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United States securities and exchange commission logo
June 25, 2021
Stanley Chia
Chief Executive Officer
Vivid Seats Inc.
111 N. Canal Street
Suite 800
Chicago, Illinois 60606
Re: Vivid Seats Inc.
Registration
Statement on Form S-4
Filed May 28, 2021
File No. 333-256575
Dear Mr. Chia:
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 May 28, 2021
Prospectus Cover
1. Quantify the cash that
Vivid Seats PubCo will pay in the Blocker Purchase and the cash
that Vivid Seats PubCo
will contribute in the Intermediate Contribution and Issuance.
Please also quantify
the number of shares of Class B common stock and warrants to
purchase Class B common
stock that Vivid Seats PubCo will issue in the Class B
Issuance. Make
conforming edits throughout your filing.
2. Here, and elsewhere in
your filing where you discuss Hoya Midco s plan to repay a
portion of its existing
debt, please quantify the amount of debt that will be repaid.
Stanley Chia
FirstName
Vivid SeatsLastNameStanley Chia
Inc.
Comapany
June NameVivid Seats Inc.
25, 2021
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3. Please revise your disclosure regarding the ownership of the
post-combination company
to:
present the Sponsor s aggregate ownership interest, as you do
on page 12, instead of
allocating the Sponsor s interest between the PIPE Investors
and the Sponsor and
founder shares;
disclose the Sponsor s total potential ownership interest
assuming exercise and
conversion of all securities. In this regard, we note that you
exclude the shares of
Class A common stock underlying Vivid Seats PubCo warrants when
calculating
these percentages; and
disclose the number of directors that Private Equity Owner will
have the right to
nominate pursuant to the Stockholders Agreement. Clarify that
Private Equity
Owner will control Hoya Topco and therefore will control all
decisions put to
stockholder.
Please make conforming revisions throughout your filing. Please also
revise your
throughout your filing where you discuss the ownership interest of
Hoya Topco in both
Vivid Seats PubCo and in Hoya Intermediate, that these interests are
controlled by the
Private Equity Owner.
What vote is required to approve the Proposals presented at the extraordinary
general meeting?,
page xxiii
4. Given that the Sponsor and Horizon s directors and officers own
approximately 28.7% of
Horizon s issued and outstanding Horizon Class A ordinary shares and
100% of Horizon's
Class B ordinary shares, please disclose the number of votes aside
from those held by the
Sponsor and Horizon s directors and officers that will be required
to approve the business
combination proposal, assuming a valid quorum is established.
Summary of the Proxy Statement/Prospectus
Quroum and Required Vote for Proposals for the Extraordinary Meeting, page 15
5. Disclose the information required by Item 3(h) of Form S-4.
Key Performance Indicators and Non-GAAP Financial Measure, page 23
6. Reference is made to the reconciliation of Adjusted EBITDA on page 24.
Please explain
to us in detail why you believe the adjustment for "Transaction costs"
used in calculating
Adjusted EBITDA is appropriate in light of any growth strategy you may
have. Please
refer to Question 100.01 of the SEC Staff's Compliance and Disclosure
Interpretations on
Non-GAAP Financial Measures.
Risk Factors, page 30
7. Disclose the material risks to unaffiliated investors presented by
taking Vivid Seats public
through a merger rather than an underwritten offering. These risks
could include the
Stanley Chia
FirstName
Vivid SeatsLastNameStanley Chia
Inc.
Comapany
June NameVivid Seats Inc.
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absence of due diligence conducted by an underwriter that would be
subject to liability for
any material misstatements or omissions in a registration statement.
The global COVID-19 pandemic has had, and is likely to continue to have, a
material negative
impact on our business and operating results..., page 30
8. Please quantify the reduction in revenues for 2020 and the first
quarter of 2021 that you
discuss in this risk factor.
Background of the Business Combination, page 99
9. We note your disclosure that Horizon considered numerous
potential business
combination targets to discuss their interest in a potential business
combination. Please
disclose how many targets Horizon considered, the general nature of
the business of those
targets, the extent of the engagements with other potential targets,
the reasons Horizon
believed Hoya Topco was the most attractive target, and the factors
considered in
dismissing the other alternative candidates considered. To the extent
that that Horizon
entered into any letters of intent or confidentiality agreements with
potential targets,
please describe these agreements. We note, in particular, the Form 8-K
filed by Horizon
on June 14, 2021 relating to a potential business combination on which
Horizon spent
substantial efforts, but which was not consummated. In addition, to
the extent that more
than one active SPAC was considered as the potential acquirer for Hoya
Topco, please
disclose this and how it was determined that Horizon would be the
acquirer.
