United States securities and exchange commission logo
April 29, 2022
Teck Chia
Chief Executive Officer
CBL International Ltd
Suite 19-9-6, Level 9, UOA Centre
No. 19 Jalan Pinang
50450 Kuala Lumpur, Malaysia
Re: CBL International
Ltd
Draft Registration
Statement on Form F-1
Submitted March 31,
2022
CIK NO. 0001914805
Dear Mr. Chia:
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 F-1 Submitted March 31, 2022
Prospectus Cover Page , page i
1. Your description here
and throughout the prospectus indicates that your operations are
based in Malaysia, Hong
Kong and Singapore, and that you may "from time to time" have
customers that are
based in China or Hong Kong. However, the geographic information
provided in Note 11 to
your your financial statements indicates that 95% of your revenue
comes from operations
in China, including mainland China and Hong Kong. Please revise
your disclosure
throughout your registration statement to clearly state that nearly all of
your revenue comes from
operations in China and Hong Kong, and indicate that
percentage of revenue
that you generate from China and Hong Kong. Please remove or
Teck Chia
CBL International Ltd
April 29, 2022
Page 2
revise any disclosure that suggests that you do not have substantial
operations in China
and Hong Kong. To the extent that you continue to discuss operations
in Malaysia and
Singapore, please also indicate the percentage of revenue that you
generate from each.
Please also remove statements suggesting that you only occasionally
have customers
based in China and Hong Kong, and clarify that nearly all of such
customers are in these
regions, to the extent accurate. In addition, in each place that you
discuss the locations of
ports where you provide services, such as on page 2, please indicate
the number of ports
contained in each region listed, or disclose that the majority of such
ports are in China and
Hong Kong.
2. Where you disclose on page 2 that you recorded a 39.4% increase in
revenue from
FY2020 to FY2021, please disclose that your sales volume for the same
period
decreased, and that the increase in revenue was primarily attributable
to the increase in
average market price per tonne of marine fuel. Please also include a
materially complete
discussion elsewhere in your prospectus explaining impact of marine
fuel prices on your
pricing and results of operations, as well as how historical
fluctuations in marine fuel
prices have impacted your results of operations, including your gross
profit. Please
include specific examples of the impact of historical fluctuations,
and include similar
examples in your related risk factor on page 17. Please also discuss
any expected trends
in marine fuel prices and whether you anticipate any material impact
to your future results
of operations from such trends.
3. Please disclose prominently on the prospectus cover page that you (CBL
International
Limited) are not a Chinese operating company but a Cayman Islands
holding company
with operations conducted by your subsidiaries based in Hong Kong.
Provide a cross-
reference to your detailed discussion of risks facing the company and
the offering as a
result of this structure.
4. We note your disclosure that you do not consider yourself as
"China-based." It is unclear
what you mean by "China-based," and whether you are using a particular
definition for
this term. Because you are based in Hong Kong, and have the majority
of your operations
in China and Hong-Kong, it does not appear appropriate for you to
state that you are not
"China-based." Please revise to remove this statement or otherwise
tell us why you
believe it is appropriate.
5. We note your disclosure that "Except where the context otherwise
requires or where
otherwise indicated, the terms 'Company,' 'we,' 'us,' 'our,' 'our
company,' 'our Group' and
'our business' refer, prior to the Reorganization discussed below, to
Banle BVI and, after
the Reorganization, to CBL International, in each case together with its
consolidated
subsidiaries as a consolidated entity." Please revise to clearly
disclose how you will refer
FirstName LastNameTeck Chia
to the holding company and subsidiaries when providing the disclosure
throughout the
Comapany NameCBL
document so thatInternational
it is clear toLtd
investors which entity the disclosure
is referencing and
which
April 29, 2022subsidiaries
Page 2 or entities are conducting the business
operations.
FirstName LastName
Teck Chia
FirstName LastNameTeck Chia
CBL International Ltd
Comapany
April NameCBL International Ltd
29, 2022
April 329, 2022 Page 3
Page
FirstName LastName
6. We note that you have provided a description of how cash is
transferred through your
organization. Please amend your disclosure here and in the summary
risk factors and risk
factor sections to state that, to the extent cash or assets in the
business is in the PRC or
Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be
available to
fund operations or for other use outside of the PRC or Hong Kong due
to interventions in
or the imposition of restrictions and limitations on the ability of
you or your subsidiaries
by the PRC government to transfer cash or assets. On the cover page,
provide cross-
references to those other discussions.
7. We note your disclosure that during the reporting periods presented,
no cash and other
asset transfers have occurred among Banle BVI and its subsidiaries,
and no dividends or
distributions from any of the subsidiaries has been made to Banle BVI.
