United States securities and exchange commission logo
April 18, 2022
Orestes Fintiklis
Chief Executive Officer
ITHAX Acquisition Corp.
555 Madison Avenue
Suite 11A
New York, NY 10022
Re: ITHAX Acquisition
Corp.
Registration
Statement on Form S-4
Filed March 21,
2022
File No. 333-263727
Dear Mr. Fintiklis:
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 March 21, 2022
Cover Page
1. Please revise to
disclose that Prasad Gundumogula, who will serve as New Mondee's
Chief Executive
Officer, will have voting control over 61% of the shares of common stock
of New Mondee through
his control of Mondee Holdings, LLC, the sole holder of capital
stock of Mondee.
Questions and Answers for Shareholders of ITHAX
Q: What will the Mondee Stockholder receive in return for the Business
Combination with
ITHAX?, page 12
2. We note your disclosure
that pursuant to the Earn-Out Agreement, New Mondee will
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issue to certain signatories of the Earn-Out Agreement (the Members
), up to 9,000,000
shares of New Mondee Common Stock (the Earn-Out Shares ), with
the Earn-Out
Shares vesting over the four-year period following Closing, based on
the achievement of
certain milestones of the trading price of New Mondee Common Stock, as
set forth in the
Earn-Out Agreement. Please revise here and elsewhere as appropriate to
disclose that
Prasad Gundumogula, the Chief Executive Officer of Mondee, who will
continue to
serve as New Mondee's Chief Executive Officer, may potentially receive
6,000,000 of
these Earn-Out Shares.
Summary of the Proxy Statement/Prospectus, page 29
3. Please include organizational diagrams depicting the ownership
structure of ITHAX and
Mondee before and after the business combination showing the number
and type of shares
and percentage interest of each shareholder group's ownership interest
in the underlying
entity. These shareholder groups should include your initial holders,
including the
directors and officers of ITHAX and Sponsor, the Mondee Stockholder,
and the public
shareholders.
The ITHAX Board's Reasons for the Business Combination
Proven Business Model with Historical Profitability, page 34
4. We note your disclosure that Mondee has a proven business model with
not only historical
2019 substantial transaction volume of over $3 billion and adjusted
net revenues of
approximately $177 million, but also actual historical profitability
with adjusted 2019
EBITDA of approximately $46 million. Please address the following
items;
For a more balanced discussion, include disclosure that also
addressees the fact that
Mondee has historically generated recurring net losses and
negative cash flows from
operations, and may be unable to make debt repayments when the
balance is due as
disclosed on page F-29 of Mondee's financial statements;
Tell us how the ITHAX board considered these historically
recurring losses and
negative cash flows when concluding that Mondee has a proven
business model with
historical profitability;
Expand your disclosure here and throughout the submission to
describe how
transaction volume relates to your total GAAP revenue, why the
metrics
provide useful information to investors, how management uses the
metrics in
managing or monitoring the performance of the business, and any
limitations. Refer
to SEC Release No. 33-10751;
We note your disclosure that Mondee had 2019 Adjusted net
revenue of $177
million. Refer to Question 100.04 of the Non-GAAP Financial
Measures
Compliance and Disclosure Interpretations and tell us how you
considered whether
this non-GAAP measure substitutes individually tailored revenue
recognition and
Orestes Fintiklis
FirstName LastNameOrestes Fintiklis
ITHAX Acquisition Corp.
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measurement methods for those of GAAP,; and
With respect to your disclosure of 2019 Adjusted EBITDA,
include a presentation
of and reconciliation to the most directly comparable financial
measure calculated
and presented in accordance with GAAP. Refer to Items
10(e)(1)(i)(A) and (B) of
Regulation S-K.
High Growth Company, page 34
5. We note disclosure that Mondee is a high growth company with
approximately 40%
organic year-on-year increase in revenues from 2015 - 2019 (compound
annual growth
rate, CAGR). Please clarify if your compound annual growth rate is
based on increases in
GAAP revenue or some other basis for calculating revenue. Please tell
us how you
considered updating this growth rate to include revenue amounts for
the years ended
December 31, 2021 and December 31, 2020 to provide a more balanced
disclosure.
Risk Factors
Risks Related to Mondee's Financial Condition and Status as an Early Stage
Company, page 64
6. You disclose on page 253 that Mondee has incurred negative cash flows
from operating
activities and significant losses from operations in the past as
reflected in its accumulated
deficit of $190 million as of December 31, 2021 and that it expects to
continue to incur
operating losses at least for the next 12 months due to the
investments that it intends to
make in its business. Please add related risk factor disclosure.
