Correspondence 0001104659-23-129308 from CorpAcq Group Plc (CPGRA) (CIK 0001987867)
CorpAcq Group Plc (CPGRA) (CIK 0001987867)
Date: Dec. 26, 2023 · CIK: 0001987867 · Accession: 0001104659-23-129308
AI Filing Summary & Sentiment
Letter
VIA EDGAR Division of Corporation Finance Office of Real Estate & Construction Re: CorpAcq Group Plc Registration Statement on Form F-4 Filed November 17, 2023 CIK No.: 0001987867
Dear Ms. Rivera:
CorpAcq Group Plc, a public limited company incorporated under the laws of England and Wales (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”) dated December 14, 2023 (the “Comment Letter”), regarding the Company’s Registration Statement on Form F-4 filed with the Commission on November 17, 2023 (the “Registration Statement”). Concurrently with the transmission of this letter, we are publicly filing Amendment No. 1 to the Company’s Registration Statement with the Commission through EDGAR (the “Amendment”), which includes changes intended to respond to certain comments included in the Comment Letter.
For the Staff’s convenience, we have repeated below each of the Staff’s comments in bold, and have followed each comment with the Company’s response. All page references in the responses set forth below refer to page numbers in the Amendment. Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Amendment.
Registration Statement on Form F-4, filed November 17, 2023
Cover Page
1. Under Explanatory Note, please include the information required by Item 501 of Regulation S-K, such as the title and amount of the securities offered, the market for the securities, and a cross-reference to the risk factors section, including the page number where it appears in the prospectus.
Response: The Company has revised the disclosure on pages i and v of the Amendment to address this comment.
2. Please note that a letter to security holders in a proxy statement/prospectus also serves as prospectus cover page and, therefore, is subject to the plain English rules. Revise to simplify your explanation of the steps of the transaction, which may be detailed later in the filing, and avoid complex information copied directly from legal documents without a clear and concise explanation of the provisions. See Rule 421(d) of Regulation C. Make similar revisions under the Explanatory Note, Questions and Answers, and Summary of the Proxy Statement/Prospectus.
Response: The Company respectfully acknowledges the Staff’s comment and has revised the disclosure in the Explanatory Note, Letter to Stockholders and Warrant Holders of Churchill Capital Corp VII (beginning page vi), Questions and Answers (beginning page 14), and Summary of the Proxy Statement/Prospectus (beginning page 42) of the Amendment to address this comment.
U.S. Securities & Exchange Commission
December 26, 2023
Page 2
3. We note your references to “certain capital raising transactions (whether debt, equity or otherwise) consummated following the date of the Merger Agreement through and including the day that is 30 days following the Closing.” Please describe these transactions in greater detail, including how much the Sponsor plans to raise. Describe the use of proceeds from the capital you expect to raise within 30 days after the Closing. If applicable, highlight material differences in the terms and price of securities issued at the time of the Churchill IPO as compared to private placements contemplated at the time of the business combination. Disclose if Churchill's sponsors, directors, officers or their affiliates will participate in the capital raising transactions. Also discuss the key terms of any convertible securities and disclose the potential impact of those securities on nonredeeming shareholders. If applicable, describe these transactions under Interests of Certain Persons in the Business Combination, Beneficial Ownership of Post-Combination Company Securities, Impact of the Business Combination on Public Float, and other disclosure relating to dilution throughout the filing.