Please revise your
disclosure to disclose whether any transfers, dividends or
distributions have been made to
date between Banle BVI and its subsidiaries, or to investors, and
quantify the amounts
where applicable. Provide cross-references to the condensed
consolidating schedule and
the consolidated financial statements.
8. To the extent you have cash management policies that dictate how funds
are transferred
between you and your subsidiaries, summarize the policies on your
cover page and in the
prospectus summary, and disclose the source of such policies (e.g.,
whether they are
contractual in nature, pursuant to regulations, etc.); alternatively,
state on the cover page
and in the prospectus summary that you have no such cash management
policies that
dictate how funds are transferred. Provide a cross-reference on the
cover page to the
discussion of this issue in the prospectus summary.
Prospectus Summary, page 1
9. We note your disclosure on page 29 that, "[a]s of the date of this
prospectus, we and our
dormant PRC subsidiary, Majestic Energy, (1) are not required to
obtain permissions from
any PRC authorities to operate or issue our securities to foreign
investors, (2) are not
subject to permission requirements from the CSRC, CAC or any other
entity that is
required to approve of Majestic Energy operations, and (3) have not
received or were
denied such permissions by any PRC authorities." Please revise to
disclose each
permission or approval that you or any of your subsidiaries are
required to obtain from
Chinese authorities to operate your business and to offer the
securities being registered to
foreign investors. We note that your current disclosure speaks
specifically to Majestic
Energy's operations, when it should cover all of your business
operations conducted by
you and your subsidiaries. If you believe that neither you nor any of
your subsidiaries are
required to obtain any permissions or approvals from Chinese
authorities either to operate
your business or offer the securities being registered to foreign
investors, disclose how
you came to the conclusion, why that is the case, and the basis on
which you made
this determination. Please also describe the consequences to you and
your investors if you
or your subsidiaries: (i) do not receive or maintain such permissions
or approvals, (ii)
inadvertently conclude that such permissions or approvals are not
required, or (iii)
Teck Chia
CBL International Ltd
April 29, 2022
Page 4
applicable laws, regulations, or interpretations change and you are
required to obtain such
permissions or approvals in the future. To the extent that you or your
subsidiaries are not
required to obtain any permissions or approvals from Chinese
authorities to operate your
business, please supplementally explain why given that the substantial
majority of your
operations are conducted in the PRC and Hong Kong.
10. Provide a clear description of how cash is transferred through your
organization. Quantify
any cash flows and transfers of other assets by type that have
occurred between the
holding company and its subsidiaries, and direction of transfer.
Quantify any dividends or
distributions that a subsidiary have made to the holding company and
which entity made
such transfer, and their tax consequences. Similarly quantify
dividends or distributions
made to U.S. investors, the source, and their tax consequences. Your
disclosure should
make clear if no transfers, dividends, or distributions have been made
to date. Describe
any restrictions on foreign exchange and your ability to transfer cash
between entities,
across borders, and to U.S. investors because of limitations placed on
you by the PRC
government. Describe any restrictions and limitations on your ability
to distribute
earnings from the company, including your subsidiaries to the parent
company and U.S.
investors.
11. Disclose that trading in your securities may be prohibited under the
Holding Foreign
Companies Accountable Act if the PCAOB determines that it cannot
inspect or investigate
completely your auditor, and that as a result an exchange may
determine to delist your
securities. Disclose whether your auditor is subject to the
determinations announced by
the PCAOB on December 16, 2021.
Our Business, page 2
12. Please revise your disclosure here and elsewhere as appropriate to
disclose your market
share in both the PRC and Hong Kong, as those are your principal
places of operation.
13. We note that revenue from your five largest customers accounted for
83.6% of your total
revenue in FY2021, and the revenue from your largest customer
accounted for 42.3% of
your total revenue in the same period. Please disclose in an
appropriate place in the
prospectus the length of time that you have provided refueling
services for each of these
customers, and disclose whether you have term contracts or spot
contracts with such
customers, including a general description of the terms of such
agreements. Please file
your agreements with your largest customer as an exhibit to the
registration statement, or
tell us why you do not believe you are required to do so.
14. We note that in FY2021, the purchases from your five largest suppliers
accounted for
FirstName LastNameTeck Chia
approximately 84.7% of your total cost of revenue. Please disclose in an
appropriate
Comapany
placeNameCBL International
in your prospectus Ltd you enter into long-term contracts or
agreements with
whether
such
April 29, suppliers.
2022 Page 4
FirstName LastName
Teck Chia
FirstName LastNameTeck Chia
CBL International Ltd
Comapany
April NameCBL International Ltd
29, 2022
April 529, 2022 Page 5
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FirstName LastName
Risks Relating to Doing Business in China, page 6
15. For each risk factor listed here, please provide a cross reference to
the specific page that
the risk factor starts on in your filing.
