March 12, 2020
Jason Mudrick
Chief Executive Officer
Mudrick Capital Acquisition Corporation
527 Madison Avenue, 6th Floor
New York, NY 10022
Re: Mudrick Capital Acquisition Corporation
Registration Statement on Form S-4
Filed February 14, 2020
File No. 333-236460
Dear Mr. Mudrick:
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 February 14, 2020
Questions and Answers About the Proposals for MUDS Stockholders, page 8
1. Please disclose here the estimated voting power of the Seller upon the
closing of the initial
business combination. We note your disclosure elsewhere at page 38 that
the Seller will
have "relative majority" voting power for the combined entity.
Q: What are the specific proposals on which I am being asked to vote at the
MUDS special
meeting?
Proposal No. 7, page 9
2. We note that your forum selection provision identifies the Court of
Chancery of the State
of Delaware as the exclusive forum for certain stockholder litigation
except "any action to
enforce any liability or duty under the Securities Act or the Exchange
Act for which
Jason Mudrick
FirstName LastNameJason Mudrick
Mudrick Capital Acquisition Corporation
Comapany2020
March 12, NameMudrick Capital Acquisition Corporation
March 12, 2020 Page 2
Page 2
FirstName LastName
federal courts have exclusive jurisdiction." If this provision does
not apply to actions
arising under the Securities Act, please ensure that your disclosure
and the exclusive
forum provision in your Second Amended and Restated Certificate of
Incorporation states
this clearly. In this regard, we note that Section 22 of the
Securities Act creates
concurrent jurisdiction for federal and state courts, rather than
exclusive federal
jurisdiction, over all suits brought to enforce any duty or liability
created by the Securities
Act or the rules and regulations thereunder.
Summary Term Sheet, page 25
3. The value of the aggregate consideration of $537,000 disclosed here
and elsewhere
appears inconsistent with your computation of preliminary estimated
consideration of
$589,435 disclosed on page 171. Please reconcile and revise your
disclosures as
appropriate.
4. Please revise page 28 to include additional details to describe the
conflict of interests
related to Mr. Mudrick and Mudrick Capital Management and its
affiliated funds. In this
regard, please describe the related interests in and affiliation with
the Seller. We note
related disclosures on page 98.
Risks Related to MUDS and the Business Combination
Sponsor, certain members of the MUDS Board and certain of MUDS' officers have
interests,
page 61
5. Please tell us, and revise, as appropriate, to clarify whether Mr.
Mudrick participated in
the initial business combination discussions with the Seller. Please
also identify the
members of your board and management who will continue to hold
positions at the
combined entity.
Background of the Business Combination, page 96
6. We note that Mudrick Capital Acquisition Corporation sent written
proposals to five
potential targets other than Hycroft Mining Corporation. Please expand
the discussion to
describe how the consideration of these target businesses progressed
during the period
when Mudrick was considering the transaction with Hycroft and disclose
the reasons why
these alternative targets were not ultimately pursued.
7. We note that in the middle of June 2019, Hycroft Mining Corporation
began to explore
alternative transactions. We further note that Hycroft received
proposals from potential
investors identified as "X" and "Y." Please describe in greater detail
the material
attributes of these alternative equity investments, how the
consideration of these
opportunities progressed and why each particular opportunity was not
pursued.
Jason Mudrick
FirstName LastNameJason Mudrick
Mudrick Capital Acquisition Corporation
Comapany2020
March 12, NameMudrick Capital Acquisition Corporation
March 12, 2020 Page 3
Page 3
FirstName LastName
Summary of Greenhill's Financial Analysis
Selected Comparable Company Analysis, page 122
8. We note that Greenhill derived an implied enterprise value range of
$53.0 million to
$717.0 million based on the low and high implied enterprise values for
the Seller. Please
disclose the relative size and attributes of the companies selected
for the comparable
company analysis.
The Business Combination, page 127
9. We are unable to locate the financial model included as Table 10-6 in
the Hycroft
Technical report as referenced on page 127 of your filing. Please
advise.
The Business Combination
Sources and Uses for the Business Combination, page 134
10. Please disclose the intended uses of the "Remaining Cash" that will
remain on the books
of HYMC as a result of the business combination.
