December 10, 2018
Leonard Fluxman
Chief Executive Officer
OneSpaWorld Holdings Limited
Office of Lennox Paton Corporate Services Limited
Bayside Executive Park, Building 3
West Bay Street, P.O. Box N-4875
City of Nassau, Island of New Providence
Commonwealth of The Bahamas
Re: OneSpaWorld Holdings Limited
Registration Statement on Form S-4
Filed November 13, 2018
File No. 333-228359
Dear Mr. Fluxman:
We have reviewed your 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 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.
Form S-4 filed November 13, 2018
Summary
Company Overview, page 1
1. You attribute numerous statements in this section to data and reports by
third parties,
including Coresight Research. To the extent you commissioned any
research or reports
for use in the Registration Statement, please file the consent as an
exhibit. Refer to
Securities Act Section 7 and Rule 436.
Leonard Fluxman
FirstName LastNameLeonard Fluxman
OneSpaWorld Holdings Limited
Comapany10, 2018
December NameOneSpaWorld Holdings Limited
December 10, 2018 Page 2
Page 2
FirstName LastName
Selectively Expand Footprint at Destination Resorts, page 29
2. Please substantiate that OneSpaWorld is known to its partners as a
proven turnkey
operator and briefly explain what it means to have "significant
whitespace potential."
The Haymaker Board's Reasons for the Business Combination, page 100
3. In the listing of factors on page 101, please discuss whether the
Haymaker Board
considered the determination not to obtain a third-party valuation or
fairness opinion as a
negative factor. We note the first full question and answer on page 9.
Comparable Companies Analysis, page 105
4. Please briefly describe the criteria used by the Haymaker Board to
select companies for
the best-in-class service operators, health and wellness, and
asset-light leisure categories.
For each of the three categories, if any companies that met the
criteria were excluded,
discuss the reasons why.
5. Please disclose the implied price to earnings per share and levered
free cash flow yield
estimates for each of the comparable companies. Please also disclose
any assumptions
made by the Haymaker Board in conducting the analysis.
Material Tax Considerations, page 112
6. To the extent you intend to file "short-form" opinions of tax counsel,
please name counsel
here and clarify that the discussion is respective counsel's opinion.
Pro Forma Adjustments to the Balance Sheet, page 155
7. We note that $613 million of the purchase price is estimated to be
allocated to concession
agreements. Please describe the nature of these concession agreements
and, if they relate
to contracts with cruise lines, tell us what circumstances resulted in
the fair value of these
agreements significantly increasing from the December 9, 2015
valuation of these assets.
Business of OneSpaWorld After the Business Combination
Products, page 172
8. Please briefly explain what retail attachment rate is and substantiate
that your rate is
"leading."
MD&A
Six-month Period Ended June 30, 2018, page 185
9. You disclose that revenues per shipboard staff per day increased by
8.8%, or $42 million
during the six months ended June 30, 2018 versus the six months ended
June 30, 2017.
However, the table preceding this disclosure indicates total revenue
increased by
approximately $15.8 million. Please advise.
Leonard Fluxman
FirstName LastNameLeonard Fluxman
OneSpaWorld Holdings Limited
Comapany10, 2018
December NameOneSpaWorld Holdings Limited
Page 3
December 10, 2018 Page 3
FirstName LastName
10. A significant portion of your results of operations disclosure is
dedicated to stating, in
narrative text form, dollar and percentage changes in accounts. In
addition, while you
discuss certain factors to which changes are attributable, you do not
quantify certain of
these factors nor analyze the underlying business reasons for the
changes. For example,
you state the decrease in cost of services was primarily attributable
to improved supplier
pricing and a favorable change in business mix, but you do not
quantify these factors nor
analyze the underlying reasons for the changes. As such, please
consider expanding this
section by:
increasing the use of tables to present dollar and percentage
changes in accounts (and
common size percentages), rather than including such information
in narrative text
form;
using tables to list, quantify, and sum all of the material
individual factors to which
changes in accounts are attributable;
refocusing the narrative text portion of the disclosure on
analysis of the underlying
business reasons for the individual factors in the tables above;
ensuring that all material factors are quantified and analyzed;
and
quantifying the effects of changes in both price and volume on
revenues and expense
categories, where appropriate
Refer to Item 303(a)(3) of Regulation S-K and Section III.D of SEC
Release No. 33-
6835.
11. The analysis portion of your disclosure on cost of services, cost of
products, and
administrative expenses (i.e, the disclosure after the narrative
portion that quantifies the
changes) is limited to a single sentence for each category. Please
expand to provide a
more robust and comprehensive discussion of your various cost
categories (cost of
services, cost of products, administrative, etc.) including separate
quantification and
discussion of changes in significant components of cost categories, as
appropriate. For
example, we note from your disclosure on page F-12 that cost of
services includes
multiple components such as allocable portion of wages paid to
shipboard employees and
of payments to cruise lines (which are derived as a percentage of
service revenues or a
minimum annual rent or a combination of both), an allocable portion of
staff-related
shipboard expenses, costs related to recruitment and training of
shipboard employees,
wages paid directly to destination resort employees, payments to
destination resort venue
owners, and health and wellness facility depreciation. As noted above,
please consider
providing tabular disclosures, as appropriate.