16. Please disclose what is meant by the statement that the Chinese
authorities may deem you
to be "Chinese-based." Please disclose whether this is a particular
finding that may be
made by the PRC regulatory authorities, and, if so, what the criteria
are for you to be
categorized as "Chinese-based." Clarify the specific impact or effect
on you and your
business if you are deemed to be "Chinese-based." Please also indicate
the reasons why
you believe that it is "unlikely" that you will be deemed to be
"Chinese-based."
17. In your summary of risk factors, disclose the risks that your
corporate structure and being
based in or having the majority of the company s operations in China
poses to investors.
In particular, describe the significant regulatory, liquidity, and
enforcement risks with
cross-references to the more detailed discussion of these risks in the
prospectus. For
example, specifically discuss risks arising from the legal system in
China, including risks
and uncertainties regarding the enforcement of laws and that rules and
regulations in
China can change quickly with little advance notice, which could
result in a material
change in your operations and/or the value of the securities you are
registering for sale.
Our Corporate Structure, page 7
18. Please disclose to identify the individual or entities that hold
interests in CBL (Asia)
Limited (Hong Kong) and Straits Energy Resources Berhad (Malaysia), as
well as the
percentage owned by such individuals or entities. Please also include
the percentage
directly owned by each entity listed in the chart. Please also include
the ownership
amounts following the offering.
Risk Factors, page 16
19. Please revise your risk factors to clearly indicate how the risks
discussed impact your
company specifically, to the extent applicable. For example, to the
extent that your
operations have been materially impacted by the credit risks of your
customers, material
disruptions in availability or supply of marine fuel, or the reduction
or termination of trade
credit from your suppliers, please discuss these instances in your
related risk factors.
Please note that these are just examples.
20. In light of recent events indicating greater oversight by the
Cyberspace Administration of
China (CAC) over data security, particularly for companies seeking to
list on a foreign
exchange, please revise your disclosure to explain how this oversight
impacts your
business and your offering and to what extent you believe that you are
compliant with the
regulations or policies that have been issued by the CAC to date. If
you do not believe
CAC regulation are applicable to you, please discuss how you came to
that conclusion.
Teck Chia
FirstName LastNameTeck Chia
CBL International Ltd
Comapany
April NameCBL International Ltd
29, 2022
April 629, 2022 Page 6
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FirstName LastName
21. Certain risk factors in this section focus on your PRC subsidiary,
such as the risk factors
on pages 30 and 31 that discuss dividends and distributions on equity
as well as loans and
direct investment in the PRC entities. Please expand your disclosure
throughout to
include a discussion of both your PRC and Hong Kong subsidiaries.
Certain judgements obtained against us by our shareholders..., page 37
22. Please revise your disclosure here to identify the directors, officers
or members of senior
management located in the PRC or Hong Kong. Please clearly explain the
challenges of
bringing actions and enforcing judgments or liabilities against such
individuals. Please
include similar disclosure in the section entitled "Enforcement of
Civil Liabilities" on
page 42.
Capitalization, page 40
23. Please revise your disclosures give effect to the sale of the ADSs in
this offering, at an
assumed initial public offering price after deducting the underwriting
discounts and
commissions and estimated offering expenses payable by you.
Management s Discussion and Analysis of Financial Condition and Results of
Operations, page
47
24. Please revise your disclosure, as applicable, to describe the impact
of the Russia-Ukraine
conflict on your business. Specifically, please discuss how the recent
dramatic increase
in marine fuel prices has impacted, or may impact, your working
capital requirements and
financial condition.
Results of Operations for the Years Ended December 31, 2021 and 2020, page 49
25. Please discuss the reason the specific factors created favorable and
unfavorable
movements in your revenues and expenses. For example, discuss the
reason for
the decrease in your sales volume of approximately 36,965 metric tons
or 5.6% from
655,660 metric tons for the year ended December 31, 2020 to
approximately 618,695
metric tons for the year ended December 31, 2021.
26. Please revise to discuss material key performance indicators or other
metrics, if any, that
management uses to manage the business. Please provide a clear
definition of such metric
and how it is calculated; the reasons why the metric is useful to
investors, how
management uses the metric in managing or monitoring the performance
of the business,
and whether there are underlying estimates or assumptions necessary to
understand the
metric or calculation. For additional guidance, refer to SEC Release
No. 33-10751.
