United States securities and exchange commission logo
March 18, 2021
Keith L. Horn
Chief Executive Officer
Forest Road Acquisition Corp.
1177 Avenue of the Americas, 5th Floor
New York, NY 10036
Re: Forest Road
Acquisition Corp.
Registration
Statement on Form S-4
Filed February 16,
2021
File No. 333-253136
Dear Mr. Horn:
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 February 16, 2021
Cover Page
1. Please discuss the
disparate voting rights and terms that your Class X common stock
has as compared to
Class A and Class C common stock and identify the holders of your
Class X common stock.
In this regard, we note your disclosure that each share of Class X
common stock is
entitled to ten votes. Refer to Item 501(b)(2) of Regulation S-K.
Risk Factors, page 45
2. Please revise your Risk
Factors, and Description of Capital Stock section, to the extent
applicable, to include
a description of the Class A and Class X Common Stock
and explain the nature
of the disparate voting rights, including:
the number of votes
per share to which each class of common stock is entitled;
Keith L. Horn
FirstName
Forest RoadLastNameKeith L. Horn
Acquisition Corp.
Comapany
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the percentage of outstanding shares that Class X stockholders
must keep to continue
to control the outcome of matters submitted for stockholder
approval;
that the controlling stockholders have the ability to control
matters requiring
stockholder approval, including the election of directors,
amendment of
organizational documents, and approval of major corporate
transactions, such as a
change of control, merger, consolidation, or sale of assets;
that there may be anti-takeover effects preventing a change in
control transaction that
stockholders might consider in their best interest; and
future instances of Class X Common Stock may be dilutive to
holders of Class A
Common Stock.
3. Please include a risk factor that discusses the risk of being a
"controlled company" within
the meaning of the corporate governance standards of the New York
Stock Exchange.
Consideration to be Received in the Business Combination, page 94
4. Elaborate upon the nature of the "instrument" you describe in
paragraph (i) and how the
conversion feature operates.
Background of the Business Combination, page 113
5. We note that you conducted your initial due diligence of all your
potential acquisition
targets based on the businesses' management, business model, and
certain financials.
Please tell us how you determined to reduce your initial 50 business
opportunities to the
15 potential business opportunities and the additional 20 potential
business opportunities
after that. In this regard, your discussion seems to transition
straight to the consideration
of a transaction with Beachbody without any sense as to whether other
transaction
candidates were under serious consideration. Additionally, we note the
assistance of your
"advisors" in this process. Please revise to include the name of such
advisors and detail
their respective roles in the process.
6. We note that a representative of The Raine Group initially contacted
you on November
28, 2020 regarding one of its investments, Beachbody. We also note
that The Raine
Group seemed to be involved in the ongoing negotiations and purchased
at least a portion
of the $72.5 million Beachbody equity that was sold on December 29,
2020 by existing
shareholders of Beachbody. You refer to The Raine Group as Beachbody's
financial
advisor with respect to the January 6, 2021 PIPE Investment. However,
you note that on
January 19, 2021, Beachbody retained The Raine Group as its financial
advisor. Please
revise your disclosure to clarify the Raine Group's role and include
the details surrounding
its evolving role from the initial introduction in November 2020
through the execution of
the transaction documents in February 2021. Please also include the
details surrounding
the The Raine Group's role in negotiations on and after January 19,
2021. To the extent
this raises any conflicts of interest or related party transaction
disclosure, please state as
much in the appropriate section.
7. We note that Mr. Staggs, the Chairperson of your Strategic Advisory
Committee, has
Keith L. Horn
FirstName
Forest RoadLastNameKeith L. Horn
Acquisition Corp.
Comapany
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a brother-in-law who was an employee of, and owned equity in,
Beachbody during the
time that you and Mr. Staggs were pursuing a business combination with
Beachbody.
Please revise your disclosure to state whether Mr. Staggs'
brother-in-law was employed in
a position that was involved in the negotiations and transactions
discussed in connection
with the business combination and revise to state his equity interest
in Beachbody.
8. We note that on December 3, 2020, you were granted access to the
virtual data room that
contained information about Beachbody and Myx. Please revise to
disclose the relevant
ongoing prior business dealings between Beachbody and Myx and any
other relevant
information regarding their relationship and any existing agreements
between the parties.
9. If a preliminary valuation of the Target Companies was arrived at on
December 6, 2020,
please disclose the amount or explain why no amount was determined.
