United States securities and exchange commission logo
March 15, 2021
Craig McCaw
Chief Executive Officer
Holicity Inc.
2300 Carillon Point
Kirkland, WA 98033
Re: Holicity Inc.
Draft Registration
Statement on Form S-4
Submitted February
16, 2021
CIK No. 0001814329
Dear Mr. McCaw:
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-4
Cover Page
1. Please expand your
disclosure to discuss the treatment of Astra's Series A, B and C
preferred stock and
convertible notes in the business combination and to reflect that
following the business
combination, Astra's existing stockholders will have over 95% of
the voting interest.
Market and Industry Data, page i
2. We note you state that
you obtained the market and industry data from publications,
surveys or studies
conducted by third parties. Please tell us whether you commissioned
any such data for use
in connection with this offering. If so, please tell us what
Craig McCaw
FirstName LastNameCraig McCaw
Holicity Inc.
Comapany
March NameHolicity Inc.
15, 2021
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consideration you gave to filing the third party's consent as an
exhibit to the registration
statement as required by Section 7 of the Securities Act and
Securities Act Rule 436. In
addition, please revise your disclosure to clearly state that you are
liable for the
information included in your registration statement and remove the
statements that you
cannot assure" the accuracy and completeness of such information.
Questions and Answers about the Business Combination and the Special Meeting
What Holicity Stockholder vote is required for the approval of each proposal
brought before the
Special Meeting?, page 8
3. We note you disclose that if all of your outstanding shares were to be
voted, you would
only need the additional affirmative vote of shares representing
approximately 31% of the
outstanding shares in order to approve the Business Combination.
Please also disclose the
number shares required to approve the Business Combination if the
minimum number of
votes cast at the Special Meeting are cast.
What equity stake will current Holicity Stockholders and Astra stockholders
hold in New Astra?,
page 9
4. We note your tabular disclosure reflects that 260,500,000 shares of
New Astra will be
issued upon completion of the Business Combination assuming no
redemption. However,
we also note that your prospectus cover page states that the total
maximum number of
shares of New Astra Class A common stock expected to be issued at the
Closing of the
Business Combination is approximately 201,277,817, assuming no
redemptions, and the
total number of shares of New Astra Class B common stock expected to
be issued at the
Closing of the Business Combination is approximately 59,222,183, which
amounts to
267,000,000. Please advise or revise.
What material negative factors did Holicity's board of directors consider in
connection with the
Business Combination?, page 11
5. Expand this Question & Answer to also address whether Holicity's board
of directors
considered the conflicts of interest that you suggest in connection
with this transaction.
Summary of the Proxy Statement/Prospectus
Holicity's Board of Directors' Reasons for Approval of the Business Combination
Compelling Contracted Revenue and Pipeline, page 23
6. We note your disclosure that Astra has over "[$150]" million of
contracted revenue from
top commercial and government customers, and a pipeline of "over
[$1.2] billion" active
opportunities at various stages of development. Please expand your
disclosure to discuss
when you expect to realize such contracted revenue and the basis for
your statement
that you have a pipeline of over [$1.2] billion active opportunities
at various stages of
development. In your revised disclosure, describe the material
contracts and any material
assumptions related to your projections.
Craig McCaw
FirstName LastNameCraig McCaw
Holicity Inc.
Comapany
March NameHolicity Inc.
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Risk Factors
New Astra's certificate of incorporation designates the Court of Chancery of
the State of
Delaware as the sole and exclusive forum, page 43
7. We note your disclosure regarding New Astra's exclusive forum does not
appear
consistent. For example, clause (D) of your exclusive forum your
exclusive forum
provision will provide that "the Court of Chancery and the federal
district court for the
District of Delaware shall have concurrent jurisdiction" over any
action arising under the
Securities Act. However, you also disclose that "the federal district
courts of the United
States are the exclusive forum for the Resolution of any action, suit
or proceeding
asserting a cause of action under the Securities Act. We also note you
disclose on pages
160 and 174 that your forum selection provision will not apply to
suits brought to enforce
a duty or liability created by the Securities Act or any other claim
for which the federal
courts have exclusive jurisdiction. Please revise to reconcile these
disclosures.
Background of the Business Combination, page 72
8. Substantially revise your disclosure throughout this section to
provide details regarding
the material issues discussed and the key negotiated terms of the
proposed business
combination with Astra. For example, it is not clear how the parties
determined the type
and amount of consideration and related terms, including the treatment
of Astra's Series
A, B and C preferred stock, Astra's convertible notes, the dual-class
structure, the
Minimum Cash Condition and the PIPE Investment. Please also expand
your discussion
of the business combination agreement to clarify the role of each
party identified in any
negotiation and the material terms negotiated from the initial
proposed LOI to the final
Business Combination Agreement, and discuss how the issues were
resolved, including
changes in any terms favorable to Astra's management and affiliates as
compared to the
public shareholders.
