United States securities and exchange commission logo
November 13, 2020
Christopher Smith
Chairman and Chief Executive Officer
Ortho-Clinical Diagnostics Bermuda Co. Ltd.
1001 Route 202
Raritan, New Jersey 08869
Re: Ortho-Clinical
Diagnostics Bermuda Co. Ltd.
Draft Registration
Statement on Form S-1
Submitted October
16, 2020
CIK No. 0001828443
Dear Mr. Smith:
We have reviewed your draft 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 providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. 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 the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1
Market, industry and other data, page iv
1. Your disclosure at the
top of page v disclaims responsibility for the accuracy and
completeness of the
information in your prospectus. Please revise to remove this
disclaimer.
Prospectus Summary, page 1
2. With reference to your
disclosure on page 48 and elsewhere, we note that you have a
significant amount of
indebtedness. Please revise the Summary to explain the types and
amounts of your debts.
Also explain briefly the impacts that this debt has or could have
on your business.
Christopher Smith
Ortho-Clinical Diagnostics Bermuda Co. Ltd.
November 13, 2020
Page 2
3. Revise to highlight that you will be a "controlled company" and the
implications of such
status. We note your disclosures on page 57 in this regard.
Our Sponsor, page 10
4. Please tell us why it is appropriate to identify Carlyle Group as your
"sponsor." In this
regard, please clarify whether Carlyle Group has any duties,
obligations or roles beyond
that of a controlling shareholder. Once known, also quantify
Carlyle's beneficial ownership stake following the offering. With
reference to the third
paragraph on page 98, also tell us whether Carlyle or its affiliates
hold any of the Senior
Notes or other indebtedness of the company.
5. Please revise to state the price that Carlyle Group paid for the
company in the Acquisition
transaction. To the extent that offering proceeds will be used to
repay debt issued in the
Acquisition, please also discuss and quantify the debt issued in the
Acquisition.
Summary consolidated financial data, page 13
6. In note (5) on page 16 you refer investors to see Use of Non-U.S.
GAAP Financial
Measures for additional information related to the use and
presentation of and the related
risks for Adjusted EBITDA, Management EBITDA, Adjusted Net Income
(Loss) and
Core revenue constant currency growth rate. However we do not see
where you have
provided this information. Please advise us or revise your Use of
Non-U.S. GAAP
Financial Measures" cross reference accordingly.
7. In note (f) on page 17 you refer investors to "Management s
discussion and analysis of
financial condition and results of operations" for additional detail
of Management
adjustments and realized foreign exchange losses (gains). However it
does not appear as
though the nature of the items in this line item are clearly
quantified and described in that
section. Please clarify where these disclosures have been made or
revise your filing to
clearly quantify and describe any material adjustments in this line
item.
Our substantial indebtedness could adversely affect our financial condition...,
page 48
8. Please revise to quantify the amount of your variable rate
indebtedness that uses LIBOR
as a benchmark. Depending on the amount at issue, consider including
the final two
paragraphs under a separate risk factor heading.
The terms of the Credit Agreement, the 2025 Notes Indenture and the 2028 Notes
Indenture
impose restrictions...,, page 51
FirstName LastNameChristopher Smith
9. Please revise the risk factor to explain whether the covenants contained
in the 2014 Credit
Comapany NameOrtho-Clinical
Agreement have materiallyDiagnostics Bermuda
or adversely affectedCo. Ltd.
your ability to
finance operations or
capital
November 13,needs.
2020 Page 2
FirstName LastName
Christopher Smith
FirstName LastNameChristopher Smith
Ortho-Clinical Diagnostics Bermuda Co. Ltd.
Comapany 13,
November NameOrtho-Clinical
2020 Diagnostics Bermuda Co. Ltd.
November
Page 3 13, 2020 Page 3
FirstName LastName
Special note regarding forward-looking statements, page 60
10. Given that this is an initial public offering, please remove your
reference to the Private
Securities Litigation Reform Act of 1995.
Use of Proceeds, page 63
11. Please revise to disclose the approximate amount intended to be used
for each of the three
purposes identified. With respect to debt repayments, please refer to
Instruction 4 to
Regulation S-K, Item 504.
Management's discussion and analysis of financial condition and results of
operations
Critical accounting estimates and summary of significant accounting policies
Stock-based compensation, page 108
12. Once you have an estimated offering price or range, please explain to
us how you
determined the fair value of the common stock underlying your equity
issuances and the
reasons for any differences between the recent valuations of your
common stock leading
up to the IPO and the estimated offering price. This information will
help facilitate our
review of your accounting for equity issuances including stock
compensation.