Response: The Company respectfully acknowledges the Staff’s comment and has revised the disclosure in the Explanatory Note and on pages viii-x, xviii-xix, 20-25, 43-47 and 156-58 of the Amendment to clarify that the Retirement Founder Shares, BermudaCo Redeemable Shares, Closing Seller Cash Consideration, the Closing Seller Share Consideration and Earnout Shares are calculated in respect of cash and cash equivalents delivered by Churchill (including amounts in the Trust Account and certain amounts delivered or committed to Churchill Capital Corp VII ("Churchill"), CorpAcq Holdings Limited (together with its subsidiaries, "CorpAcq"), the Company or any of their respective subsidiaries in connection with certain types of qualifying capital raising transactions (whether debt, equity or otherwise) consummated following the date of the Merger Agreement through and including the day that is 30 days following the Closing. The amended disclosure also clarifies that other than the refinancing of the Facility (that is being negotiated by CorpAcq), there are currently no other planned capital raising transactions. As a result, other than funds in the Trust Account (net of any Churchill Stockholder Redemptions), no such additional cash or cash equivalents is anticipated to be delivered or committed to Churchill, CorpAcq, the Company or any of their respective subsidiaries that would impact the calculation of the Retirement Founder Shares, BermudaCo Redeemable Shares, Closing Seller Cash Consideration, Closing Seller Share Consideration or Earnout Shares.
The Company has included disclosure on pages 24-25 of the Amendment to specify any funds raised in any capital raising transactions will be used for general corporate purposes, including to ensure there is sufficient cash on the Company's balance sheet to support its overall business strategy and acquisition objectives. However, because no capital raising transactions are planned other than the refinancing of the Facility (that is being negotiated by CorpAcq), the Company has not included any disclosure as to material differences in in the terms and price of securities issued at the time of the Churchill IPO, key terms of convertible securities, potential impact to nonredeeming shareholders and whether Churchill’s sponsors, directors officers or their affiliates will participate in any such capital raising transactions.
4. With respect to the Sponsor’s transfer of its remaining Founder Shares to BermudaCo in exchange for BermudaCo Redeemable Shares (or other authorized share capital) equal to the number of Founder Shares attributable to the Delivered Capital Amount and the Estimated Delayed Financing Amount, please disclose or provide an estimate of the number of CorpAcq shares underlying the Redeemable Shares (or other authorized share capital) that will be or is expected to be issued to the Sponsor. Describe these transactions under Interests of Certain Persons in the Business Combination, Beneficial Ownership of Post-Combination Company Securities, Impact of the Business Combination on Public Float, and other disclosure relating to dilution throughout the filing.
Response: The Company respectfully acknowledges the Staff’s comment and has revised the disclosure in the Explanatory Note and on pages 28-29, 58, 117-18, 160-62, 186, and 342-48 of the Amendment to address this comment.
U.S. Securities & Exchange Commission
December 26, 2023
Page 3
5. Please disclose the subscription price for the B Share Subscription.
Response: The Company respectfully acknowledges the Staff’s comment has revised the disclosure on the pages iii, ix, xix, 22, 45, 155 and 200 of the Amendment to address this comment.
6. Please discuss the purpose for the creation of Polaris Bermuda Limited in connection with the business combination, including the purpose of the Exchange Right pursuant to the BermudaCo Bye-laws and the Back to Back Share Issuance Agreement. Also clarify why the Back to Back Share Issuance Agreement may constitute a derivative contract within the United Kingdom derivative contracts tax regime and quantify the potential tax charges that may arise in BermudaCo and/or PubCo in this regard.
Response: With respect to the Staff's comment regarding the purpose of Polaris Bermuda Limited, the Company respectfully acknowledges the Staff’s comment and has revised the disclosure in the Explanatory Note and on pages ii, viii, xvii, 20, 42 and 44 of the Amendment to clarify that (i) the Post-Combination Company will be organized in an “Up-C” structure in which the business of CorpAcq and its subsidiaries and the Surviving Corporation will be held directly or indirectly by BermudaCo and (ii) consistent with other “Up-C” structures, the holder of BermudaCo Redeemable Shares will be entitled to cause BermudaCo to exchange such BermudaCo Redeemable Shares for, at the option of BermudaCo, cash or Post-Combination Company Ordinary A1 Shares, which rights are provided for in the BermudaCo Bye-laws and the Back to Back Share Issuance Agreement.
