sec-comment-letter-second-round.docx

1015-00001 · Graymont Brothers Inc · SEC Correspondence

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION DIVISION OF CORPORATION FINANCE OFFICE OF ENERGY & TRANSPORTATION 100 F Street, N.E. Washington, D.C. 20549

June 3, 2022

Via EDGAR

Sandra Haverford General Counsel & Corporate Secretary Calloway-Briggs Renewables Inc. 4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746

Re: Calloway-Briggs Renewables Inc. Draft Registration Statement on Form S-1 Submitted April 11, 2022 Amendment No. 1 filed May 20, 2022 CIK No. 0001948372 EDGAR Accession No. 0001948372-22-000002

Dear Ms. Haverford:

We have reviewed your amended draft registration statement filed May 20, 2022 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.

We note that the Company has submitted its draft registration statement on a confidential basis pursuant to the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). The draft registration statement has not been publicly filed with the Commission. Our comments are based on your Amendment No. 1 to the Draft Registration Statement on Form S-1, filed with the Commission via EDGAR on May 20, 2022, bearing Accession No. 0001948372-22-000002.

Please respond to each comment below. Where applicable, please revise your disclosure in an amended draft registration statement. If you do not believe a comment is applicable or do not believe a revision is warranted, please explain the basis for your position in your response letter. In addition to revising the filing, we may ask you to provide supplemental information so that we may better understand your disclosure.

We remind you that the Company and its management are responsible for the adequacy and accuracy of the disclosure in the filing, notwithstanding any review, comments, action, or absence of action by the Staff of the Commission or the Division of Corporation Finance.

This letter contains seven comments, numbered sequentially as Comments 1 through 7. These comments follow our initial comment letter, which contained eighteen comments and to which the Company responded in its Amendment No. 1 filing.

Management's Discussion and Analysis — Critical Accounting Policies — Tax-Equity Partnerships

Comment 1

1. We note the Company's revisions to the disclosure of its Hypothetical-Liquidation-at-Book-Value ("HLBV") methodology in the Critical Accounting Policies section of Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), as set forth at pages 72 through 75 of Amendment No. 1. While we acknowledge that the Company provided additional disclosure in response to our first-round comments regarding HLBV accounting for the Solaris West tax-equity partnership, we believe additional clarification is needed in several respects.

Please revise your disclosure to explain in greater detail how the HLBV method allocates income and loss between Calloway-Briggs Renewables Inc. ("CBR" or the "Company") and its tax-equity investor, Veltara Basin Financial LLC, within the Solaris West tax-equity partnership. We note that the Solaris West partnership involves an aggregate tax-equity investment of $280,000,000, with an expected partnership-flip event in 2028. The current disclosure describes the HLBV method in general terms but does not provide investors with sufficient information to understand how the specific economics of the Solaris West partnership are reflected in the Company's financial statements.

Specifically, please revise your disclosure to address each of the following:

• Describe the specific inputs to the HLBV calculation as applied to the Solaris West partnership, including how the hypothetical liquidation waterfall is constructed, the order and priority of distributions assumed in the hypothetical liquidation, and how investment tax credits ("ITCs") and accelerated depreciation benefits (including benefits claimed under the Modified Accelerated Cost Recovery System) are reflected in the hypothetical liquidation proceeds allocated to each partner.

• Quantify the cumulative amount of income (loss) allocated to the tax-equity investor (Veltara Basin Financial LLC) and to the sponsor (CBR) under the HLBV method for each of fiscal year 2020 and fiscal year 2021. In addition, disclose whether the income (loss) allocation under the HLBV method would differ materially from the allocation that would result under an alternative methodology, such as a percentage-of-completion or pro-rata allocation approach, and, if so, quantify the difference for each period presented.

• Explain how the expected partnership-flip event in 2028 will affect the allocation of income and loss between the partners going forward, including the accounting treatment the Company expects to apply upon the occurrence of the flip (for example, whether CBR will consolidate the partnership upon acquiring the tax-equity investor's residual interest and, if so, under what guidance). Please also disclose any material changes in the HLBV waterfall that will occur at the time of the flip and how such changes will be reflected in the Company's financial statements.