9. Please discuss in greater detail the rocket loss error that Astra
suffered in September 2020.
10. We note that you engaged Deutsche Bank to provide financial advice on
a potential
transaction and assist with the preparation of a financial model of
Astra's business. We
also note your disclosure that Deutsche Bank presented their views on
the valuation of
Astra to Randy Russel, you Chief Investment Officer, and
representatives of Holicity on
December 18, 2020 and also presented on the valuation, peer
comparables, execution of
other transactions and positioning of the combined entity in the
market to your board on
January 29, 2021. We further note your disclosure on page 75 that you
reviewed the
results of diligence conducted by your financial advisors regarding
Astra's operations,
forecasts and the Business Combination in determining that the
Business Combination is
in your best interests and recommending that your stockholders approve
and adopt the
Business Combination. Please note that if a report, opinion or
appraisal materially related
to the transaction has been received from an outside party and is
referred to in the
prospectus, your disclosure must provide the information required by
Item 1015(b) of
Craig McCaw
Holicity Inc.
March 15, 2021
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Regulation M-A with respect to such report, opinion or appraisal. In
addition, any written
materials contained or used in the report, opinion or appraisal, as
well as the consent of
the outside party, must be filed as exhibits to the Form S-4. Please
refer to Items 4(b) and
21(c) of Form S-4. In the alternative, please tell us why you do not
believe Items 4(b) and
21(c) of Form S-4 apply here.
11. Reference is made to our prior comment above. If you did not obtain a
fairness opinion in
connection with this transaction, please clarify your disclosures and
tell us what
consideration you have given to including a risk factor in this
regard.
12. We note the disclosure that "Holicity determined not to continue
negotiations with
Companies W, X, Y or Z, having determined that a business combination
with Astra was
more favorable for Holicity stockholders, as it was immediately
actionable and in an
industry in which Holicity was focused, possessed opportunity for
growth and provided
the best valuation proposition for the Holicity Stockholders and other
financial attributes
that Holicity intended to target at the time of its Initial Public
Offering." Revise to expand
the disclosure to describe the specific reasons Holicity did not
consider each alternative.
The Business Combination Proposal
Holicity's Board of Directors Reasons for the Approval of the Business
Combination, page 74
13. We note that the board of directors considered certain information
reviewed by Holicity s
management, and their advisors, which included comparable target
companies and
comparable transactions in its recommendation to approve the Business
Combination
Agreement and related transaction agreements and the transactions
contemplated thereby.
Please revise to disclose the material comparable target companies and
comparable
transactions referred to in the registration statement.
Projected Financial Information, page 78
14. Please disclose the date that the financial projections were prepared
and quantify the
operational assumptions and expected rocket material costs, launch
operation costs, labor
and other general and administrative expenses discussed on page 79. In
that regard, we
note you disclose that the financial projections do not take into
account any circumstances
or events occurring after the date they were prepared. We also note
certain additional
information contained in an investor presentation filed as Exhibit 99.2
to your Form 8-K
filed on February 3, 2021.
FirstName LastNameCraig McCaw
15. Please change the title of EBITDA to Adjusted EBITDA to conform the
title to that in the
Comapany NameHolicity
investor Inc.
presentation presented in Exhibit 99.2 in the Form 8-K filed on
February 3, 2021,
as well as to
March 15, 2021 Page 4more accurately describe the measure.
FirstName LastName
Craig McCaw
FirstName LastNameCraig McCaw
Holicity Inc.
Comapany
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Business of New Astra
Our Competitive Strengths, page 137
16. We note you disclose that the only way to assess the reliability of a
product, such as
launch services or satellites, is by seeing a history of successful
results. Please discuss the
results of your three test flights, other than the Rocket 3.2.
17. You disclose that your first launch with commercial customers is
planned for 2021.
Please balance this disclosure with a discussion of any operating
requirements you must
meet prior to commencing commercial launches. In that regard, we note
you disclose on
page 144 that Astra must improve propellant depletion controls to
address findings from
Astra's December flight and secure launch licenses with the FAA prior
to commencing
commercial launches.
