October 7, 2019
Antony Leung
Chairman
New Frontier Corp
23rd Floor, 299 QRC
287-299 Queen's Road Central
Hong Kong
Re: New Frontier Corp
Preliminary Proxy Materials on Schedule PreM14A
Filed on September 11, 2019
File no. 001-38562
Dear Mr. Leung:
We have reviewed your filing 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 these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have additional
comments.
Preliminary Proxy Materials on Schedule PreM14A, filed on September 11, 2019
What happens if a substantial number of the public shareholders...exercise
their redemption
rights?, page 3
1. Please revise paragraph two briefly to disclose what constitutes
"Necessary Cash."
Did the board of directors of NFC obtain a third-party valuation or fairness
opinion?, page 5
2. We note that McKinsey & Company, Pricewaterhouse Coopers, Simpson
Thacher
& Bartlett and Global Law Firm acted as outside advisors in connection
with the proposed
acquisition, however only Simpson Thacher's activities are described in
the Background
of the Transaction section of your proxy materials. Please revise to
disclose what services
your other advisors provided, or advise us why you believe no revision
is necessary.
Antony Leung
FirstName LastNameAntony Leung
New Frontier Corp
October 7, NameNew Frontier Corp
Comapany 2019
Page 2
October 7, 2019 Page 2
FirstName LastName
Structure Following the Business Combination , page 14
3. It appears you intend to use a variable interest entity structure.
Please disclose and discuss
the arrangements and agreements necessary to do so and make
corresponding changes to
your corporate diagram, including identifying shareholders and
percentage ownership of
each entity.
4. Please revise your corporate diagram to provide more granular
disclosure concerning the
various entities at each level. Please identify that New Frontier
Health Corporation will be
a holding company, with no direct operations. Please enumerate the
several subsidiaries,
and please identify, as you discuss in risk factor disclosure at page
45, which are
established as a China-Foreign Equity Joint Venture, and which are
established as a
China-Foreign Contractual Joint Venture. We also note that you discuss
Wholly Foreign-
Owned Enterprises in the first paragraph of "Changes in the Foreign
Investment Law and
regulatory regime could have an impact on the transactions and the
operations of UFH's
business" on page 45, but see no reference to a WFOE in your corporate
diagram. Please
advise or revise.
5. Please advise as to the business purpose for establishing a Delaware
holding company for
Chindex International, Inc.
Financial projections with respect to UFH may not prove to be reflective of
actual future results.,
page 37
6. We note that financial projections were prepared and considered by the
NFC board of
directors in connection with the proposed transaction. Please provide
us with these
projections, and any similar materials furnished to board members.
Upon review, we may
have further comments.
UFH depends on key personnel for the success of its business., page 39
7. Please revise to identify the key personnel upon whom UFH relies.
NFH's debt could impair its financial condition and prevent if from fulfilling
its business
obligations., page 42
8. Please revise paragraph one to indicate the amount of cash NFH would
expect to have
assuming various levels of redemption were to occur.
If UFH fails to comply with environmental, health and safety laws in China...,
page 47
9. In addition to the general risk you have described, please break out
here, or in separate
risk factors, the key environmental, health and safety laws and
regulations in China with
which the company must be in compliance, identifying the specific risk
posed in each
instance were the company found to be in noncompliance.
Antony Leung
FirstName LastNameAntony Leung
New Frontier Corp
Comapany 2019
October 7, NameNew Frontier Corp
Page 3
October 7, 2019 Page 3
FirstName LastName
The Sponsor will have significant influence over us after completion of the
business
combination. , page 55
10. In addition to the Sponsor's beneficial ownership of approximately
12.4%, please indicate
the effective percentage controlled by the Sponsor following execution
of the various
arrangements discussed.
11. Please revise to provide a separate risk factor with its own heading
addressing the risk
posed by your Proposed Charter's provision that New Frontier
Corporation renounce any
interest or expectancy in the business opportunities of the Sponsor
and its respective
officers, as you discuss in the concluding paragraph on page 56.
Following the consummation of the business combination, our only significant
asset., page 57
12. Please revise to disclose and discuss any applicable Chinese rules or
regulations that could
limit the ability of UFH to pay dividends or make distributions or
loans to the holding
company, New Frontier Corporation.
Unaudited Pro Forma Condensed Combined Financial Information
Introduction, page 67
13. We note on page 67 you state that "NFC's shareholders as a group will
have the largest
voting interest in the combined entity under the no redemption and
maximum redemption
scenarios". Please disclose the voting percentages that will be held
by the NFC
shareholders as a combined group, the new investors, and the former
owners of Healthy
Harmony, including the holders of the rollover equity.
14. Reference is made to footnote (b) on page 67. Explain to us the nature
of the obligation to
pay the additional RMB 144.3 million, how you intend to account for
this payment, and
your basis for this accounting under IFRS. Disclose and explain to us
how you intend to
fund this payment obligation. Also, please explain to us how you
addressed this payment
obligation within the pro forma balance sheet.