We direct your attention to the guidance in ASC 810, Consolidation, ASC 323, Investments — Equity Method and Joint Ventures, and the Staff's views regarding HLBV accounting for tax-equity structures in the renewable energy industry as described in remarks at the AICPA National Conference on Current SEC and PCAOB Developments. Your revised disclosure should be sufficiently detailed to allow an investor to understand the mechanics and financial-statement impact of the HLBV methodology as applied to the Company's most significant tax-equity partnership.

Management's Discussion and Analysis — Critical Accounting Policies — Tax-Equity Partnerships

Comment 2

2. In connection with Comment 1 above, and with reference to pages 72 through 75 of Amendment No. 1, we request that the Company provide additional disclosure regarding the key judgments and estimates inherent in the application of the HLBV methodology to the Solaris West tax-equity partnership.

Specifically, please revise your disclosure to address each of the following:

• Disclose the Company's assumptions regarding the timing of investment tax credit ("ITC") recapture risk and explain how that assumption affects the hypothetical liquidation waterfall and the resulting allocation of income and loss between CBR and Veltara Basin Financial LLC. For example, if the Company assumes that ITC recapture risk diminishes or is extinguished at the end of the five-year recapture period under Section 50 of the Internal Revenue Code, please explain how that assumption affects the amounts allocated to the tax-equity investor in each period. If the assumption were to change — for example, if recapture risk were assumed to extend beyond the statutory five-year period due to contractual indemnification obligations — please disclose the effect such a change would have on the allocation.

• Describe the sensitivity of the income (loss) allocation under the HLBV method to changes in projected taxable income of the partnership, including changes resulting from variations in energy production, curtailment, or changes in market prices for electricity. Disclose whether and to what extent changes in projected taxable income could result in material changes to the amount of income or loss allocated to CBR and, correspondingly, to the Company's reported earnings. Where appropriate, consider providing a quantitative sensitivity analysis or a range of reasonably possible outcomes, particularly to the extent that the income (loss) allocation under the HLBV method is materially sensitive to changes in one or more key assumptions.

We note that this disclosure is important in light of the magnitude of the Solaris West tax-equity investment ($280,000,000), the extended period before the expected partnership-flip event (2028), and the significance of the HLBV method to the Company's consolidated results of operations. We further note that the HLBV methodology was the subject of extensive discussion in our first-round Comment Letter and that several of our prior comments (specifically, Comments 3, 4, and 5 of our letter dated May 2, 2022) addressed this topic. While we acknowledge the Company's revisions in Amendment No. 1, we believe that the additional disclosure requested in this comment and Comment 1 above is necessary for investors to assess the reliability and sensitivity of the Company's application of the HLBV method.

Management's Discussion and Analysis — Revenue Recognition; Business Section — Project Portfolio

Comment 3

3. We acknowledge the Company's revisions to its revenue recognition disclosure in Amendment No. 1, including the additional information provided in the Business section regarding the Company's project portfolio. However, we request further detail regarding revenue derived from power purchase agreements ("PPAs").

We note that the Company's 22 operating projects, with a combined generating capacity of approximately 3.8 GW, are described in relatively general terms in the Business section of Amendment No. 1, and that the revenue recognition disclosure in MD&A does not provide sufficient detail for investors to understand the proportion of the Company's revenue that is contracted under long-term PPAs versus the proportion that is exposed to merchant or spot-market pricing. Accordingly, please revise your disclosure to address each of the following:

• For each material PPA or, if appropriate, for each group of PPAs with substantially similar economic terms, disclose the contracted capacity (in MW), the pricing structure (e.g., fixed price per MWh, fixed price with annual escalation, merchant or spot-market exposure, hybrid or collar structure, or other pricing mechanism), the remaining contract term, and whether the PPA includes renewal or extension options held by either party. If the Company believes that disclosure of individual PPA pricing terms would be competitively harmful, please provide this information on a supplemental basis and explain the basis for omitting such information from the registration statement, citing any applicable confidential treatment request or the basis for your position under Item 601(b)(10) of Regulation S-K.

• Disclose the percentage of total fiscal year 2021 revenue ($487.3 million) attributable to contracted PPA revenue versus merchant or spot-market revenue. To the extent that any portion of contracted PPA revenue includes a merchant or market-based component (for example, revenue above a contracted floor price), please describe how such amounts are classified.

