United States securities and exchange commission logo
April 13, 2021
Mark Penn
Chief Executive Officer
MDC Partners Inc.
One World Trade Center, Floor 65
New York, NY 10007
Re: MDC Partners Inc.
Amendment No. 1 to
Registration Statement on Form S-4
Filed March 30,
2021
File No. 333-252829
Dear Mr. Penn:
We have reviewed your amended 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.
Unless we note
otherwise, our references to prior comments are to comments in our March
10, 2021 letter.
Amendment No. 1 to Registration Statement on Form S-4
Proposals, page 35
1. We note your response
to our prior comment 18 and reissue in part. With respect to each
proposal, we note that
you have added additional disclosure regarding votes expected to
be cast in favor. In
certain cases, it is unclear the voting power attached to certain classes
of outstanding
securities and how such voting intention would affect obtaining the
required vote. Please
revise to clarify in greater detail how the disclosed voting intentions
directly correlate to
obtaining the disclosed required vote, so that readers can appreciate
how assured each of
these proposals may be.
Mark Penn
FirstName LastNameMark Penn
MDC Partners Inc.
Comapany
April NameMDC Partners Inc.
13, 2021
April 213, 2021 Page 2
Page
FirstName LastName
Unaudited Condensed Combined Financial Information
5. Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet, page 86
2. Refer to footnote 5(k) - We note your response and the revisions made
to page 89 in
response to comment 8. However, we are still unclear as to how you
determined the fair
value of the non-controlling interest and the related adjustments of
$29,822 and $354,714
that were made in the pro forma balance sheet. Please explain in
further detail how you
calculated or determined each of these adjustments and provide us with
any related
computations prepared in determining each of these pro forma
adjustments.
6. Adjustments to Unaudited Pro Forma Condensed Combined Statement of
Operations, page 89
3. Refer to footnote 6(a) - We note your response and your revisions to
footnote 6(a) but are
unclear as to how the MDC share price of $2.51 resulted in recognition
of pro forma
compensation expense of $29.7 million for Stagwell awards tied to
closing of the merger
transaction. Please revise to explain in further detail how you
calculated or determined
the $29.7 million of compensation expense reflected in adjustment
6(a). As part of your
revised disclosure, please indicate the number of awards vesting as a
result of the merger,
explain the basis for the use of an MDC share price of $2.51 and
explain how these factors
resulted in the determination of $29.7 million of compensation
expense.
4. Refer to footnote 6(b) - We note your response to comment 10 and the
revisions to
footnote 6(b) but are still unclear as to how you calculated or
determined the $11,329
increase to rent expense in connection with MDC's leases. Please
supplementally provide
us with your computation of this adjustment and revise to disclose the
specific
assumptions that were used in computing this portion of pro forma
adjustment 6(b).
5. Refer to footnote 6(d) - We note your response and the revisions made
to footnote 6(d) in
response to comment 11 but are still unclear as to how certain
components of adjustment
6(d) were determined. Please revise to disclose the method and period
over which the
$26,108 consent fee is being amortized to expense and indicate what
portion of the
$18,301 is comprised of this amortization expense.
6. Refer to footnote 6(f) - Please revise footnote 6(f) to disclose the
amount of this
adjustment that relates to the reversal of MDC's valuation allowance.
Also, please explain
the significant assumptions (i.e., amount of partnership losses
excluded from tax expense
calculation and related tax rate) that resulted in the remaining
portion of this pro forma
adjustment.
7. Refer to footnote 6(g) - We note your response to comment 13 and the
revisions to
footnote 6(g) made in response to our comment but are still unclear as
to how this
adjustment was determined. Please revise to disclose the amount of
OpCo's net income
for the period to which Stagwell is entitled to 74%. Also, please
disclose the amount of
annual accretion on the Company's Series 4 and 6 Preferred shares and
explain how this
accretion was calculated or determined. In addition, disclose the
effect of tax attributes
Mark Penn
MDC Partners Inc.