With respect to the Staff's comment regarding the Back to Back Share Issuance Agreement (the "Back-to-Back Agreement") and why it may constitute a derivative contract within the United Kingdom derivative contracts tax regime and quantifying the potential tax charges that may arise in BermudaCo and/or PubCo in this regard, the Company respectfully acknowledges the Staff’s comment and advises the Staff as follows:
General comment
In order to be a derivative contract within the United Kingdom derivative contracts tax regime, the Back-to-Back Agreement:-
· has to be either an option, a future, or a contract for differences;
· broadly be treated as a derivative for accounting purposes; and
· not be excluded from the rules due to its subject matter.
As disclosed under “Related Agreements—Back to Back Share Issuance Agreement,” the Back-to-Back Agreement obligates PubCo to issue Post-Combination Company Ordinary A1 Shares to the exchanging holders of the BermudaCo Redeemable Shares upon notice from BermudaCo and gives BermudaCo the contractual rights it needs as against PubCo in order to satisfy its obligation to deliver Post-Combination Company Ordinary A1 Shares in PubCo to exchanging holders, where BermudaCo elects to satisfy those redemptions with such shares instead of cash.
U.S. Securities & Exchange Commission
December 26, 2023
Page 4
Is the Back-to-Back Agreement an option, a future, or a contract for differences?
As regards the first condition, the Back-to-Back Agreement is not a future or a contract for differences.
It is not a future because it is not a contract for the sale of property under which delivery is to be made at a future date agreed when the contract is made and at a price so agreed.
It is also not a contract for differences as it is not a contract the purpose or pretended purpose of which is to make a profit or avoid a loss by reference to fluctuations in (i) the value or price of property described in the contract, or (ii) an index or other factor designated in the contract.
Consequently, the only way the Back-to-Back Agreement could be a derivative contract is if it is an option. Arguably, it might be said that it is not an option because BermudaCo has the right to cash settle the arrangement so that the holder of BermudaCo Redeemable Shares does not have the absolute right (so as to be an option) to be delivered Post-Combination Company Ordinary A1 Shares on redeeming its BermudaCo Redeemable Shares.
In certain circumstances, for example with the income tax treatment of employee share options, HM Revenue & Customs (“HMRC”) can treat the discretion of an employer to settle an option in cash as meaning there is no right to receive shares for the employee and so no option (see HMRC’s Employment Related Securities Manual paragraph 110025).
https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm110025
Having said that, in a different context (namely the UK’s capital gains tax rules, also in a case related to employee share options), a UK court determined that there was no discernible reason for it to exclude from the ambit of a statute’s provisions which dealt with options, options that were capable of being settled in cash at the discretion of the (employer) grantor.
https://www.gov.uk/tax-and-chancery-tribunal-decisions/stephen-davies-v-the-commissioners-for-hm-revenue-and-customs-2018-ukut-0130-tcc
Consequently, it is not free from doubt whether in the context of the UK’s derivative contract rules a UK court would prima facie treat the Back-to-Back Agreement as an option or not (before considering its accounting treatment and the application of any exclusions).
Would the Back-to-Back Agreement be treated as a derivative for accounting purposes?
As regards the second condition, that is, whether the Back-to-Back Agreement would be treated as a derivative for accounting purposes for either BermudaCo or PubCo, this will generally depend on a number of factors, including the consideration which PubCo receives from BermudaCo under the Back-to-Back Agreement for issuing its Post-Combination Company Ordinary A1 Shares to holders of BermudaCo Redeemable Shares. Section 2.2(b) of the Back-to-Back Agreement requires BermudaCo to pay PubCo, for each Post-Combination Company Ordinary A1 Share issued by PubCo, (i) $0.001 per Post-Combination Company Ordinary A1 Share or (ii) at the joint election of PubCo and BermudaCo, an equivalent amount in such other form of consideration that qualifies as “cash consideration” for the purposes of Section 593 of the UK Companies Act 2006. Where that consideration is cash, the view is that the Back-to-Back Agreement is unlikely to be accounted for as a derivative, whereas if such other form of consideration were to be a loan note convertible into cash then there is more risk, though one assumes that if it wer
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CORRESP
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filename1.htm
CORPACQ GROUP PLC
CorpAcq House, 1 Goose Green
Altrincham, United Kingdom WA14 1DW
VIA EDGAR
December 26, 2023
U.S. Securities & Exchange Commission
Division of Corporation Finance
Office of Real Estate & Construction
Washington, D.C. 20549
Attn: Isabel Rivera
Re:
CorpAcq Group Plc
Registration Statement on Form F-4
Filed November 17, 2023
CIK No.: 0001987867
Dear Ms. Rivera:
CorpAcq Group Plc, a public
limited company incorporated under the laws of England and Wales (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”) dated December 14, 2023 (the “Comment Letter”),
regarding the Company’s Registration Statement on Form F-4 filed with the Commission on November 17, 2023 (the “Registration
Statement”). Concurrently with the transmission of this letter, we are publicly filing Amendment No. 1 to the Company’s
Registration Statement with the Commission through EDGAR (the “Amendment”), which includes changes intended to respond
to certain comments included in the Comment Letter.