10. Please disclose the terms included in the initial draft of the letter
of intent an affiliate of
Horizon delivered to an affiliate of Hoya Topco on February 22, 2021,
a comprehensive
description of the negotiation of those terms and the positions taken
by each of the parties
throughout the negotiations, and the terms of the final term sheet
executed by the parties
on March 5, 2021. Please also identify the entity which is the
"affiliate of Horizon" and
whether this entity was engaged in a separate search for a business
combination target.
11. Please substantially revise the disclosure in this section to include
a description of the
negotiations relating to the $2 billion valuation. For example, it is
not clear who proposed
an initial valuation and what the initial proposal was, if and how the
amount evolved
throughout the negotiations, and when the final valuation and type of
consideration was
agreed upon by the parties.
12. We note your disclosure in this section that Hoya Topco engaged
Evercore and Horizon
engaged Credit Suisse and Deutsche Bank to act as financial advisors
and equity capital
markets advisors in connection with the business combination and your
disclosure on page
242 that Horizon engaged D.A. Davidson, and William Blair, and that
Vivid Seats
engaged Citigroup Global Markets, to act as financial and equity
capital markets advisors
more generally. Please revise your discussion in this section to
address in greater detail
the role that the financial advisors played in the transaction
negotiations and valuation
discussions. Please clarify whether the financial advisors delivered
any reports to the
board that were materially related to the transaction.
Stanley Chia
FirstName
Vivid SeatsLastNameStanley Chia
Inc.
Comapany
June NameVivid Seats Inc.
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13. Please substantially revise your disclosure in this section to include
a chronological
description of the negotiations relating to material terms of the
transaction and ancillary
agreements, including, but not limited to, the type and breakdown of
consideration to be
paid to Hoya Topco and Crescent, the financial projections and any
discussions relating to
the assumptions underlying such projections, the reasons for the Tax
Receivable
Agreement and amounts payable thereunder, the dual-class
capitalization structure, the
allocation of control between Hoya Topco and Vivid Seats PubCo of Hoya
Intermediate,
Hoya Intermediate s Second Amended and Restated LLC Agreement and
the related
mechanisms to match the ownership interests of Hoya Intermediate with
Vivid Seats
PubCo, and the director nomination rights. In your revised disclosure,
please list each
person present at the meeting (ex: the particular members of the Hoya
Topco board who
attended the meetings), explain the reason and significance of the
issues and terms
discussed at the meetings, each party's position on such issues and
how you reached
agreement on the final terms.
14. We note that Eldridge Industries, LLC, an affiliate of the Sponsor,
has agreed to purchase
19,000,000 shares of Vivid Seats Class A Common Stock in the PIPE
Subscription.
Please revise your disclosure in this section to include a description
of the negotiations
relating to the PIPE Subscription, including how the amount of the
PIPE Subscription and
the Sponsor Backstop Commitment amount was determined, how potential
PIPE investors
were selected, and what relationship the investors (other than
Eldridge Industries) have
with Horizon, the Sponsor, Vivid Seats, and the placement agents.
Please disclose that
Credit Suisse and Evercore acted as placement agents for the PIPE
Subscription.
15. Please include a general description of the diligence matters
discussed on March 11, 2021
and how those discussions impacted the terms of the transaction.
16. We note that Credit Suisse performed additional services as placement
agent for the PIPE
Subscription and part of the IPO underwriting fee was deferred and
conditioned on
completion of a business combination. Please quantify the aggregate
fees payable to
Credit Suisse that are contingent on completion of the business
combination.
17. Horizon s current charter waives the corporate opportunities
doctrine. Please address this
potential conflict of interest and whether it impacted Horizon s
search for an acquisition
target. In particular, we note that Horizon Acquisition Corp II is
also searching for a
business combination target. In addition, please revise to include any
discussions with
Hoya Topco relating to the waiver of the corporate opportunities
doctrine for which you
are seeking approval in Proposal No. 5.
Horizon's Board of Directors' Reasons for the Approval of the Business
Combination, page 102
18. We note your disclosure that Horizon s board considered current
information and
forecast projections from Horizon and Vivid Seats PubCo s management
regarding (i)
Hoya Intermediate and Vivid Seats PubCo s business, prospects,
financial condition,
operations, technology, products, services, management, competitive
position, and
Stanley Chia
FirstName
Vivid SeatsLastNameStanley Chia
Inc.
Comapany
June NameVivid Seats Inc.
25, 2021
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strategic business goals and objectives, (ii) general economic,
industry, regulatory and
financial market conditions and (iii) opportunities and competitive
factors within Vivid
Seats PubCo s industry. Clarify whether these projections are the
same projections
included on page 108, and if not, please include such projections in
your filing or tell us
why you are not required to do so. Please also clarify whether Horizon
and Vivid Seats
PubCo s management prepared two different sets of projections.
