United States securities and exchange commission logo
January 19, 2024
Gregory D. King
Chief Executive Officer
Osprey Bitcoin Trust
1241 Post Road, 2nd Floor
Fairfield, CT 06824
Re: Osprey Bitcoin
Trust
Schedule TO-I filed
January 11, 2024
File No. 005-94280
Dear Gregory D. King:
We have reviewed your filing 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 these comments by providing the requested
information or advise us as
soon as possible when you will respond. If you do not believe our
comments apply to your facts
and circumstances, please tell us why in your response.
After reviewing your
response to these comments, we may have additional comments.
Schedule TO-I filed January 11, 2024
Summary Term Sheet, page 3
1. On Page 3, you state
that if the offer is extended for the purpose of determining the
Purchase Price for
tendered Units, the NAV of such Units will be determined at the close
of business on the
first (1st) Business Day after the date on which the tender offer actually
expires. (emphasis
added). Elsewhere (e.g., on page 6) you state such determination will
be made on the third
business day after the offer expires. Please explain or correct this
discrepancy, subject to
resolution of our comment below regarding the timing of the
determination of the
NAV purchase price.
Background and Purpose of the Offer, page 6
2. We note that the
Sponsor is not making any recommendation to its investors as to whether
to tender into the
offer. However, you state in this section that the Sponsor has
determined . . . that
the Offer is in the best interests of investors of the Trust. Please
explain why the Sponsor
is stating that the Offer is in the best interests of investors, but is
Gregory D. King
FirstName LastNameGregory D. King
Osprey Bitcoin Trust
Comapany
January 19,NameOsprey
2024 Bitcoin Trust
January
Page 2 19, 2024 Page 2
FirstName LastName
not recommending it. In addition, revise here and wherever similar
disclosure appears in
the offer materials, to note the Sponsor's conflict of interest, given
the fees it will earn
from repurchases of Units in the Offer.
Purchases and Payment, page 9
3. You state that you will seek to obtain cash in the aggregate amount
necessary to pay the
Purchase Price for Units acquired pursuant to the Offer from the sale
of Bitcoin but that
the Trust may be unable to dispose of Bitcoin. You further
disclose: There can be no
assurances, however, that there will not be delays in the making of
any of the Cash
Payments provided for above. Please disclose the existence of any
alternative financing
plans or arrangements in the event the Trust is not able to raise the
necessary funds to pay
the offer consideration as contemplated. If there are none, so state.
See General Instruction
E to Schedule TO, Item 7 of Schedule TO, and Item 1007(b) of
Regulation M-A. In
addition, please reconcile the language above with your statements
elsewhere in the Offer
to Purchase that you will pay promptly for tendered Units, consistent
with your obligation
under Rule 14e-1(a). Finally, in your response letter, provide an
analysis as to why
commencing a tender offer without being able to ensure the bidder's
ability to pay for
tendered securities and without a financing condition is consistent
with Rule 14e-8(c).
Certain Conditions of the Offer, page 10
4. Refer to page 11, where you state that the Sponsor may terminate the
Offer if it
determines in good faith that effecting any [purchase of tendered
Units] would constitute
a breach of its fiduciary duty owned to the Trust or unitholders.
Please expand to explain
what fiduciary duties could be implicated by purchase of tendered
Units and under what
circumstances.
5. Refer again to the disclosure on page 11, where you state that the
Sponsor may terminate
the Offer if it determines to liquidate the Trust after due
consideration of the amount of
Units being tendered in the Offer, the amount of Units that would
remain in the Trust if
the Offer were completed, the ability of the Sponsor to continue to
manage effectively the
Trust's portfolio, and the projected aggregate expense ratio of the
Trust following
consummation of the Offer. Since the number of Units being sought
in the Offer is a
known quantity, revise to clarify whether this condition would be
triggered if the Offer
is fully subscribed or if it could be triggered at a lesser tender
threshold. We may have
further comments.
6. In the first paragraph on page 11, you state that the Trust may
terminate the Offer if the
Sponsor determines that the Trust would not be able to sell Bitcoin
in an orderly manner
in light of the existing market conditions and such liquidation would
have an adverse
effect on the NAV of the Trust to the detriment of the non-tendering
unitholders...
Revise to quantify the adverse effect that would implicate this
Offer condition.
