United States securities and exchange commission logo
February 22, 2023
Anton Feingold
Corporate Secretary
Ares Acquisition Corp
245 Park Avenue, 44th Floor
New York, New York 10167
Re: Ares Acquisition
Corp
Registration
Statement on Form S-4
Filed January 25,
2023
File No. 333-269400
Dear Anton Feingold:
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.
Form S-4 Filed January 25, 2023
Cover Page
1. The discussion of the
risks related to your Up-C structure, the Tax Receivable Agreement
and the resulting
redirection of cash flows to the pre-business combination owners should
be enhanced and given
more prominence in your prospectus. Please revise your
prospectus cover page
to disclose that the TRA confers significant economic benefits to
the pre-business
combination owners, redirects cash flows to the TRA participants at the
expense of the rest of
your shareholders, and materially affects your liquidity. Please
ensure that your
revised disclosure states clearly that you expect the payments to be
substantial and that
the arrangement will reduce the cash provided by the tax savings that
would otherwise have
been available to you for other uses. Because the arrangement could
be considered a
windfall for the pre-business combination owners, your disclosure should
Anton Feingold
Ares Acquisition Corp
February 22, 2023
Page 2
quantify the range of payments associated with agreement.
Market and Industry Data, page xii
2. We note your disclosure that you obtained some of the market and
industry data included
in the registration statement from various third-party sources and
that you have not
independently verified this information. This statement appears to
imply a disclaimer of
responsibility for this information in the registration statement.
Please either revise this
section to remove such implication or specifically state that you are
liable for all
information in the registration statement.
Summary of the Proxy Statement/Prospectus, page 1
3. Please revise this section to clearly describe each of the securities
that will be outstanding
post-business combination, including the voting rights of each
security. Additionally,
revise to disclose, if material, any conflicts of interest, economic
differences or potential
economic differences between the securities, including the OpCo common
units, and the
risks that such differences pose to public stockholders.
4. Please disclose the total combined voting power of the X-energy
Founder post-business
combination.
5. Please revise this section to 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.
We will depend on pre-sales revenue to fund our demonstration, corporate growth
and
commercial development..., page 39
6. We note your disclosure that you have previously experienced delays
and/or other
complications in the design, manufacture, production and delivery of
the Xe-100 and
related technology, such as the TRISO-X Fuel Fabrication Facility.
Please revise to
identify the reasons for those delays and disclose how your business
has been affected.
We are subject to information technology and cyber security threats..., page 48
FirstName LastNameAnton Feingold
7. Please describe the extent and nature of the role of the board of
directors in overseeing
Comapany NameAresrisks,
cybersecurity Acquisition Corp
including in connection with the company s supply
chain/suppliers/service
February 22, 2023 Page 2 providers.
FirstName LastName
Anton Feingold
FirstName LastNameAnton Feingold
Ares Acquisition Corp
Comapany22,
February NameAres
2023 Acquisition Corp
February
Page 3 22, 2023 Page 3
FirstName LastName
Summary of Financial Analysis, page 131
8. We note that Ocean Tomo reviewed prospective financial information and
forecasted
unlevered cash flows of X-energy for fiscal year 2022 through fiscal
year 2036 in
connection with the preparation of its fairness opinion. Please
clarify whether the AAC
board, Special Committee or Ocean Tomo reviewed projected or
prospective financial
information of X-Energy in connection with the Business Combination in
addition to the
Unit Economic information provided on pages 140-144. If so, please
revise to
include those projections and disclose all material assumptions and
estimates underlying
those projections.
9. We note your disclosure that Ocean Tomo's opinion was furnished
"solely for the use and
benefit of the Special Committee in connection with assessing the
fairness of the Purchase
Price." We also note the language in the fairness opinion itself on
page N-1 which states
that the fairness opinion is furnished solely for the use and
benefit of the Directors[.] As
written these statements may be construed as disclaimers of any
potential liability Ocean
Tomo may owe to security holders. Please either revise this disclosure
and
the fairness opinion itself to remove these statements or provide the
legal basis for the
company's and the advisor's belief that security holders cannot rely
on the opinion to bring
state law actions, including a description of any state law authority
on such a defense. If
no such authority exists, please disclose that the issue will be
resolved by a court,
resolution of the issue will have no effect on rights and
responsibilities of the board under
state law, and the availability of this defense has no effect on the
rights and
responsibilities of either the advisor or the board under the federal
securities laws.