The COVID-19 pandemic has had, and may continue to have, a material adverse
impact on the
travel industry, page 66
7. We note your disclosure here and elsewhere that the COVID-19 pandemic
resulted in a
material decrease in business and consumer spending and an
unprecedented decline in
transaction volumes in the global travel industry, and that your
financial results and
prospects are largely dependent on these transaction volumes. We
further note your
disclosure that, as a result, your financial results for the year
ended December 31, 2020
and the results for the 2021 fiscal year were significantly and
negatively impacted, with a
material decline in total revenues, net income, cash flow from
operations and Adjusted
EBITDA, as compared to 2019, and this downward trend could continue
for an
unpredictable period. Please discuss how management is planning for
COVID-19- related
uncertainties. For guidance, consider the Division of Corporation
Finance's Disclosure
Guidance Topics Nos. 9 & 9A, available on our website.
Risks Relating to Ownership of Our Common Stock following the Business
Combination
Concentration of ownership among New Mondee s executive officers, directors
and their
respective affiliates, page 89
8. You disclose on page 289 that pursuant to the Registration Rights
Agreement, New
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Mondee will be obligated to file, no later than 30 calendar days after
the Closing, a
registration statement under the Securities Act covering the
60,800,000 shares of New
Mondee Common Stock issued to the Mondee Stockholder and the 5,000,000
issued to the
PIPE Investors in the PIPE Financing. Please add related risk factor
disclosure.
9. We note your disclosure that upon completion of the business
combination, the executive
officers and directors of New Mondee and their respective affiliates
are expected to
beneficially own, in the aggregate, approximately 21.1% of outstanding
New Mondee
Common Stock, assuming no public shareholders redeem their Class A
ordinary shares.
Please revise to reflect the voting control of Prasad Gundumogula, who
will serve as New
Mondee's Chief Executive Officer, of more than 61% of the shares of
common stock of
New Mondee through his control of Mondee Holdings, LLC, the sole
holder of capital
stock of Mondee.
Risks Related to the Business Combination and ITHAX
Even if the Business Combination is consummated, the warrants may never be in
the money, and
they may expire worthless, page 103
10. Please highlight the material risks to public warrant holders,
including those arising from
differences between private and public warrants. Clarify whether
recent common stock
trading prices exceed the threshold that would allow the company to
redeem public
warrants. Clearly explain the steps, if any, the company will take to
notify all
shareholders, including beneficial owners, regarding when the warrants
become eligible
for redemption.
Background of the Transactions, page 132
11. We note that representatives or members of management of ITHAX and
Mondee
participated in video conferences and other meetings and discussions
from May through
December 2021 to discuss the potential business combination. Revise to
clearly identify
the representatives or members of management who participated in the
referenced video
conferences, meetings and discussions. As examples, we note your
general references to
"representatives" of ITHAX and Mondee and "members" of ITHAX s and
Mondee s
management teams.
12. Please expand the disclosure in this section to include a more
detailed description of the
negotiations surrounding the material terms of the business
combination agreement and
related transactions. For example, given the specificity of the letter
of intent, the final
version of which was executed on July 27, 2021, please describe the
substance of the
parties' multiple conversations and discussions prior to that date. To
the extent that basic
terms and structure were negotiated at this preliminary stage, please
describe those
negotiations. Your revised disclosure should ensure that investors are
able to understand
how the terms of the business combination evolved during negotiations
and why ITHAX's
board approved the initial business combination with Mondee and
determined the business
combination advisable and fair to, and in the best interests of, ITHAX
and its
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shareholders. To the extent that certain terms were deemed not subject
to negotiation,
please disclose this fact.
