View:
United States securities and exchange commission logo
March 14, 2022
Yanzhuan Zheng
Chief Financial Officer
Microvast Holdings, Inc.
12603 Southwest Freeway, Suite 210
Stafford, Texas 77477
Re: Microvast Holdings,
Inc.
Amendment No. 5 to
Registration Statement on Form S-1
Response dated
February 14, 2022
File No. 333-258978
Dear Mr. Zheng:
We have limited our review of your registration statement to
those issues we have
addressed in our comments. In some of our comments, we may ask you to
provide us with
information so we may better understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Response dated February 14, 2022
General
1. Please update your
disclosure throughout the filing as some information is inconsistent,
has become outdated,
requires additional clarification, or needs to be updated to reflect the
passage of time. These
examples include:
Cautionary
Statements Regarding Forward-Looking Statements on page vi contains
the following
disclosure, These forward-looking statements include, but are not
limited to,
statements regarding our industry and market sizes, future opportunities
for us, our
estimated future results and the Business Combination, including the
implied enterprise
value. Please clearly disclose what estimated future results or
implied enterprise
value the company is referencing. Also, the bullet point list in this
Yanzhuan Zheng
FirstName LastNameYanzhuan Zheng
Microvast Holdings, Inc.
Comapany
March NameMicrovast Holdings, Inc.
14, 2022
March2 14, 2022 Page 2
Page
FirstName LastName
section refers to the failure to realize anticipated pro forma
results and underlying
assumptions; however, such information is not provided in the
filing.
Disclosure on page 3 refers to expanding the company s
presence and product
promotion to Europe and the U.S. in the past tense, while other
parts of the filing
discloses that such expansion is ongoing. Please update your
disclosure throughout
the filing for this inconsistency.
Manufacturing Capacity disclosure on page 12 states, We
expect to complete the
construction of a module and pack manufacturing facility near
Berlin, Germany in the
fourth quarter of 2021.
Please update the penultimate summary risk factor, and
disclosure throughout the
filing, which talks about future resales of common stock as
this filing is the
prospectus facilitating those sales.
The risk factor on page 48 entitled Our management has
limited experience in
operating a public company discloses that you may not have
adequate personnel
with the appropriate level of knowledge, experience, and training
in the accounting
policies, practices or internal controls over financial reporting
required of public
companies in the U.S in light of the Form 12b-25 filed for the
quarter ended June
30, 2021 and the Item 4.02 Form 8-K filed December 10, 2021.
Please update your
disclosure in this regard.
The risk factor on page 49 entitled We have expanded our
presence in markets other
than our main manufacturing site in PRC and may continue to do so
(emphasis
added). However, as noted above, other disclosure states that you
are currently still
expanding your presence.
In the risk factor on page 61 entitled We may have
difficulties transferring and
communicating technology globally, especially if communications
and visa processes
between the PRC and other countries worsen you should describe
whether the
difficulties transferring and communicating technology globally
has affected your
geographic diversification strategy.
On page 90 in the section entitled Manufacturing Capacity,
you disclose that you
expect to use some of the proceeds from the business combination
to expand your
manufacturing facilities to increase your manufacturing output to
address your
backlog and to capture growing market opportunities. You should
update your
disclosure to state whether you did what the disclosure states
given that it has been
about 6 months since the business combination.
In the section entitled Liquidity and Capital Resources
on page 100, you state that
your consolidated net cash position as of September 30, 2021
included cash, cash
Yanzhuan Zheng
FirstName LastNameYanzhuan Zheng
Microvast Holdings, Inc.
Comapany
March NameMicrovast Holdings, Inc.
14, 2022
March3 14, 2022 Page 3
Page
FirstName LastName
equivalents and restricted cash of $80.7 million held by the PRC
subsidiaries that is
not available to fund domestic operations unless funds are
repatriated. Please clarify
whether this takes into account Europe and if so whether the same
withholding tax
applies. Given your German operations and expansion plans, please
include
additional updated and relevant information.
In the same section, you state that the net proceeds from the
merger include $708.4
million cash to be retained for purposes of working capital,
business expansion and
capital expenditure. Please update your disclosure as needed and
provide your capital
expenditure forecast.
