United States securities and exchange commission logo
August 3, 2022
Arnaud Massenet
Chief Executive Officer
Aurora Acquisition Corp.
20 North Audley Street
London W1K 6LX, United Kingdom
Re: Aurora Acquisition
Corp.
Amendment No. 6 to
Registration
Statement on Form S-4
Filed July 13, 2022
File No. 333-258423
Dear Mr. Massenet:
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 May
9, 2022 letter.
Amended Registration Statement filed July 14, 2022
General
1. Please provide us with
any correspondence between each of Barclays and Bank of
America and Aurora and
Citigroup and Better relating to their respective resignations as
financial advisors.
2. Please provide us with
letters from each of Barclays, Citigroup and Bank of
America stating whether
each of them agrees with the statements made in your prospectus
related to their
resignation and, if not, stating the respects in which they do not agree.
Please revise your
disclosure accordingly to reflect that you have discussed the disclosure
Arnaud Massenet
Aurora Acquisition Corp.
August 3, 2022
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with Barclays, Citigroup and Bank of America and they either agree or
do not agree with
the conclusions and the risks associated with such outcome. If the
firms do not respond,
please revise your disclosure to indicate you have asked and not
received a response and
disclose the risks to investors. Additionally, if applicable, please
indicate that the firms
refused to discuss the reasons for their resignations and forfeiture
of fees, if applicable,
with management.
Transaction Summary, page 43
3. Please clarify whether the PIPE Investment by SoftBank is a condition
to closing the
Business Combination, and, if not, disclose the impact to the
post-business combination
company if the PIPE Investment is not consummated.
Risk Factors, page 81
4. Refer to your response to comment 7. Please update your risk factor
disclosure to reflect
recent negative trends impacting your business, including by way of
example the caption
of the risk factor on page 89 "[w]e may not be able to continue to
grow our loan
production business" and the risk factor on page 91 captioned "[o]ur
recent growth has
already dramatically slowed and we may not be able to grow our
revenues in the future."
Risk Factors
We identified a material weakness in our internal control over financial
reporting, page 104
5. Refer to your response to comment 12. Please address the following:
Specify the COSO framework utilized; and
Enhance your disclosure to explain in more detail the nature of
the deficiencies of
Better s workplace culture and organizational structure that
prevented it from
demonstrating a commitment to integrity and ethical values, and
for management to
establish structures, reporting lines, and appropriate authorities
and responsibilities
that resulted in ineffective control over financial reporting. We
note the material
weaknesses you cite are internal control components and principles
of the COSO
2013 Framework.
Risks Related to Our Warehouse Lines of Credit
Our business relies on our warehouse lines, page 135
6. Please place this risk factor in context by disclosing that Barclays has
paused the $500
million warehouse lending line and other services to Better and describe
the specific risks
FirstName LastNameArnaud Massenet
because Barclays is re-evaluating its relationship with Better. Please
similarly revise other
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risk factors where Acquisition
you referenceCorp.
"a financial counter-party's decision
to pause" the
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Risks Related to the Business Combination and Aurora
Each of Baclays and City Group has resigned from its financial advisory role,
page 167
7. Please remove the statement that Barclay's and Citigroup's
"resignation reflects a broader
trend at similar companies." This disclosure is not appropriate given
each has disclaimed
responsibility for the proxy statement/prospectus disclosure and is
inconsistent with your
statement in the first paragraph that you will not speculate as to the
financial advisors'
reasons for resigning from their respective engagements.
8. Please clarify whether any or all of Barclays, Citibank, and Bank of
America were involved in the preparation of disclosure that is
included in the registration
statement, or material underlying disclosure in the registration
statement, including but not
limited to the disclosure regarding the summary of the financial
analyses prepared by
Better's management and reviewed by the board of directors of Aurora
or the projected
financial information of Better. In this regard it appears from this
risk factor that each
Barclays, Citibank, and Bank of America were involved in preparing
this disclosure.
Revise here and on page 224 to describe in detail the respective roles
of each Barclays,
Citibank, and Bank of America in connection with the preparation of
the registration
statement and the valuation of Better. Please also disclose the
rationale for continuing to
rely on information disclaimed by the professional organizations
associated with or
responsible for that information.
9. Please disclose here and on page 224 whether Barclays, Citigroup, or
Bank of
America assisted in the preparation or review of any materials
reviewed by the Aurora
board of directors or management or as part of their services to
Better, as the case may be,
and whether Barclays, Citigroup, or Bank of America have withdrawn
their association
with those materials and notified Aurora or Better, respectively, of
that disassociation.
For context, disclose that there are similar circumstances in which
the financial
institutions are named and that the resignations indicate those
parties are not willing to
have the liability associated with such work in this transaction.
10. Please provide us with the engagement letters between Aurora and
Barclays and Better
and Citigroup. Please disclose any other ongoing obligation of Aurora
or Better under the
respective engagement letters that will survive the termination of the
engagement. In this
regard we note your disclosure on page 167 that the indemnity and
contribution
obligations will continue.
