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United States securities and exchange commission logo
March 24, 2023
David Nock
General Counsel
Carbon Revolution Ltd.
Ten Earlsfort Terrace
Dublin 2, D02 T380
Ireland
Re: Carbon Revolution
Ltd.
Registration
Statement on Form F-4
Filed February 27,
2023
File No. 333-270047
Dear David Nock:
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 F-4 filed February 27, 2023
Market and Industry Data, page 6
1. 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.
David Nock
FirstName LastNameDavid Nock
Carbon Revolution Ltd.
Comapany
March NameCarbon Revolution Ltd.
24, 2023
March2 24, 2023 Page 2
Page
FirstName LastName
Sources and Uses of Consideration Provided by Twin Ridge to MergeCo in the
Business
Combination, page 20
2. It appears that the Cash and Investment Held in the Trust Account
amount in the
maximum redemption table does not reflect the impact of 100% of the
Twin Ridge Class
A ordinary shares being redeemed in connection with the business
combination. Please
clarify or update.
Market Price and Dividend Information
Carbon Revolution , page 23
3. Please revise to briefly discuss the reasons that trading of shares of
Carbon Revolution
was temporarily suspended on October 31, 2022 and also provide the
current share price
on ASX. Additionally, revise to state that shares of Carbon Revolution
will cease to be
quoted on the ASX after the closing of the business combination.
What interests do the current Twin Ridge shareholders and Twin Ridge's other
current officers
and directors have..., page 32
4. We note the disclosure that the personal and financial interests of
the Sponsor as well as
Twin Ridge s executive officers and directors may have influenced
their motivation in
identifying and selecting Carbon Revolution as a business combination
target. Please
revise to discuss how the board considered those conflicts in
negotiating and
recommending the business combination.
Carbon Revolution's or a third party's information technology system..., page
63
5. We note that there has been a previous instance of unauthorized access
of Carbon
Revolution s IT systems and that when the issue was identified,
access was terminated
and steps were then taken to increase security. Please expand your
disclosure to discuss
the magnitude of the incident, its consequences and, if material, any
impact to Carbon
Revolution's financial condition. Additionally, please describe the
extent and nature of the
role of the board of directors in overseeing cybersecurity risks,
including in connection
with the company s supply chain/suppliers/service providers.
Tax Consequences of the Merger to U.S. Holders, page 117
6. 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.
David Nock
FirstName LastNameDavid Nock
Carbon Revolution Ltd.
Comapany
March NameCarbon Revolution Ltd.
24, 2023
March3 24, 2023 Page 3
Page
FirstName LastName
Background to the Business Combination, page 148
7. We note that financial projections without assumptions were presented
to Twin Ridge on
October 24, 2022 and revised projections with assumptions were
presented to Twin Ridge
and Craig-Hallum on November 13, 2022. Please tell us whether the
October 24, 2022
projections are materially the same as the projections included in the
registration
statement. If the projections are materially different, please explain
these differences, what
changes were made and why. Additionally, disclose any discussions
relating to the
assumptions underlying any projections.
Certain Unaudited Carbon Revolution Projected Financial Information, page 167
8. Please expand your disclosure to discuss the material assumptions
underlying your
estimated backlog, quantifying where applicable. Additionally, please
revise to disclose
the number of years remaining in the lifetime of the programs included
in the estimated
backlog and the basis for, and risk related to, including backlog for
years beyond CY2024.
Unaudited Pro Forma Condensed Combined Financial Information, page 174
9. We note your disclosure on page 178 that MergeCo intends to grant
equity incentive
awards equal to 5% of the number of issued and outstanding MergeCo
ordinary shares
immediately after the closing of the business combination. Please
prominently disclose, if
true, that the pro forma financial statements have not been adjusted
to reflect such
issuance. To the extent the compensation charge is expected to be
material, please
disclose as such and, if quantifiable, disclose the expected amount or
range of the
compensation charge.
Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2022, page
179
10. Please disclose on the face of the pro forma balance sheet the pro
forma common stock
issued and outstanding.
