United States securities and exchange commission logo
September 23, 2020
Andrew A. McKnight
Chief Executive Officer
Fortress Value Acquisition Corp.
1345 Avenue of the Americas
46th Floor
New York, New York 10105
Re: Fortress Value
Acquisition Corp.
Registration
Statement on Form S-4
Filed August 27,
2020
File No. 333-248433
Dear Mr. McKnight:
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 August 27, 2020
Fortress Value Acquisition Corp.
Notice of the Special Meeting of Stockholders, page 1
1. The disclosures
regarding your exclusive forum provision at pages 1, 70, 255 and 300
appear to be
inconsistent. Please disclose whether your provision applies to actions
arising under the
Securities Act or Exchange Act. In this regard, Section 27 of the
Exchange Act creates
exclusive federal jurisdiction over all suits brought to enforce any
duty or liability
created by the Exchange Act or the rules and regulations thereunder, and
Section 22 of the
Securities Act creates concurrent jurisdiction for federal and state courts
over all suits brought
to enforce any duty or liability created by the Securities Act or the
rules and regulations
thereunder. If the provision applies to Securities Act claims, please
Andrew A. McKnight
FirstName LastNameAndrew A. McKnight
Fortress Value Acquisition Corp.
Comapany 23,
September NameFortress
2020 Value Acquisition Corp.
September
Page 2 23, 2020 Page 2
FirstName LastName
also revise your prospectus to state that there is uncertainty as to
whether a court would
enforce such provision and that investors cannot waive compliance with
the federal
securities laws and the rules and regulations thereunder.
Unaudited Historical Comparative and Pro Forma Combined Per Share Data of FVAC
and the
Companies, page 40
2. Please show us how you derived historical book value per share for
MPMO as of
December 31, 2019 and June 30, 2020. Revise your disclosures as
necessary.
Certain Projected Financial Information of the Companies, page 86
3. Please describe and quantify, as applicable, the material assumptions,
such as the future
demand for, and prices of, rare earth minerals and products, that
underlie the projected
financial information. Please also disclose the assumptions used
regarding the timing of
the Stage II optimization project and Stage III downstream expansion
that underlie those
projections, as applicable.
4. We note disclosure on page 107 of a three-stage projection prepared by
SNR and MPMO.
Based on your disclosure on page 107, stage one of the projections has
been completed;
stage two appears assumed to be completed in 2022; and stage three of
the projections
appears assumed to be completed in 2025 and later. To the extent that
SNR and MPMO
provided to the financial advisor and the registrant projected
financial information beyond
2023, please revise the presentation of projections at page 86 to
disclose any such material
projected financial information.
Background of the Business Combination, page 88
5. Revise to discuss how the parties determined the enterprise value for
the companies,
the exchange ratio based on that value, and the number of earn-out
shares.
6. We note the reference on page 106 about an investor presentation
prepared by Morgan
Stanley, dated June 2020, for SNR, MPMO and FVAC. Please disclose in
your
background section when this presentation was made and summarize the
materials
presented. Please also provide your analysis as to whether Morgan
Stanley's
presentation was materially related to the transaction under Item 4(b)
of Form S-4. If so,
please revise to disclose information required by Item 1015(b) of
Regulation M-A and to
include the report, opinion or appraisal as an exhibit.
Material U.S. Federal Income Tax Consequences, page 113
7. The exhibit index indicates that the tax opinions by Sidley Austin
LLP, and Simpson
Thacher & Bartlett LLP will be filed in an amendment as exhibits 8.1
and 8.2,
respectively. If you elect to use a short-form opinion, state clearly
in the two exhibits and
this section that the disclosure constitutes the opinion of the named
law firm(s). See
Section III.B.2 of Staff Legal Bulletin 19, Legality and Tax Opinions
in Registered
Andrew A. McKnight
FirstName LastNameAndrew A. McKnight
Fortress Value Acquisition Corp.
Comapany 23,
September NameFortress
2020 Value Acquisition Corp.
September
Page 3 23, 2020 Page 3
FirstName LastName
Offerings.
