United States securities and exchange commission logo
July 15, 2022
William A. Ackman
Chief Executive Officer
Pershing Square SPARC Holdings, Ltd./DE
787 Eleventh Avenue, 9th Floor
New York, New York 10019
Re: Pershing Square
SPARC Holdings, Ltd./DE
Amended
Registration Statement on Form S-1
Filed June 16, 2022
File No. 333-261376
Dear Mr. Ackman:
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.
Form S-1A filed on June 16, 2022
General
1. We note the disclosure
on page v that you will place a portion of the proceeds from the
purchase of the sponsor
preferred shares in an escrow account to ensure you maintain net
tangible assets of at
least $5,000,001 until you consummate an initial business
combination. In order
to comply with Rule 3a51-1(g)(3)(i) of the Exchange Act and avoid
having to comply with
Rule 419, the company must provide audited financial statements
reflecting net tangible
assets in excess of $5,000,000. Please either provide the financial
statements requested or
revise your offering to comply with Rule 419.
William A. Ackman
FirstName LastNameWilliam A. Ackman
Pershing Square SPARC Holdings, Ltd./DE
Comapany
July NamePershing Square SPARC Holdings, Ltd./DE
15, 2022
July 15,
Page 2 2022 Page 2
FirstName LastName
2. With a view toward disclosure, please tell us whether your sponsor is,
is controlled by, or
has substantial ties with a non-U.S. person. If so, also include risk
factor disclosure that
addresses how this fact could impact your ability to complete your
initial business
combination. For instance, discuss the risk to investors that you may
not be able to
complete an initial business combination with a U.S. target company
should the
transaction be subject to review by a U.S. government entity, such as
the Committee on
Foreign Investment in the United States (CFIUS), or ultimately
prohibited. Disclose that
as a result, the pool of potential targets with which you could
complete an initial business
combination may be limited. Further, disclose that the time necessary
for government
review of the transaction or a decision to prohibit the transaction
could prevent you from
completing an initial business combination and require you to
liquidate. Disclose the
consequences of liquidation to investors, such as the losses of the
investment opportunity
in a target company, any price appreciation in the combined company,
and the warrants,
which would expire worthless.
3. We note the disclosure in your April 28, 2022 press release that if
PSTH liquidates prior
to a registration statement for the issuance of the SPARs being
declared effective by the
Commission, SPARC intends to "create a mechanism whereby PSTH
shareholders and
warrant holders at the time of PSTH s initial business combination
or liquidation, as
applicable, would be entitled to receive SPARs in any future legally
permissible
distribution thereof." We also note that the letter to stockholders
filed with PSTH's July
11, 2022 Form 8-K indicates that the distribution is expected to occur
in the Fall of 2022.
As such, please clearly describe the "mechanism" by which PSTH
shareholders and
warrant holders at the time of PSTH's liquidation will be entitled to
receive SPARs in this
distribution. Please provide your analysis as to whether that
mechanism would result in
the creation of a security, and if so, the exemption you believe is
available for the issuance
of such security.
4. We note that your offering will not be of a covered security, as
defined in Section 18 of
the Securities Act and thus this offering will be subject to
concurrent state regulation.
Please clearly disclose how you will comply with the state regulations
in this distribution.
5. We note disclosures beginning on page 131 comparing the SPARC terms to
those of a
traditional SPAC listed on the NYSE. Please revise your disclosure
here and throughout,
including the summary and business sections, to more specifically
describe how the
OTCQX listing requirements are different from those of the NYSE and
Nasdaq. Please
specifically discuss Rule 15c2-11 which provides a time-limited window
of 18 months
during which broker-dealers may quote the securities of shell
companies. In addition,
please highlight how you differ from a traditional SPAC listed on the
NYSE or Nasdaq,
including any negatives associated with your structure as compared to
a traditional SPAC.
William A. Ackman
FirstName LastNameWilliam A. Ackman
Pershing Square SPARC Holdings, Ltd./DE
Comapany
July NamePershing Square SPARC Holdings, Ltd./DE
15, 2022
July 15,
Page 3 2022 Page 3
FirstName LastName
6. We note that you have included a risk factor that you may be deemed an
investment
company under the Investment Company Act, as well as disclosure
regarding the holding
of $5,000,001 in an escrow account and the holding of proceeds from
the election and
payment of the SPARs in a custodial account and disclosure that you
plan to structure
your business combination so that you will not be required to register
as an investment
company under the Investment Company Act. Please provide your analysis
with respect to
both the escrow account and the custodial account as to how you
reached the
determination that you will not be required to register either account
as an investment
company under the Investment Company Act.