19. Please revise your disclosure in this section to state with more
specificity how certain of
these factors supported the board's decision to recommend approval of
the business
combination. For example, it's unclear what in particular the board
considered about the
historical financial performance and results of operations of Hoya
Intermediate and Vivid
Seats Pubco.
Certain Forecasted Financial Information for Vivid Seats PubCo,, page 106
20. Please revise to include a description of the material assumptions
made by Vivid Seat s
management in preparing these projections. In this discussion, please
address how you
accounted for the uncertainty resulting from the COVID-19 pandemic. In
this regard, we
note your disclosure that due to the unprecedented nature of the
global COVID-19
pandemic and its impacts on [y]our business, [y]our ability to
forecast [y]our cash inflows
is hampered. Please also disclose how and why the timeframe leading
out to 2024
projected financial results was selected and disclose whether or not
the projections are in
line with historic operating trends and, if not, explain why the
change in trends is
appropriate.
21. We note the investor presentation for prospective investors in the
PIPE Subscription that
was included in the 8-K Horizon filed on April 22, 2021. We note the
presentation
includes a similar comparable company analysis to the analysis
discussed on pages 104-
106 and also includes additional analyses related to Vivid Seats
financial profile and
valuation and includes certain underlying assumptions. Please tell us
whether the Board
considered the additional analyses included in the presentation as a
factor in
recommending that the Horizon shareholders approve the transaction. If
so, please include
the additional analyses in the filing. If the Board did not consider
these projections, please
tell us why and explain the material differences in the analyses
included in the investor
presentation as compared to the disclosure in your filing. To the
extent a third party
prepared the analyses and provided it to Horizon, please include the
information required
by Item 1015(b) of Regulation M-A.
Interests of Certain Persons in the Business Combination, page 108
22. Please revise your disclosure here and elsewhere in your filing, as
applicable, to include:
the value of the Horizon Class A ordinary shares, Horizon Class
B ordinary shares,
and Horizon IPO Private Placement Warrants currently owned by the
Sponsor and by
any other initial shareholders.
Stanley Chia
FirstName
Vivid SeatsLastNameStanley Chia
Inc.
Comapany
June NameVivid Seats Inc.
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the value of the out of pocket expenses incurred by the
sponsor, directors, officers
and their affiliates that are subject to reimbursement;
the approximate dollar value of the Sponsor s ownership
interest in Hoya
Intermediate based on the transaction value and recent trading
prices as compared to
the price paid; and
clarify if the Sponsor can earn a positive rate of return on
its investment, even if other
Horizon shareholders experience a negative rate of return in the
post-business
combination company.
23. Please include comparable disclosure for the directors and executive
officers of Hoya
Intermediate. Refer to Item 18(a)(5)(i) of Form S-4.
U.S Federal Income Tax Considerations, page 112
24. You disclose in this section that the merger should qualify as an F
Reorganization, and
that holders that beneficially own less than $50,000 should not be
required to recognize
gain or loss under Section 367(b) of the Code. As the tax treatment of
the transaction is
material to investors, please revise to provide a tax opinion and
clearly identify and
articulate the opinion being rendered as to the tax consequences of
the business
combination. If there is uncertainty regarding the tax treatment of
the transactions,
counsel may issue a "should" or "more likely than not" opinion to make
clear that the
opinion is subject to a degree of uncertainty, and explain why it
cannot give a firm
opinion. Please make similar revisions where you discuss the tax
consequences of the
transaction, and include risk factor disclosure, as appropriate.
Please also remove
language stating that this section is a "discussion" or "summary."
Refer to Section III of
Staff Legal Bulletin 19.
Proposal No. 4 - Organizational Documents Proposal B, page 132
25. Please describe in more detail in this section the specific conflicts
between the
organizational documents and the rights of the Sponsor and Hoya Topco
in the
Stockholders' Agreement. Please also include a more complete
description of the rights
granted in the Stockholders Agreement such as, for example, the number
of directors each
party is entitled to designate based on specific beneficial ownership
thresholds and the
relevant sunset dates. Please include similar disclosure elsewhere as
appropriate.
Proposal No. 5 -- Organizational Documents Proposal C, page 133
26. It appears in this proposal that shareholders are being asked to waive
the doctrine of
corporate opportunity for certain investors and include a choice of
forum provision in the
organizational documents, in addition to other changes to the
organizational documents.
