United States securities and exchange commission logo
August 31, 2020
James McEntee
President and Chief Financial Officer
FINTECH ACQUISITION CORP III PARENT CORP
c/o FinTech Acquisition Corp. III
2929 Arch Street, Suite 1703
Philadelphia, PA 19104-2870
Re: FINTECH ACQUISITION
CORP III PARENT CORP
Registration
Statement on Form S-4
Filed August 5,
2020
File No. 333-240410
Dear Mr. McEntee:
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 5, 2020
Frequently Used Terms, page ii
1. If material to
investors, please define Reimbursable Transaction Expenses. In this regard,
we note that the term
is defined by reference to disclosure schedules to which investors
may not have access.
Risk Factors
"To acquire and retain a segment of our merchants . . .", page 18
2. You disclose that
"gaining and maintaining loyalty or exclusivity can require financial
concessions to maintain
current distribution partners and merchants or to attract potential
distribution partners
and merchants from [y]our competitors," and "[you] have been
James McEntee
FirstName LastNameJames CORP
McEntee
FINTECH ACQUISITION III PARENT CORP
Comapany
August 31, NameFINTECH
2020 ACQUISITION CORP III PARENT CORP
August
Page 2 31, 2020 Page 2
FirstName LastName
required, and expect to be required in the future, to make concessions
when renewing
contracts with [y]our distribution partners and such concessions can
have a material
impact on [y]our financial condition or operating performance." Please
briefly describe
the types of financial and other concessions you have made and expect
to make in the
future.
"We may not be able to successfully execute our strategy . . .", page 27
3. You disclose that "[a] significant part of [y]our growth strategy is
to enter new vertical
markets through platform acquisitions of vertically focused integrated
payment and
software solutions providers and to expand within [y]our existing
vertical markets through
selective tuck-in acquisitions." Please clarify whether you have any
current plans or
agreements for acquisitions.
"We rely on bank sponsors . . .", page 30
4. Please disclose the length of the term of your agreements to sponsor
your ACH network
with Wells Fargo and Fifth Third, and briefly describe any other terms
material to
understanding these agreements and the agreement with BMO Harris.
Please tell us what
consideration you have given to filing these agreements as material
contracts. See Item
601(b)(10) of Regulation S-K.
"Our initial stockholders, directors and officers may have a conflict of
interest . . .", page 39
5. The bulleted list beginning on page 39 does not actually appear to
list the conflicts of your
initial stockholders, directors, and officers. Please revise for
consistency.
Proposal No. 1 The Business Combination Proposal
Consideration, page 66
6. You disclose that " the aggregate consideration to be paid in the
Transactions will consist
of . . . based on Holdings current capitalization, assuming no
redemptions, an estimated
$565.5 million in cash[, and] 48.0 million shares of Parent s common
stock." Please
provide more detail regarding how you arrived at the $565.5 amount of
cash consideration
and 48.0 million shares of common stock.
Earnout Shares, page 66
7. Please define the "Median Target."
Additional Agreements
Director Nomination Agreement, page 76
8. We note your disclosure that "[p]ursuant to the Director Nomination
Agreement, GTCR
will be granted certain rights to nominate members of the board of
Parent following the
transaction, subject to certain conditions set forth in the Director
Nomination
Agreement." Please briefly describe these certain rights and certain
conditions. Further,
James McEntee
FirstName LastNameJames CORP
McEntee
FINTECH ACQUISITION III PARENT CORP
Comapany
August 31, NameFINTECH
2020 ACQUISITION CORP III PARENT CORP
August
Page 3 31, 2020 Page 3
FirstName LastName
please file the Director Nomination Agreement as an exhibit to your
registration
statement, or tell us why you do not believe you are required to do
so. See Item
601(b)(10) of Regulation S-K.
Background of the Merger , page 77
9. Please revise throughout to provide details of the negotiations of the
material terms of the
transaction. Your disclosure should indicate the particular views and
positions that were
discussed at each meeting, as applicable, and how you reached final
agreement on such
terms. Such terms include, but are not limited to, consideration
amounts, purchase price
adjustments and the agreement to include earnout shares, material
termination provisions
and termination fees, stockholder approval requirements, the size of
the PIPE investment,
your obligations under the TRA, and the percentages held in the
combined company by
each party, including the Company, Seller, and Blocker Seller.
10. There appear to be some discrepancies in meeting dates throughout your
"Background of
the Merger" disclosure. For example, we note the following
disclosures:
On page 79, you disclose that "In January 2020, representatives of the
financial advisor to
Target C introduced representatives of the Company to the management
team of Target C
and, on January 28, 2020, we executed an NDA with Target C. In
February 2019,
representatives of Target C s financial advisor provided
representatives of the Company
with information regarding Target C and, throughout March 2019,
representatives of the
Company held several face-to-face and video conference meetings with
management of
Target C to discuss Target C s business and the terms of a potential
transaction. During
April 2019, representatives of the Company held calls with various
members of Target
C s management team and conducted additional business due diligence
and negotiated the
terms of a potential transaction . . . . On May 18, 2020, the parties
executed a letter of
intent providing (a) for the transaction structure and (b) that the
parties would agree on a
valuation following receipt of updated financials reflecting
performance through the
recent months during the COVID-19 crisis. In early June 2019, the
parties agreed on a
transaction valuation and began preparing materials for confidential
investor marketing.
