June 26, 2018
Paul Raymond
Chief Executive Officer
Alithya Group Inc.
700 De La Gaucheti re
Street West, Suite 2400
Montr al, QC, Canada
H3B 5M2
Re: 9374-8572 Quebec Inc.
Draft Registration Statement on Form F-4
Submitted May 30, 2018
CIK No. 0001734520
Dear Mr. Raymond:
We have reviewed your draft registration statement and have the
following 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 providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. 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 the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement filed on Form F-4 on May 30, 2018
Recommendations of Edgewater's Board of Directors: Edgewater's Reasons for the
Merger,
page 60
1. Please explain the impact, if any, of the Oracle EPM business and
outlook on Edgewater's
financial performance. On page 60, you state that the increasing
competitive burdens and
constraints facing Edgewater, specifically Edgewater's Oracle EPM
business in light of
Oracle ecosystem developments, as a factor considered by the board for
the transaction.
Paul Raymond
FirstName LastNamePaul Raymond
Alithya Group Inc.
Comapany NameAlithya Group Inc.
June 26, 2018
June 26, 2018 Page 2
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FirstName LastName
We also note your discussion of Mr. Rutherford's concern regarding the
recent financial
performance of the Edgewater Ranzal business unit on page 58.
Opinion of Edgewater's Financial Advisor, page 66
2. Please provide a more detailed discussion of the Expected Synergies
and whether
management of Alithya or Edgewater provided specific quantitative
projections related to
these Expected Synergies.
3. Please clarify whether William Blair considered in any of its analyses
the special dividend
payment of $20.5 million or the loss of voting power for Edgewater
stockholders due to
the multiple voting shares to be issued to certain shareholders of
Alithya.
Security Ownership of Certain Beneficial Owners and Management, page 76
4. In light of Alithya's director Ghyslain Rivard's indirect majority
ownership of and control
of Services informatiques MixM dia inc., along with the power to
direct investments
and/or power to vote its securities, please advise us why the shares
of this entity are not
included in the Directors and Executive Officers as a Group line in
the chart on page 78.
Merger Consideration to Edgewater Stockholders; Special Dividend for Edgewater
Stockholders,
page 101
5. Prior to the merger transactions, Edgewater will declare a $20.5
million special dividend
for Edgewater's stockholders to be paid within 10 days following the
closing of the
transactions. Please clarify the source of funding for the special
dividend. It appears
that neither Edgewater nor Alithya have sufficient cash currently to
pay the special
dividend.
Representations and Warranties, page 103
6. You reference a fairness opinion from Alithya's financial advisor as a
representation and
warranty on page 104. Please advise us whether Alithya received a
fairness opinion and,
if so, please describe the substance of this fairness opinion.
7. Please revise your list of representations and warranties on pages 104
to 106 to describe
the material terms of each item rather than providing a summary list.
The Arrangement Agreement
Conditions to the Completion of the Merger and the Arrangement, page 118
8. You disclose that one of the conditions to the transaction is that
both Alithya and
Edgewater must receive a tax opinion that New Alithya will not be
treated as a domestic
corporation under Section 7874(b) of the Internal Revenue Code. Please
advise us
whether you will file these opinions under Item 601(b)(8) of the
Regulation S-K or any
other tax opinions regarding material consequences to investors as a
result of the merger
Paul Raymond
FirstName LastNamePaul Raymond
Alithya Group Inc.
Comapany NameAlithya Group Inc.
June 26, 2018
June 26, 2018 Page 3
Page 3
FirstName LastName
transactions and offering. We note there are no tax opinions listed in
your exhibit index.
Stockholder Advisory Vote on Certain Compensatory Arrangements, page 125
9. Please revise to specify the merger-related compensation that are
being voted on in this
proposal or clarify you mean the entire "The Merger and the
Arrangement-Interests of
Certain Persons in the Merger" section. Further, please file the
change-of-control
agreements for Messrs. Rutherford and McNeice as exhibits.
Information About Alithya
Customers, page 148
10. Please provide a description of the Alithya agreements with its top
three customers, which
have generated more than 10% of Alithya's total revenue individually
and 53%
collectively for the year ended March 31, 2017. Further, please
provide a description of
these top three customers, including any related party relationships.
You state on page F-
38 that C$45.3 million of Alithya's fiscal year 2017 total revenue is
attributable to
shareholders that exercise significant influence over Alithya.
Management's Discussion and Analysis of Financial Condition and Results of
Operations of
Alithya
Factors Influencing Alithya's Results of Operations, page 156
11. Please provide further details regarding the nature of your revenues
across the services
that Alithya provides, such as Oracle solutions, Microsoft Solutions,
Hiring Solutions and
other material lines of business to the extent material.