Selected Historical Financial Information of MPMO, page 145
8. We note from page 211 that due to the revenue treatment resulting from
the Shenghe
implied discount, the amount of revenue you recorded for periods from
July 1, 2019 to
June 5, 2020 is not comparable to the amount of revenue recorded in
other periods. Please
provide a note here to briefly describe or cross-reference to a
discussion included in the
filing. Refer to Instruction 2 to Item 301 of Regulation S-K.
2. Accounting Policies, page 158
9. Please revise to explain the reclassification adjustments you made on
pages 151 and 152.
Refer to Rule 11-02(b)(6) of Regulation S-X.
Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet, page 159
10. Please revise Note (D) to disclose the details of MPMO s historical
debt that will be
settled concurrently with the close of the transaction. Refer to Rule
11-02(b)(6) of
Regulation S-X.
11. Please revise Note (E) to describe the terms of SNR s Earnout Shares
and how you
determined the amounts of fair values of SNR s Earnout Shares. Refer
to Rule 11-
02(b)(6) of Regulation S-X.
Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations,
page 160
12. Please revise Note (EE) to explain how the amounts in the adjustments
for the periods
presented were determined. In this regard, also disclose the
amortization methods and the
useful lives or periods of amortization of the mineral rights. Refer
to Rule 11-02(b)(6) of
Regulation S-X.
13. Please revise Note (GG) to show the computation of interest expense
eliminated. Refer to
Rule 11-02(b)(6) of Regulation S-X
14. Please revise Note (HH) to disclose how the estimated statutory tax
rate of 29.8% was
derived. In addition, tell us why there are no adjustments for
deferred taxes. Refer to
Rule 11-02(b)(6) of Regulation S-X.
15. Please revise Note (II) to describe whether the new executed executive
agreements are
effective at the same time Merger is consummated and disclose how the
amounts were
derived for the adjustments. Refer to Rule 11-02(b)(6) of Regulation
S-X.
History of Ownership and Current Operations, page 181
16. We note your statement that Molycorp, Inc., invested over $1.7 billion
of capital primarily
in constructing your rare earth processing and separation facilities
on the Mountain Pass
mine site. Please disclose the specific amounts invested in the mine
site instead of
Andrew A. McKnight
FirstName LastNameAndrew A. McKnight
Fortress Value Acquisition Corp.
Comapany 23,
September NameFortress
2020 Value Acquisition Corp.
September
Page 4 23, 2020 Page 4
FirstName LastName
Molycorp s total capital investment, which includes multiple
facilities.
Information about the Companies' Business
Rare Earth Industry Overview and Market Opportunity, page 184
17. Please revise to disclose whether you commissioned the CRU Group's
"Rare Earth Market
Study, 2020, CRU" or any other third-party research referenced in the
prospectus. If so,
please file as exhibits the corresponding consents which Securities
Act Rule 436 requires.
Our Resource, page 190
18. We note your disclosure of proven and probable reserves as of July 1,
2020 which
references the report prepared by SRK Consulting for your mining
properties. We will
need to view this technical report, the associated cash flow analysis,
and other information
that establishes the legal, technical, and economic feasibility of
your materials designated
as reserves, as outlined in paragraph (c) of Industry Guide 7. These
documents should be
formatted as Adobe PDF files. Please provide the name and phone number
for a technical
person whom our engineer may call if we have technical questions about
your reserves.
Please contact our Mining Engineer, George K. Schuler, at (202)
551-3718 to arrange for
the submission of the information outlined above.
The Mountain Pass Facility, page 194
19. Please disclose your mine and mill production for the last two years.
This would include
mine/mill tonnage, grade and resulting concentrate tonnages and grade.
Results, page 198
20. Please state the reserve price used to estimate your reserves
including detail regarding the
multiple components used to determine this price and your stated
metallurgical process
recoveries.