Regarding the reference to exited noncontrolling interests
in the section entitled
Cash Flows from Financing Activities on page 101, please
clarify whether you are
referring to redemptions.
In the Contractual Obligations and Commitments section on
page 103, you refer to
capacity expansion in three countries but refer to both
projects in the subsequent
sentence when disclosing timing for completion of the
projections. Please update to
discuss the current number projects.
In the same section, you disclose that the total cost of these
projects is approximately
$420 million which you plan to finance primarily through the
proceeds from the
business combination. Please update your disclosure to state
whether you will have
enough funds to complete the projects given their cost and the
other cash required to
pay for the contractual obligations and commitments listed in the
table on page 103.
As of September 30, 2021 it appears that you had $572 million in
proceeds from the
business combination left. Please clarify whether this would be
sufficient to cover all
disclosed and estimated costs.
2. Please revise your prospectus to disclose the price that each selling
security holder paid
for the common stock and warrants being registered for resale.
Highlight any differences
in the current trading price, the prices that the Sponsor, private
placement investors, PIPE
investors, and other selling shareholders acquired their shares and
warrants, and the price
that the public shareholders acquired their shares and warrants.
Disclose that while the
Sponsor, private placement investors, PIPE investors, and other
selling shareholders may
experience a positive rate of return based on the current trading
price, the public
shareholders may experience a negative rate of return on the shares
they purchased at the
SPAC IPO price. Please also disclose the potential profit the selling
shareholders will
earn based on the current trading price. Lastly, please include
appropriate risk factor
disclosure.
Prospectus Cover Page, page i
3. Please disclose the price that each selling security holder paid for
the common stock and
Yanzhuan Zheng
FirstName LastNameYanzhuan Zheng
Microvast Holdings, Inc.
Comapany
March NameMicrovast Holdings, Inc.
14, 2022
March4 14, 2022 Page 4
Page
FirstName LastName
private warrants being registered for resale.
4. With respect to the registration of the resale of 837,000 private
warrants owned by the
Sponsor, please disclose the exercise price of the warrants compared
to the market price of
the underlying common stock. If the warrants are out the money, please
disclose the
likelihood that warrant holders will not exercise their warrants.
Provide similar disclosure
in the prospectus summary, risk factors, MD&A and use of proceeds
sections and disclose
that cash proceeds associated with the exercises of the warrants are
dependent on the stock
price. As applicable, describe the impact on your liquidity and update
the discussion on
the ability of your company to fund your operations on a prospective
basis with your
current cash on hand.
5. We note that the company is registering the sale of 837,000 private
warrants owned by the
Sponsor. Please disclose the price that the Sponsor initially paid for
the warrants in the
private placement. Please also disclose the potential profit the
Sponsor will earn based on
the current trading price of the warrants.
6. We note the significant number of redemptions of your common stock in
connection with
your business combination and that the shares being registered for
resale will constitute a
considerable percentage of your public float. We also note that all of
the shares being
registered for resale were purchased by the selling shareholders for
prices considerably
below the current market price of the common stock. Highlight the
significant negative
impact that sales of shares in this registration statement could have
on the public trading
price of the common stock.
Prospectus Summary, page 1
7. Please revise to correct inconsistencies in the disclosure in the
Prospectus Summary
section and throughout your filing that implies that dividends or cash
transfers were made
by subsidiaries, including the China subsidiary, and disclosure that
states that no
dividends or cash transfers were made by subsidiaries. For example,
disclosure on page 13
in the Prospectus Summary states, All revenue from our operations
and funding of the
capital expenditures we make in for our business are generated by or
made through
subsidiaries, including subsidiaries based in the PRC. We rely on
dividends and other
distributions on equity paid by our PRC subsidiary to us for a portion
of our capital
expenditures, cash needs to service any debt we may incur and to pay
our operating
expenses. However, subsequent disclosure states, To date, no
subsidiary has made any
payments or transferred any cash or other assets to the Company.
8. We note your disclosure that no approvals are required for your or
your subsidiaries
operations. We also note your disclosure that the issuance of your
securities to foreign
investors is not currently subject to the approval of the China
Securities Regulatory
Commission or any other governmental agency of the PRC. Please explain
how you
determined that permissions and approvals were not necessary. If the
company relied on
the advice of PRC counsel, please identify counsel and file the
consent of counsel as an
Yanzhuan Zheng
FirstName LastNameYanzhuan Zheng
Microvast Holdings, Inc.