11. Please discuss the potential impact on the transaction related to the
resignation of Barclays
and Citigroup. We note that Barclays has advised on the business
combination transaction,
served as financial advisor to Aurora's board of directors and PIPE
placement agent, as
well as provided general advisory services in the context of proposed
targets of Aurora,
including by not limited to valuation advice. We also note that the
primary services
rendered by Citigroup in connection with the business combination
included financial
advice to Better s board of directors, review of investor materials,
and assistance in
preparation of the dilution analysis. If Barclays, Citigroup, or Bank
of America would
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have played a role in the closing, please revise to identify the party
who will be filling
those roles.
12. Please disclose whether the PIPE investors have been notified of the
Barclays resignation and whether any of the PIPE investors have
withdrawn from the deal
based on these resignations. Also disclose whether any other bank will
be paid the portion
of the fees owed to Barclays in connection with PIPE placement agent
services.
Better Overview, page 325
13. You disclose that Tinman allows you to change the cost structure of
the legacy
homeownership process, shifting the model from one built around
expensive
commissioned intermediaries, that you have been able to re-architect
the problematic
aspects of traditional industry processes and deliver value through
lower cost relative to
industry averages. You also disclose that you remain focused on
enhancing your
automated systems, including Tinman, your automated decision-making
engine, in a
manner that will improve efficiency and reduce labor hours devoted to
loan production but
that there remain numerous parts of your loan production process that
require human
labor. Please expand your disclosures to address the following:
Specify the problematic aspects of traditional industry processes
that you have been
able to re-architect and eliminate or reduce the cost that you
would otherwise incur in
a legacy homeownership process; and
Specify the parts of your loan production process that still
require human labor and
how these parts correlate to your mortgage platform expenses.
14. You disclose on page 326 that in the quarter ended March 31, 2021,
mortgage platform
revenue made up 95.3% of your total net revenues, that you generated
mortgage revenue
through Gain on Sale from loans, that the lower rates you provided to
your customers
resulted in a lower Gain on Sale Margin but that you sought to offset
lower Gain on Sale
Margin through a lower origination cost structure enabled by your
technology and
operating efficiency, as well as to generate revenue on non-mortgage
products offered to
your customers and that you demonstrated 492.0% year-over-year growth
in total non-
mortgage revenue for the quarter ended March 31, 2022. Please revise
your discussion in
order to present a balanced discussion as follows:
Discuss results in chronological order from latest to oldest
beginning with the latest
financial information included in the registration statement;
Disclose both dollar amounts and related percentages of mortgage
platform revenue
and non-mortgage revenue; and
Consider presenting quantitative results in a table format and
address period-over-
period changes in trends to support your discussion on the
relationship between rates
offered by you and the value proposition to customers, including
non-mortgage
products.
15. Your disclosures of the Better Net Income (Loss) Margin and Better
Adjusted Net Income
(Loss) Margin in the table on page 326 appear to be non-GAAP financial
measures.
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Please identify these as non-GAAP financial measures, and include the
appropriate disclosure and reconciliations in your disclosure of
non-GAAP financial
measures beginning on page 381. Refer to Item 10(e)(2) of Regulation
S-K and
Regulation G.
16. Please update your business model revenue growth and growth
discussions on page 328 to
reflect the latest financial information included in the registration
statement and discuss
results in chronological order from latest to oldest to present a
balanced discussion.
Better Cash Offer Program, page 330
17. Please enhance your discussion here and on page 366 to provide greater
detail of the
structure of the cash offer program, including how you would expect to
earn a profit, as
well as the following:
Disclose how you fund homes purchased by you under the cash offer
program and if
the subsequent purchase by the borrower of the home from you
occurs through your
home finance products process and if different, how so, including
impact to liquidity
and capital resources; and
Disclose the nature of expense incurred by you to offer this
product.
Information About Better
Lower Labor Cost, page 339
18. Please clarify and address the following related to the decrease in
total mortgage platform
revenue for the three months ended March 31, 2022:
The decrease in total mortgage platform revenue is attributable to
net loss on sale of
loans of $19.6 million for the three months ended March 31, 2022
compared to a net
gain on sale of loans of $279.5 million as a result of a 50.5%
decrease in total funded
loans offset by an 11.7% increase in the fair value of IRLCs and
forward sales
commitments;
The 50.5% decrease in total funded loans was driven by a reduction
in Funded Loan
Volume, Refinance Loan Volume, D2C Loan Volume offset by an
increase in
Purchase Loan Volume and B2B Loan Volume; and
Present the table disclosed on page 326 that shows for each
specified period, average
MBA 30-year fixed rate, Better s average 30-year fixed rate,
Better s Gain on Sale
Margin and explain why you recognized a net loss on sale of loans
despite a gain on
sale margin, and the factors contributing to the net loss on sale
of loans for the period
ended March 31, 2022.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Our Business, page 354
19. Please update your disclosures and related discussions throughout the
registration
statement and Management s Discussion and Analysis to present in
chronological order
from latest to oldest, beginning with the latest financial information
included in the
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registration statement to present a balanced discussion.