Year Ended December 31, 2017, page 187
12. You disclose that cost of products as a percentage of products revenue
decreased to 87.8%
in 2017 from 93.5% in 2016 primarily attributable to improved supplier
pricing on retail
products. Please explain the underlying reason for the improved
supplier pricing. In this
Leonard Fluxman
FirstName LastNameLeonard Fluxman
OneSpaWorld Holdings Limited
Comapany10, 2018
December NameOneSpaWorld Holdings Limited
December 10, 2018 Page 4
Page 4
FirstName LastName
regard, we note your disclosure on page 183 that the prices of beauty
products purchased
by OSW Predecessor from the Supplier Entity prior to 2017 were at
amounts not
comparable to those set forth under the agreement and applicable to
future periods. Please
also quantify this factor.
Financial Statements, page F-1
13. Please update the historical and pro forma financial information in
your filing to comply
with Rules 3-12 and 11-02(c) of Regulation S-X.
Combined Statements of Equity, page F-6
14. The amounts reported here for "Net distributions to Parent and
affiliates" do not agree
with the amounts reported on your statements of cash flows. Please
advise.
Combined Statements of Cash Flows, page F-7
15. We note your disclosure on pages F-11 and F-28 that you receive
services and support
from various functions performed by the Parent, that these expenses
relate to allocations
of Parent corporate overhead, and that such amounts are classified as
salary and payroll
taxes and administrative expenses in the combined income statements.
Please tell us the
nature of the non-cash adjustment for "allocation of Parent corporate
overhead," how such
amounts are ultimately settled, and where the settlements are
presented in the statements
of cash flows.
16. We note that changes in accounts payable provided increases in cash
flows from operating
activities of $2.4 million, $32.3 million, and $29.7 million in the
fiscal years ending
December 31, 2017, 2016, and 2015, respectively. These amounts
cumulatively total to
an approximately $64.4 million increase in accounts payable over the
three-year period as
compared to accounts payable totaling $5.9 million as of December 31,
2017. Please
advise.
Note 1: Organization, page F-9
17. We note your disclosure here that contracts with cruise lines are
generally renewed every
five years. We also note your disclosure on page 45 that cruise line
agreements have
specific terms, ranging from 2.6 to 10.7 years with an average
remaining term per ship of
approximately 3.5 years as of June 30, 2018. Please describe for us
the nature of your
contract intangible and tell us your basis for the 39 year weighted
average useful life
assigned to contract intangibles upon your acquisition on December 9,
2015.
Note 9: Transactions with Related Parties, page F-27
18. We note your disclosure that as of December 31, 2016 and 2015, a large
portion of the
then outstanding accounts payable [to supplier entities related to
purchases from wholly-
owned subsidiaries of the Parent] were considered contributions of
capital from the
Leonard Fluxman
OneSpaWorld Holdings Limited
December 10, 2018
Page 5
Parent, which are included in the combined financial statements of the
Company. Please
explain to us in more detail your accounting for these transactions,
including cash flow
statement presentation, and for similar transactions during 2017.
19. Please revise the line item labeled "accounts payable" in the second
table to "accounts
payable related parties" for consistency with the balance sheet
presentation.
Segment and Geographic Information, page F-28
20. Please tell us the factors used to identify your reportable segments.
Additionally, tell us
how you evaluated the criteria in ASC 280-10-50-11 in determining that
you have one
reportable segment, including how the Maritime and Destination Resort
segments have
similar economic characteristics.
Note 6: Long-term Debt, page F-45
21. We note that in 2018 you recognized approximately $356 million of debt
after entering
into an assignment and assumption agreement with your Parent. We also
note from page
F-27 that your assets were previously pledged in December 2015 as
collateral under a
pledge and security agreement for this debt and that, as of September
30, 2015, Spa
Operations were the predominate source of revenues and operating
income for your Parent
per their Form 10-Q. Given the carve-out basis of your financial
statements, please tell us
what consideration you gave to attributing this debt to the carve-out
financial statements
in earlier-presented periods. Reference is made to ASC 405-40, 450,
and 460 and SAB
Topic 1B.1 question 4.
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.
You may contact Theresa Brillant at (202) 551-3307 or Lyn Shenk,
Accounting Branch
Chief, at (202) 551-3380 if you have questions regarding comments on the
financial statements
and related matters. Please contact J. Nolan McWilliams, Attorney-Advisor, at
(202) 551-3217
or John Dana Brown, Attorney-Advisor, at (202) 551-3859 with any other
questions.
FirstName LastNameLeonard Fluxman Sincerely,
Comapany NameOneSpaWorld Holdings Limited
Division of
Corporation Finance
December 10, 2018 Page 5 Office of
Transportation and Leisure
FirstName LastName