Please revise to present any material changes to the charter,
including the waiver of
corporate opportunity and the choice of forum provision, as separate
proposals. Alternatively, provide us with your analysis as to why you
are not required to
unbundle these proposals. Please refer to Rule 14a-4(a)(3) of
Regulation 14A, as well as
Stanley Chia
FirstName
Vivid SeatsLastNameStanley Chia
Inc.
Comapany
June NameVivid Seats Inc.
25, 2021
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Question 201.01 of the Exchange Act Rule 14a-4(a)(3) Compliance and
Disclosure
Interpretations.
Business of Vivid Seats, page 171
27. Please disclose when Vivid Seats was incorporated and when the Private
Equity Owner
purchased its controlling interest in Vivid Seats.
28. Please disclose the basis for your statement that Vivid Seats is a
"leading marketplace
and identify the third-party reports supporting your statement that
the U.S. primary and
secondary live event ticketing market is $39 billion as of 2019, with
the secondary live
event ticketing market estimated at $11 billion, representing growth
in the secondary live
event ticketing market of 57% since 2014.
Components of Results of Operations, page 189
29. Reference is made to your description of general and administrative
expenses. Please tell
us your consideration of classifying certain personnel-related and
information technology
expenses as cost of revenues rather than general and administrative
expenses.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources, page 199
30. We note your disclosure that you have historically financed your
operations primarily
through cash generated from your operating activities. Given your
disclosure elsewhere in
your filing that Vivid Seats anticipates that the COVID-19 pandemic
and mitigation
policies enacted by governmental entities will continue to have a
material impact on its
cash flows, please disclose whether you anticipate a need to raise
additional capital after
the completion of the business combination to carry out your
operations. If so, please
disclose the sources of capital you will seek.
31. To the extent practicable, please discuss the impact your obligations
under the Tax
Receivable Agreement may have on your liquidity. In this regard, we
note your disclosure
that the Tax Receivable Agreement will require you to make cash
payments to Hoya
Topco and that such payments may exceed any actual tax benefits or be
accelerated.
Please also disclose the range of future payouts that you expect to
pay under this
Agreement, as well as the amount of the lump-sum cash payment that you
will be required
to make in the event of early termination.
Critical Accounting Policies and Estimates, page 202
32. Reference is made to your discussion of revenue recognition. We note
your disclosure
that an estimate for future cancellation charges is based on
cancellation charge history.
Please disclose the material judgments, assumptions and uncertainties
associated with
estimating cancellation charges. Please also clarify when a credit is
issued and when there
is a cash refund.
Stanley Chia
FirstName
Vivid SeatsLastNameStanley Chia
Inc.
Comapany
June NameVivid Seats Inc.
25, 2021
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33. Reference is made to your discussion of goodwill impairment on page
204. Please
provide information for investors to assess the probability of future
goodwill impairment
charges. For example, please disclose whether your reporting unit is
at risk of failing the
quantitative impairment test or that the fair value of your reporting
unit substantially
exceeds the carrying value and is not at risk of failing. If a
reporting unit is at risk of
failing, you should disclose the percentage by which fair value
exceeded carrying value at
the date of the most recent test and the amount of goodwill allocated
to the reporting
unit. Please refer to Item 303(b)(3) of Regulation S-K.
General
34. Please revise your disclosure throughout the filing to address the
potential impact of
redemptions on non-redeeming shareholders and all possible sources and
the extent of
dilution that shareholders who elect not to redeem their shares may
experience in
connection with the business combination, including:
the potential impact on the per share value of the shares owned
by non-redeeming
shareholders by including a sensitivity analysis showing a range
of redemption
scenarios, including minimum, maximum and interim redemption
levels;
the impact of each significant source of dilution, including
the amount of equity held
by founders, convertible securities, including warrants retained
by redeeming
shareholders, at each of the redemption levels detailed in your
sensitivity analysis,
including any needed assumptions;
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 to non-redeeming shareholders; and
disclose the effective underwriting fee on a percentage basis
for shares at each
redemption level presented in your sensitivity analysis related
to dilution. In this
regard, we note that it appears that underwriting fees remain
constant and are not
adjusted based on redemptions.
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.
Stanley Chia
Vivid Seats Inc.
June 25, 2021
Page 9
You may contact Nasreen Mohammed at 202-551-3773 or Adam Phippen at
202-551-
3336 if you have questions regarding comments on the financial statements and
related
matters. Please contact Taylor Beech at 202-551-4515 or Erin Jaskot at
202-551-3442 with any
other questions.
FirstName LastNameStanley Chia Sincerely,
Comapany NameVivid Seats Inc.
Division of
Corporation Finance
June 25, 2021 Page 9 Office of Trade &
Services
FirstName LastName