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United States securities and exchange commission logo
November 18, 2021
Andrew McBride
Chief Financial Officer
Gores Metropoulos II, Inc.
6260 Lookout Road
Boulder, CO 80301
Re: Gores Metropoulos
II, Inc.
Amendment No. 4 to
Registration Statement on Form S-4
Filed October 29,
2021
File No. 333-257726
Dear Mr. McBride:
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
October 7, 2021 letter.
Amendment No. 4 to Registration Statement on Form S-4 Filed October 29,
2021
General
1. Please revise your
Summary and where appropriate to highlight the material differences in
the terms and price of
securities issued at the time of the IPO as compared to the New
PIPE Investment at the
time of the business combination, as well as your Sponsor's
participation in the
New PIPE Investment. Please also revise to clarify any interplay
between the Sponsor's
participation in the Existing PIPE, New PIPE, and Additional
Sponsor Commitment, as
well as the Share Surrender Agreement. Please also revise your
discussion of Related
Agreements beginning on page 49 to compare the Sponsor's
participation in the
New PIPE Investment with its proportion of the Existing PIPE
Investment, as amended,
assuming that your Sponsor syndicates up to 4,000,000 of its
Andrew McBride
FirstName LastNameAndrew
Gores Metropoulos II, Inc. McBride
Comapany 18,
November NameGores
2021 Metropoulos II, Inc.
November
Page 2 18, 2021 Page 2
FirstName LastName
shares under the Existing PIPE Investment, as you currently expect.
Please also disclose
the reason for the reduced aggregate amount of the New PIPE Investment
and the
Additional Sponsor Commitment, from the amount assumed by Moelis in
its fairness
opinion dated October 19, 2021, as well as the Sponsor's increased
level of participation in
the Existing PIPE Investment by virtue of the Existing Subscription
Amendment.
2. We note your revisions related to the Delayed Draw Note Term Sheet
between Sonder and
certain PIPE Investors, which contemplates the sale of an aggregate of
$220 million in
principal amount of delayed draw subordinated secured notes, as well
as the additional
issuance of additional warrants to purchase up to 3,300,000 shares of
the Post-
Combination Company's Common Stock that may be issued "within three
days of the
closing of the Business Combination." We also note that Amendment No.
1 to the
Agreement and Plan of Merger contemplates a delayed draw note purchase
agreement or
similar, as well as Sonder's intent to close the Delayed Draw Note
Purchase Agreement in
the fourth quarter of 2021. Please revise your Summary to disclose the
material terms of
the Delayed Draw Note Term Sheet, Notes, and Warrants. For example
only, please
disclose the manner in which the Delayed Draw Warrants may be
exercised, as well as
whether the trading price of the Post-Combination Company may impact
the terms of any
issuances of Common Stock underlying the Warrants and, if so, how. To
the extent that
the Delayed Draw Warrants may be issued "in any other amount" as your
disclosure on
pages 21, 121, 125 and 173 indicates, please revise to address the
range of possibilities
discussed or as currently contemplated by the parties, as well as how
the terms of the
Delayed Draw Notes and Warrants may interact when a definitive
agreement is reached.
3. Please identify the "certain PIPE Investors" that are parties to the
Delayed Draw Note
Term Sheet, file the Term Sheet as an exhibit, and revise Background
of the Business
Combination beginning on page 173 to address negotiations over the
Term Sheet.
4. We note the statement in the fee table that you assume all Rollover
Options are exercised
on a gross basis "as opposed to a net exercise basis, which is assumed
elsewhere in this
Registration Statement." Please revise to explain the reasons for
assuming gross in some
instances and net in others. In this regard, clarify why your
estimated number of shares to
be issued when exercised on a net exercise basis exceeds your
estimated number of shares
to be issued when exercised on a gross basis, and explain for us the
exemption from
registration available for the shares underlying the Rollover Options
if exercised on a net
exercise basis. Please also revise to summarize the material terms of
the exercise of the
Rollover Options in an appropriate section of your prospectus,
including but not limited to
the recycling of Rollover Options.