The Purchase Agreement and Related Agreements
Amended and Restated Registration Rights Agreement, page 159
11. When available, please revise to disclose the approximate number of
Class A shares of
HYMC common stock which you will be required to register pursuant to
the Amended
and Restated Registration Rights Agreement. We note your description
of "Registrable
Security" in Annex D.
Unaudited Pro Forma Condensed Combined Financial Information
Pro Forma Condensed Combined Balance Sheet, page 165
12. We note your disclosure on page 36 and elsewhere that 3,584,615 shares
of MUDS Class
B common stock will be surrendered. Please show us how this
transaction is reflected in
your pro forma balance sheet and in the computation of pro forma
shares on page 176.
Revise your disclosures as appropriate.
Note 1. Basis of Presentation
Accounting for the Business Combination, page 169
13. You state that the Business Combination will be accounted for as a
reverse
recapitalization with Hycroft Mining Corporation ("Seller") treated as
the accounting
acquirer and Mudrick Capital Acquisition Corporation ("MUDS") treated
as the acquired
company. Please tell us why you believe that Hycroft is the accounting
acquirer as it
appears from the disclosures on page 176 that Seller's common
stockholders (excluding
Lien Noteholders) will own approximately less than 1% of the equity
interest in the
Jason Mudrick
FirstName LastNameJason Mudrick
Mudrick Capital Acquisition Corporation
Comapany2020
March 12, NameMudrick Capital Acquisition Corporation
March 12, 2020 Page 4
Page 4
FirstName LastName
combined entity. Please provide us a comprehensive analysis of the
factors considered
pursuant to ASC 805-10-55-11 through 55-15 to support your conclusion
and clarify your
disclosures. In this regard, please disclose how you considered the
composition of the
board of directors upon the consummation of business combination and
which party has
the ability to elect or appoint or to remove a majority of the board
of directors of the
combined entity.
14. It appears that retained earnings of Mudrick Capital is carried over
in the pro forma
combined balance sheet. Considering your disclosure that Mudrick has
been treated as the
acquired company, explain to us how this is appropriate and revise as
necessary.
Notes to the Unaudited pro Forma Condensed Combined Financial Statements
2. Adjustment to the Unaudited Pro Forma Condensed Combined Balance Sheet as of
September
30, 2019, page 172
15. Please disclose the number of shares issued, canceled or redeemed for
each of the equity
transaction disclosed here and reconcile such transactions and share
computations to the
disclosures in table of estimated pro forma shares on page 176.
16. Please explain in detail stockholder's equity adjustment 2(c)(4) and
show the computation
of MUDS Class A common stock that are distributed to existing owners
of Seller common
stock.
17. Please explain to us the basis for the adjustment 2(g)(4) relating to
reduction of $25.7
million of 2.0 Lien notes and clarify the disclosures.
4. Adjustments to the Unaudited Pro Forma Condensed Statement of Operations for
the Year
Ended December 31, 2018, page 175
18. Please show us where the effect of the obligations relating to $54.7
million of New
Subordinated notes have been included in adjustment 4(e).
5. Pro Forma Loss Per Share, page 176
19. Please revise to provide the computations of number of shares for each
party, disclosing
separately each of the underlying transactions. In addition, please
reconcile the
transactions and share calculations disclosed here to such disclosures
on page 27 and 292
and revise as necessary.
Information about Seller and the Hycroft Business, page 197
20. Please revise to disclose the total cost for or book value of the
property and its associated
plant and equipment. See Item 1304(b)(2)(iii) of Regulation S-K.
21. Please revise to disclose the cut-off grade for the mineral resource
estimate and the
assumed metallurgical recovery factor. See Item 1304(d)(1) of
Regulation S-K. In the
case of a variable net smelter return (NSR) cut-off consider including
a range of NSR
Jason Mudrick
FirstName LastNameJason Mudrick
Mudrick Capital Acquisition Corporation
Comapany2020
March 12, NameMudrick Capital Acquisition Corporation
Page 5
March 12, 2020 Page 5
FirstName LastName
values.