Our company, page 110
13. We note that you state on page 111 that your COVID-19 antibody test is
the only test
currently specified as a manufacturing step before release to
hospitals and patients. Please
revise to provide additional context to this disclosure and clarify
the significance of your
antibody test being a "manufacturing step."
Our Industry, page 117
14. We refer to the caption under the table on page 118. Please revise to
remove the
attribution to an unidentified third-party source or, alternatively,
identify the source and
tell us whether you commissioned the report.
Collaboration arrangements, page 127
15. Please discuss the material terms of your collaboration agreement with
Grifols Diagnostic
Solutions, Inc. Please also file this agreement as an exhibit to the
registration or advise.
(s) Property, plant and equipment and depreciation, page F-17
16. You disclose that customer leased instruments are depreciated over the
shorter of the
contract length or useful economic life. In determining the
depreciation period for leased
instruments, please tell us how you considered ASC paragraphs
360-10-35-3 and 4.
Additionally reconcile your disclosure in this note with your
disclosure on page 105 that
indicates the depreciable life of leased instruments may extend beyond
the lease term in
certain instances.
Christopher Smith
Ortho-Clinical Diagnostics Bermuda Co. Ltd.
November 13, 2020
Page 4
Notes to the Consolidated Financial Statements for the Years Ended December 31,
2019
Note 3 - Summary of significant accounting policies
(t) Goodwill and other identifiable intangible assets, page F-18
17. You state on page F-19 that based on your qualitative impairment test
for the fiscal year
ended December 29, 2019, the fair value of your reporting unit is in
excess of its carrying
value. You state on page F-90 that you assessed the carrying value of
goodwill as a result
of the COVID-19 pandemic and it does not appear that you have recorded
any
impairments. We note that the company incurred net losses for the
three years ended
December 31, 2019 and the six months ended June 28, 2020 and cash
flows significantly
declined in the six months ended June 28, 2020. Please tell us what
factors you considered
in determining that a quantitative impairment test was not necessary
to consider if any
impairments were required to be recorded. In this regards, at a
minimum please address
the factors in ASC 350-20-35-3C. In addition, please tell us how you
concluded that you
had one reporting unit.
Note 20 - Segments and geographic information, page F-67
18. You disclose on page F-20 that in the first quarter of 2020, the
financial information that
was regularly reviewed by the Chief Operating Decision Maker was
changed, which
resulted in three geographically-based reportable segments: North
America, EMEA and
Greater China. Please address the following:
Clarify if the information in this footnote has been recast in
accordance with ASC
280-10-50-34.
Explain to us if the results of your Japan, Asia- Pacific
(ASPAC) and Latin America
(LATAM) operating segments have been aggregated and tell us which
line
item(s) include the results of these operating segments.
Explain to us the material components of the "Other" segment
line item.
To the extent you are aggregating segments provide us with an
analysis of each of
the aggregation criteria under ASC paragraphs 280-10-50-11 to
50-19.
19. Please separately disclose your revenues and long-lived assets related
to your country of
domicile and any individual foreign countries that are material. Also,
disclose the method
you use to attribute revenues from external customers to individual
countries. Refer to
ASC 280-10-50-41.
Exhibits
FirstName LastNameChristopher Smith
20. With reference to disclosures on pages 25 and F-62-63 as well as other
descriptions
Comapany NameOrtho-Clinical
contained Diagnostics
in the prospectus, please fileBermuda Co. Ltd.Agreement as an
exhibit to the
the Acquisition
registration
November 13, 2020statement.
Page 4 Refer to Regulation S-K, Item 601(b)(2).
FirstName LastName
Christopher Smith
FirstName LastNameChristopher Smith
Ortho-Clinical Diagnostics Bermuda Co. Ltd.
Comapany 13,
November NameOrtho-Clinical
2020 Diagnostics Bermuda Co. Ltd.
November
Page 5 13, 2020 Page 5
FirstName LastName
General
21. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
22. With reference to Release No. 33-10825, please revise your next draft
submission or
filing, as applicable, to reflect the amendments to Regulation S-K,
Items 101, 103, and
105, which became effective as of November 9, 2020.
You may contact Eric Atallah at (202) 551-3663 or Mary Mast at (202)
551-3613 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Courtney Lindsay at (202) 551-7237 or Joe McCann at (202) 551-6262 with
any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Life
Sciences
cc: Patrick H. Shannon