Notes to Unaudited Pro Forma Condensed Financial Information
1. Basis of Presentation, page 182
11. We note you "arithmetically derived" Twin Ridge's income statement for
the year ended
June 30, 2022 from other financial statements. Please clearly disclose
your methodology
for deriving the related statement of operations. Also disclose the
exchange rate(s) used in
translating the Twin Ridge financial statements to Australian dollars.
3. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information,
page 183
12. Regarding pro forma adjustment (b), please explain to us in greater
detail and revise your
disclosures to clarify what this adjustment represents and why it is
necessary. In doing so,
explain how you determined the $34.6 million fair value of the Founder
Shares and tell us
why your pro forma statement of operations does not appear to reflect
an adjustment for
David Nock
FirstName LastNameDavid Nock
Carbon Revolution Ltd.
Comapany
March NameCarbon Revolution Ltd.
24, 2023
March4 24, 2023 Page 4
Page
FirstName LastName
the corresponding compensation charge. Additionally, quantify the fair
value of the
shares transferred to the directors and explain your consideration of
whether a pro forma
compensation charge is necessary given the assumed consummation of the
recapitalization for pro forma purposes.
13. We note that pro forma adjustment 1A impacts borrowings and equity in
addition to cash
and marketable securities. Please revise your footnote to provide a
more comprehensive
explanation of all items included in this pro forma adjustment.
14. Please tell us how you determined the waiver of deferred underwriting
fees reflected
in pro forma adjustment 1B should be recorded within income on your
statement of
operations rather than as an adjustment to equity.
15. Please revise your description of pro forma adjustment 1C.1 to explain
in greater detail the
nature and terms of the share based award payment to advisors.
16. We note that pro forma adjustments 1C, 1D, 1D.1, 1D.2 and 1D.3 reflect
estimated direct
and incremental transaction costs. Citing authoritative accounting
guidance, as applicable,
please tell us and disclose how Twin Ridge and Carbon Revolution
account for all
transaction costs. Clearly describe any costs reflected as a reduction
of equity rather than
expensed. Also revise your disclosures to more fully describe the
nature, amounts, and
pro forma treatment of transaction costs included under each
redemption scenario.
Consider providing a tabular presentation.
17. We note your disclosure on page 176 that a 100% redemption scenario
will result in an
IFRS 2 charge for the excess of fair value of MergeCo shares issued to
Twin Ridge
shareholders. Please revise your pro forma financial statement
footnotes to clearly
disclose where this charge has been reflected in the pro forma
statement of operations.
Also revise the footnotes to prominently disclose that the maximum
redemption scenario
would result in a negative cash balance.
Business of Carbon Revolution and Certain Information About Carbon Revolution,
page 186
18. We note that you quantify revenue forecasts for fiscal years 2023 and
2024 on page 186.
Please revise your disclosures to fully comply with Item 10(b) of
Regulation S-K. In
particular, we note that Item 10(b)(2) indicates revenues, net income
(loss) and earnings
(loss) per share usually are presented together in order to avoid any
misleading inferences
that may arise when the individual items reflect contradictory trends
and that it generally
would be misleading to present revenue projections without one of the
foregoing measures
of income. In addition, confirm that going forward, pursuant to Item
10(b)(3)(iii), you
will make full and prompt disclosure of material facts, both favorable
and unfavorable,
regarding previously issued projections.
19. Please revise to elaborate on the Mega-line project. Clearly state the
expected timeline for
each phase of the Mega-line project, your current production capacity,
your expected
production capacity at each phase of the Mega-line project and an
estimate of the capital
David Nock
FirstName LastNameDavid Nock
Carbon Revolution Ltd.
Comapany
March NameCarbon Revolution Ltd.
24, 2023
March5 24, 2023 Page 5
Page
FirstName LastName
expenditures required to complete each phase of the project.
20. Please expand your disclosure to include a description of the sources
and availability of
raw materials, including a description of whether prices of principal
raw materials are
volatile. Refer to Item 4.B.4. of Form 20-F.