13. We note your disclosure that, on June 25, 2021, ITHAX sent
representatives of Cantor a
Framework Letter to which a term sheet was attached proposing an
initial enterprise value
for Mondee of up to $582.5 million, and that after additional
preliminary diligence,
ITHAX submitted a revised Framework Letter and Term Sheet on June 29,
2021, which,
among other changes, adjusted the proposed pre-dilution, enterprise
value of the
transaction to up to $700 million. We further note your disclosure
that thereafter, on
July 12, 2021, ITHAX submitted a second revision to the Framework
Letter and Term
Sheet, which among other changes, adjusted the proposed pre-dilution,
enterprise value of
the transaction to up to $725 million, and that the final Letter of
Intent executed on July
27, 2021 further adjusted the pre-money equity valuation of Mondee to
$608
million. Please expand your disclosure to explain how the initial
enterprise value was
determined and the reasons it was adjusted in the revised Framework
Letter and Term
Sheet submitted on June 29, 2021, the second revised Framework Letter
and Term Sheet
submitted on July 12, 2021, and the final Letter of Intent executed on
July 27, 2021.
14. You disclose on pages 34 and 138 that the ITHAX Board considered that
the agreed
valuation appears to be at a substantial discount to publicly traded
comparables, which
have historical organic and in-organic growth (2015 - 2019)
substantially lower than that
of Mondee as a material factor generally supporting its decision to
enter into the Business
Combination Agreement and the related agreements and the Transactions.
Your further
disclose on page 91 that the ITHAX Board reviewed, among other things,
financial and
market data information on selected comparable companies and implied
purchase price
multiple of Mondee in concluding that the Business Combination was in
the best interest
of its shareholders. Please revise your disclosure to summarize the
financial and market
data information on selected comparable companies reviewed by the
ITHAX Board.
Also disclose the implied purchase price multiples that were reviewed
by the ITHAX
Board and how they were extrapolated. Please consider including this
information in a
chart. Explain how this data was applied to determine Mondee's
enterprise value. In
addition, disclose the criteria used to select the comparable
companies.
15. You also disclose on page 91 that the ITHAX Board reviewed, among
other things,
financial due diligence materials prepared by professional advisors,
including quality of
earnings reports and tax due diligence reports in concluding that the
Business
Combination was in the best interest of its shareholders. Please
expand your disclosure to
include the information required by Item 1015(b)(6) of Regulation M-A
as it appears the
financial due diligence materials prepared by professional advisors,
including quality of
earnings reports and tax due diligence reports, are materially related
to the business
combination and referred to in the registration statement.
16. You disclose on page 135 that after negotiating the terms of the
Letter of Intent between
July 16, 2021 and July 23, 2021, the parties ultimately agreed to an
earn-out, that was later
on finalized to be 9,000,000 shares of common stock, to be allocated
to Mondee
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management and/or Mondee s existing shareholders, with any earn-out
securities that
remain unvested on the 4-year anniversary of closing of the
transactions to be forfeited for
no consideration. Please expand your disclosure to provide additional
details regarding
the negotiations of this earn-out consideration.
17. We note your disclosure on page 44 that contingent upon the closing of
the transactions,
ITHAX is obligated to pay: (i) up to $3,500,000 in fees to Deutsche
Bank Securities Inc.
( Deutsche Bank ) in consideration for Deutsche Bank s services
as capital markets
advisor and placement agent for the PIPE Financing; (ii) $500,000 in
fees to AXIA
Capital Markets LLC ( AXIA Capital ) in consideration for AXIA
Capital s services as
placement agent for the PIPE Financing; (iii) $1,000,000 in fees to
Cantor Fitzgerald
& Co. ( Cantor ) in consideration for Cantor s services as
capital markets advisor; (iv)
$500,000 in fees to Northland Securities, Inc. ( Northland ) in
consideration for
Northland s services as capital markets advisor is contingent upon
the Closing of the
Transactions, and (v) $500,000 in fees to D.A. Davidson & Co. (
Davidson ) in
consideration for Davidson s services as capital markets advisor is
contingent upon the
Closing of the Transactions. We also note your disclosure on page 132
that Cantor will
receive deferred underwriting commissions from the ITHAX initial
public offering in
connection with the consummation of ITHAX s initial business
combination. Please
revise to clarify the role with respect to ITHAX of Cantor, who also
acted as ITHAX's
IPO underwriters, after the completion of ITHAX's IPO, and the roles
of Deutsche Bank,
AXIA Capital, Northland, and Davidson. Please also disclose the
aggregate fees payable
to Cantor that are contingent on completion of the business
combination.
18. We note that Cantor acted as ITHAX's IPO underwriters and will receive
a deferred
underwriting fee of $9,082,500 upon the consummation of the business
combination. We
further note that Cantor acted as financial advisor to Mondee in the
negotiations of the
business combination. Please revise your disclosure here and elsewhere
as appropriate to
discuss Cantor's conflict of interest and related risks.