10. Clarify when an initial draft of an LOI was provided to Beachbody and
disclose its
original terms as well as how and why any terms were revised over
time. In this regard,
we note the ongoing discussions and negotiations that occurred
throughout the first half of
December 2020. Please expand your discussion to include how
determinations were made
as to the consideration in the transaction and how valuations, and
advisors, if any, played
a role in such discussions and negotiations that resulted in the
entering into the LOI on
December 16, 2020 and subsequent revisions to the LOI on December 17,
2020. Clearly
state when the final consideration terms of the merger were arrived
at.
11. Please summarize the details of due diligence and resulting
discussions and negotiations
that occurred between December 21, 2020 and February 9, 2021. Please
provide a
summary of the financial, business, and legal due diligence questions
that arose during
your diligence meetings. Disclose the concerns with respect to each
item, and with
respect to the resulting transaction documents, how any provisions,
deal structure,
valuations and reports impacted negotiations.
12. We note that on December 7, 2020 Beachbody made a $10 million
investment in Myx
and on December 29, 2020, certain existing shareholders of Beachbody,
including a
limited number of current management, sold $72.5 million of their
existing equity in
Beachbody to Raine and certain new investors, at an implied enterprise
value of
approximately $1.5 billion. Please revise to disclose what impact, if
any, each of these
transactions had on ongoing negotiations.
13. Please revise to include the names of all advisors mentioned in this
section and where
applicable, clarify their roles in each meeting, negotiation, and
presentation. For example,
it is not clear to us how the roles of Guggenheim Securities and
Greenhill may have
differed and what roles they played as advisors. We also note the
summary report
prepared by K&E on January 28, 2021 and the summary of Forest Road's
advisors'
respective preliminary diligence findings submitted on January 6, 2021
and subsequent
financial and valuation analyses presented on February 3, 2021. As
applicable, please
provide the information required by Item 4(b) of Form S-4. Please also
tell us whether
you received any other reports from any of the various advisors
mentioned in this section.
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Forest RoadLastNameKeith L. Horn
Acquisition Corp.
Comapany
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If you did, please revise your disclosure to state as much and provide
the information
required by Item 4(b) of Form S-4.
The Board's Reasons for the Approval of the Business Combination, page 121
14. You state that the Board reviewed the results of the due diligence
conducted by your
management and advisors, including projections provided by Myx,
however it does not
appear that you have included such projections on page 123. Please
revise to include such
projections or tell us why you do not believe it is necessary to do
so.
15. We note your statement that "the Board concluded, in its business
judgment, that the
potentially positive reasons relating to the Business Combination and
the other related
transactions outweighed the potentially negative reasons. In
connection with its
deliberations, the Board did not consider the fairness of the
consideration to be paid by it
in the Business Combination to any person other than Beachbody and
Myx." None of the
factors you discuss here appear to pertain to the consideration to be
received by
stockholders as part of the transaction. Explain how you determined
the transaction to be
fair to stockholders when it does not appear that the Board took into
account the
consideration to be received in exchange for your shares.
16. We note the presentation that is included with the Form 8-K filed on
February 10, 2021.
Please revise to explain whether the Board considered as a factor in
favor the transaction
the comparable companies or transactions, or Operational Benchmarking
or Valuation
Benchmarking, analyses presented in the presentation. If so, please
state as much and
disclose this aspect of the presentation in the prospectus, as well as
who prepared it.
The Organizational Document Proposal
Forum, page 133
17. Please ensure that in each instance where you discuss your exclusive
forum provision, you
include the proposed treatment of claims which may be brought under
the Securities Act
and Exchange Act.
Business of Beachbody, page 190
18. We note your statement that you are a "leading holistic health and
wellness platform with
over 2.6 million digital subscriptions and 0.4 million nutritional
subscriptions." Please
provide additional support for your claim that your are a "leading
holistic health and
wellness platform" and please tell us the means by which you measure
your subscriptions
(e.g. whether a one-time purchase qualify as a "subscription"). Also,
we note your
statement that you have an "extensive library of content that contains
some of the most
successful programs in the fitness industry." Please quantify your
"extensive library of
content" and tell us how you define "successful programs" in this
instance.
19. We note your statement that "[o]ur low subscriber churn rate, together
with our high
digital subscriber and nutrition gross margins, generates an
attractive lifetime value, or
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FirstName
Forest RoadLastNameKeith L. Horn
Acquisition Corp.
Comapany
March NameForest Road Acquisition Corp.
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LTV, of our customers relative to our customer acquisition costs."
Please provide support
for this statement and quantify such measurements, to the extent
possible. Please tell us
whether LTV is a key operating metric that you use in evaluating your
business, and if so,
please tell us how this measurement has changed from prior years.
