UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-5546
DIVISION OF
CORPORATION FINANCE
Mail Stop 5546
July 6, 2007
Mr. Richard Tan
Chief Executive Officer
Stone Tan China Acquisition Corp.
9191 Towne Center Drive, Suite 410
San Diego, California 92122
Re: Stone Tan China Acquisition Corp.
Amendment No. 1 to Registration Statement on Form S-1
Filed June 15, 2007
File No. 333-142729
Dear Mr. Tan:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may raise additional comments.
General
1. We note your response to prior comment one. Please revise
Summary
and Proposed Business to make clear that the amount to be held in
trust is a "subject to market" term, which may be revised during
the
course of the offering. Also, it appears from your response that
the
principal factor in determining the size of the offering is the
maximum amount that the underwriter expects to be able to
successfully solicit on behalf of the management. Please revise
to
clarify, if true, that this is the principal factor in determining
the size of the offering.
2. We note your response to prior comment three. Please confirm
that
prior to effectiveness of this registration statement, you will
notify us that you have resolved any outstanding state regulatory
agency comments and that you have received clearance from all
states
where you have applied to have your securities registered for
sale.
3. We note your response to prior comment six. Advise us of the
timing of any such purchases, particularly as compared to the
beginning of trading of your securities, the closing of the
offering
and sale of all securities to be distributed if the underwriters
exercise their over-allotment option. Advise us of any formal
arrangements or understandings with the underwriter, Stone Tan or
others regarding the amount, timing, manner or terms of any such
sales. We may have further comment.
Summary
4. With respect to the supplemental letter provided in response to
comment eight, please submit it as correspondence on EDGAR. Note
that you may request confidential treatment as appropriate
pursuant
to Rule 83.
5. We note your response to prior comments eight and nine. Please
revise page one and where appropriate to identify the number of
companies and their area of business instead of using the phrase
"a
limited number of potential target businesses." Also, please
identify the "businesses owned by [your] Chief Executive Officer."
6. Also regarding your response to prior comment nine, please
provide
a clear definition of "affiliate" that addresses, for example,
situations where insiders are passive investors, officers,
directors
and/or creditors of portfolio companies or their private equity
investors.
7. We reissue prior comment 10 with respect to the ability of
shareholders to rely on the fairness opinion. If the company
anticipates hiring a financial advisor that limits the ability to
rely on the opinion to the board of directors, please revise to so
state.
8. We note your response to prior comments 12 and 19 and reissue
the
comments in part. Please revise to include a risk factor that
addresses your ability to consummate a transaction despite
shareholder disapproval in excess of what would be permissible in
a
traditional SPAC, as that may be viewed negatively by potential
investors seeking shareholder protections consistent with
traditional
SPAC offerings. Your revised disclosure should address the fact
that
you may go forward with a proposed transaction despite a
percentage
of disapproving shareholders that is larger than what is
permissible
in a traditional SPAC.
9. We note your revised disclosure in response to prior comment
16.
Please revise to clarify under what circumstances it would not be
in
your best interest to bring a claim in the event your executive
officers or directors refuse to honor their indemnification
obligations.
Risk Factors
10. We note your response to prior comment 23 and the reference to
"subject to their respective fiduciary obligations." Please
revise
the second risk factor on page 21 to state, if true, that your
executive officers and directors must first present business
opportunities to the companies with which they are affiliated as
directors, investors or otherwise.
11. We note your response to prior comment 28. Please revise to
clarify how investors would possess shares in an offering that was
disallowed. Also, explain why it would be difficult for
shareholders
to execute resale transactions.
12. We note your response to prior comment 29. Please revise to
indicate, consistent with your response, that you will have
successfully applied for registration in the identified states and
delete the reference to "or will seek to obtain."
13. Also, please revise to include a risk factor indicating, if
true,
that no secondary trading may occur in the seven states identified
in
the second bullet point on page 85, identifying such states in the
risk factor. Your revised disclosure should also address the
status
of any required notice filings with respect to secondary trades in
states in which you will conduct offerings, such as the District
of
Columbia and Illinois.
Proposed Business
14. We note your response to prior comment 32. Please revise
"Contractual arrangements" on page 54 to briefly summarize the
principal terms that would be included in a contract to provide
you
the economic benefits of control. Please revise to explain how
such
an agreement in which you do not control a majority of the equity
or
board of directors could be considered a "Business Combination."
15. Also, we note that the definition of Business Combination in
the
letter agreements does not refer to contractual arrangements.
Please
advise us of how a business combination through contractual
arrangements is defined or covered by the definition. Explain
what
contractual terms must be included in an agreement for it to be
considered a business combination.
16. We note your response to prior comment 35 and reissue it in
part.
Although you refer to KapStone and Paper Packaging Corporation and
another entity, you do not disclose a comprehensive list of the
companies, private equity affiliates, portfolio companies and
other
entities whose affiliation with your officers and directors
presents
a conflict of interest. Please revise accordingly.
17. We note your response to prior comment 45 and reissue it in
part.
You refer to the uncertainty of the public offering and the fact
that
the underwriters` option will only be received upon completion of
an
offering. As both the founders` shares and the underwriters`
option
are subject to the uncertainty of the offering, it is unclear on
what
you base the distinction regarding compensation. Regardless of
whether the underwriters` option has any bearing on the founders`
shares, the treatment of the underwriters` option as compensation
raises the question as to whether or not the founders` shares,
whose
terms are in part more advantageous than the underwriters` option,
are also compensation. Please expand on your response to discuss
the
basis for your belief and identify any case law or regulations
supporting your view.
Liquidation if No Business Combination
18. Please revise to disclose the basis of your belief that your
directors and executive officer are of substantial means and
capable
of funding a shortfall in your trust account in the event of such
eventuality.
Exhibits
19. Please provide for Exhibits 10.1 and 10.2 the omitted
Exhibit
A and Exhibit B.
20. Please refer to Exhibit 5.1. Please revise to quantify the
warrants and shares underlying the securities identified in parts
(iv) and (v) of the first paragraph.
* * * * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
You may contact Angela Halac at (202) 551-3398 if you have
questions regarding the financial statements and related matters.
Please contact Jack A. Guggenheim at (202) 551-3523 or James Lopez
at
(202) 551-3536 with any other questions.
Sincerely,
John Reynolds
Assistant Director
cc: Fran Stoller, Esq.
Fax (212) 214-0706