United States securities and exchange commission logo
January 13, 2023
Mu Hongwei
Chief Executive Officer
Chijet Motor Company, Inc.
Sertus Chambers
Governors Square, Suite #5-204
23 Lime Tree Bay Avenue, P.O. Box 2547
Grand Cayman, KY1-1104, Cayman Islands
Re: Chijet Motor
Company, Inc.
Draft Registration
Statement on Form F-4
Submitted December
16, 2022
CIK No. 0001957413
Dear Mu Hongwei:
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-4 submitted December 16, 2022
General
1. Your charter waived the
corporate opportunities doctrine. Please address this potential
conflict of interest
and whether it impacted your search for an acquisition target.
2. Please disclose the
sponsor and its affiliates total potential ownership interest in the
combined company,
assuming exercise and conversion of all securities.
Mu Hongwei
FirstName LastNameMu Hongwei
Chijet Motor Company, Inc.
Comapany
January 13,NameChijet
2023 Motor Company, Inc.
January
Page 2 13, 2023 Page 2
FirstName LastName
3. Please expand your disclosure regarding the sponsor s ownership
interest in the target
company. Disclose the approximate dollar value of the interest based
on the transaction
value and recent trading prices as compared to the price paid.
4. We note that certain shareholders agreed to waive their redemption
rights. Please describe
any consideration provided in exchange for this agreement.
5. We note that I-Bankers Securities, Inc. performed additional services
after the IPO and
part of the IPO underwriting fee was deferred and conditioned on
completion of a
business combination. Please quantify the aggregate fees payable to
I-Bankers Securities,
Inc. that are contingent on completion of the business combination.
6. We note that you may enter into arrangements to sell additional
securities to complete the
business combination transaction after returning funds to redeeming
stockholders. If
applicable, revise your disclosure to discuss the key terms of any
convertible securities
and to disclose the potential impact of those securities on
non-redeeming shareholders.
7. Please update your compensation disclosure to reflect the fiscal year
ended December 31,
2022.
8. We note your disclosure on page 105 regarding Russia's invasion of
Ukraine. Please
revise your filing, as applicable, to provide more specific disclosure
related to the direct or
indirect impact that Russia's invasion of Ukraine and the
international response have had
or may have on your business. For additional guidance, please see the
Division of
Corporation Finance's Sample Letter to Companies Regarding Disclosures
Pertaining to
Russia s Invasion of Ukraine and Related Supply Chain Issues, issued
by the Staff in May
2022.
9. 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. Please also tell us
whether anyone or any
entity associated with or otherwise involved in the transaction, 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. 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.
Mu Hongwei
FirstName LastNameMu Hongwei
Chijet Motor Company, Inc.
Comapany
January 13,NameChijet
2023 Motor Company, Inc.
January
Page 3 13, 2023 Page 3
FirstName LastName
Cover Page
10. Clearly disclose how you will refer to the holding company and
subsidiaries when
providing the disclosure throughout the document so that it is clear
to investors which
entity the disclosure is referencing and which subsidiaries or
entities are conducting the
business operations. Disclose clearly the entity (including the
domicile) in which
investors are purchasing an interest.
11. We note you have been advised by Mainland China counsel. Please ensure
you file
counsel s consent.
Market and Industry Data, page 14
12. We note that the prospectus includes market, industry and other data
based on information
from third-party sources. Please tell us if you commissioned any of
the industry or other
data that you reference in the prospectus and, if so, file consents of
such third parties
pursuant to Rule 436 of the Securities Act as exhibits to your
registration statement or
advise.
Risk Factor Summary, page 20
13. 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; and the risk that
the Chinese
government may intervene or influence your operations at any time, or
may exert more
control over offerings conducted overseas and/or foreign investment in
China-based
issuers, which could result in a material change in your operations
and/or the value of the
securities you are registering for sale. Acknowledge any risks that
any actions by the
Chinese government to exert more oversight and control over offerings
that are conducted
overseas and/or foreign investment in China-based issuers could
significantly limit or
completely hinder your ability to offer or continue to offer
securities to investors and
cause the value of such securities to significantly decline or be
worthless.
