metals Corp. (the “Company,” “we,” “our” or “us”) hereby
transmits the Company’s response to the comment letter received from the staff (the “Staff”) of the U.S. Securities
and Exchange Commission (the “Commission”), on August 22, 2023, regarding our Amendment No. 4 to Registration Statement
on Form F-4 (the “Registration Statement”) filed with the Commission on August 7, 2023.
For
the Staff’s convenience, we have repeated below the Staff’s comments in bold, and have followed each comment with the Company’s
response. Disclosure changes made in response to the Staff’s comments have been made in Amendment No. 5 to the Registration Statement
(the “Amended Registration Statement”), which is being filed with the Commission contemporaneously with the submission
of this letter.
Amendment
No. 4 to Registration Statement on Form F-4 Cover Page
Proposal
No. 1 -- The NTA Proposal, page 0
1. We
note the disclosure you added regarding the new “NTA Proposal.” Where you discuss
this proposal, including in the letter to Sizzle stockholders, please disclose that passage
of this proposal poses risks to stockholders, and include a cross-reference to the related
disclosure which begins at page 105 under “Risks Related to the NTA Proposal.”
Response
to Comment No. 1: The Company respectfully acknowledges the Staff’s comment and has included a reference to risks to Sizzle stockholders
and the cross-reference noted as per the Staff’s comment, in the Amended Registration Statement, on the cover page, the notice
page and on pages 12, 15, 51 and 172.
Summary
of the Proxy Statement/ Prospectus
Conditions
to Consummation of the Business Combination, page 33
2. Your
disclosure on the prospectus cover page that each of the Business Combination Proposal, the
NTA Proposal, the Charter Amendment Proposal, the Nasdaq Proposal, the Incentive Plan Proposal
and the ESPP Proposal is cross-conditioned on the approval of each other appears inconsistent
with disclosure here that if the NTA Proposal is not approved at the special meeting of Sizzle
stockholders, the Business Combination would otherwise occur if the $5,000,001 minimum net
tangible asset test is satisfied by Sizzle or Pubco and after payment of SPAC’s underwriters’
fees and commissions. Please advise or revise.
Response
to Comment No. 2: The Company respectfully acknowledges the Staff’s comment and has revised references to the NTA Proposal to
indicate that the Business Combination can be consummated (assuming satisfaction of the referenced condition precedent proposals) if
either the NTA Proposal is approved or if the referenced minimum net tangible asset test is satisfied. Accordingly, revised
disclosure is provided in the Amended Registration Statement on the cover page, notice page and in other relevant
disclosure.
Unaudited
Pro Forma Condensed Combined Financial Information, page 58
3. We
note your response to comment 1. In your response, you state the value of the shares to be
issued to European Lithium Ltd (EUR) is US$750,000,000 based on the fairness opinion which
has been allocated against issued capital in the accounts of Pubco. However, you have not
addressed the accounting for the difference between the value of the shares to be issued
by the accounting acquirer (EUR) and the fair value of the accounting acquiree’s (Sizzle’s)
identifiable net assets in the pro forma financial statements. Refer to paragraphs 8 and
13A of IFRS 2 and the March 2013 IFRS Interpretations Committee agenda decision on “IFRS
3 Business Combination and IFRS 2 Share-based Payment – Accounting for reverse acquisitions
that do not constitute a business.” To the extent you do not believe a listing expense
should be reflected in your pro forma financial statements, please explain your consideration
of the guidance noted and why you do not believe it is applicable.
Response
to Comment No. 3: The Company respectfully acknowledges the Staff’s comment and responds to this query in three parts.
Part
1 – Identifying the Acquirer
Under
IFRS 3 Business Combinations, the accounting acquirer is the entity that obtains control of the other combining business. IFRS 3 initially
directs an entity to IFRS 10 Consolidated Financial Statements to identify the acquirer, and to consider which entity controls the other
(i.e., the acquiree).
Management
initially considered the three elements of control outlined in IFRS 10. Based on the transaction structure and the voting and economic
rights post-transaction, there is not a clear indicator as to which entity obtains control. Neither European Lithium Ltd (EUR) or Sizzle
Acquisition Corp (Sizzle) shareholding groups acquire unilateral control of the Company. The Post-Closing Board of the Company, which
is considered to be the governing body that will control the Company (including decisions on activities that impact the Company’s
operating performance given, its ability to approve operating budgets and key management etc.) will not be unilaterally controlled by
EUR or Sizzle. Accordingly, management further analyzed the acquiring entity by applying paragraphs B14–B18 of IFRS 3.
Although
there is a higher level of judgement when it comes to the analysis of the conditions set forth in IFRS 3, management believes that the
indicators of relative voting rights, composition of governing body, composition of senior management, terms of exchange, relative size,
and other factors favored EUR as the accounting acquirer. Therefore, based upon the above guidance, management has determined that EUR
is the accounting acquirer under IFRS 3. Therefore, Sizzle is considered to the accounting acquiree.
2
Part
2 – Evaluate whether the Accounting Acquirer is a Business
IFRS
3 requires the entity to determine whether assets acquired, and any liability assumed constitute a business. If the assets and liabilities
are not considered to be a business, then the transaction should be accounted for an asset acquisition.
Following
a detailed review, management determined that the accounting acquiree (being Sizzle) does not meet the definition of a business under
IFRS 3 because it lacks substantive processes as defined by IFRS 3. Thus, the transaction is to be accounted for as an asset acquisition
within the scope of IFRS 3.