April 13, 2021
Page 3
that are included in this adjustment and explain how they were
determined. Also, please
supplementally provide us with your computations of all components of
this pro forma
adjustment.
2020 Non-Employee Director Awards, page 201
8. We note your response to our prior comment 27 and reissue. Please
revise to identify and
detail if any awards will vest based upon the expected composition of
the new Combined
Company board. In this regard, we note that you have provided
additional narrative
disclosure regarding the treatment of different director groups but
you have not
specifically disclosed if specific awards related to specific
directors will vest based upon
the expected composition of the new Combined Company board.
Material U.S. Federal Income Tax Considerations for MDC Canada Shareholders,
page 278
9. We note that the tax opinions filed as Exhibits 8.1 and 8.2 are
short-form tax
opinions. The short-form tax opinion and the tax disclosures in the
prospectus both must
state clearly that the disclosures in the tax consequences sections of
the prospectus are the
opinion of counsel. Refer to Section III.B.2 of Staff Legal Bulletin
No. 19. Please revise
the respective sections and have counsel revise their respective tax
opinions to state
clearly that the tax consequences discussed in the respective sections
are counsel s
opinion. A description of the law is not sufficient. Refer to Section
III.C.2 of Staff Legal
Bulletin No. 19.
10. Please refer to Exhibit 8.2 and opinion paragraphs (1) and (2). We
note that the opinion
paragraphs focus on the tax treatment of the redomiciliation and
reorganization from a
high level. Item 601(b)(8) of Regulation S-K is focused on the tax
consequences to
investors and representations related to those tax consequences.
Please have counsel
revise all three opinion paragraphs so that they appropriately cover
all material tax
consequences discussed in the prospectus.
11. Please refer to Exhibit 8.2 and opinion paragraph (3). We note that
the referenced tax
sections in opinion paragraph (3) don't align with any sections in the
prospectus. Please
have counsel revise as applicable. This comment also applies to
Exhibit 8.1, paragraph 2.
Certain Canadian Federal Income Tax Considerations for MDC Canada Shareholders,
page 284
12. We note that the header refers to "certain" and that the introductory
sentence states that
FirstName LastNameMark Penn
the summary describes the "principal" Canadian federal income tax
considerations.
Comapany NameMDC
Please Partners
revise to clarify Inc.
that the summary describes the material
Canadian federal income
tax considerations.
April 13, 2021 Page 3 Refer to Section III.C.1 of Staff Legal Bulletin
No. 19.
FirstName LastName
Mark Penn
FirstName LastNameMark Penn
MDC Partners Inc.
Comapany
April NameMDC Partners Inc.
13, 2021
April 413, 2021 Page 4
Page
FirstName LastName
13. We note your disclosure that this summary is of a general nature only
and is not intended
to be, nor should it be construed to be, legal or tax advice to any
particular holder.
Investors are entitled to rely on the opinion as expressed. Please
remove this
inappropriate limitation on reliance. This comment also applies to the
closing paragraphs
of Exhibits 8.1 and 8.2. Refer to Section III.D.1 of Staff Legal
Bulletin No. 19.
Stagwell Marketing Group LLC and Subsidiaries Consolidated Financial Statements
Notes to Consolidated Financial Statements
Note 10. Intangible Assets, Net, page F-28
14. It appears that you have omitted tables reflecting the various
categories of intangible
assets included in your consolidated balance sheets as of December 31,
2020 and 2019
and the related gross carrying amounts, accumulated amortization, net
carrying amounts
and the weighted average amortization periods consistent with those
disclosed in Note 10
on page F-73. Please revise to include tables reflecting this
information in Note 10 to
your audited financial statements for the years ended December 31,
2020 and 2019. Refer
to the disclosure requirements in ASC 350-30-50-2.
You may contact Blaise Rhodes at 202-551-3774 or Linda Cvrkel at
202-551-3813 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Donald Field at 202-551-3680 or Mara Ransom at 202-551-3264 with any
other
questions.
Sincerely,
Division of
Corporation Finance
Office of Trade &
Services