22. Please revise to disclose the cut-off grade, the metallurgical
recovery factor, and the point
of reference for the mineral reserve estimate. See Item 1304(d)(1) of
Regulation S-K. In
the case of a variable net smelter return (NSR) cut-off consider
including a range of NSR
values.
23. Please revise to include the information required under Item
1304(f)(1) of Regulation S-K
for first time reporting of reserves and resources including a brief
discussion of the
material assumptions and criteria in the disclosure and cite
corresponding sections of the
technical report summary.
Seller's Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources, page 238
24. Please expand your discussion to disclose your expected capital
expenditures for the year
ended December 31, 2020. In this regard, we note your disclosure on
page 52 that you
expect to incur "considerable" expenditures relating to your new
two-stage pre-oxidation
and leach process. Refer to Item 303(a)(2)(i) of Regulation S-K.
Beneficial Ownership of Securities , page 292
25. Please disclose the natural person or persons who directly or
indirectly exercise sole or
shared voting or investment control over the shares that will be held
by each of Whitebox
Advisors, Highbridge Capital Management LLC, Aristeia Capital, LLC and
Wolverine
Asset Management, LLC. Refer to Item 403 of Regulation S-K and
Exchange Act Rule
13d-3.
Exhibit 96.1, page II-8
26. Please provide the disclosures required by Item 601 paragraphs
(b)(96)(iii)(B)(10)(ii) and (b)(96)(iii)(B)(10)(v) of Regulation S-K
regarding mineral
processing and metallurgical testing.
27. Please define and explain component 1 and component 2 as used in Table
11-7 on page
144 regarding variogram parameters.
28. We are unable to locate the back-up cost assumptions in Section 10 and
in Section
14.9.1.1 as referenced on page 158 of your technical report summary.
Please advise.
29. Please disclose the reason for using the selected price with respect
to your mineral
resources. See Item 601(b)(96)(iii)(B)(11)(iii) and Item 1302(d)(2) of
Regulation S-K.
30. Please provide the disclosures required by Item 601 paragraphs
(b)(96)(iii)(B)(11)(v) and (b)(96)(iii)(B)(11)(vii) of Regulation S-K
regarding mineral
resource estimates.
Jason Mudrick
Mudrick Capital Acquisition Corporation
March 12, 2020
Page 6
31. Please provide the disclosures required by Item
601(b)(96)(iii)(B)(12)(vi) of Regulation
S-K regarding mineral reserve estimates.
32. We note that you plan to leach sulfide ore rather than oxide ore. Please
tell us if you
considered Item 601(b)(96)(iii)(B)(14)(iv) of Regulation S-K in your
assessment of
processing and recovery methods.
33. Please provide the disclosures required by Item
601(b)(96)(iii)(B)(17)(vi) of Regulation
S-K regarding environmental studies, permitting, and plans negotiations
or agreement
with local individuals or groups.
34. Please revise the title of paragraph (25) to "Reliance on Information
Provided by the
Registrant" and provide the disclosures required by Item 1302(f)(2) of
Regulation S-K.
Additionally, explain the basis for the inclusion of "other experts" in
this section.
General
35. Please clarify whether the company will be a "controlled company" under
the definition of
the NASDAQ stock exchange following the consummation of the business
combination
and provide appropriate disclosure on the prospectus cover page and risk
factors to the
extent appropriate. In this regard, we note your disclosure in the risk
factor section on
page 60 indicating that there will be a concentration of ownership
following the business
combination.
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.
For questions regarding comments on engineering matters, you may contact
John
Coleman, Mine Engineer, at (202) 551-3610. You may contact Joanna Lam, Staff
Accountant, at
(202) 551-3476 or Raj Rajan, Staff Accountant, at (202) 551-3388 if you have
questions
regarding comments on the financial statements and related matters. Please
contact Anuja A.
Majmudar, Attorney-Adviser, at (202) 551-3844 or, in her absence, Loan Lauren
Nguyen, Legal
Branch Chief, at (202) 551-3642 with any other questions.
Sincerely,
FirstName LastNameJason Mudrick
Comapany NameMudrick Capital Acquisition Corporation Division of Corporation
Finance
Office of Energy &
Transportation
March 12, 2020 Page 6
FirstName LastName Cohen
cc: Jackie