• Disclose whether any single PPA or offtaker accounted for 10% or more of the Company's consolidated revenue in fiscal year 2021 or in any other period presented. If so, please identify the customer or, if the Company believes that identification would be competitively harmful, provide the basis for omitting the customer's identity and confirm that the concentration disclosure required by ASC 280, Segment Reporting, and Item 101(c)(1)(vii) of Regulation S-K has been provided. We also note that, to the extent the loss of a material offtaker would have a material adverse effect on the Company, appropriate risk-factor disclosure may be warranted.

Your revised disclosure should be sufficiently detailed to permit an investor to evaluate the predictability and stability of the Company's revenue streams and to understand the degree of market-price exposure inherent in the Company's project portfolio.

Prospectus Summary — Summary Financial Data; Management's Discussion and Analysis — Non-GAAP Financial Measures

Comment 4

4. We note that the Company presents Adjusted EBITDA as a key performance measure in both the Prospectus Summary and the MD&A section. For fiscal year 2021, the Company reports Adjusted EBITDA of $218.6 million, as compared to GAAP net income of $41.7 million, and provides a reconciliation of Adjusted EBITDA to GAAP net income in Amendment No. 1. We have the following comments regarding the reconciliation and presentation of this non-GAAP financial measure.

Please revise the Adjusted EBITDA reconciliation to separately label and quantify each adjustment from GAAP net income to Adjusted EBITDA. We note that the reconciliation in Amendment No. 1 includes the following adjustment categories, but that certain of these categories appear to be insufficiently disaggregated:

• Interest expense;

• Income tax provision (benefit);

• Depreciation and amortization;

• Stock-based compensation expense;

• Transaction-related costs;

• Loss on debt extinguishment (if applicable); and

• Non-cash items related to tax-equity partnerships (including HLBV-related adjustments).

In particular, we note that the reconciliation includes an adjustment labeled "Other non-cash items" in the amount of $27.4 million for fiscal year 2021. This amount appears material, representing approximately 12.5% of Adjusted EBITDA for that period. Please disaggregate this line item and separately describe each component, including the nature of the non-cash item, the reason for the adjustment, and why management believes the exclusion of each component is appropriate and useful to investors. To the extent that any component of "Other non-cash items" relates to HLBV adjustments within the Solaris West tax-equity partnership or other tax-equity structures, please disclose that fact and explain how the HLBV-related adjustment is calculated.

We remind the Company of the requirements under Item 10(e) of Regulation S-K and the Commission's Compliance & Disclosure Interpretation ("C&DI") 100.01 regarding non-GAAP financial measures. Among other things, a registrant presenting a non-GAAP financial measure must provide a reconciliation to the most directly comparable GAAP measure, must not present the non-GAAP measure with greater prominence than the GAAP measure, and must disclose the reasons why management believes the non-GAAP measure provides useful information to investors.

Please also confirm that the Adjusted EBITDA reconciliation for each period presented — fiscal year 2019 ($138.7 million), fiscal year 2020 ($179.2 million), fiscal year 2021 ($218.6 million), and the first quarter of 2022 ($59.8 million) — will be updated and presented on a consistent basis in any amended filing. To the extent that the composition or definition of Adjusted EBITDA has changed between any of the periods presented, please disclose that fact and present the reconciliation on a basis that permits period-to-period comparability.

Prospectus Summary — Summary Financial Data

Comment 5

5. Related to Comment 4 above, we note that the Prospectus Summary presents Adjusted EBITDA figures prominently, including in tabular format, in the "Summary Financial Data" section of the Prospectus Summary. We note that Adjusted EBITDA is presented before GAAP net income in the table, and that the Adjusted EBITDA figures are presented in bold typeface while the GAAP net income figures are not.

Please revise the Prospectus Summary to present GAAP net income (loss) with equal or greater prominence than Adjusted EBITDA, consistent with Item 10(e) of Regulation S-K and C&DI 100.01. This includes, at a minimum, presenting the GAAP net income (loss) figure before the Adjusted EBITDA figure in the "Summary Financial Data" table and giving the GAAP measure formatting (e.g., typeface, type size, and placement) that is at least as prominent as that given to the non-GAAP measure.