For the Staff’s
convenience, we have repeated below each of the Staff’s comments in bold, and have followed each comment with the
Company’s response. All page references in the responses set forth below refer to page numbers in the Amendment.
Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Amendment.
Registration Statement on Form F-4, filed November 17, 2023
Cover Page
1. Under
Explanatory Note, please include the information required by Item 501 of Regulation S-K,
such as the title and amount of the securities offered, the market for the securities, and
a cross-reference to the risk factors section, including the page number where it appears
in the prospectus.
Response: The Company has revised
the disclosure on pages i and v of the Amendment to address this comment.
2. Please
note that a letter to security holders in a proxy statement/prospectus also serves as prospectus
cover page and, therefore, is subject to the plain English rules. Revise to simplify your
explanation of the steps of the transaction, which may be detailed later in the filing, and
avoid complex information copied directly from legal documents without a clear and concise
explanation of the provisions. See Rule 421(d) of Regulation C. Make similar revisions under
the Explanatory Note, Questions and Answers, and Summary of the Proxy Statement/Prospectus.
Response: The Company respectfully
acknowledges the Staff’s comment and has revised the disclosure in the Explanatory Note, Letter to Stockholders and Warrant Holders
of Churchill Capital Corp VII (beginning page vi), Questions and Answers (beginning page 14), and Summary of the Proxy Statement/Prospectus
(beginning page 42) of the Amendment to address this comment.
U.S. Securities
& Exchange Commission
December
26, 2023
Page 2
3. We note your references to
“certain capital raising transactions (whether debt, equity or otherwise) consummated
following the date of the Merger Agreement through and including the day that is 30 days
following the Closing.” Please describe these transactions in greater detail, including
how much the Sponsor plans to raise. Describe the use of proceeds from the capital you expect
to raise within 30 days after the Closing. If applicable, highlight material differences
in the terms and price of securities issued at the time of the Churchill IPO as compared
to private placements contemplated at the time of the business combination. Disclose if Churchill's
sponsors, directors, officers or their affiliates will participate in the capital raising
transactions. Also discuss the key terms of any convertible securities and disclose the potential
impact of those securities on nonredeeming shareholders. If applicable, describe these transactions
under Interests of Certain Persons in the Business Combination, Beneficial Ownership of Post-Combination
Company Securities, Impact of the Business Combination on Public Float, and other disclosure
relating to dilution throughout the filing.
Response: The Company respectfully
acknowledges the Staff’s comment and has revised the disclosure in the Explanatory Note and on pages viii-x, xviii-xix, 20-25, 43-47 and 156-58 of the Amendment to clarify that the Retirement Founder Shares, BermudaCo Redeemable Shares, Closing Seller Cash Consideration,
the Closing Seller Share Consideration and Earnout Shares are calculated in respect of cash and cash equivalents delivered by Churchill
(including amounts in the Trust Account and certain amounts delivered or committed to Churchill Capital Corp VII ("Churchill"),
CorpAcq Holdings Limited (together with its subsidiaries, "CorpAcq"), the Company or any of their respective subsidiaries
in connection with certain types of qualifying capital raising transactions (whether debt, equity or otherwise) consummated
following the date of the Merger Agreement through and including the day that is 30 days following the Closing. The amended disclosure
also clarifies that other than the refinancing of the Facility (that is being negotiated by CorpAcq), there are currently no other planned
capital raising transactions. As a result, other than funds in the Trust Account (net of any Churchill Stockholder Redemptions), no such
additional cash or cash equivalents is anticipated to be delivered or committed to Churchill, CorpAcq, the Company or any of their respective
subsidiaries that would impact the calculation of the Retirement Founder Shares, BermudaCo Redeemable Shares, Closing Seller Cash Consideration,
Closing Seller Share Consideration or Earnout Shares.