Questions and Answers for Stockholders of JWAC
Did JWAC's board of directors obtain a fairness opinion in determining whether
or not to
proceed with the Business Combination, page 25
14. Please explain why JWAC's board of directors obtained a fairness
opinion in connection
with the business combination.
Mu Hongwei
FirstName LastNameMu Hongwei
Chijet Motor Company, Inc.
Comapany
January 13,NameChijet
2023 Motor Company, Inc.
January
Page 4 13, 2023 Page 4
FirstName LastName
May JWAC, the Sponsor or JWAC's directors, officers, advisors..., page 26
15. We note the disclosure on page 26 that the SPAC sponsor/affiliate
may purchase SPAC
securities in the open market and vote the securities in favor of
approval of the business
combination transaction. Please provide your analysis on how such
potential purchases
would comply with Rule 14e-5.
Summary of the Proxy Statement/ Prospectus
Interests of JWAC's Directors and Officers in the Business Combination, page 58
16. Please quantify the aggregate dollar amount and describe the nature of
what the sponsor
and its affiliates have at risk that depends on completion of a
business combination.
Include the current value of securities held, loans extended, fees
due, and out-of-pocket
expenses for which the sponsor and its affiliates are awaiting
reimbursement. Provide
similar disclosure for the company s officers and directors, if
material.
17. Please highlight the risk that the sponsor will benefit from the
completion of a business
combination and may be incentivized to complete an acquisition of a
less favorable target
company or on terms less favorable to shareholders rather than
liquidate.
18. Please clarify if the sponsor and its affiliates can earn a positive
rate of return on their
investment, even if other SPAC shareholders experience a negative rate
of return in the
post-business combination company.
19. Please revise the conflicts of interest discussion so that it
highlights all material interests
in the transaction held by the sponsor and the company s officers
and directors. This
could include fiduciary or contractual obligations to other entities
as well as any interest
in, or affiliation with, the target company. In addition, please
clarify how the board
considered those conflicts in negotiating and recommending the
business combination.
Unaudited Pro Forma Condensed Consolidated Combined Financial Information
Basis of Pro Forma Presentation, page 65
20. Although you disclose on page 71 that your pro forma financial
statements were prepared
in accordance with the recently amended pro forma guidance, you still
include references
on page 65 to the legacy pro forma guidance regarding adjusting for
events that are
directly attributable to the business combination, factually
supportable, and expected to
have a continuing impact. Please revise your pro forma financial
statements to fully
comply with Article 11 of Regulation S-X and to remove any references
to the legacy pro
forma guidance. In doing so, confirm that your pro forma financial
statements include all
necessary transaction accounting adjustments, including those that are
not expected to
have a continuing impact.
Mu Hongwei
FirstName LastNameMu Hongwei
Chijet Motor Company, Inc.
Comapany
January 13,NameChijet
2023 Motor Company, Inc.
January
Page 5 13, 2023 Page 5
FirstName LastName
Risk Factors
Chijet's business model and technology have yet to be operated..., page 78
21. Please clarify what you mean by your plans to "commercialize" electric
commercial
vehicles and "commercialize" a large number of electric passenger
cars. In addition,
please define "a large number" of electric passenger cars, and please
provide the
anticipated timeline for completion of the electric vehicle
manufacturing site.
Chijet is dependent on its strategic partners and suppliers..., page 88
22. We note your risk factor that your supply chain may be impacted by
your reliance on
single source suppliers. Update your risks characterized as potential
if recent supply chain
disruptions have impacted your operations.
Risks Related to Doing Business in China, page 116
23. We note your disclosure on page 220 that one of your principal
subsidiaries, FAW Jilin, is
29.5% owned by China FAW, a state-owned enterprise. Please add a
discussion in Risk
Factors that addresses the risks associated with the mixed ownership.