The Company, page 186
21. We note your discussion of projected revenue in this section differs
from the revenue
projections disclosed on page 170. Please revise to (i) clarify which
are the latest
projections, (ii) clarify if the projections relate to the calendar
year or your fiscal year, (iii)
discuss material differences from the projections provided to Twin
Ridge and Craig-
Hallum and (iv) provide the material assumptions underlying the
projections and the
limitations of those projections.
Management's Discussion and Analysis of Financial Condition and Results of
Operations of
Carbon Revolution, page 200
22. If applicable, please expand your discussion of interest rates to
describe their impact on
your financial condition, including your balance sheet. For example,
given rising rates,
describe any resulting impacts on your inventory, accounts payable,
long-term debt or
accrued expense balances. Expand your disclosure to describe how you
are funding these
additional costs.
23. We note that you have experienced supply chain disruptions. 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. Revise to discuss known trends or uncertainties resulting
from mitigation
efforts undertaken, if any. Explain whether any mitigation efforts
introduce new material
risks, including those related to product quality, reliability or
regulatory approval of
products.
24. If applicable, please expand your disclosure to identify the principal
factors contributing
to the inflationary pressures the company has experienced and clarify
the resulting impact
to the company. Please also update your disclosure to identify actions
planned or taken, if
any, to mitigate inflationary pressures.
Management's Discussion and Analysis of Financial Condition and Results of
Operations of
Carbon Revolution
Capital Employed (in AUD, as of June 30, 2022), page 205
25. We note that your presentation of working capital is calculated
as receivables plus
inventories less payables. Considering your adjusted working capital
measure excludes
certain current liabilities, please tell us how your presentation
complies with Item
10(e)(1)(ii)(A) of Regulation S-K, which generally prohibits excluding
charges or
David Nock
FirstName LastNameDavid Nock
Carbon Revolution Ltd.
Comapany
March NameCarbon Revolution Ltd.
24, 2023
March6 24, 2023 Page 6
Page
FirstName LastName
liabilities that required or will require cash settlement from
non-GAAP liquidity
measures. Also see the third bullet of Question 102.10(a) of the
Compliance and
Disclosure Interpretations on Non-GAAP Financial Measures.
26. Please clearly disclose how you calculate debtor days and inventory
days. To the extent
you use average balances, ensure you specify how the average is
determined.
Current Outlook, page 206
27. We note that you are pursuing short-term bridge funding and a new debt
facility. Please
revise to provide an update on the status of the bridge funding and
new debt facility.
Critical Accounting Policies and Estimates, page 211
28. We note that you perform impairment testing of fixed assets,
intangible assets, and right
of use assets at the consolidated entity level. Please tell us in
sufficient detail how your
impairment methodology complies with IAS 36 and why the recoverable
amount of each
asset type cannot be estimated on an individual basis or at a
cash-generating unit below
the consolidated level.
Management of MergeCo Following the Business Combination, page 229
29. We note your disclosure on page 248 that MergeCo's board shall be
divided into three
classes. Please revise to specify the class and term of each director
and director nominee.
Index to Financial Statements , page F-1
30. We note that Carbon Revolution Limited financial statements for the
half-year ended
December 31, 2022 have been provided on its website. Please include
the interim
financial statements in your next amendment. See Item 8.A.5 of Form
20-F.
Carbon Revolution Limited Audited Financial Statements
Notes to the financial statements
Government grants, page F-53
31. We note that you reflected payments related to the Australian Federal
Government's
JobKeeper scheme within operating activities on your statement of cash
flows. Please tell
us and disclose your accounting policy for classifying government
grants on your
statement of cash flows and explain how your accounting treatment
complies with IAS 7
and IAS 20.
Exhibits
32. Please file the following agreements or explain why you are not
required to do so:
material lease agreements;
material debt agreements; and
a form of indemnification agreement with MergeCo.
David Nock
FirstName LastNameDavid Nock
Carbon Revolution Ltd.
Comapany
March NameCarbon Revolution Ltd.