U.S. Federal Income Tax Considerations, page 177
10. We note that you intend that the merger will qualify as a
"reorganization" within the
meaning of Section 368(a). Please revise your disclosures to more
clearly state counsel's
tax opinion on whether the transaction will qualify as a
reorganization. Also, state in your
disclosure that the discussion is the opinion of tax counsel and
identify counsel. Whenever
there is significant doubt about the tax consequences of the
transaction, it is permissible
for the tax opinion to use should rather than will, but
counsel providing the opinion
must explain why it cannot give a will opinion and describe the
degree of uncertainty in
the opinion. Refer to Sections III.B and C of Staff Legal Bulletin 19.
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
Equity Capitalization, page 197
11. Please revise to include the 2,303,325 Earn Out Shares expected to be
received by
Management LLC in the Other instruments table on page 198, or
explain why you do
not believe such revision is necessary.
Anton Feingold
FirstName LastNameAnton Feingold
Ares Acquisition Corp
Comapany22,
February NameAres
2023 Acquisition Corp
February
Page 4 22, 2023 Page 4
FirstName LastName
Adjustment B, page 204
12. We note that pursuant to the PIPE Commitment Letter, the purchase
commitment will be
reduced up to $25.0 million, on a dollar-for-dollar basis by the
amount by which (i) the
sum of (A) the amount of cash available in the Trust Account
immediately prior to the
Closing, less amounts required for the Redemptions (to the extent not
already paid); plus
(B) the aggregate proceeds, if any, actually received by AAC from the
PIPE Investment
(including any amount actually funded pursuant to the Commitment
Letter); plus (C) the
aggregate amount actually funded to X-energy in connection with any
Permitted
Financing prior to January 15, 2023, exceeds (ii) $400,000,000. Please
tell us how you
determined that the full commitment amount of $45.0 million will be
purchased.
13. We note that you classified the Series A Preferred Stock as temporary
equity. Please
describe the material terms of the Series A Preferred Stock including,
but not limited to,
voting, conversion, and redemption rights. We also note that your
disclosure for the New
X-Energy Preferred Stock in Description of New X-energy Securities on
page 234 states
No shares of New X-energy Preferred Stock will be issued or
outstanding immediately
after the completion of the Business Combination. Please revise to
resolve the
inconsistency and include the material terms of the Series A Preferred
Stock.
Adjustment C, page 204
14. Your disclosure states that the pro forma adjustment was made to
record transaction costs
of $80.0 million, relating to legal, third-party advisory, investment
banking, and other
miscellaneous fees which were direct and incremental to the Business
Combination.
However, $35.0 million of the $80.0 million appears to be related to
deferred underwriter
commissions recorded by AAC in connection with its IPO. Please revise
your disclosure
to more fully clarify the nature of the transaction costs.
Basis of Presentation, page 204
15. Please explain why you believe the business combination between AAC
and X-energy
should be accounted for as a common control transaction, and revise
your disclosure to
include the basis for your conclusion. For reference, see ASC
805-50-15-6.
Adjustment E, page 205
16. We note that as part of the issuance of New X-energy Common Stock,
X-energy s legacy
Series A redeemable convertible preferred stock and legacy Series B
redeemable
convertible preferred stock will be eliminated and converted into
permanent equity at
Closing. As this transaction does not appear to be discussed
elsewhere, please revise your
disclosures throughout the filing to include a discussion of any
transactions related to
the preferred stock that are expected to occur in connection with the
Business
Combination.