The Company has included disclosure
on pages 24-25 of the Amendment to specify any funds raised in any capital raising transactions will be used for general corporate purposes,
including to ensure there is sufficient cash on the Company's balance sheet to support its overall business strategy and acquisition
objectives. However, because no capital raising transactions are planned other than the refinancing of the Facility (that is being negotiated
by CorpAcq), the Company has not included any disclosure as to material differences in in the terms and price of securities issued at
the time of the Churchill IPO, key terms of convertible securities, potential impact to nonredeeming shareholders and whether Churchill’s
sponsors, directors officers or their affiliates will participate in any such capital raising transactions.
4. With respect to the Sponsor’s
transfer of its remaining Founder Shares to BermudaCo in exchange for BermudaCo Redeemable
Shares (or other authorized share capital) equal to the number of Founder Shares attributable
to the Delivered Capital Amount and the Estimated Delayed Financing Amount, please disclose
or provide an estimate of the number of CorpAcq shares underlying the Redeemable Shares (or
other authorized share capital) that will be or is expected to be issued to the Sponsor.
Describe these transactions under Interests of Certain Persons in the Business Combination,
Beneficial Ownership of Post-Combination Company Securities, Impact of the Business Combination
on Public Float, and other disclosure relating to dilution throughout the filing.
Response: The Company respectfully
acknowledges the Staff’s comment and has revised the disclosure in the Explanatory Note and on pages 28-29, 58, 117-18, 160-62,
186, and 342-48 of the Amendment to address this comment.
2
U.S. Securities
& Exchange Commission
December
26, 2023
Page 3
5. Please disclose the subscription
price for the B Share Subscription.
Response: The Company
respectfully acknowledges the Staff’s comment has revised the disclosure on the pages iii, ix, xix, 22, 45, 155 and 200
of the Amendment to address this comment.
6. Please discuss the purpose
for the creation of Polaris Bermuda Limited in connection with the business combination,
including the purpose of the Exchange Right pursuant to the BermudaCo Bye-laws and the Back
to Back Share Issuance Agreement. Also clarify why the Back to Back Share Issuance Agreement
may constitute a derivative contract within the United Kingdom derivative contracts tax regime
and quantify the potential tax charges that may arise in BermudaCo and/or PubCo in this regard.
Response: With respect to
the Staff's comment regarding the purpose of Polaris Bermuda Limited, the Company respectfully acknowledges the Staff’s
comment and has revised the disclosure in the Explanatory Note and on pages ii, viii, xvii, 20, 42 and 44 of the Amendment to
clarify that (i) the Post-Combination Company will be organized in an “Up-C” structure in which the business of CorpAcq
and its subsidiaries and the Surviving Corporation will be held directly or indirectly by BermudaCo and (ii) consistent with other
“Up-C” structures, the holder of BermudaCo Redeemable Shares will be entitled to cause BermudaCo to exchange such
BermudaCo Redeemable Shares for, at the option of BermudaCo, cash or Post-Combination Company Ordinary A1 Shares, which rights are
provided for in the BermudaCo Bye-laws and the Back to Back Share Issuance Agreement.