Certain Prospective Financial Information for Mondee, page 139
19. We note that your presentation of Mondee's historical financial
statements do not align
with certain metrics included in the projections for the same period.
For example,
you recorded $93.2 million of revenue in Mondee's audited statement of
operations for the
year ended December 31, 2021 and reported Adjusted EBITDA of ($5.5)
million for the
year ended December 31, 2021 on page 247. However, your quantified
projections for the
year ended December 31, 2021 include revenue, net of $65.2 million and
Adjusted
EBITDA of $1.2 million. Please clarify whether or not the projections
still reflect
management s views on future performance and tell us what
consideration the board gave
to obtaining updated historical amounts for the year ended December
31, 2021 as well as
the projections for the years following.
20. We note the Mondee Projections include non-GAAP financial measures
that either
exclude or include amounts that are not excluded or included in the
most directly
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comparable measures calculated and presented in accordance with GAAP.
Please clarify
whether you use titles or descriptions of non-GAAP financial measures
that are the same
as, or confusingly similar to, titles or descriptions used for GAAP
financial measures. For
example, tell us if the measures of total net revenue and total
operating expenses included
in your projections are calculated and presented in accordance with
GAAP.
21. Please tell us how you considered further disclosure to clarify why
your projected
Adjusted EBITDA of $1.1 million for the year ended December 31, 2021
differed from
the actual Adjusted EBITDA of ($5.5) million for the same period.
22. We note that you present % margin which is calculated as total
operating expenses
divided by total net revenue. It appears that this calculation is a
measure based on total
operating expenses expressed as a percentage of total revenues. Tell
us how you
considered a more accurate description of this metric or utilization
of a different
computation such as (total net revenue less total operating expenses)
divided by total net
revenue.
23. We note that you present financial projections through the fiscal year
ending December
31, 2023. Please expand your disclosures to further describe the key
assumptions
underlying the projections for the years ended 2022 through 2023 and
to explain why you
believe the assumptions are reasonable. Also explain how these
assumptions and estimates
resulted in the projected information you disclose and disclose any
factors or
contingencies that might prevent such growth from ultimately
materializing.
U.S. Federal Income Tax Considerations
Effects of the Domestication to U.S. Holders, page 194
24. You state that Reed Smith will "deliver an opinion that the
Domestication will qualify as
an F Reorganization, filed by an amendment as Exhibit 8.1 to the
registration statement on
Form S-4, of which this proxy statement/prospectus is a part" but that
the opinion is not a
condition to the parties' obligations. Please clarify whether the
ensuing disclosure
constitutes the opinion of counsel, rather than "assuming" the effects
of the opinion.
Unaudited Pro Forma Condensed Combined Financial Information
Note 4 - Net Loss per Share, page 216
25. Please disclose the number of securities, including those issuable
pursuant to contingent
stock agreements that have been excluded from the net loss per share
calculations as they
are deemed to be anti-dilutive.
Information About Mondee, page 233
26. We note your use of industry and market data in this section of your
proxy
statement/prospectus. Please provide us with supplemental support, or
in the alternative
provide citations that include the names and dates of third party
studies or reports, if any,
for all statements that utilize industry or market data or relate to
your competitive position
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within your industry. To the extent that you commissioned any of the
third-party data that
you cite in the prospectus, also provide the consent of the
third-party in accordance with
Rule 436
Mondee's Executive and Director Compensation, page 260
27. We note your disclosure on page 260 regarding Mondee's employment
agreements with
its named executive officers, each of whom will continue as a named
executive officer of
New Mondee following the business combination. Please file copies of
Mondee's
employment agreements with these named executive officers as exhibits.
Refer to Item
601(b)(10)(iii)(A) of Regulation S-K.
Beneficial Ownership of Securities, page 269
28. We note your disclosure in footnote (7) that Mr. Gundumogula has
voting and investment
discretion with respect to the ordinary shares held of record by the
Mondee Holdings LLC
and may be deemed to have shared beneficial ownership of the ordinary
shares held
directly by Mondee Holdings LLC. Please revise the share ownership
disclosed in the
table to reflect the number of shares beneficially owned by Mr.
Gundumogula through his
ownership interest in Mondee Holdings LLC.