Anton Feingold
FirstName LastNameAnton Feingold
Ares Acquisition Corp
Comapany22,
February NameAres
2023 Acquisition Corp
February
Page 5 22, 2023 Page 5
FirstName LastName
Adjustment F, page 205
17. Please revise to disclose the method you used, including material
assumptions and
estimates, to determine the adjustment amounts recorded for the Earn
Out Securities and
modification of the AAC Support Parties Private Placement Warrants.
Adjustment H, page 205
18. We note that Management LLC will receive 2,303,325 Earn Out Shares at
closing. Please
revise to disclose how this is reflected in the pro forma financial
statements, or explain to
us why it is not reflected.
Adjustment L, page 205
19. Please explain why you believe X-energy OpCo Common Units held by
non-controlling
interests should be classified in mezzanine equity.
Customers and Partners, page 265
20. Please revise to further describe the material terms of your exclusive
framework
agreement with Ontario Power Generation.
Our Business Model, page 272
21. We note your discussion of the projected Unit Economics in MD&A.
Please revise to
provide a cross reference to the Unit Economic Information section and
the material
assumptions underlying the projections and the limitations of those
projections.
X-Energy Reactor Company, LLC Financial Statements
Note 8 - Debt, page F-90
22. We note that X-energy had $37.4 million in convertible notes as of
September 30, 2022,
and issued $20.0 million in additional convertible notes on October 7,
2022. Please revise
to disclose the effect of the Business Combination on the rights of
the noteholders,
including their conversion rights, and the impact on the pro forma
financial information, if
any.
Exhibits
23. Please file the following agreements or explain why you are not
required to do so:
joint venture agreement with Intuitive Machines, LLC;
applicable management and director compensation agreements; and
all material debt and guaranty agreements.
Anton Feingold
FirstName LastNameAnton Feingold
Ares Acquisition Corp
Comapany22,
February NameAres
2023 Acquisition Corp
February
Page 6 22, 2023 Page 6
FirstName LastName
General
24. We understand that the sponsor may receive additional securities
pursuant to an anti-
dilution adjustment based on the company's additional financing
activities. If applicable,
please quantify the number and value of securities the sponsor will
receive. In addition,
disclose the ownership percentages in the company before and after the
additional
financing to highlight dilution to public stockholders.
25. Please disclose the sponsor and its affiliates' total potential
ownership interest in the
combined company, assuming exercise and conversion of all securities.
26. Disclose the material risks to unaffiliated investors presented by
taking the company
public through a merger rather than an underwritten offering. These
risks could include
the absence of due diligence conducted by an underwriter that would be
subject to liability
for any material misstatements or omissions in a registration
statement.
27. Your charter waived the corporate opportunities doctrine. Please
address this potential
conflict of interest and whether it impacted your search for an
acquisition target.
28. Please update the registration statement to reflect the results of
your February 2,
2023 extraordinary general meeting. Please include the number of
shares that were
redeemed and update the amount remaining in the trust account.
29. We note that the registration statement includes market opportunity
data from PA
Consulting. If any data in the registration statements relates to
publications, surveys or
reports that were commissioned by you for use in connection with the
registration
statement, please file consents of such third parties pursuant to Rule
436 of the Securities
Act as exhibits to your registration statement or tell us why you
believe you are not
required to do so.
30. It appears that underwriting fees remain constant and are not adjusted
based on
redemptions. Revise your disclosure to disclose the effective
underwriting fee on a
percentage basis for shares at each redemption level presented in your
sensitivity analysis
related to dilution.
31. We note that certain of the underwriters of your IPO 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 each
underwriter that are contingent on completion of the business
combination.
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.
Anton Feingold
Ares Acquisition Corp
February 22, 2023
Page 7
You may contact Eiko Yaoita Pyles at 202-551-3587 or Kevin Stertzel at
202-551-
3723 if you have questions regarding comments on the financial statements and
related
matters. Please contact Eranga Dias at 202-551-8107 or Evan Ewing at
202-551-5920 with any
other questions.
FirstName LastNameAnton Feingold Sincerely,
Comapany NameAres Acquisition Corp
Division of Corporation
Finance
February 22, 2023 Page 7 Office of Manufacturing
FirstName LastName