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United States securities and exchange commission logo
February 18, 2022
Yongchen Lu
Chief Executive Officer
TH International Limited
2501 Central Plaza
227 Huangpi North Road
Shanghai, People s Republic of China, 200003
Re: TH International
Limited
Amendment No. 2 to
Registration Statement on Form F-4
Filed January 28,
2022
File No. 333-259743
Dear Mr. Lu:
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
January 5, 2022 letter.
Amendment No. 2 to Registration Statement on Form F-4 filed January 28,
2022
Prospectus Cover Page
1. We note your response
to comment 1, as well as your amended disclosure on the cover
page that on December
16, 2021 the PCAOB "issued a report on its determination that it is
unable to inspect or
investigate completely PCAOB-registered public accounting firms
headquartered in
mainland China and Hong Kong" and that "THIL s auditors are
headquartered in
mainland China and the PCAOB has been and currently is unable to
inspect THIL s
auditors." We reissue the comment in-part. In light of the foregoing,
please disclose that
your auditor is subject to the determinations announced by the
PCAOB on December 16,
2021, if true (emphasis added).
Yongchen Lu
FirstName LastNameYongchen Lu
TH International Limited
Comapany18,
February NameTH
2022 International Limited
February
Page 2 18, 2022 Page 2
FirstName LastName
2. Please revise the prospectus cover page to state that you may be a
controlled company and
therefore exempt from certain corporate governance requirements that
provide protection
to shareholders of companies that are not controlled companies.
3. Please revise the prospectus cover page to include the statement that
you are not a Chinese
operating company. Please also revise the prospectus cover page to
provide a description
of how cash is transferred through your organization and disclose your
intentions to
distribute earnings or settle amounts owed within your organization.
State whether any
transfers, dividends, or distributions have been made to date between
the holding
company and its subsidiaries, or to investors, and quantify the
amounts where applicable.
Provide cross-references to the condensed consolidating schedule and
the consolidated
financial statements.
Questions and Answers about the Business Combination and the Extraordinary
General Meeting
Q: What happens if a substantial number of public shareholders vote in favor of
the Business
Combination Proposal . . . ?, page xiii
4. We note your response to comment 14, as well as your amended
disclosure regarding the
"sensitivity table" that "shows the potential impact of redemptions on
the pro forma book
value per share" as well as the pro forma equity value per share that
remains at $10.00 for
each redemption level. We note that your analysis does not take into
account "certain
potential sources of dilution . . . ." Please revise your disclosure
to identify these sources
of dilution and to show the potential impact at each redemption level
when taking into
account such sources of dilution, or tell us why you are not required
to do so.
Summary, page 6
5. We note your response to comment 3, as well as your amended disclosure
on page 3 that
includes Pangaea Data Tech (Shanghai) Co., Ltd. ("DataCo") in the
company's diagram.
Please also indicate in the diagram that DataCo has a contractual
arrangement with Tim
Hortons (China) Holdings Co., Ltd. Also revise the footnote to
identify the affiliate of
Cartesian Capital Management LLC that owns 75% of DataCo.
6. We note your response to comment 4, as well as your amended disclosure
on page 18, and
we reissue the comment in-part. To provide investors with additional
clarity under the
"Regulatory Matters" sub-section, please briefly summarize your
analysis of the
applicability of the permission and/or approval requirements from the
CAC, including
the applicability of the new regulations that will go into effect on
February 15 that will
require internet platform operators holding data of more than 1
million users to undergo a
network security review, as you discuss on page 37 and refer to on
page 4.
7. We note your response to comment 6, as well as your amended
disclosure, and we reissue
the comment in-part. Please disclose here that your auditor is subject
to the
determinations announced by the PCAOB on December 16, 2021, if true
(emphasis
added). Additionally, in your risk factor beginning on page 50, we
note your amended
Yongchen Lu
FirstName LastNameYongchen Lu
TH International Limited
Comapany18,
February NameTH
2022 International Limited
February
Page 3 18, 2022 Page 3
FirstName LastName
disclosure that the AFHCAA would, if enacted, "shorten the
three-consecutive-year
compliance period under the HFCAA to two consecutive years." Please
also state that, as
a result, the time before your securities may be prohibited from
trading or delisting would
be reduced.
8. Under "Regulation," please revise to clarify that the consequences you
describe (fines,
penalties, etc.) will result if you do not receive or maintain
required permissions or
approvals, inadvertently conclude that such permissions or approvals
are not required,
or applicable laws, regulations, or interpretations change and you are
required to obtain
such permissions or approvals in the future. Please also revise to
broaden this disclosure
to include permissions and approvals relating to the operation of your
business and
issuance of securities, in addition to the Business Combination.
Please make conforming
changes on page 42.
Summary Consolidated Financial Information of THIL
Non-GAAP Financial Measure, page 22
9. We reviewed your response and revisions in response to comment 9.
Please tell us why it
is appropriate to add back depreciation and amortization in your
computation of a fully-
burdened gross profit.
10. We reviewed your response to comment 10. Please tell us the adjustment
amounts related
to store-pre opening periods and rent-free periods as a result of
COVID-19 for each
period. We may have further comment.
11. We reviewed your response to comment 11. Please tell us if the input
VAT refund line
item reflects all VAT statement of operations activity including VAT
paid or payable. If
not, please explain why. Please also tell us whether any of the VAT
refund is required to
be refunded to your suppliers.