In addition, please include a reconciliation table in the Prospectus Summary itself, or, alternatively, include a clear and prominent cross-reference to the full Adjusted EBITDA reconciliation in the MD&A section, so that an investor reviewing the Prospectus Summary can readily identify the most directly comparable GAAP measure and the nature and amount of each adjustment made in arriving at Adjusted EBITDA. If the Company elects to include a cross-reference rather than the full reconciliation, the cross-reference should identify the specific page number of the MD&A section where the reconciliation appears.

Underwriting Section; Shares Eligible for Future Sale

Comment 6

6. We note the disclosure in the "Underwriting" section and the "Shares Eligible for Future Sale" section of Amendment No. 1 regarding the lock-up provisions applicable to the Company's officers, directors, and certain stockholders. The lock-up agreements provide for a 180-day lock-up period following the date of the final prospectus, subject to certain carve-outs. Based on our review of the disclosure, the carve-outs include, among others: (i) transfers to affiliates; (ii) estate-planning transfers; (iii) adoption (but not execution) of Rule 10b5-1 trading plans during the lock-up period; and (iv) pledges of shares to lenders.

Please revise your disclosure to address each of the following:

• Describe each carve-out from the lock-up restrictions with specificity, including the conditions or limitations applicable to the exercise of each carve-out. For example, with respect to the estate-planning transfer carve-out, disclose whether such transfers are limited to transfers to trusts for the benefit of the lock-up party or the lock-up party's immediate family members, and disclose any notice requirements that must be satisfied prior to or following the transfer. With respect to the pledge carve-out, disclose whether there are any limitations on the identity of the lender or the circumstances under which the pledgee may foreclose on or otherwise dispose of the pledged shares during the lock-up period.

• Clarify whether shares transferred to affiliates under the affiliate-transfer carve-out remain subject to the lock-up restrictions in the hands of the transferee for the remainder of the 180-day lock-up period. If the transferee is not bound by the lock-up restrictions, disclose that fact and explain how the affiliate-transfer carve-out operates in practice, including whether the transferred shares could be resold by the transferee during the lock-up period.

• Identify Hargrove Keating & Co., as lead-left book-running manager and representative of the underwriters, as the party with authority to grant early release from the lock-up, and disclose the standards, criteria, or conditions (if any) governing the exercise of that authority. If Hargrove Keating & Co. has sole discretion to grant early releases without the consent of the Company or other underwriters, disclose that fact. If there are no stated criteria or limitations on that discretion, disclose that fact as well.

• Disclose the "Change of Control" trigger for automatic release from the lock-up restrictions and provide the definition of "Change of Control" as used in the lock-up agreements, or include a cross-reference to the specific location in the registration statement or the lock-up agreement (filed as an exhibit) where the definition can be found. To the extent that the definition of "Change of Control" differs from the definition used elsewhere in the registration statement (for example, in the description of the Company's credit agreements or equity incentive plans), please note the difference.

We note that approximately 18 persons or entities are subject to the lock-up agreements, including all directors and executive officers of the Company and Pinnacle Vista Capital Partners III, LP. We further note that Pinnacle Vista Capital Partners III, LP holds approximately 62% of the Company's pre-IPO outstanding shares, or approximately 62,000,000 shares. Given the significance of these holdings and their potential effect on the trading market for the Company's common stock following the expiration or early release of the lock-up, we believe the disclosure described above is important to investors.

Underwriting Section — Issuer Lock-Up

Comment 7

7. Related to Comment 6 above, we note the issuer lock-up provision described in the "Underwriting" section of Amendment No. 1. The issuer lock-up restricts Calloway-Briggs Renewables Inc. from issuing, selling, or registering additional shares of its common stock for 180 days following the date of the final prospectus, subject to customary exceptions, including exceptions for issuances under employee equity plans and issuances in connection with acquisitions.