7. We note your disclosure regarding the distribution of SPARC II Tontine
SPARs to
exercising SPAR holders, and that there is currently no registration
statement filed for a
distribution of SPAR II warrants. Please tell us how you have
considered whether the
disclosure constitutes an offer of the SPARC II securities at this
time, including why this
would not condition the market for SPARs or SPARC II securities.
8. We note disclosures throughout the prospectus that during the Holder
Election Period the
SPARs will be restricted from trading once an Election has been
submitted, while other
holders who have not made an Election will continue trading, and all
trading will halt two
days before the end of the Holder Election Period, and thereafter
unless the company
announces a decision not to proceed with the transaction during the
Company Decision
Period, at which time trading would resume. Please describe the
mechanisms that will be
used to enforce or release restrictions on trading of some or all of
the SPARS during
various periods in the company life cycle. Please also disclose any
risks associated with
these restrictions.
Prospectus Cover Page, page i
9. We note the disclosure that the SPARs have a minimum exercise price of
$10 per share,
that the actual exercise price will be announced at the time you enter
into a definitive
agreement with a proposed business combination, and that there is no
maximum exercise
price. We also note that the common stock is being registered with the
SPARs in this
registration statement. Please revise to disclose the offering price
of the securities, as
required by Item 501(b)(3) of Regulation S-K, rather than a minimum
price. Please add
disclosure throughout, including risk factors, regarding the ability
to change the price in a
post-effective amendment.
10. Please reduce the disclosure on the cover page significantly. Much of
the information in
the seven pages of cover page is repeated in the summary. The cover
page should include
only the information required by Item 501(b) of Regulation S-K and
other information
that is key to an investment decision.
William A. Ackman
FirstName LastNameWilliam A. Ackman
Pershing Square SPARC Holdings, Ltd./DE
Comapany
July NamePershing Square SPARC Holdings, Ltd./DE
15, 2022
July 15,
Page 4 2022 Page 4
FirstName LastName
Summary, page 1
11. We note the disclosure on page 9 that you expect the business
combination will be
consummated within 15 business days of the end of the SPAR Holder
Election Period, but
certain events such as disagreements with the business combination
partner, failure to
satisfy closing conditions, actions by governmental authorities or
regulators, etc., could
delay this time period. Please clarify whether there is a maximum
period of time between
the end of the SPAR Holder Election Period and completion of the
business combination,
during which payments from the SPAR holders will be held in the
custodial account and
after which payments will be returned to SPAR holders if the business
combination is not
completed. Please also advise what considerations you gave to Rule
10b-9 with regard to
the custodial account.
Board Observers, page 23
12. Please confirm whether the persons identified as "Board observers"
will be directors or
director nominees when the registration statement becomes effective.
Please describe the
material terms of any agreement, arrangement or understanding pursuant
to which these
individuals will have observation rights and will be offered the
opportunity to serve as
directors of SPARC after their service to PSTH concludes, and file the
agreement as an
exhibit to the registration statement. Please also note the
requirement of Rule 438 of
Regulation C to file the written consent of any person who has not
signed the registration
statement and is named therein as about to become a director.
Disclosure Period, page 29
13. Disclosure regarding your Post-Effective Amendment states that it will
contain
comprehensive disclosures regarding the transaction, equivalent to the
disclosure that
would be included in a merger proxy statement. Please further clarify
that it will include
disclosure of all payments, incentives, and benefits that may be
received by, and any
conflicts of interest involving, the sponsor or its affiliates in
connection with the business
combination.
Sponsor Warrants and Director Warrants, page 35
14. We note your disclosure that you will issue the Private Warrants at
fair market value
(determined in consultation with a third-party, nationally recognized
valuation firm) if
PSTH were to complete an acquisition, but you will issue the Private
Warrants at a
"nominal cost" if PSTH does not complete an acquisition. You state
that if PSTH does
not complete an acquisition, the holders of Private Warrants will have
"in effect, already
paid for the investment opportunity represented by the Private
Warrants," and that your
Private Warrants will represent substantially the same investment
opportunity as do the
private warrants of PSTH - the right to acquire a fixed percentage of
a post-combination
company.
