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United States securities and exchange commission logo
October 29, 2020
Ilene Eskenazi
General Counsel
PET Acquisition LLC
10850 Via Frontera
San Diego, California 92127
Re: PET Acquisition LLC
Draft Registration
Statement on Form S-1
Submitted on
October 2, 2020
CIK No. 0001826470
Dear Mr. Eskenazi:
We have reviewed your draft 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 providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. 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 the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1
Cover Page
1. Please revise the cover
page and summary to disclose the conversion rights of the Class A,
Class B-1, and Class
B-2 common stock. In this regard, we note your disclosure
elsewhere suggesting
that each share of Class A can be converted into one share of each
of Class B-1 and Class
B-2, and that one share each of Class B-1 and Class B-2 may
together be converted
into one share of Class A.
2. Please revise to
clarify whether you intend to register in this offering the shares of Class A
common stock that are
issuable upon conversion of the Class B-1 and Class B-2 common
stock.
Ilene Eskenazi
FirstName LastNameIlene Eskenazi
PET Acquisition LLC
Comapany
October 29,NamePET
2020 Acquisition LLC
October
Page 2 29, 2020 Page 2
FirstName LastName
Summary, page 1
3. Please revise to provide a brief history of your relationship with
your Sponsor. Your
current disclosure is unclear as to why the initial notes were issued
and whether there was
a pre-existing relationship between Scooby LP and the company or its
affiliates.
Increase Engagement and Monetization Across All Channels and Offerings, page 8
4. Please revise your chart indexing the average spend by customers to
add explanatory
quantifying disclosure.
The loss of any of our key merchandise vendors, page 21
5. With a view towards disclosure, please tell us whether the inability
of vendors to supply
goods and products to you has had a material effect on your business,
including your
premium brands, and whether you materially rely on any of the affected
vendors.
If we are required to restructure our operations to comply with regulations,
page 31
6. Please expand your risk factor to provide additional clarity as to how
regulations related to
the transportation and sale of small animals might materially affect
your business. We
note, in particular, that the extent of your involvement in and
dependence on the sale of
small animals is unclear. Please advise.
Our substantial indebtedness could adversely affect our cash flows, page 39
7. Please revise to also disclose the amount of available credit upon
closing of this offering.
Recapitalization and Corporate Conversion, page 55
8. Please substantially revise to provide a more detailed discussion of
the corporate
conversion here and in the summary, including the timing and
individual steps of the
conversion, the manner in which you will determine the number of
shares of Class A,
Class B-1, and Class B-2 to be issued, and the basis upon which such
shares will be
apportioned. In addition, explain in greater detail the transfer of
equity from Scooby LP
to a newly formed and wholly owned subsidiary, as described on page
12, and whether
this transfer is a necessary step of the corporate conversion,
reorganization, or otherwise.
Selected Historical Consolidated Financial Data
Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDA Margin, page 63
9. You account for your Mexico joint venture as an equity method
investment. In arriving at
the non-GAAP measure adjusted EBITDA you exclude income/loss
from equity
method investees, which presumably includes your share of the Mexico
joint venture.
However, you also adjust for 50% of the Mexico joint venture s
EBITDA in computing
your adjusted EBITDA. Please tell us why it is appropriate to adjust
for the Mexico joint
Ilene Eskenazi
FirstName LastNameIlene Eskenazi
PET Acquisition LLC
Comapany
October 29,NamePET
2020 Acquisition LLC
October
Page 3 29, 2020 Page 3
FirstName LastName
venture s EBITDA in excess of your equity method share of the joint
venture. Refer to
Question 100.04 of the staff s Compliance and Disclosure
Interpretations Non-GAAP
Financial Measures for guidance.
10. You disclose you believe it is useful to include your portion of the
results of the Mexico
joint venture in computing your adjusted EBITDA as it best reflects
the actual
performance of your overall business. Please explain to us the basis
for your belief.
Additionally, explain to us why it is appropriate to include the
results of the Mexico joint
venture but not those of your other equity method investments.
Management s Discussion and Analysis of Financial Condition and Results of
Operations, page
66
11. We note several instances in which two or more factors are cited as a
cause of a variance
in financial statement items, like net sales and net cash provided by
operating activities.
Please quantify each factor cited so that investors may understand the
magnitude and
relative impact of each. Refer to section 501.04 of the staff s
Codification of Financial
Reporting Releases for guidance.
Quantitative and Qualitative Disclosures about Market Risk, page 82
12. Please explain to us how your disclosure complies with the
requirements of Item 305 of
Regulation S-K and whether more fulsome disclosure is appropriate.
Our Transformation, page 86
13. We note that your prospectus highlights the operational changes in
your business over the
course of the last three years. Please revise here, and elsewhere, to
describe in greater
detail the specific steps (including acquisitions) that were taken and
the costs to you.
Please also revise to balance your disclosure. In this regard we note
that your discussion
in the prospectus (e.g., pages 86-88) frequently emphasizes sales
growth without a
corresponding discussion of associated cost or loss metrics.
Executive Compensation, page 113
14. Please disclose the performance metrics established for the annual
cash incentive program
for Fiscal 2019, the threshold, target and maximum goals for each
metric, and the actual
results achieved for each metric.
General
15. You state that you obtained the industry data, estimates, market
research, and other
information from reports, studies and similar data prepared by third
party sources,
government data and similar sources. Please tell us whether you
commissioned any third
party research for use in connection with this offering. If so, please
tell us what
Ilene Eskenazi
PET Acquisition LLC
October 29, 2020
Page 4
consideration you gave to filing the third party's consent as an exhibit
to the registration
statement as required by Section 7 of the Securities Act and Securities
Act Rule 436.
16. Please revise throughout to describe the material terms of your
agreements with the
various partners you rely upon to deliver services to your customers. In
this regard, please
describe your agreements with suppliers, physicians, and distributors. To
the extent that
these agreements are not individually material, please summarize the
material terms of
your standard agreements, including payment, term and termination
provisions. If
material, please file the agreements as exhibits to this registration
statement.
17. In appropriate places in your filing, including the Summary, Risks
Factors and
Description of Capital Stock sections, please address:
the extent to which the holders of each class of stock will be
limited in their ability to
influence corporate matters due to your multi-class structure;
whether there is a limit to the number or timing of conversions
that a stockholder may
make between classes of common stock;
whether converted stock may subsequently be converted back to its
original class(es);
whether ownership of Class B-1 and B-2 shares may separated and,
if so, the
mechanics and consequences of such separation to the invidual
stockholder and to all
classes of stockholders;
the extent to which your multi-class structure may have a dilutive
effect on the
influence of Class A holders on corporate matters; and
why voting rights that typically attach to a single share of
common stock are divided
between Class B-1 and Class B-1 common stock.
You may contact Keira Nakada at (202) 551-3659 or Doug Jones at (202)
551-3309 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Daniel Morris at (202) 551-3314 or Lilyanna Peyser at (202) 551-3222
with any other
questions.
Sincerely,
FirstName LastNameIlene Eskenazi
Division of
Corporation Finance
Comapany NamePET Acquisition LLC
Office of Trade &
Services
October 29, 2020 Page 4
cc: Andrew Fabens
FirstName LastName