Certain Information About the Trust, page 11
Gregory D. King
FirstName LastNameGregory D. King
Osprey Bitcoin Trust
Comapany
January 19,NameOsprey
2024 Bitcoin Trust
January
Page 3 19, 2024 Page 3
FirstName LastName
7. Please include the range of high and low closing prices for the
current quarter, through a
recent date as of filing, in the table on page 12.
8. We note the following disclosure in the last paragraph on page 12:
The Sponsor
currently contemplates, but has not definitively determined, to cause
the Trust on or after
the eleventh (11th) Business Day after the Expiration Date to
negotiate an agreement or
agreement(s) to repurchase Units held by its affiliates under similar
terms as of the
Offer. Provide additional details about these contemplated
purchases from affiliates,
including by identifying the affiliates involved and the percentage of
Units that may be
repurchased. In this regard, it appears from the table on page 13 that
the only affiliate who
owns over 1% of these Units is the Sponsor, Gregory King. If the
Sponsor's Units may be
repurchased, this information must be highlighted. Please analyze how
such arrangements
or agreements as currently contemplated and described in the offer
materials would be
consistent with Rule 14e-5.
9. See our last comment above and the following disclosure on page 12 of
the Offer to
Purchase: The Sponsor believes that a single, or a series of,
private transactions to
repurchase Units held by affiliates would be in the best interests of
the Trust to mitigate
against the possibility that the Offer will be oversubscribed and
subject to proration.
Please explain why, rather than arranging for separate purchases after
the Offer, the
Sponsor did not elect to simply increase the size of the Offer.
General
10. You state throughout the Offer to Purchase that the offer is for up
to 20% or 1,668,107
outstanding units. We understand that 1,668,107 represents the
number of units equal
to 20% of the Trust's issued and outstanding units as of the date of
filing, based on the
number of issued and outstanding units disclosed on page 13. Please
clarify how the Trust
will determine the amount of securities purchased pursuant to the
offer if, as of expiration,
20% of units issues and outstanding does not equal 1,668,107 units.
11. Item 4 of Schedule TO and Item 1004(a)(1)(ii) of Regulation M-A
require the offer to
purchase to set forth the amount of consideration offered. You
define the purchase price
as equal to the Units net asset value . . . less applicable fees
payable to the Sponsor . . .
as of the close of business on February 14, 2024. As such, in the
Offer as currently
structured, the purchase price will not be determined until after the
expiration date of the
Offer and includes a deduction of an unspecified amount with respect
to certain fees. This
structure does not comply with Item 4 of Schedule TO, Item
1004(a)(1)(ii) of Regulation
M-A and Rule 14e-1(b) relating to changes in the Offer consideration.
Please revise.
12. Please provide a brief statement of the accounting treatment of the
offer, or advise in
your response letter why you do not believe it is material in the
context of this offer. See
General Instruction E to Schedule TO, Item 4 of Schedule TO, and Item
1004(a)(1)(xi) of
Regulation M-A.
13. See our comments above. In multiple places in the offer materials, you
state that
Gregory D. King
Osprey Bitcoin Trust
January 19, 2024
Page 4
although the Offer expires on February 9, 2024, tendering investors
remain investors in
the Trust until February 14, 2024, when the NAV of their Units is
calculated. If the
Offer expires on February 9, 2024, the Trust has until 9:00 a.m. on
the next business day
to accept tendered Units, at which time, those Units can no longer be
withdrawn.
Therefore, it does not appear that tendering investors would remain
investors in the Trust
until February 14, 2024. Please revise or advise.
14. It appears that the Sponsor is responsible for the day-to-day
administration of the affairs
of the Trust, and will control the terms of the Offer, such as whether
to waive or assert
Offer conditions. Please advise why, under these facts, the Sponsor
should not be
included as a bidder in the Offer.
15. Refer to General Instruction C to Schedule TO. Provide the information
called for by that
Instruction as to the entities or persons controlling the Trust.
We remind you that the filing persons are responsible for the accuracy
and adequacy of
their disclosures, notwithstanding any review, comments, action or absence of
action by the staff.
Please direct any questions to Christina Chalk at 202-551-3263 or Laura
McKenzie at
202-551-4568.
FirstName LastNameGregory D. King Sincerely,
Comapany NameOsprey Bitcoin Trust
Division of
Corporation Finance
January 19, 2024 Page 4 Office of
Mergers & Acquisitions
FirstName LastName