12. You indicate that Alithya manages the activities of its professionals
and closely monitors
engagement schedules and staffing requirements, noting rapid
fluctuations could have a
short-term impact on utilization of its professionals. Please clarify
if Alithya's
management has any key metrics that it uses to evaluate its business
that addresses the
utilization or chargeability of professionals. For instance, Edgewater
provides measures
such as annualized service revenue per billable consultant and
billable consultant
utilization in its Form 10-K for the fiscal year ended December 31,
2017.
Non-IFRS Measures, page 157
13. We note your disclosure of "Revenue Net of Payrolling." Please clarify
further for us
what this measure represents and revise to further explain why
management believes it is
useful information to investors.
Contractual Obligations, page 163
14. Please include your long-term debt in your contractual obligations
table and describe the
terms of your material long-term debt agreements.
Paul Raymond
FirstName LastNamePaul Raymond
Alithya Group Inc.
Comapany NameAlithya Group Inc.
June 26, 2018
June 26, 2018 Page 4
Page 4
FirstName LastName
Information About Edgewater
Overview, page 171
15. You disclose that Edgewater is now exploring divestiture opportunities
for its consulting
business. Please provide disclosure to describe the size and scope of
the consulting
business, such as revenues, number of consultants, or any other
appropriate measurement.
Further, where appropriate, please clarify any discussions with
Alithya management or its
advisors regarding any plans for divestiture of the Edgewater
consulting business.
Information About New Alithya
Directors and Senior Management of New Alithya, page 179
16. On page 185, you disclose that New Alithya expects its board of
directors will meet the
majority of independent directors requirement of Nasdaq's marketplace
rules. In light of
the concentration of voting power of New Alithya held by current
Alithya management,
please clarify the applicability of the Nasdaq's controlled company
exemption and
whether New Alithya will avail themselves of any such exemptions
related to corporate
governance. Similarly, please clarify whether New Alithya will avail
themselves of any
foreign issuer or transitional exemptions for new issuers to Nasdaq's
corporate
governance rules.
Compensation of Directors and Senior Management of New Alithya, page 184
17. You state on page 102 that the Edgewater equity incentive plan,
Edgewater's
employee stock purchase program, the Alithya stock option plan, and
the Althiya
employee share purchase plan will all be canceled at the close of the
merger transactions.
These plans will be replaced by a new equity compensation plan for
directors and
executive officers and new employee stock purchase plan that will be
finalized shortly
prior to or after the close of the merger transactions. Please provide
a narrative
description of these prospective compensation plans.
General
18. It appears that, as a result of the transaction, New Alithya will
become a successor issuer
to Edgewater as provided in Rule 12g-3(a) under the Exchange Act and,
as a result, may
not qualify as an emerging growth company after the transaction.
Please provide
appropriate risk factor disclosure in the filing. Alternatively,
provide us with your legal
analysis regarding why New Alithya would continue to qualify as an
emerging growth
company and whether New Alithya will succeed to Edgewater s reporting
obligations
under Section 12(g) of the Exchange Act. See Exchange Act Rule 12g-3,
and for
guidance, refer to Question 24 of the Division of Corporation Finance
s Generally
Applicable Questions on Title I of the JOBS Act.
19. We note that holders of approximately 17% of the outstanding shares of
Edgewater
common stock and approximately 79% of the voting power of the
outstanding Alithya
Paul Raymond
Alithya Group Inc.
June 26, 2018
Page 5
shares entered into support agreements to vote in favor of the
transaction. The execution
of lock-up agreements may constitute agreements of sale under the
Securities Act such
that the registration of the shares may not be appropriate. Please
provide a legal analysis
why you believe that an offer and sale did not commence at the time of
the negotiation
and execution of the support agreements. Please refer generally to
Compliance and
Disclosure Interpretation 139.30 in the Division of Corporation Finance
Compliance and
Disclosure Interpretations, Securities Act Sections.
You may contact Brittany Ebbertt, Staff Accountant, at (202) 551-3572
or Christine
Dietz, Assistant Chief Accountant, at (202) 551-3408 if you have questions
regarding comments
on the financial statements and related matters. Please contact Edwin Kim,
Attorney-
Advisor, at (202) 551-3297 or Jan Woo, Legal Branch Chief, at (202) 551-3453
with any other
questions.
FirstName LastNamePaul Raymond Division of
Corporation Finance
Office of
Information Technologies
Comapany NameAlithya Group Inc.
and Services
June 26, 2018 Page 5
cc: Jason Comerford, Esq.
FirstName LastName