William A. Ackman
FirstName LastNameWilliam A. Ackman
Pershing Square SPARC Holdings, Ltd./DE
Comapany
July NamePershing Square SPARC Holdings, Ltd./DE
15, 2022
July 15,
Page 5 2022 Page 5
FirstName LastName
Please clarify how the purchase of sponsor warrants from PSTH at their
then-fair market
value is "in effect" payment for an investment opportunity in SPARC's
Private Warrants,
and explain how the investment opportunities are the same, or revise
to remove
this implication. In this regard, please consider and address in
disclosure the differences
in the structures and durations of the two companies, the respective
material terms of their
sponsor warrants, whether the SPARC will receive any portion of the
payment PSTH
received for its sponsor warrants, and the considerations underlying
PSTH s valuation of
its sponsor warrants, including probability of completing a business
acquisition by its
dissolution deadline, as described in PSTH s prospectus dated July
21, 2020.
15. Please ensure that disclosure is clear that the $65 million price that
holders of Private
Warrants paid for an investment opportunity with PSTH bears no
relation to the fair
market value of the Private Warrants and that the 'nominal cost' to be
paid for the Private
Warrants may be significantly less than their fair market value, which
will not have been
determined by the company in consultation with a third party valuation
expert or
otherwise at the time that the Private Warrants are issued. Lastly,
please explain
whether issuing the Private Warrants at a nominal cost instead of fair
market value is
expected to have any impact on the company, investors, or SPARC's
ability or
attractiveness in searching for and consummating the acquisition of a
target company.
Risk Factors, page 55
16. Please revise the second risk factor on page 55 to disclose that being
quoted on the
OTCQX marketplace means investors will likely have increased trading
costs and a lack
of corporate governance protections that apply to exchange listed
securities under
exchange rules, consistent with disclosures elsewhere in the
prospectus.
17. Please add risk factor disclosures regarding the additional risks the
SPARs present to
investors, including with respect to their valuation and their
susceptibility to manipulation.
Capitalization, page 94
18. We note your response to comment 13 from our letter dated July 22,
2021. Please tell us
why you believe it is appropriate to present your capitalization
assuming that all the
SPARs are exercised and assuming the sale of shares pursuant to the
Committed Forward
Purchase Agreement. Your response should address that there is no
guarantee that the
SPARs will ever be exercised and the Committed Forward Purchase will
only occur
simultaneously with the closing of a business combination.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
95
19. We note your disclosure on page F-11 that the SPARs, the Private
Warrants and the
Forward Purchase Shares will be classified as liabilities once they
are outstanding and will
initially and subsequently be measured at fair value with changes in
fair value reflected on
the statement of operations at each reporting period. Please revise
your filing to disclose
William A. Ackman
Pershing Square SPARC Holdings, Ltd./DE
July 15, 2022
Page 6
the methodologies, inputs and assumptions that you will use in your
valuation of these
instruments. In addition, please disclose where you will reflect the
charge (e.g. equity or
expense) for the initial measurement of these instruments.
Related Party Policy, page 150
20. We note that you will adopt a code of ethics prior to the distribution
requiring the
avoidance of all conflicts of interest, including any financial
transaction or arrangement or
relationship involving the company, except under guidelines approved by
the board or as
disclosed in SEC filings. We also note several references in the
prospectus to the possible
need to obtain additional financing or capital. Please clarify whether
the company could
enter into any arrangements for additional financing or capital, or any
other financial
transactions, arrangements or relationships with the sponsor or any of
its affiliates,
including in connection with the business combination, and if so, whether
these
transactions would constitute conflicts of interest that would be
excepted from
this prohibition under guidelines approved by the board or as disclosed
in SEC filings.
You may contact Ameen Hamady at 202-551-3891 or Jennifer Monick at
202-551-3295
if you have questions regarding comments on the financial statements and
related
matters. Please contact Pam Howell at 202-551-3357 or Pam Long at 202-551-3765
with any
other questions.
Sincerely,
FirstName LastNameWilliam A. Ackman
Division of Corporation
Finance
Comapany NamePershing Square SPARC Holdings, Ltd./DE
Office of Real Estate &
Construction
July 15, 2022 Page 6
cc: Gregory P. Patti, Jr.
FirstName LastName