September 9, 2019
Lee Neibart
Chairman of the Board of Directors
Trinity Sub Inc.
55 Merchant Street, Suite 1500
Honolulu, Hawaii 96813
Re: Trinity Sub Inc.
Registration Statement on Form S-4
Filed August 12, 2019
File No. 333-233214
Dear Mr. Neibart:
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.
Registration Statement on Form S-4 Filed August 12, 2019
Cover Page
1. We note that you intend to operate your business in a manner that will
permit you to
maintain an exemption from registration under the Investment Company Act
of 1940, as
amended. Please provide us with a supplemental detailed analysis of:
the specific exemption that you and each of your subsidiaries intend to
rely on; and
how you and each of your subsidiaries' investment strategy and business
model will
support that exemption.
Please ensure that the disclosure in your prospectus is consistent with
your supplemental
analysis. We will refer your response to the Division of Investment
Management for
Lee Neibart
FirstName LastNameLee Neibart
Trinity Sub Inc.
Comapany 9, 2019
September NameTrinity Sub Inc.
September 9, 2019 Page 2
Page 2
FirstName LastName
further review.
2. Please tell us if you intend to register as an investment adviser
under the Investment
Advisers Act of 1940, as amended. To the extent you do not intend to
register as an
investment adviser, please provide us with a supplemental detailed
analysis as to why you
believe you are not required to register. Explain in your response how
your current and
planned business operations and investment strategy are consistent
with your conclusion.
3. We note your disclosure regarding the Warrant Payment, including the
Early Consent Fee
and the Later Consent Fee, that Broadmark Realty will pay. Please tell
us how you
determined the amount of such fees and the source of the funds that
Broadmark intends to
use to pay such fees. With a view toward disclosure, please also more
specifically explain
to us the mechanics of this process. For example, without limitation,
please clarify (i) how
investors will know, at the time they provide consent, the fee to
which they will be
entitled, (ii) how you will determine the fees if more than 65% of the
consents are
received on the same day, and (iii) if investors can revoke their
consent.
Will Broadmark Realty obtain new financing ...?, page xx
4. We note your disclosure on page 59 regarding obtaining additional
financing for the
business combination. Please provide us with an analysis regarding why
the concurrent
PIPE offering should not be integrated into your current public
offering. In this regard,
advise us of your relationship with the PIPE investors. Refer to
Securities Act Release No.
8828 and Securities Act Sections CDI 139.25. Additionally, please file
as an exhibit,
documentation related to this transaction. Prefer refer to Item
601(b)(10) of Regulation S-
K.
5. We note, based on your disclosure on pages 79 to 80, that Farallon may
cash settle their
exercise of their option to purchase additional shares of common stock
and that they
would receive, instead of shares, a cash payment equal to the in the
money portion of the
shares. Please revise your disclosure here to more specifically
describe the mechanics of
such settlement, explain the circumstances under which this may occur,
and provide an
example of how this may be calculated in an appropriate section.
Additionally, we note
that you will pay the consent fee to Farallon in connection with these
warrants, but in no
event less than $.30 per warrant. Please tell why this is not balanced
proportionally
between the $.15 and $.30 that you will pay to other holders of
warrants depending on
when they provide their consent. Further, please disclosure the
relationship between
Farallon and the entities that are participating in the merger.
Summary, page 1
6. Please revise to quantify all fees paid to third party advisors in
connection with the
proposed business combination and clarify whether any fees are
contingent on the
consummation of the business combination.
Lee Neibart
FirstName LastNameLee Neibart
Trinity Sub Inc.
Comapany 9, 2019
September NameTrinity Sub Inc.
September 9, 2019 Page 3
Page 3
FirstName LastName
7. Please revise to provide a more detailed post-merger ownership
structure, including any
operating subsidiaries.
Summary Historical Financial and Other Data of the Company Group
BRELF III, page 13
8. We note that BRELF III, LLC's statement of operations summary table
does not include
provision for income taxes consistent with the statement of operations
included in the
respective audited financial statements for the period from January
24, 2018 through
December 31, 2018 . Please reconcile this difference.
The Business Combination, page 57
9. We note that Trinity did not obtain a fairness opinion regarding the
acquisition of the
Broadmark entities. Please revise your disclosure in this section to
explain in detail how
the Trinity board determined that the Business Combination and the
transactions
contemplated thereby, including the compensation to be paid to acquire
the Broadmark
entities, is fair and in the best interests of Trinity and its
stockholders. In addition, please
revise your risk factor on page 22 to more specifically describe the
risks of not obtaining a
fairness opinion.
10. We note your disclosure beginning on page 57. Please revise your
disclosure to describe
more specifically the other strategic transactions considered by
Trinity and also disclose
why each of the parties did not pursue other options.
11. We note your disclosure on page 77 regarding the potential purchases
of Trinity
securities. Please disclose the maximum amount of shares, if any, that
the Trinity Sponsor
and/or other insiders or affiliates may purchase from stockholders who
would have
otherwise elected to redeem their shares. In addition, please disclose
the potential
purchases of public shares in your Q&A section.
Accounting Treatment of the Business Combination, page 79
12. We note that you have been determined MgCo I to be the accounting
acquirer in the
Business Combination. Please explain to us in detail the facts and
circumstances
considered in arriving at your conclusion. Your response should
address the factors to be
considered outlined within paragraphs 805-10-55-10 to 15 of the FASB
Accounting
Standards Codification.
Unaudited Pro Forma Condensed Combined Financial Information, page 137
13. We note from your disclosure that each Company and each Management
Company is a
separate legal entity that has its own equity members. Please clarify
whether or not any of
the entities involved in the Business Combination are entities under
common control.
Lee Neibart
FirstName LastNameLee Neibart
Trinity Sub Inc.
Comapany 9, 2019
September NameTrinity Sub Inc.
Page 4
September 9, 2019 Page 4
FirstName LastName
Unaudited Pro Forma Condensed Combined Broadmark Realty Statement of
Operations, page
146
14. We note from the disclosure included in the notes to the consolidated
financial statements
of the Companies that loan origination fees or costs are not deferred,
but rather recorded at
the time of origination due to the short-term nature of the loans. We
also note from your
disclosure on page 196 that the majority of fee income is comprised of
loan origination
fees. Please tell us your consideration for including an adjustment to
your unaudited pro
forma condensed statement of operations to account for loan
origination fees as prescribed
under ASC 310-20.
Note 2. Unaudited pro forma combined balance sheet adjustments, page 151
15. Please reconcile total purchase price of $152.5 million disclosed in
the purchase price
allocation table included in footnote 2(c) to total consideration of
$162.5 million to be
paid for the Management Companies. Additionally, explain how tangible
book value of
zero was determined for each of the management companies in the
purchase price
allocation table.
Businessf the Company Group ..., page 177
16. We note your disclosure on page 177 regarding past distributions paid
by the Broadmark
companies as well as your disclosure on page 186 regarding the
weighted average all-in
unlevered cash yield. Please explain to us the basis for the
distributions and yield
amounts. In addition, please clarify that there is no guarantee that
these distributions and
yield will continue to be paid.
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.
Lee Neibart
Trinity Sub Inc.
September 9, 2019
Page 5
You may contact Isaac Esquivel at 202-551-3395 or Daniel Gordon at
202-551-3486 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Stacie Gorman at 202-551-3585 or Jennifer Gowetski at 202-551-3401 with
any other
questions.
Sincerely,
FirstName LastNameLee Neibart
Division of
Corporation Finance
Comapany NameTrinity Sub Inc.
Office of Real Estate
and
September 9, 2019 Page 5 Commodities
FirstName LastName