Teck Chia
FirstName LastNameTeck Chia
CBL International Ltd
Comapany
April NameCBL International Ltd
29, 2022
April 729, 2022 Page 7
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FirstName LastName
Liquidity and Capital Resources
Cash Flows in Operating Activities - Fiscal Years Ended December 31, 2021 and
2020, page 51
27. Your discussion of cash flows from operating activities should be a
comparative analysis
of material changes in this amount between periods. Refer to Item
303(a) and (b) of
Regulation S-K. In your analysis, please note that references to
results of operations,
which is prepared on the accrual basis of accounting, and working
capital movements may
not provide a sufficient basis for an investor to fully understand
comparative changes in
terms of cash. Your discussion should address the drivers underlying
each factor cited. For
example, please discuss the specific items that created favorable and
unfavorable
movements in working capital in terms of cash and the reasons
underlying such
movements.
Business, page 57
28. Where you note that five of the top 10 international container ship
operators are your
customers, please disclose the percentage of your total revenue
generated from such
customers.
29. Where you note that your Group is considered one of the few leading
bunkering
facilitators in "some of the Asia Pacific regions," please specify the
particular regions in
which the Group has a leading position, and specify the percentage of
market share in
such regions, including the measure by which you are measuring such
market share.
Our Business Strategies, page 59
30. Where you discuss strengthening your position in Singapore and South
Korea, please
disclose the status of your current operations and your market share
in each region.
Our Operation Flows, page 65
31. Please revise your disclosure in this section to discuss the general
terms of term contracts
and spot contracts, including the duration of such agreements and
whether agreements set
forth minimum volume requirements. Please also disclose the percentage
of your revenue
that is derived from spot contracts versus term contracts. To the
extent that this varies
from year to year, please disclose this and indicate how it impacts
your overall results of
operations, if applicable.
Regulations, page 71
32. Please revise this section to explain how the listed regulations, to
the extent
material, impact your operations and whether you are in compliance
with such
regulations. The current disclosure is simply a list of various
regulations, and it is unclear
when and how they apply to you, and whether you are in compliance with
such
regulations. Please revise to clearly state the material effects of
such regulations on your
business. See Item 4.B. of Item 20-F.
Teck Chia
CBL International Ltd
April 29, 2022
Page 8
Management, page 85
33. Please file your employment agreements referenced on page 86 as
exhibits to the
registration statement.
Financial Statements, page F-1
34. Please include the financial statments of the Registrant, CBL
International Limited, or, if
true, a a statement that the entity has not commenced operations and
has no (or nominal)
assets or liabilities.
Notes to the Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
M. Revenue and Cost of Revenue, page F-15
35. You disclose that you recognize sales and distribution of marine fuel
revenue on a gross
basis as you have control of the products or services before they are
delivered to your
customers. In drawing this conclusion, you considered various factors,
including inventory
risk management, latitude in establishing the sales price, discretion
in the supplier
selection and that you are normally the primary obligor in the sales
arrangements. On
pages 19 and 68, you disclose that generally, you do not maintain any
inventory as you
arrange your suppliers to deliver marine fuel to your customers
vessels directly on your
behalf. During FY2020 and FY2021, your did not maintain any inventory.
However,
you could bear inventory risk if the ownership of marine fuel is
passed to you before it is
transferred to your customers. Please tell us your consideration of
ASU 606-10-55-37,
which states that an entity does not necessarily control a specified
good if the entity
obtains legal title to that good only momentarily before legal title
is transferred to a
customer.
General
36. Please tell us of your consideration of providing pro forma financial
statements to present
your financial position and results of operations after giving pro
forma effect to the
reorganization of your corporate structure pursuant to which CBL
International will
acquire all of the outstanding equity interests of Banle BVI.
37. We note news reports that indicate that Banle Energy International Ltd
has filed an
application for a listing on the Hong Kong Stock Exchange. Please tell
us whether you are
planning to conduct a listing on the Hong Kong Stock Exchange at the
same time as you
are seeking to list your ADSs on Nasdaq. To the extent that proceeds
from a planned
FirstName LastNameTeck Chia
initial public offering on the Hong Kong Stock Exchange will be used for
the same
Comapany NameCBL
purposes International
as outlined Ltdof Proceeds section on page 39,
please disclose this fact
in the Use
and2022
April 29, the amount
Page 8 of proceeds that you expect to receive from the Hong
Kong IPO.
FirstName LastName
Teck Chia
FirstName LastNameTeck Chia
CBL International Ltd
Comapany
April NameCBL International Ltd
29, 2022
April 929, 2022 Page 9
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FirstName LastName
You may contact Patrick Kuhn at 202-551-3308 or Lyn Shenk at
202-5551-3380 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Scott Anderegg at 202-551-3342 or Erin Jaskot at 202-551-3442 with any
other
questions.
Sincerely,
Division of Corporation
Finance
Office of Trade &
Services