With respect to the Staff's comment
regarding the Back to Back Share Issuance Agreement (the "Back-to-Back Agreement") and why it may constitute a derivative contract
within the United Kingdom derivative contracts tax regime and quantifying the potential tax charges that may arise in BermudaCo and/or
PubCo in this regard, the Company respectfully acknowledges the Staff’s comment and advises the Staff as follows:
General comment
In order to be a derivative contract within the United Kingdom
derivative contracts tax regime, the Back-to-Back Agreement:-
· has
to be either an option, a future, or a contract for differences;
· broadly
be treated as a derivative for accounting purposes; and
· not
be excluded from the rules due to its subject matter.
As disclosed under
“Related Agreements—Back to Back Share Issuance Agreement,” the Back-to-Back Agreement obligates PubCo to
issue Post-Combination Company Ordinary A1 Shares to the exchanging holders of the BermudaCo Redeemable Shares upon notice from
BermudaCo and gives BermudaCo the contractual rights it needs as against PubCo in order to satisfy its obligation to deliver
Post-Combination Company Ordinary A1 Shares in PubCo to exchanging holders, where BermudaCo elects to satisfy those redemptions with
such shares instead of cash.
3
U.S.
Securities & Exchange Commission
December
26, 2023
Page 4
Is the Back-to-Back Agreement an option, a
future, or a contract for differences?
As regards the first condition, the Back-to-Back Agreement
is not a future or a contract for differences.
It is not a future because it is not
a contract for the sale of property under which delivery is to be made at a future date agreed when the contract is made and at a price
so agreed.
It is also not a contract for differences
as it is not a contract the purpose or pretended purpose of which is to make a profit or avoid a loss by reference to fluctuations in
(i) the value or price of property described in the contract, or (ii) an index or other factor designated in the contract.
Consequently, the only way the
Back-to-Back Agreement could be a derivative contract is if it is an option. Arguably, it might be said that it is not an
option because BermudaCo has the right to cash settle the arrangement so that the holder of BermudaCo Redeemable Shares does not
have the absolute right (so as to be an option) to be delivered Post-Combination Company Ordinary A1 Shares on redeeming its
BermudaCo Redeemable Shares.
In certain circumstances, for example
with the income tax treatment of employee share options, HM Revenue & Customs (“HMRC”) can treat the discretion of an
employer to settle an option in cash as meaning there is no right to receive shares for the employee and so no option (see HMRC’s
Employment Related Securities Manual paragraph 110025).
https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm110025
Having said that, in a different context
(namely the UK’s capital gains tax rules, also in a case related to employee share options), a UK court determined that there
was no discernible reason for it to exclude from the ambit of a statute’s provisions which dealt with options, options that were
capable of being settled in cash at the discretion of the (employer) grantor.
https://www.gov.uk/tax-and-chancery-tribunal-decisions/stephen-davies-v-the-commissioners-for-hm-revenue-and-customs-2018-ukut-0130-tcc
Consequently, it is not free from doubt
whether in the context of the UK’s derivative contract rules a UK court would prima facie treat the Back-to-Back Agreement as an
option or not (before considering its accounting treatment and the application of any exclusions).
Would the Back-to-Back Agreement be treated
as a derivative for accounting purposes?
As regards the second condition,
that is, whether the Back-to-Back Agreement would be treated as a derivative for accounting purposes for either BermudaCo or PubCo,
this will generally depend on a number of factors, including the consideration which PubCo receives from BermudaCo under the
Back-to-Back Agreement for issuing its Post-Combination Company Ordinary A1 Shares to holders of BermudaCo Redeemable Shares.
Section 2.2(b) of the Back-to-Back Agreement requires BermudaCo to pay PubCo, for each Post-Combination Company Ordinary A1 Share
issued by PubCo, (i) $0.001 per Post-Combination Company Ordinary A1 Share or (ii) at the joint election of PubCo and BermudaCo, an
equivalent amount in such other form of consideration that qualifies as “cash consideration” for the purposes of Section
593 of the UK Companies Act 2006. Where that consideration is cash, the view is that the Back-to-Back Agreement is unlikely to
be accounted for as a derivative, whereas if such other form of consideration were to be a loan note convertible into cash then
there is more risk, though one assumes that if it wer