24, 2023
March7 24, 2023 Page 7
Page
FirstName LastName
General
33. Please provide us with any correspondence between Barclays, Evercore
and Twin Ridge
relating to the resignations of Barclays and Evercore, including the
November 15, 2022
letters.
34. Please provide us with Barclays' and Evercore's engagement letters
with Twin Ridge.
Please disclose any ongoing obligations of the company pursuant to the
engagement
letters that will survive the termination of the engagement, such as
indemnification
provisions, rights of first refusal and lockups, and discuss the
impacts of those obligations
on the company in the registration statement.
35. Please disclose whether Barclays or Evercore assisted in the
preparation or review of any
materials reviewed by Twin Ridge's board of directors or management
and whether
Barclays and Evercore have withdrawn their association with those
materials and notified
Twin Ridge of such disassociation. For context, include that there are
similar
circumstances in which a financial institution is named and that the
resignations indicate that Barclays and Evercore are not willing to
have the liability
associated with such work in this transaction.
36. Please revise your disclosure to highlight for investors that the
withdrawals of Barclays
and Evercore indicate that they do not want to be associated with the
disclosure or
underlying business analysis related to the transaction. In addition,
revise your disclosure
to caution investors that they should not place any reliance on the
fact that Barclays and
Evercore have been previously involved with the transaction.
37. We understand that Barclays and Evercore, representatives of the
underwriters in your
SPAC IPO, waived the deferred underwriting commissions that would
otherwise be due to
them upon the closing of the business combination. Please disclose how
this waiver was
obtained, why the waiver was agreed to and clarify Twin Ridge's
current relationship with
Barclays and Evercore.
38. Disclose whether Barclays and Evercore provided you with any reasons
for the fee
waiver. If there was no dialogue and you did not seek out the reasons
why Barclays and
Evercore waived deferred fees, despite already completing their
services, please indicate
so in your registration statement. Further, revise the risk factor
disclosure to explicitly
clarify that Barclays and Evercore performed all of their obligations
to obtain the fee and
therefore is gratuitously waiving the right to be compensated.
39. Please describe what relationship existed between Barclays/Evercore
and Twin Ridge
after the close of the IPO, including any financial or merger-related
advisory services
conducted by Barclays or Evercore. For example, clarify whether
Barclays or Evercore
had any role in the identification or evaluation of business
combination targets.
40. Please tell us whether you are aware of any disagreements with
Barclays or
Evercore regarding the disclosure in your registration statement.
Further, please add risk
David Nock
Carbon Revolution Ltd.
March 24, 2023
Page 8
factor disclosure that clarifies that Barclays and Evercore were to be
compensated, in part,
on a deferred basis for their underwriting services in connection with
the SPAC IPO and
such services have already been rendered, yet Barclays and Evercore
waived such fees
and are disclaiming responsibility for the registration statement.
Clarify the unusual nature
of such a fee waiver and the impact of it on the evaluation of the
business combination.
41. Please provide us with a letter from each of Barclays and Evercore
stating whether they
agree 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 with each of
Barclays and Evercore and
they either agree or do not agree with the conclusions and the risks
associated with such
outcome. If Barclays and Evercore do not respond, please revise your
disclosure to
indicate you have asked and not received a response and disclose the
risks to investors.
42. Your charter waived the corporate opportunities doctrine. Please
address this potential
conflict of interest and whether it impacted your search for an
acquisition target.
43. Quantify the value of warrants, based on recent trading prices, that
may be retained by
redeeming stockholders assuming maximum redemptions and identify any
material
resulting risks.
44. Please update the registration statement to reflect the results of
your March 6, 2023
extraordinary general meeting. Please include the number of shares
that were redeemed
and update the amount remaining in the trust account throughout the
registration
statement.
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.
You may contact Mindy Hooker at 202-551-3732 or Andrew Blume at
202-551-3254 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Evan Ewing at 202-551-5920 or Jay Ingram at 202-551-3397 with any other
questions.
FirstName LastNameDavid Nock Sincerely,
Comapany NameCarbon Revolution Ltd.
Division of
Corporation Finance
March 24, 2023 Page 8 Office of
Manufacturing
FirstName LastName