Comapany
March NameMicrovast Holdings, Inc.
14, 2022
March5 14, 2022 Page 5
Page
FirstName LastName
exhibit. If the company did not consult counsel, please explain why
and the basis for your
belief that you are not required to obtain approvals for your
operations and offering.
9. In the prospectus summary, you state that each of your subsidiaries
with operations in the
PRC is required to obtain a business license from the Administration
for Market
Regulation of PRC or its competent local counterparts for their
operations. You should
disclose whether your subsidiaries have obtained the required
licenses.
10. Please revise the prospectus summary to disclose the composition of
your board of
directors after consummation of the Business Combination in relation
to the members
associated with each of the pre-Business Combination entities. In
addition please disclose
the locations of the board members and CEO.
11. Please provide summary risk factor disclosure about the impediments of
moving cash out
of China and how it may hamper any growth and diversification that you
are pursuing and
the costs associated therewith, including increased manufacturing
costs. Please also
update the more detailed risk factor on page 50 accordingly.
Summary Risk Factors, page 14
12. Please add sub-headings to the Summary Risk Factors section.
Risk Factors, page 19
13. Include an additional risk factor highlighting the negative pressure
potential sales of
shares pursuant to this registrations statement could have on the
public trading price of
your common stock. To illustrate this risk, disclose the average
purchase price of the
shares being registered for resale, the percentage that these shares
currently represent of
the total number of shares outstanding and that even though the
current trading price is
below the SPAC IPO price, the Sponsor, private placement investors,
PIPE investors, and
other selling shareholders have an incentive to sell because they will
still profit on sales
because of the lower price that they purchased their shares than the
public investors, as
applicable.
14. The risk factor titled We have expanded our presence in markets
other than our main
manufacturing site in PRC " on page 49 lists some of the challenges
of diversification,
such as requiring significant resources and management costs. Please
clarify whether this
includes higher production costs. In addition, these challenges should
be quantified and
explained in light of the current plan.
Use of Proceeds, page 67
15. Please revise your disclosure here and other relevant disclosure to
qualify that the amount
of proceeds you may receive is dependent on the stock price. Disclose
the exercise price
of the warrants and the current stock price. In that regard, we note
that the warrants
offered by the shareholders have an exercise price of $11.50 per
share. However, we also
note that the stock price has not traded above $11.50 since September
10, 2021 and only
Yanzhuan Zheng
Microvast Holdings, Inc.
March 14, 2022
Page 6
did so for two days. Given the foregoing, the disclosure should make
clear that the
company may not obtain proceeds from exercise of the warrants.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
89
16. On page 89 in the section entitled Technology and Product
Innovation, you state that
you intend to continue to invest in R&D in order to continually
develop and introduce
innovative products. Please disclose whether you will continue to
do so in the PRC or
whether you will do so elsewhere given the limits on moving technology
in and out of the
PRC.
Liquidity and Capital Resources, page 100
17. We note that the projected revenues for 2021 were $230 million, as set
forth in the
unaudited prospective financial information Microvast s management
prepared and
provided to the Microvast Board, Microvast s financial advisors and
Tuscan in connection
with the evaluation of the Business Combination. We also note that
your actual revenues
for the Nine Months Ended September 30, 2021 was approximately $85
million. It
appears that you will miss your 2021 revenue projection. Please update
your disclosure
here and elsewhere to address this and provide updated information
about the company s
financial position and further risks to the business operations and
liquidity.
Internal Control Over Financial Reporting, page 106
18. Please disclose in this section that you did not file your June 30,
2021 Form 10-Q on time
and that you filed a Form 8-K for non-reliance on certain prior
financial information.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
Please contact Sherry Haywood, Staff Attorney at (202) 551-3345 or Asia
Timmons-
Pierce, Special Counsel at (202) 551-3754 with any questions.
FirstName LastNameYanzhuan Zheng Sincerely,
Comapany NameMicrovast Holdings, Inc.
Division of
Corporation Finance
March 14, 2022 Page 6 Office of
Manufacturing
FirstName LastName