Please revise your disclosure to address each of the following:

• Quantify the maximum number of shares of common stock that could be issued during the 180-day lock-up period under the employee equity plan exception. We note that the Company has reserved 12,727,273 shares of common stock for issuance under the 2022 Omnibus Equity Incentive Plan, representing approximately 10% of post-IPO outstanding shares on a fully-exercised basis (based on 127,272,727 fully-exercised shares outstanding). We further note that the Company has reserved 2,545,455 shares of common stock for issuance under the 2022 Employee Stock Purchase Plan, representing approximately 2% of post-IPO outstanding shares on a fully-exercised basis. Please disclose the aggregate maximum number of shares issuable under these plans during the lock-up period and, to the extent that the Company expects to grant or sell a lesser number of shares during the lock-up period, disclose any limitations, caps, or vesting schedules that would limit the actual number of shares issued during the lock-up period.

• Clarify whether shares of common stock issued under the 2022 Omnibus Equity Incentive Plan or the 2022 Employee Stock Purchase Plan during the lock-up period are themselves subject to any transfer restrictions, holding-period requirements, or other limitations on resale beyond those set forth in the applicable plan terms. For example, if recipients of equity awards are required to agree to lock-up restrictions as a condition of the grant, or if awards are subject to vesting conditions that would prevent resale during the lock-up period, please disclose those facts.

• Describe the acquisition exception to the issuer lock-up with greater specificity. Disclose any limitations on the aggregate number or dollar value of shares of common stock that may be issued by the Company in connection with acquisitions during the 180-day lock-up period. If there are no such limitations, disclose that fact. In addition, disclose whether shares issued in connection with acquisitions during the lock-up period are subject to any lock-up or transfer restrictions in the hands of the recipients, and, if so, describe such restrictions.

•

Please respond to this letter within ten business days or tell us when you will provide your response. If you anticipate that the response will require additional time, please contact the undersigned to discuss a mutually agreeable timeline for the response.

Please file a revised draft registration statement (Amendment No. 2) reflecting any revisions to your disclosure that are responsive to the Staff's comments set forth in this letter. We may have additional comments upon review of your response and any amended filing.

You may contact David Kwan, Staff Attorney, Office of Energy & Transportation, at (202) 551-3489 with questions regarding legal comments, or Patricia Reyes, Accounting Branch Chief, Office of Energy & Transportation, at (202) 551-3611 with questions regarding accounting comments. In all correspondence, please refer to the Company's CIK No. 0001948372.

Sincerely,

/s/ David Kwan

David Kwan Staff Attorney Office of Energy & Transportation Division of Corporation Finance United States Securities and Exchange Commission

Reviewing Supervisor:

/s/ Patricia Reyes

Patricia Reyes Accounting Branch Chief Office of Energy & Transportation Division of Corporation Finance United States Securities and Exchange Commission