Home Finance Mortgage Platform Revenue Model, page 357
20. Please enhance your Home Finance Mortgage Platform Revenue Model
discussion as
follows:
Present the table of components of mortgage platform revenue, net
on page 372 as
part of this discussion since Integrated relationships and IRLC
and forward sales
commitments are integral to mortgage platform revenue; and
Expand to specifically address the impact of the change in trends
to a net loss on sale
of loans and that total mortgage platform revenue, net for the
three months ended
March 31, 2022 is attributable to changes in fair value of the
IRLCs and forward
sales commitments.
Refer to Item 303(b)(2)(ii) of Regulation S-K.
Results of Operations
Key Business Metrics, page 363
21. You disclose that as part of your business model the low rates you
provide to your
customers result in a lower Gain on Sale Margin through a lower
origination cost structure
enabled by your technology and operating efficiency, as well as
generate revenue on non-
mortgage products offered to your customers and that you have
demonstrated 492.0%
year-over-year growth in your total non-mortgage revenue, which was
$125.5 million in
the quarter ended March 31, 2022, as a result of the growth of your
Cash Offer program.
Please disclose both the dollar volume and number of total homes
purchased and total
loans sold or leased as part of your Cash Offer program consistent
with your Home
Finance and Better Plus portfolios as part of your Key Business
Metrics disclosures.
Mortgage Platform Revenue, Net, page 373
22. Please clarify and address the following related to the decrease in
total mortgage platform
revenue for the three months ended March 31, 2022:
The decrease in total mortgage platform revenue is attributable to
net loss on sale of
loans of $19.6 million for the three months ended March 31, 2022
compared to a net
gain on sale of loans of $279.5 million as a result of a 50.5%
decrease in total funded
loans offset by an 11.7% increase in the fair value of IRLCs and
forward sales
commitments;
The 50.5% decrease in total funded loans was driven by a reduction
in Funded Loan
Volume, Refinance Loan Volume, D2C Loan Volume offset by an
increase in
Purchase Loan Volume and B2B Loan Volume; and
Present the table disclosed on page 326 that shows for each
specified period, average
MBA 30-year fixed rate, Better s average 30-year fixed rate,
Better s Gain on Sale
Margin and explain why you recognized a net loss on sale of loans
despite a gain on
sale margin.
Refer to Item 303(b)(2)(ii) of Regulation S-K.
Arnaud Massenet
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August 3, 2022
Page 7
Operating Expenses, page 374
23. Refer to your response to comment 27. We also note that you attribute
the $27.2 million
or 17% increase in mortgage platform expense to $185.8 million for the
quarter ended
March 31, 2022 from $158.5 million for the quarter ended March 31,
2021 to the increase
in purchase volumes and your operational restructuring. Please enhance
your disclosures
to clarify the following:
Total loans funded during the quarter ended March 31, 2022
declined 50.5% to $20.9
million for the period ending March 31, 2022 from $42.3 million
for the period ended
March 31, 2021 offset by the increase in purchase loan volume to
$2.7 million for the
period ending March 31, 2022 from $1.4 million for the period
ended March 31,
2021; and
More fully explain the increase in mortgage platform expense
despite the significant
decrease in total loans funded and disclose the amount of the
$37.7 million in
restructuring costs attributable to mortgage platform expense.
Refer to Item 303(b)(2)(ii) of Regulation S-K.
Non-GAAP Financial Measures, page 381
24. You disclose in footnote 7 to your reconciliations of Adjusted Net
Income (Loss) and
Adjusted EBITDA that Other non-recurring expenses includes an
adjustment of $37.7
million and $16.0 million for employee related severance costs in the
periods ended
March 31, 2022 and December 31, 2021. Please quantify for us the
amount recognized by
line item in your Consolidated Statements of Operations and
Comprehensive Income
(Loss).
Quantitative and Qualitative Disclosures about Market Risk, page 391
25. Refer to your response to comment 27 and the hypothetical impact of
increases and
decreases in interest rates by 25 and 50 basis points. Please revise
to present hypothetical
changes in market rates that are expected to reflect reasonable
possible near-term change.
Refer to Regulation S-K, Item 305(a)(1)(ii) and related instructions.
26. You disclose that you do not believe you have material exposure to
foreign currency
FirstName LastNameArnaud Massenet
exchange risk. Considering approximately half of your team members are
located in India
Comapany NameAurora
and the Acquisition
United Kingdom, Corp.
please enhance your disclosure to clarify
your foreign exposure
Augustrelated
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these7 activities.
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You may contact Rolf Sundwall at (202) 551-3105 or Michelle Miller at
(202) 551-
3368 if you have questions regarding comments on the financial statements and
related
matters. Please contact Tonya K. Aldave at (202) 551-3601 or J. Nolan
McWilliams, Acting
Legal Branch Chief, at (202) 551-3217 with any other questions.
Sincerely,
Division of
Corporation Finance
Office of Finance
cc: Carl Marcellino, Esq.