Part
3 - Accounting for an Asset Acquisition
As
set out above, the Business Combination is to be accounted for as an asset acquisition in accordance with IFRS 3. For the purposes of
the proforma, the total cost of the shares to be issued to EUR (67,989,216 shares at $11.03 per share) has been allocated against issued
capital in the accounts of the Company. The number of shares to be issued has been calculated by taking into account the fair value of
the shares ($11.03) with the total consideration of $750,000,000 based on the fairness opinion issued by Marshall & Stevens. The
fair value of the shares ($11.03) has been calculated based on the cash balance of Sizzle as at October 19, 2023 ($34,042,748) divided
by the current shares on issue by Sizzle (3,086,053).
Unaudited
Pro Forma Combined Balance Sheet as of December 31, 2022, page 62
4. We
note your presentation of a pro forma negative cash balance of $(20,229,715) under the maximum
redemption scenario. Please address the following points:
● Tell
us how you determined that the transaction remains viable under these circumstances and why
you believe the current presentation reflects a scenario that is probable of occurring.
● If
true, disclose that you do not have the ability to fund the business combination transaction
under the maximum redemption scenario and highlight the uncertainties surrounding the completion
of the transaction assuming maximum redemptions.
● Expand
your pro forma disclosure to describe any other sources of funding available to meet the
minimum cash conditions with details sufficient to understand how the company determined
that this funding is probable of occurring.
● Tell
us why you believe, with reference to authoritative literature, it is appropriate to present
a pro forma negative cash balance, as opposed to a liability or other presentation.
Response to Comment No. 4: The Company
respectfully acknowledges the Staff’s comment and has revised unaudited pro forma combined financial statements in the Amended Registration
Statement to reflect, among other things, the entrance into a binding agreement with Vellar Opportunities Fund Master, LTD., which will
provide the combined company with up to $10 million of cash at the closing of the business combination transaction. For further information
regarding the agreement, please see pages 138-139 in the Amended Registration Statement. As a result of this financing arrangement and
other changes reflected in the pro forma financial statements, the combined company now will have a positive cash balance under all of
the redemption scenarios presented in the Registration Statement, including in the maximum redemption scenario.
We have also provided a summary of all
the financing arrangements affecting the combined company on pages 137-140 of the Amended Registration Statement and we have updated references
to these financing arrangements on several pages of the Registration Statement, including on the cover page, the notice of special meeting
and pages 15, 18, 29-30, 39, 42, 64, 72-73, 97 and 137-140. As a result of these currently effective and/or future financing arrangements,
together with other changes as reflected throughout the Amended Registration Statement, we believe that the transaction remains viable
under all redemption scenarios.
3
5. We
note you included $1.875 million related to GEM Agreement commitment in your pro forma combined
balance sheet as Other current assets, which is described in footnote 2(j). Please explain
why you believe the payment of the commitment fee represents an asset for purposes of your
pro forma financial statement presentation.
Response
to Comment 5: The Company respectfully acknowledges the Staff’s comment and confirms that the Company is entitled to draw down
up to US$125 million of gross proceeds (the “Aggregate Limit”) under the GEM Agreement in exchange for ordinary shares of
the Company following closing of the Business Combination, subject to an effective registration statement of the Company registering
for resale the ordinary shares issuable to GEM upon any such draw down. The Company is obligated to pay a commitment fee to GEM at the
closing of the Business Combination in an amount equal to 1.5% of the Aggregate Limit which equates to the $1,875,000 disclosed in the
proforma (1.5% of $125,000,000). The Aggregate Limit funds will not be available until after of the closing of the Business Combination
and an effective registration statement of the Company registering for resale the ordinary shares issuable to GEM upon any such draw
down, causing the commitment fee to be considered a prepayment, and as such has been coded as a current asset with the other side being
recognised as a payable.
Unaudited
Pro Forma Combined Statement of Operations for the Six Months Ended December 31, 2022, page 64
6. We
note your response to comment 3. Please address the following:
● It
appears you have included the provision for income tax as a finance cost in the historical
column. Explain why you believe this classification is appropriate or revise.
● We
are not able to recalculate the amount included as formation and operating costs. Please
provide your calculation or revise this amount.
● Based
on a net loss of $253,893 for the year ended December 31, 2022, less net loss of $327,734
for the six months ended June 30, 2022, it appears the amount included as net income for
the six-month period ended December 31, 2022 should be $73,841 rather than $411,808. Please
explain or revise your disclosure.
Response
to Comment 6: The Company respectfully acknowledges the Staff’s comment and has revised the unaudited proforma combined statement
of operations to reflect the provision for income tax as a separate line item titled “income tax expense”.
The
Company confirms that the amount included under formation and operating cost expense including franchise tax expenses (which is considered
an operating cost expense) for Sizzle Acquisition Corp. of $2,777,863 has been calculated based on the formation and operating costs
for the six month period ended June 30, 2023 ($1,184,700) plus formation and operating costs for the twelve month period ended December
31, 2022 ($2,222,551) less formation and operating costs for the six month period ended June 30, 2022 ($629,388).
The
Company confirms that the Loss after tax from continuing operations for Sizzle Acquisition Corp. of $29,161 for the twelve months ended
June 30, 2023 has been calculated based on net loss for the six month period ended June 30, 2023 ($103,063) plus loss for the twelve
month period ended December 31, 2022 ($253,833) less net loss for the six month period ended 30 June 30, 2022 ($327,734).
4
Risk
Factors
Pubco’s
issuance of additional capital stock in connection with financings, acquisitions, investments, share
incentive plans or otherwise..., page 112
7. Please
revise to quantify the number of shares that may be issued under the GEM A