Unaudited Pro Forma Condensed Combined Balance Sheet, page 70
15. Please tell us your assumptions regarding Permitted Leakage Expenses
(as defined on
page 89) and your consideration for a related cash adjustment in the
pro forma balance
sheet.
16. Please tell us how you considered an adjustment for 280G payments and
benefits (i.e.,
payment that is reasonably expected to be a "parachute payment" within
the meaning of
Section 280G(b)(2) of the Internal Revenue Code) as described in
Section 7.17 of the
Transaction Agreement on page A-51.
17. Refer to footnote E on page 77. Please tell us your consideration for
giving pro forma
effect to the payoff of the IFC loan. We note your disclosure in Note
2.1 of Health
Harmony Holdings' financial statements that such loan may be payable
on demand upon
Antony Leung
FirstName LastNameAntony Leung
New Frontier Corp
Comapany 2019
October 7, NameNew Frontier Corp
Page 4
October 7, 2019 Page 4
FirstName LastName
the Completion of the Change in Control Event.
Termination, page 98
18. Please disclose whether termination fees would be incurred were either
party to terminate
the agreement prior to the closing.
Fosun Rollover Agreement, page 101
19. Please revise paragraph two on page 102 to discuss why NFC agreed not
to adopt or
maintain any shareholder rights plan pursuant to the Fosun Rollover
Agreement. We note
your related risk factor disclosure at page 56 concluding that "this
arrangement could limit
the ability of our board of directors to take defensive actions
against a potential takeover
attempt even if it believes that such defensive actions would be in
the best interests of our
company." Please advise, with a view towards disclosure, how this
limitation is consistent
with the directors' fiduciary obligations.
Background of the Transaction, page 110
20. Please revise paragraph five to clarify what led NFC specifically to
seek out negotiations
with UFH in July, 2018.
Background of the Business Combination, page 111
21. Please revise paragraph three to disclose the relationship between
Credit Suisse and NFC.
Certain Projected Financial Information, page 121
22. Please revise to indicate why the NFC board of directors did not
review any financial
projections prepared by UFH's management.
23. Please revise to indicate in what sense the financial projections
prepared by NFC's
management are "more conservative" than those prepared by UFH
management.
Waiver of Corporate Opportunities, page 133
24. Please revise to indicate how your proposed charter will make the
delineation between
what constitutes a corporate opportunity for NFH, and what constitutes
a commercial
opportunity that a director or officer may otherwise pursue in his or
her individual
capacity.
The Investment Environment, page 169
25. We note that you cite to industry research for information and
statistic regarding economic
trends. Please provide us with marked copies of any materials that
support these and any
other third party statements, clearly cross-referencing a statement
with the underlying
factual support.
Antony Leung
FirstName LastNameAntony Leung
New Frontier Corp
Comapany 2019
October 7, NameNew Frontier Corp
Page 5
October 7, 2019 Page 5
FirstName LastName
Regulatory Matters, page 176
26. Please revise to enumerate and discuss all applicable Chinese laws and
regulations,
including foreign investment in the healthcare industry, material to
conducting the
company's operations, including the impact or likely impact of each
law and regulation on
those operations.
Beneficial Ownership of Securities, page 203
27. Please revise to indicate the individual(s) who have
voting/dispositive power for the
shares held by Fosun Industrial Group, Nan Fung Group, and Vivo
Capital Fund IX.
Healthy Harmony Holdings LP- Notes to the Consolidated Financial Statements
1. General Information
Information about subsidiaries, page F-39
28. We note your investment in Chindex International Inc. Please clarify
in your disclosure
the nature of the Chindex business and how it is accounted for in the
financial statements.
4. Revenue from Contracts with Customers
Healthcare Services, page F-55
29. In the fifth paragraph on page 167, you stated (in part) that UFH
often partners with well-
known hospitals in tier one cities to expand the number of advanced
services it is able to
offer. You also referred to your asset light strategy through
management contracts on page
168. If material, please disclose UHF's policies for recognizing
revenues from such
arrangements and advise us.
Healthy Harmony Holdings LP- Notes to the Consolidated Financial Statements
16. Related Party Transactions
(c) Compensation of key management personnel of the Group, page F-65
30. Please further disclose any payments or benefits to which certain key
executives and/ or
shareholders are entitled pursuant to a change in control or the
closing of the proposed
business combination. We note your disclosure in Section 7.17 of the
Transaction
Agreement set forth on page A-51.
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.
You may contact Kathryn Jacobson, Senior Staff Accountant, at
202-551-3365, or Robert
S. Littlepage, Accounting Branch Chief, at 202-551-3361, if you have questions
regarding
comments on the financial statements and related matters. Please contact Paul
Fischer, Staff
Antony Leung
New Frontier Corp
October 7, 2019
Page 6
Attorney, at 202-551-3415,or Celeste M. Murphy, Legal Branch Chief, at
202-551-3257, with
any other questions.
Sincerely,
FirstName LastNameAntony Leung
Division of
Corporation Finance
Comapany NameNew Frontier Corp
Office of Real Estate
& Construction
October 7, 2019 Page 6
cc: Jonathan Rochwarger
FirstName LastName