Certain Relationships and Related Person Transactions-Mondee
Mondee Group Note, page 274
29. We note your disclosure that Mondee Holdings LLC extended a loan to
Mondee Group
LLC, a limited liability company owned by Prasad Gundumogulain, in the
original
principal amount of $19,282,363.27 pursuant to that certain Secured
Non-Recourse
Promissory Note, dated as of March 25, 2016, which was was
subsequently transferred to
Mondee, Inc. As Mr. Gundumogulain will serve as the Chief Executive
Officer of New
Mondee, please tell us how you intend to comply with Section 13(k) of
the Securities
Exchange Act of 1934 with respect to this loan.
Mondee Holdings II, Inc.
Notes to Consolidated Financial Statements
Note 1 - Nature of Operations
Going Concern, page F-29
30. We note your disclosure of the conditions that raise substantial doubt
about your ability to
continue as a going concern for a period of twelve months following
the date of issuance
of the consolidated financial statements for the year ended December
31, 2021. Please tell
us whether your auditor assessed your ability to continue as a going
concern and if so,
how they concluded that an explanatory paragraph in the audit opinion
regarding your
ability to continue as a going concern was not considered necessary.
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Note 2 - Summary of Significant Accounting Policies
Recent Accounting Pronouncements Not Yet Adopted, page F-38
31. We note your disclosure in which you state that you will adopt FASB
ASC 842, Leases on
January 1, 2022 and are currently evaluating the impact on the
company's financial
statements. As the adoption date was January 1, 2022, please disclose
the impact that the
adoption of FASB ASC 842 is expected to have on your financial
statements. Please refer
to FASB ASC 250-10-S99-5 (SAB Topic 11:M).
Note 7 - Debt
TCW Credit Agreement, page F-44
32. We note that you have entered into various revisions of the TCW credit
agreement.
Please tell us how you accounted for each revision and specify how you
applied the
guidance in FASB ASC 470-50 in determining whether an extinguishment;
modification;
or exchange of debt had occurred.
Note 8 - Business Combination, page F-46
33. We note that Mondee issued common shares as consideration for business
acquisitions
occurring in 2020 and 2019. Further, we note Mondee attached put
options to each of the
common shares issued as consideration, resulting in scenarios where
the holders of the put
options may have the right to sell the shares of common stock back to
Mondee at the
original price per stock as of the date of acquisition. Finally, we
note that you have
classified these common shares with the attached put options as a
component of
permanent equity for all periods presented. Please address the
following;
Tell us and disclose the quantity of shares subject to the put
options and the price per
share to be paid, including details that could cause variability
to the price paid in the
event a holder of the put options sells their shares back to
Mondee; and
Refer to the guidance in FASB ASC 480 and tell us how you
concluded that the
classification of the common shares with the attached put options
as permanent
equity is appropriate.
Note 13 Related Party Transactions, page F-58
34. We note that Mondee has a secured promissory note receivable from
Mondee Group LLC,
bearing an interest rate of 2.33% compounded annually, with a 10-year
term, and is
secured by 14,708 Class A units in Mondee Holdings, LLC. We also note
that Mondee
Group LLC is a limited liability company owned by Mr. Gundumogula who
will continue
in his role as executive officer of Mondee subsequent to the proposed
merger with
ITHAX. . Please tell us what was the business purpose of the initial
loan extended
by Mondee Holdings LLC to Mondee Group LLC in the original principal
amount of
$19.3 million, and why was it subsequently transferred to Mondee, Inc;
In addition, tell
Orestes Fintiklis
ITHAX Acquisition Corp.
April 18, 2022
Page 10
us how you considered the guidance in SAB Topics 4:E and 4:G in
determining the
appropriate classification of this note receivable.
General
35. Quantify the value of warrants, based on recent trading prices, that may
be retained by
redeeming stockholders assuming maximum redemptions and identify any
material
resulting risks.
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 John Cannarella, Staff Accountant, at 202-551-3337 or
Jenifer
Gallagher, Staff Accountant, at 202-551-3706 if you have questions regarding
comments on the
financial statements and related matters. Please contact Irene
Barberena-Meissner, Staff
Attorney, or Tim Levenberg, Special Counsel, at 202-551-3707 with any other
questions.
Sincerely,
FirstName LastNameOrestes Fintiklis
Division of
Corporation Finance
Comapany NameITHAX Acquisition Corp.
Office of Energy &
Transportation
April 18, 2022 Page 10
cc: Lynwood E. Reinhardt, Esq.
FirstName LastName