Throughout June 2019, representatives of the Company worked with
representatives of
Target C" (emphasis added).
Please revise your filing to address what appears to be a discrepancy
in your chronological
discussion of the background of your merger agreement, or tell us why
you have chosen to
present your background discussion in this manner.
Reasons for the Approval of the Merger, page 81
11. To provide balanced disclosure for investors, please briefly describe
any negative factors
considered by your board when determining whether to enter into the
merger agreement
with Paya.
12. We note your disclosure that your board engaged and consulted
"third-party experts and
James McEntee
FirstName LastNameJames CORP
McEntee
FINTECH ACQUISITION III PARENT CORP
Comapany
August 31, NameFINTECH
2020 ACQUISITION CORP III PARENT CORP
August
Page 4 31, 2020 Page 4
FirstName LastName
financial advisors including, but not limited to, Northland, Morgan
Stanley and Stefan
Elephante, a technology advisor." Please amend your disclosure about
the merger to
briefly summarize any third-party reports, valuations, etc., provided
to your board by
Morgan Stanley and Stefan Elephante, including when the board
considered these reports
in relation to the meetings and negotiations discussed in your
"Background of the
Merger."
Description of Fairness Opinion of Northland, page 83
13. Please revise to disclose the data underlying the results reached by
Northland that are
described in this section. For example, disclose the enterprise value,
and the LTM, 2020E
and 20201E revenue and gross profit for each company in the Comparable
Public
Company Analysis. Please provide similar information for the
Comparable M&A
Transaction Analysis. For each analysis, show how the information from
the analysis
resulted in the multiples/values disclosed.
Certain Projected Financial Information, page 91
14. You disclose that "[t]he assumptions and estimates underlying the
prospective financial
information are inherently uncertain and are subject to a wide variety
of significant
business, economic and competitive risks and uncertainties that could
cause actual results
to differ materially from those contained in the prospective financial
information." Please
briefly describe the material assumptions underlying the financial
projections.
Proposal No. 2 The Charter Proposals, page 96
15. You disclose that "[a]mendments to certain provisions of Parent s
amended and restated
certificate of incorporation will require either the affirmative vote
of the holders of at least
662/3% of the voting power of the outstanding capital stock of Parent
or the affirmative
vote of the holders of a majority of the voting power of the
outstanding capital stock of
Parent." Please briefly describe the "certain provisions" discussed in
this bullet point.
Vote Required for Approval, page 98
16. Please clarify whether shareholders will vote for each charter
proposal separately, and
whether charter proposals can be approved individually, or if the
approval of
each proposal is conditioned upon the approval of all proposals. If
these proposals are to
be voted upon separately, please consider unbundling the proposals
into separate
proposals so as to allow shareholders to vote separately on material
matters, or tell us why
you do not believe you are required to do so. Please refer to Rule
14a-4(a)(3) of
Regulation 14A, as well as Question 201.01 of the Division's Exchange
Act Rule 14a-
4(a)(3) Compliance and Disclosure Interpretations.
Material U.S. Federal Income Taxes, page 112
17. It appears from your Exhibit Index that you intend to file a short
form tax opinion as
James McEntee
FirstName LastNameJames CORP
McEntee
FINTECH ACQUISITION III PARENT CORP
Comapany
August 31, NameFINTECH
2020 ACQUISITION CORP III PARENT CORP
August
Page 5 31, 2020 Page 5
FirstName LastName
exhibit 8.1 to your proxy/registration statement. Please amend your
disclosure to clearly
state that the disclosure in the tax consequences section of the
prospectus is the opinion of
the named counsel. See Section III.B.2. of Staff Legal Bulletin 19,
available on our public
website.
Information About Fintech
Employees, page 118
18. We note your disclosure that "[e]ach of [y]our executive officers and
directors is engaged
in other business endeavors and is not obligated to contribute any
specific number of
hours per week to [y]our affairs, but they intend to devote as much of
their time as they
deem necessary to our affairs until we have completed the Business
Combination." Please
provide risk factor disclosure related to your officers and directors
engaging in other
business endeavors, and the time they intend to devote to your
business.
Information About Paya
Company Overview, page 130
19. Please disclose the measure by which you determined you are a
"leading" independent
integrated payments and commerce platform.
20. We note your disclosure that "[you] derive most of [y]our revenue from
fees paid by
[y]our customers which principally include a processing fee that is
charged as a
percentage of total payment volume." Please briefly describe your
other sources of
revenue. As a related matter, please clearly define "customer,"
"premier customer," and
"partner," and clarify the manner by which you charge fees or
otherwise generate revenues
from each.
21. We also note your disclosure that "[i]n some cases, including card
processing in [y]our
government and utilities end-market and in ACH and check processing,
fees are charged
in the form of a fixed fee per transaction. [You] also derive a
portion of revenue from
monthly and annual fees for customers to use the Paya Connect platform
and its suite of
value-added services." Please clarify the other ways by which you
charge fees to your
customers. Disclose the percentage of your revenue derived from fees
per transaction,
recurring fees for use of the Paya Connect platform, and any other
source of fees,
respectively, or tell us why you are not required to do so.