In addition, please
ensure that your disclosure on pages 220 and 221 include a balanced
discussion that
acknowledges the risks of mixed ownership.
The PRC government exerts substantial influence..., page 119
24. Disclose each permission or approval that you or your subsidiaries are
required to obtain
from Chinese authorities to operate your business. State whether you
or your
subsidiaries are covered by permissions requirements from the China
Securities
Regulatory Commission (CSRC), Cyberspace Administration of China (CAC)
or any
other governmental agency that is required to approve your operations,
and state
affirmatively whether you have received all requisite permissions or
approvals and
whether any permissions or approvals have been denied. 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) applicable laws, regulations,
or interpretations
change and you are required to obtain such permissions or approvals in
the future. In
addition, we note your disclosure you are not required to obtain
approval from Chinese
authorities to list on U.S. exchanges. Provide the basis for your
conclusion that you are
not required to obtain any permission or approval to list on U.S.
exchanges. If the basis
for your conclusion is the advice of counsel, please state this and
identify counsel in your
disclosure.
Mu Hongwei
FirstName LastNameMu Hongwei
Chijet Motor Company, Inc.
Comapany
January 13,NameChijet
2023 Motor Company, Inc.
January
Page 6 13, 2023 Page 6
FirstName LastName
The Business Combination Proposal
Earnout Provisions, page 160
25. We note that the issuance of certain ChiJet shares are subject to an
earnout equal in value
to $674 million and that the shares shall be issued and registered but
remain unvested and
subject to potential surrender and cancellation provided the earnout
criteria are not met.
Citing authoritative accounting guidance, such as ASC 718 and ASC
815-40, please tell us
in sufficient detail how you intend to account for the earnout shares
upon issuance, vesting
and/or cancellation. Ensure you provide your assessment of whether the
earnout
falls within the scope of ASC 718, whether the earnout qualifies for
equity or liability
classification, and how, if at all, the contingent value rights issued
to Jupiter Wellness
Acquisition Corp. shareholders impact your accounting. Also clarify
why, as noted on
page 64, the earnout is not given effect in the pro forma financial
statements.
Background of the Business Combination, page 167
26. We note your disclosure in the penultimate paragraph on page 168 that
the Business
Combination Agreement was based on the last versions of the business
combination
agreement between DMAQ and Chijet with earnout and structure
reflecting a reduced
valuation and was revised to formulate the earnout and make certain
other changes.
Please specifically quantify the reduced valuation and "certain other
changes."
JWAC's Board of Directors' Reasons for the Approval of the Business
Combination, page 169
27. We note your disclosure that JWAC reviewed the due diligence report
prepared for
DMAQ by AlixPartners who had performed extensive due diligence,
including conducting
extensive in-person meetings and calls with Chijet s management team
and its
representatives regarding Chijet s operations and financial
prospects, and technical
analysis. We note also your disclosure on page 168 that JWAC s board
discussed
assumptions and conclusions with the people at AlixPartners. Please
revise to include the
assumptions discussed and the financial prospects that the JWAC board
considered in
evaluating the business combination.
Material U.S. Federal Income Tax Considerations, page 194
28. We note your disclosure that the surrender by a U.S. Holder of the
shares of Common
Stock in exchange for the Pubco Ordinary Shares pursuant to the
Business Combination,
when taken together with the other steps of the Business Combination,
should qualify as a
non-recognition transaction pursuant to Section 351(a) of the Code.
Please file a tax
opinion as Exhibit 8.1 that supports this statement. To extent that
you intend to file a
short form tax opinion as Exhibit 8.1, please revise your disclosure
on page 194 to reflect
the fact that the discussion reflects the opinion of counsel and is
not solely a "summary."
Mu Hongwei
FirstName LastNameMu Hongwei
Chijet Motor Company, Inc.