20. We note that you compare the cost of your monthly connected fitness
subscription to the
cost of monthly gym memberships, personal training sessions, and
connected fitness
classes at boutique studios. Please revise to include comparisons to
other connected
fitness subscription costs that are used at home, or tell us why you
do not believe such
comparison is appropriate.
Impact of COVID-19, page 206
21. We note your disclosure regarding the impact of COVID-19 on your
business. To the
extent applicable, please analyze and revise your disclosure based on
CF Disclosure
Guidance: Topics 9 and 9A. Additionally, here and in the Business
section, we note your
disclosure of your increased performance for the nine months ended
September 30, 2020.
To the extent that such increases may be attributed to COIVD-19,
please state as much.
Please also revise to clarify the extent that you believe that these
trends will continue after
COVID-19. Please also include any relevant disclosure in your Risk
Factors section.
Management's Discussion and Analysis of Financial Condition and Results of
Operations of
Beachbody
Non-GAAP Information, page 210
22. Please tell us how you determined the amounts included in the other
non-recurring
adjustment to arrive at Adjusted EBITDA, which includes restructuring
benefits and
certain transaction costs, are non-recurring or revise your
disclosures to no longer describe
them as such. Refer to Item 10(e)(1)(ii)(B) of Regulation S-K and
Question 102.03 of the
Non-GAAP Financial Measures Compliance and Disclosure Interpretations.
Components of our Operating Results and Results of Operations, page 214
23. Where changes in results are attributed to more than one item, please
quantify the impact
of each item, where practicable. For example, you attribute the
increase in digital cost of
revenue to streaming costs and credit card processing expense, as well
as OpenFit live
training costs and the amortization of intangible assets, partially
offset by decrease in
content assets amortization. Refer to paragraphs (b)(2) and (c)(2) in
Item 303 of
Regulation S-K.
Management of the Company Following the Business Combination, page 235
24. Please include the dates of employment for Jonathan Gelfand. Refer to
Item 401(e) of
Regulation S-K.
25. Please file a consent to be named as a director for Mr. Kevin Mayer as
an exhibit to the
Keith L. Horn
Forest Road Acquisition Corp.
March 18, 2021
Page 6
registration statement, consistent with Rule 438.
Beneficial Ownership of Securities, page 253
26. Please revise your beneficial ownership table to include the Class X
Common Stock.
Refer to Item 403(b) of Regulation S-K.
Description of Securities, page 256
27. We note your disclosure that you have a multi-class structure
including Class A, Class C,
and Class X common stock. Please disclose whether or not, upon the
completion of this
offering, any shares of Class C common stock will be issued and
outstanding. Amend
your disclosure to clarify the purpose of the Class C common stock and
describe the
impact of future issuances of the Class C shares on the voting and
economic power of
Class A and Class X holders, and the types of transactions and/or
classes of individuals to
whom you eventually plan to issue such shares. In addition, please
revise your risk factor
disclosure to include a detailed discussion of the material risks
relating to any future
issuances of Class C shares, including, but not limited to, the
potential conflict of interest
presented by a misalignment of the Class X holders voting control
and economic
interest. In this regard, it appears that any issuance of Class C
shares will effectively
reduce the Class X holders economic interests, while the voting
control of the Class
X shares will not be affected. Please make conforming changes to your
Prospectus
Summary, including a description of the purpose and material risks of
such structure.
The Beachbody Company Group, LLC Consolidated Financial Statements
Consolidated Statements of Mezzanine Equity and Members' Equity, page F-60
28. Please tell us how you treated the undistributed earnings (losses) at
April 2, 2019, when
you made the election, discussed on page F-69, to change the entity
status to a regarded C-
Corporation from a regarded pass-through entity for income tax
purposes. Refer to SAB
Topic 4.B.
1. Organization, Business and Summary of Accounting Policies
Segments, page F-70
29. Information regarding your Openfit operating segment can be treated in
one of the
manners described in ASC 280-10-50-12 through 50-15, but cannot be
combined with
FirstName LastNameKeith L. Horn
your Beachbody reportable segment, unless the aggregation criteria in
ASC 280-10-50-11
Comapany NameForest
are met. Road Acquisition
Please present Corp. reportable segment information
separately or
your Beachbody
March explain
18, 2021how the6 aggregation criteria have been met.
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Acquisition Corp.
Comapany
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18, 2021
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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 Blaise Rhodes at (202) 551-3774 or Rufus Decker at (202)
551-3769 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Cara Wirth at (202) 551-7127 or Mara Ransom at (202) 551-3264 with any
other
questions.
Sincerely,
Division of
Corporation Finance
Office of Trade &
Services
cc: Tamar Donikyan