Segments, page 131
22. Please clarify whether your Paya connect platform falls into one
segment, or whether and
which services provided by the Paya connect platform are included in
each segment,
respectively.
Key Trends Impacting Our Market, page 133
23. Please tell us whether you commissioned the Accenture market study. If
so, please
James McEntee
FirstName LastNameJames CORP
McEntee
FINTECH ACQUISITION III PARENT CORP
Comapany
August 31, NameFINTECH
2020 ACQUISITION CORP III PARENT CORP
August
Page 6 31, 2020 Page 6
FirstName LastName
provide the consent required by Rule 436 and Section 7 of the
Securities Act.
Partner-centric Distribution, page 136
24. Please clarify what is meant by "future-proof payments platform" and
"sandbox
environment."
Paya's Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Revenue, page 159
25. We note your disclosure that "[t]he increase in Integrated Solutions
revenue was driven by
increased volume from both new and existing customers." Please clarify
the percentage
increase attributable to each of new and existing customers,
respectively, or tell us why
you are not required to do so. In an appropriate place in your filing,
define "new
customers" and "existing customers," including any relevant time
period by which you
define each. Make conforming changes to your filing.
Paya's Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018, page 167
26. The increase in cash provided by operating activities was
significantly impacted by
changes in assets and liabilities, net of the impact of business
acquisitions. Please revise
to discuss these changes.
Critical Accounting Policies
Goodwill and other intangible assets, net, page 170
27. Please clarify when a quantitative test is required in the goodwill
impairment evaluation.
In addition, please provide information for investors to assess the
probability of future
goodwill impairment charges. For example, please disclose whether any
of your reporting
units are at risk of failing the quantitative impairment test or that
the fair value of each of
your reporting units are substantially in excess of carrying value and
are not at risk of
failing. If a reporting unit is at risk of failing, you should
disclose:
the percentage by which fair value exceeded carrying value at the
date of the
most recent step one quantitative test;
the amount of goodwill allocated to the reporting unit;
a more detailed description of the methods and key assumptions
used and how the
key assumptions were determined;
a discussion of the degree of uncertainty associated with the
assumptions; and
a description of potential events and/or changes in circumstances
that could
reasonably be expected to negatively affect the key assumptions.
Please refer to Item 303(a)(3)(ii) of Regulation S-K, which requires a
description of
James McEntee
FirstName LastNameJames CORP
McEntee
FINTECH ACQUISITION III PARENT CORP
Comapany
August 31, NameFINTECH
2020 ACQUISITION CORP III PARENT CORP
August
Page 7 31, 2020 Page 7
FirstName LastName
known uncertainties, and Section V of the Commission s Guidance
Regarding
Management s Discussion and Analysis of Financial Condition and
Results of Operations,
SEC Release No. 34-48960, issued December 19, 2003 and available on
our website at
www.sec.gov.
Conflicts of Interest, page 190
28. We note your disclosure that "Parent s certificate of incorporation
will, to the maximum
extent permitted from time to time by Delaware law, renounce any
interest or expectancy
that Parent has in, or right to be offered an opportunity to
participate in, specified business
opportunities that are from time to time presented to certain of
Parent s officers, directors
or shareholders or their respective affiliates, other than those
officers, directors,
shareholders or affiliates who are Parent s or Parent s
subsidiaries employees." Please
amend your filing to include risk factor disclosure describing the
risks to shareholders
related to this provision.
Financial Statements, page F-1
29. Please tell us your consideration and disclose why separate financial
statements of
FinTech Acquisition Corp. III Parent Corp. have not been presented.
GTCR-Ultra Holdings II, LLC Audited Financial Statements
Notes to Consolidated Financial Statements, page F-82
30. Please disclose supplementary financial information. Refer to Item 302
of Regulation S-K.
6. Long-term debt, page F-98
31. Reference is made to page 169 where the maximum net leverage ratio
permitted by the
Credit Agreement's financial covenant is discussed. Please provide
similar disclosure
regarding this covenant in Note 6.
General
32. Please file the following agreements as exhibits, or tell us why you
believe you are not
required to do so:
Agreement with AWS;
Tax Receivable Agreement; and
Strategic Alliance Agreement.
See Item 601(b)(10) of Regulation S-K.
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.
James McEntee
FINTECH ACQUISITION CORP III PARENT CORP
August 31, 2020
Page 8
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 Adam Phippen at (202) 551-3336 or Angela Lumley at
(202) 551-
3398 if you have questions regarding comments on the financial statements and
related
matters. Please contact Katherine Bagley at (202) 551-2545 or Lilyanna Peyser
at (202) 551-
3222 with any other questions.
FirstName LastNameJames McEntee Sincerely,
Comapany NameFINTECH ACQUISITION CORP III PARENT CORP
Division of Corporation Finance
August 31, 2020 Page 8 Office of Trade & Services
FirstName LastName