Comapany
January 13,NameChijet
2023 Motor Company, Inc.
January
Page 7 13, 2023 Page 7
FirstName LastName
Information About Chijet
Our Structure before and after the Business Combination, page 219
29. Please improve legibility by increasing the font size of the text
included in your graphic.
In addition, please include an ownership structure diagram in the
prospectus summary.
Legal proceedings, page 235
30. We note your table depicting twelve separate legal proceedings with
varying current status
that involve FAW Jilin as defendant. We note elsewhere in your
document, including
within your contingencies footnotes on pages F-57 and F-88, that you
state "most" of your
legal proceedings relating to FAW Jilin were settled. Please more
fully and consistently
clarify the status of your legal proceedings throughout your filing
and, in doing so, ensure
you provide all pertinent disclosures required by ASC 450-20-50-1
through - 5. It is
unclear whether you believe certain loss contingencies are probable,
reasonably possible
or remote and, given the various settlement and mediation agreements
reached, why it
appears for most legal proceedings that "you did not record any
accrual for expected loss
payments" as of the most recent annual and interim period ends. To the
extent it is
reasonably possible you will incur losses in excess of recorded
accruals related to your
contingencies, provide the applicable disclosures required by ASC
450-20-50-3 through -
4, including the amount or range of reasonably possible losses in
excess of recorded
amounts. Alternatively, if no amount of loss in excess of recorded
accruals is believed to
be reasonably possible, please state this in your disclosure.
Chijet's Management's Discussion and Analysis of Financial Condition and
Results of
Operations, page 246
31. Please discuss whether supply chain disruptions materially affect your
outlook or business
goals. Specify whether these challenges have materially impacted your
results of
operations or capital resources and quantify, to the extent possible,
how your sales, profits,
and/or liquidity have been impacted.
Chijet's Management's Discussion and Analysis of Financial Condition and
Results of
Operations
Results of Operations
Six months ended June 30, 2022 compared to six months ended June 30, 2021
Cost of Revenues - idle capacity, page 252
32. Your annual and interim results of operations disclosures on page 252
and 254 state that
the increase in idle capacity cost of revenues was mainly "due to the
temporary suspension
at the factories." Please expand your disclosure to discuss the
reasons for and durations
of the temporary suspensions at your factories. It is unclear if these
suspensions were
related to COVID-19 closures or for other business reasons.
Mu Hongwei
FirstName LastNameMu Hongwei
Chijet Motor Company, Inc.
Comapany
January 13,NameChijet
2023 Motor Company, Inc.
January
Page 8 13, 2023 Page 8
FirstName LastName
Chijet Motor Company, Inc. Audited Financial Statements
2. Summary of Significant Accounting Policies
(b) Principles of consolidation, page F-66
33. We note that the consolidated financial statements include the
financial statements of
subsidiaries for which you are the "primary beneficiary." Please
confirm whether or not
you consolidate any variable interest entities under the variable
interest model. If you
strictly use the voting interest model, as your page 5 disclosure
suggests, remove all
references to primary beneficiary or tell us why such disclosure is
appropriate.
(w) Government grants, page F-72
34. We note that you receive government subsidies for specific purposes,
such as for land
fulfillment costs and manufacturing plant construction. You disclose
that the specific
subsidies are recognized as other income using a systematic basis or
when receivable,
depending on the related expense or loss. Please tell us in further
detail the nature of
government subsidies received and the related accounting treatment. In
doing so, describe
the specific expenses for which you are being compensated, the timing
of the expense and
related income recognition, and the extent to which subsidies are
recorded over the
depreciable lives of the related assets. We note the materiality of
government grant
income in relation to your operating expenses, including depreciation
and amortization, as
well as to your investments in fixed assets and land use rights.
You may contact Kevin Stertzel at 202-551-3723 or Andrew Blume at
202-551-3254 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Patrick Fullem at 202-551-8337 or Erin Purnell at 202-551-3454 with any
other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Manufacturing
cc: Arthur Marcus, Esq.