Astra's Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Research and Development , page 146
18. For the year ended December 31, 2019, you expensed research and
development costs of
$40.1 million. Please include disaggregated disclosure of the nature
of expenses incurred
for each period, along with the following information for each of your
major research and
development projects; in that regard, we note you discuss Rocket 3.2,
potential launch
sites, such as that in Kodiak, Alaska, and spaceports in the filing:
the costs incurred during each period presented and to date on
the project;
the anticipated completion date;
the risks and uncertainties associated with completing
development on schedule, and
the consequences to operations, financial position and liquidity,
if the project is not
completed timely; and
the period in which material net cash inflows from significant
projects are expected to
commence.
Regarding the first bullet point, if you do not maintain research and
development costs by
project, disclose that fact and explain how management maintains and
evaluates research
and development costs. Provide other quantitative or qualitative
disclosure that indicates
the amount of the company's resources being used on the project.
Regarding the second and third bullet points, disclose the amount or
range of estimated
costs and timing to complete the phase in process and each future
phase. To the extent that
information is not estimable, disclose those facts and circumstances,
indicating the
uncertainties that preclude you from making a reasonable estimate.
Craig McCaw
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Holicity Inc.
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March NameHolicity Inc.
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Indebtedness
Convertible Promissory Notes, page 153
19. Please discuss whether this transaction will be deemed to be an equity
financing that
results in either the June or October 2019 Convertible Promissory
Notes converting into
shares of preferred stock.
Description of New Astra Securities
New Astra Preferred Stock, page 155
20. We note you disclose here that there will be no shares of preferred
stock outstanding
immediately upon consummation of the Business Combination. Please
revise your
disclosure to discuss how Astra's Series A, B and C preferred stock
will be treated in the
Business Combination.
Beneficial Ownership of Securities, page 175
21. Please revise to disclose the natural person or persons who exercise
voting or dispositive
control over the shares beneficially owned by Millennium Management
LLC, Sherpa
Ventures Fund II, LP (ACME Capital), A/NPC Holdings LLC and Canaan X,
L.P. See
Item 403 of Regulation S-K and Exchange Act Rule 13d-3.
New Astra Management After the Business Combination Board of Directors and
Management,
page 177
22. Please describe the business experience during the past five years of
each director,
executive officer, or director nominee. For example, please clarify
the business experience
during the past five years of your Founder, Chairman and Chief
Executive Officer, Chris
Kemp, and director nominee, Craig O. McCaw. See Item 401(e) of
Regulation S-K. In
addition, please file a consent for Chris Kemp and any other director
nominee as an
exhibit to your registration statement. See Rule 438 of Regulation C
under the Securities
Act.
Material U.S. Federal Income Tax Considerations
Tax Consequences of the Merger to Holders of Astra Common Stock, page 194
23. We note your disclosure indicates that the parties intend for the
merger and related
transactions to be tax free either under Section 368(a) or Section 351
of the Internal
Revenue Code. In this regard, it appears that the tax consequences
would be material to
investors here. Notwithstanding that the receipt of tax opinions is
not a condition to the
merger, a tax opinion must be filed whenever the tax consequences of a
transaction are
material to an investor and a representation as to tax consequences is
set forth in the
filing. Please file a tax opinion as an exhibit to the filing and make
corresponding changes
to your disclosures concerning the material tax consequences within
the body of your
prospectus, including under "What are the material U.S. federal income
tax consequences
Craig McCaw
Holicity Inc.
March 15, 2021
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of the Business Combination to me?" on page 17, or provide us your
analysis as to why
you do not believe such an opinion is required. Refer to Item 601(b)(8)
of Regulation S-K
and, for guidance, Section III.A.2 (including footnote 39) of Staff Legal
Bulletin No. 19.
If there is uncertainty regarding the tax treatment of the share exchange
and merger
Exhibits
24. Please file the employment agreements you entered into with each of Chris
Kemp, Adam
London, Kelyn Brannon and Martin Attiq in connection with the Business
Combination
Agreement. Please also file you indemnification agreements with officers
and directors.
Refer to Item 601(b)(10) of Regulation S-K.
You may contact Wei Lu, Staff Accountant, at (202) 551-3725 or Kimberly
Calder,
Assistant Chief Accountant, at (202) 551-3701 if you have questions regarding
comments on the
financial statements and related matters. Please contact Karina Dorin, Staff
Attorney, at (202)
551-3763 or Loan Lauren Nguyen, Legal Branch Chief, at (202) 551-3642 with any
other
questions.
Sincerely,
FirstName LastNameCraig McCaw
Division of
Corporation Finance
Comapany NameHolicity Inc.
Office of Energy &
Transportation
March 15, 2021 Page 7
cc: David Sakowitz
FirstName LastName