MPMO's Management's Discussion and Analysis of Financial Condition and Results
of
Operations
Our relationship with Shenghe, page 210
Our Relationship with Shenghe, page 210
21. We note your disclosure on page 211 that $30.0 million increase in the
contractual balance
owed to Shenghe Resources (Singapore) was not recorded in your
financial statements
and contractual commitment remained off-balance sheet. In addition,
you also state that
the Shenghe implied discount was applied as a reduction to your
off-balance sheet
commitment and therefore was not recognized as revenue. Please explain
to us in detail
the contractual commitments, how it arose and basis for determination
of such contractual
commitment amounts. Please demonstrate to us the accounting basis for
not recording
contractual commitments and the implied discounts. Provide us the
specific accounting
literature that supports your accounting position. In addition, for
the periods presented
Andrew A. McKnight
FirstName LastNameAndrew A. McKnight
Fortress Value Acquisition Corp.
Comapany 23,
September NameFortress
2020 Value Acquisition Corp.
September
Page 5 23, 2020 Page 5
FirstName LastName
disclose the contractual commitments outstanding that remained
off-balance sheet and
implied discounts that were not recognized as revenue.
22. You disclose that the A&R Offtake Agreement modified the definition of
offtake
products in order to remove from the scope of that definition
certain types of future
products. Please clarify the types of future products removed from
such definition.
Key Performance Indicators, page 212
23. Please revise to include the computations of Realized Price per REO MT
reconciling total
value realized for a given period to the product sales revenue
reported in your financial
statements for the periods presented.
Cash Flows, page 225
24. We note significant fluctuations in cash provided by operating
activities during the
periods presented on pages F-23 and F-53. Please expand your
disclosure to include a
robust discussion describing and quantifying the specific effects of
the drivers that
contributed to the material changes in your operating cash flows for
the periods
presented. The disclosure should also include a discussion of the
underlying reasons for
changes in working capital items that affect operating cash flows. See
guidance in Section
IV.B.1 of SEC Release 33-8350.
Certain Relationships and Related Party Transactions
Certain Relationships and Related Person Transactions Companies
Shenghe Agreements, page 282
25. Please clarify what will happen to Shenghe Resources' (Singapore)
89.88 MPMO
preferred units, and Leshan Shenghe s ownership of its 110.98 MPMO
preferred units
issued in connection with the original commercial arrangements, as
part of the closing of
the business combination.
Beneficial Ownership of Securities, page 287
26. Please disclose the natural person or entity that controls Shenghe
Resources Holding Co.,
Ltd., which you indicate at page 282 is publicly listed on the
Shanghai Stock Exchange.
See Item 403 of Regulation S-K and Item 18(a)(5)(ii) of Form S-4.
Financial Statements
Report of Independent Registered Public Accounting Firm, page F-2
27. The audit period stated in the first sentence of the opinion section (
i.e. January 24,2020
through January 31, 2020 ) is inconsistent with the financial
statements presented and
period covered in the opinion. Please revise to provide an audit
report that includes
appropriate period audited consistent with the period covered by the
opinion.
Note 2- Summary of Significant Accounting Policies
Andrew A. McKnight
Fortress Value Acquisition Corp.
September 23, 2020
Page 6
Revenue Recognition, page F-26
28. We note your disclosure that sales to Shenghe under the Offtake Agreement
beginning in
July 2019 also reflect an adjustment for an implicit discount referred as
Shenghe implied
discount . Please disclose your accounting policies regarding Shenghe
implied discount
and explain to us how it complies with ASC 606.
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 Steve Lo at (202) 551- 3394 or Raj Rajan at (202)
551-3388 if you have
questions regarding comments on the financial statements and related matters.
Please contact
George K. Schuler, Mining Engineer, at (202) 551-3718 for engineering related
questions. Please
contact Kevin Dougherty at (202) 551-3721 or Timothy S. Levenberg, Special
Counsel, at (202)
551-3707 with any other questions.
Sincerely,
FirstName LastNameAndrew A. McKnight
Division of
Corporation Finance
Comapany NameFortress Value Acquisition Corp.
Office of Energy &
Transportation
September 23, 2020 Page 6
cc: Jackie Cohen
FirstName LastName