Risk Factors
Risks Related to Doing Business in China
"The approval and/or other requirements . . . ", page 42
12. You state that the Business Combination will not be subject to the
CSRC Draft Rules
because you publicly filed the registration statement on September 23,
2021. Please
clarify whether this conclusion remains accurate in the event your
securities are not yet
listed on Nasdaq if and when the CSRC Draft Rules are adopted and, if
so, why.
THIL's Business
Intellectual Property, page 137
13. We note the communication filed pursuant to Rule 425 on January 25,
2022, in which you
disclose that "Tims China received permission from RBI to design its
alternative logo,
with the short-form name that [Mr. Yu] said is "more fluent" for
Chinese customers and a
prominent Maple Leaf." Please describe such permission here and in
appropriate places
Yongchen Lu
FirstName LastNameYongchen Lu
TH International Limited
Comapany18,
February NameTH
2022 International Limited
February
Page 4 18, 2022 Page 4
FirstName LastName
throughout the proxy statement/prospectus to the extent that you deem
such alternative
logo to be material.
Unaudited Pro Forma Condensed Combined Financial Information, page 171
14. We note your response to comment 12, as well as your amended
disclosure on pages xviii,
10 and 81 that highlights the ownership interests of the holders of
THIL ordinary shares
reflecting potential sources of dilution. Please make conforming
changes to your chart on
page 171 to reflect such ownership interests. Additionally, we note
certain discrepancies
between such charts. For example, the shares underlying the granted
option shares and
restricted shares is 9,432,822 on page 171 but 9,068,537 on pages
xviii, 10 and 80, and the
charts on pages xviii, 10 and 80 additionally now take into account
the note holders.
Please tell us why such ownership presentations vary here or revise to
ensure consistency
throughout the proxy statement/prospectus.
15. We note your amended disclosure on page xiv that includes a
placeholder for the per share
pro forma book value of THIL ordinary shares outstanding at closing,
as well as your
reference to the section entitled "Unaudited Pro Forma Condensed
Combined Financial
Information" for disclosure regarding such per share pro forma book
value. Please tell us
how such section discusses the per share pro forma book value, as we
note that the
discussion and accompanying financial information only include the
loss per share.
Taxation
Certain Material U.S. Federal Income Tax Considerations, page 192
16. Please revise to state that the disclosure in this section is the
opinion of Morrison
& Foerster LLP, as opposed to a summary of tax consequences. In
addition, revise
statements in this section regarding what the tax consequences
"should" be to describe the
degree of uncertainty of such opinions and explain why counsel cannot
give a "will"
opinion. As examples only, we note statements such as "a U.S. Holder
generally should
not recognize gain or loss," the tax basis "should be equal," a "U.S.
Holder should expect
all cash distributions." Revise Exhibit 8.1 to delete the reference to
the disclosure in this
section being a summary of tax consequences ("insofar as such
statements summarize
U.S. federal income tax law or legal conclusions with respect
thereto"). In addition, revise
paragraph (b)(1) of Exhibit 8.1 to exclude the company from your
assumptions regarding
due execution and delivery, as well as requisite corporate power and
authority. Refer to
Staff Legal Bulletin No. 19.
General
17. We note the communication filed pursuant to Rule 425 on December 13,
2021, in which
you disclose that you raised money "from a leading global asset
manager," that such
"[unnamed] investor also committed to so-called PIPE fundraising," and
that "[s]everal
current investors, including affiliates of Sequoia Capital China and
Eastern Bell Capital,
also commit[ted] to PIPE funding." In connection therewith, please:
Yongchen Lu
TH International Limited
February 18, 2022
Page 5
Quantify the aggregate fees on page 93 that are payable to UBS
upon completion of
the business combination when taking into account the amount of such
committed
financing. In this regard, we note that your amended disclosure in
response to
comment 15 quantifies the aggregate fees in the event of a
hypothetical PIPE
financing.
Include a description of the proposed PIPE investments in
appropriate
places throughout the proxy statement/prospectus and file the
related form of
investment agreement, form of Private Note and form of Note as
exhibits to the
registration statement.
Update the relevant beneficial ownership tables in your section
entitled "Beneficial
Ownership of Securities" as appropriate to reflect the securities to
be held as a result
of the PIPE financing, including by the additional PIPE investors
and by your
"current investors, including affiliates of Sequoia Capital China
Eastern Bell
Capital." In this regard, we note that the table and footnotes on
page 227 do not
indicate any change in ownership of SCC Growth VI Holdco D, Ltd. and
Eastern Bell
International XXVI Limited.
To the extent that any investors, including the additional PIPE
investors, will own
more than 5% of the combined company following the business
combination, please
also update the relevant beneficial ownership table. In this regard,
please clarify
whether the additional PIPE investors are the same as your
convertible note holders.
Additionally, explain why you have excluded from the third table in
this section the
securities identified in (i)-(v) on page 227. In this regard, it
appears that the holders of
the $50 million in convertible notes could own an equivalent amount
of shares at
closing if they elect to convert, and the warrants for THIL Ordinary
Shares will be
exercisable within 60 days of closing.
You may contact Tatanisha Meadows at 202-551-3322 or Adam Phippen at
202-551-
3336 if you have questions regarding comments on the financial statements and
related
matters. Please contact Brian Fetterolf at 202-551-6613 or Lilyanna Peyser at
202-551-3222
with any other questions.
Sincerely,
FirstName LastNameYongchen Lu
Division of
Corporation Finance
Comapany NameTH International Limited
Office of Trade
& Services
February 18, 2022 Page 5
cc: John Owen
FirstName LastName