Summary
Interests of Certain Persons in the Business Combination
Interests of the Company Initial Stockholders..., page 62
5. We note your revisions related to the Existing PIPE Investment, New
PIPE Investment,
Additional Sponsor Commitment and Share Surrender Agreement. Please
disclose the
Andrew McBride
Gores Metropoulos II, Inc.
November 18, 2021
Page 3
aggregate per share price your Sponsor will have paid for its total
common stock in the
Post-Combination Company, consistent with your expectation that
4,000,000 shares the
Sponsor will purchase in the Existing PIPE Investment will be
syndicated. Please also
disclose the impact on the aggregate per share price paid by the
Sponsor in the event that
such shares are not syndicated.
The Business Combination
The Impact of the Business Combination on the Company's Public Float, page 169
6. We note your revisions related to ownership of the post-combination
company under
different redemptions scenarios. Please revise to disclose your
Sponsor's aggregate
ownership. It appears your Sponsor's total ownership includes
securities disclosed across
portions of four different rows in the table. Please also explain your
presentation
of Existing PIPE Investors and New PIPE Investors separately, rather
than PIPE Investors
collectively, as it appears the later would aid investor understanding
of the Post-
Combination Company's ownership. Please further revise your tabular
disclosure of
Additional Dilution Sources to include the Delayed Draw Warrants
consistent with your
disclosure that the Delayed Draw Warrants "could further diluter the
ownership of
stockholders in the Post-Combination Company."
Recommendation of our Board of Directors..., page 181
7. Please revise to address the extent to which the Board of Directors
considered the growth
projections and underlying assumptions to be reasonable given the
decline in enterprise
valuation.
Certain Financial Projections Provided to Our Board, page 195
8. We note the revisions related to the projections provided to your Board
and Moelis, which
were previously disclosed for the last three quarters of 2021 but are
now disclosed for the
fourth quarter of 2021. Please revise to clarify whether your
projections for the fourth
quarter of 2021 materially changed from those that were included in the
last three quarters
of 2021 and, if so, please revise to summarize these changes. In this
regard we note that
certain projections appear to have decreased in relative proportion to
the shorter
timeframe presented, while others reflect more pronounced changes.
Please also include
narrative disclosure summarizing any material differences between the
projections
previously provided to your Board and Moelis, and Sonder's actual
results for any period
disclosed. For example only, it appears that your Federal NOL Ending
Balance is now
estimated to be approximately $58 million more in all periods estimated
than indicated by
FirstName LastNameAndrew McBride
your previous estimates. Additionally, please revise pages 191, 200 or
where appropriate
Comapany NameGores
to clarify Metropoulos
the extent II, Inc. projections were provided to
and considered by
to which updated
Moelis.
November 18, 2021 Page 3
FirstName LastName
Andrew McBride
FirstName LastNameAndrew
Gores Metropoulos II, Inc. McBride
Comapany 18,
November NameGores
2021 Metropoulos II, Inc.
November
Page 4 18, 2021 Page 4
FirstName LastName
Material Assumptions Underlying the Financial Projections, page 199
9. We note that the Sonder projections assume revenue growth that far
exceeds growth for
the historical periods presented in the filing, which appears driven
by corresponding
growth projections for Sonder's Live Units & Contracted Units through
2025, while
simultaneously increasing its forecasted Revenue per Available Room
each year. Please
revise your filing to provide more detailed disclosure of your growth
assumptions,
including the growth rates used, if applicable, as well as the reasons
you believe these
assumptions are reasonable. In this regard we note, for example, that
Sonder's actual
Revenue per Available Room decreased in 2019, the period presented in
which its Live
Units and Contracted Units grew at the fastest pace, as well as your
disclosure on the
availability of suitable properties in attractive markets and
increased competition for such
properties, indicating that such growth rates may not be sustainable
over the next five
years. Please also enhance your discussion of the process undertaken
to formulate the
projections and assumptions, the parties who participated in the
preparation of these
projections, and how they were used.
You may contact William Demarest at (202) 551-3432 or Robert Telewicz
at (202) 551-
3438 if you have questions regarding comments on the financial statements and
related matters.
Please contact Christopher Dunham at (202) 551-3783 or James Lopez at (202)
551-3536 with
any other questions.
Sincerely,
Division of
Corporation Finance
Office of Real
Estate & Construction
cc: James R. Griffin, Esq.