cc: Calderwood & Harkness LLP (via e-mail)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION DIVISION OF CORPORATION FINANCE OFFICE OF ENERGY & TRANSPORTATION 100 F Street, N.E. Washington, D.C. 20549
June 3, 2022
Via EDGAR
Sandra Haverford General Counsel & Corporate Secretary Calloway-Briggs Renewables Inc. 4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746
Re: Calloway-Briggs Renewables Inc. Draft Registration Statement on Form S-1 Submitted April 11, 2022 Amendment No. 1 filed May 20, 2022 CIK No. 0001948372 EDGAR Accession No. 0001948372-22-000002
Dear Ms. Haverford:
We have reviewed your amended draft registration statement filed May 20, 2022 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.
We note that the Company has submitted its draft registration statement on a confidential basis pursuant to the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). The draft registration statement has not been publicly filed with the Commission. Our comments are based on your Amendment No. 1 to the Draft Registration Statement on Form S-1, filed with the Commission via EDGAR on May 20, 2022, bearing Accession No. 0001948372-22-000002.
Please respond to each comment below. Where applicable, please revise your disclosure in an amended draft registration statement. If you do not believe a comment is applicable or do not believe a revision is warranted, please explain the basis for your position in your response letter. In addition to revising the filing, we may ask you to provide supplemental information so that we may better understand your disclosure.
We remind you that the Company and its management are responsible for the adequacy and accuracy of the disclosure in the filing, notwithstanding any review, comments, action, or absence of action by the Staff of the Commission or the Division of Corporation Finance.
This letter contains seven comments, numbered sequentially as Comments 1 through 7. These comments follow our initial comment letter, which contained eighteen comments and to which the Company responded in its Amendment No. 1 filing.
Management's Discussion and Analysis — Critical Accounting Policies — Tax-Equity Partnerships
Comment 1
1. We note the Company's revisions to the disclosure of its Hypothetical-Liquidation-at-Book-Value ("HLBV") methodology in the Critical Accounting Policies section of Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), as set forth at pages 72 through 75 of Amendment No. 1. While we acknowledge that the Company provided additional disclosure in response to our first-round comments regarding HLBV accounting for the Solaris West tax-equity partnership, we believe additional clarification is needed in several respects.
Please revise your disclosure to explain in greater detail how the HLBV method allocates income and loss between Calloway-Briggs Renewables Inc. ("CBR" or the "Company") and its tax-equity investor, Veltara Basin Financial LLC, within the Solaris West tax-equity partnership. We note that the Solaris West partnership involves an aggregate tax-equity investment of $280,000,000, with an expected partnership-flip event in 2028. The current disclosure describes the HLBV method in general terms but does not provide investors with sufficient information to understand how the specific economics of the Solaris West partnership are reflected in the Company's financial statements.
Specifically, please revise your disclosure to address each of the following:
• Describe the specific inputs to the HLBV calculation as applied to the Solaris West partnership, including how the hypothetical liquidation waterfall is constructed, the order and priority of distributions assumed in the hypothetical liquidation, and how investment tax credits ("ITCs") and accelerated depreciation benefits (including benefits claimed under the Modified Accelerated Cost Recovery System) are reflected in the hypothetical liquidation proceeds allocated to each partner.
• Quantify the cumulative amount of income (loss) allocated to the tax-equity investor (Veltara Basin Financial LLC) and to the sponsor (CBR) under the HLBV method for each of fiscal year 2020 and fiscal year 2021. In addition, disclose whether the income (loss) allocation under the HLBV method would differ materially from the allocation that would result under an alternative methodology, such as a percentage-of-completion or pro-rata allocation approach, and, if so, quantify the difference for each period presented.
• Explain how the expected partnership-flip event in 2028 will affect the allocation of income and loss between the partners going forward, including the accounting treatment the Company expects to apply upon the occurrence of the flip (for example, whether CBR will consolidate the partnership upon acquiring the tax-equity investor's residual interest and, if so, under what guidance). Please also disclose any material changes in the HLBV waterfall that will occur at the time of the flip and how such changes will be reflected in the Company's financial statements.
We direct your attention to the guidance in ASC 810, Consolidation, ASC 323, Investments — Equity Method and Joint Ventures, and the Staff's views regarding HLBV accounting for tax-equity structures in the renewable energy industry as described in remarks at the AICPA National Conference on Current SEC and PCAOB Developments. Your revised disclosure should be sufficiently detailed to allow an investor to understand the mechanics and financial-statement impact of the HLBV methodology as applied to the Company's most significant tax-equity partnership.
Management's Discussion and Analysis — Critical Accounting Policies — Tax-Equity Partnerships
Comment 2
2. In connection with Comment 1 above, and with reference to pages 72 through 75 of Amendment No. 1, we request that the Company provide additional disclosure regarding the key judgments and estimates inherent in the application of the HLBV methodology to the Solaris West tax-equity partnership.
Specifically, please revise your disclosure to address each of the following:
• Disclose the Company's assumptions regarding the timing of investment tax credit ("ITC") recapture risk and explain how that assumption affects the hypothetical liquidation waterfall and the resulting allocation of income and loss between CBR and Veltara Basin Financial LLC. For example, if the Company assumes that ITC recapture risk diminishes or is extinguished at the end of the five-year recapture period under Section 50 of the Internal Revenue Code, please explain how that assumption affects the amounts allocated to the tax-equity investor in each period. If the assumption were to change — for example, if recapture risk were assumed to extend beyond the statutory five-year period due to contractual indemnification obligations — please disclose the effect such a change would have on the allocation.
• Describe the sensitivity of the income (loss) allocation under the HLBV method to changes in projected taxable income of the partnership, including changes resulting from variations in energy production, curtailment, or changes in market prices for electricity. Disclose whether and to what extent changes in projected taxable income could result in material changes to the amount of income or loss allocated to CBR and, correspondingly, to the Company's reported earnings. Where appropriate, consider providing a quantitative sensitivity analysis or a range of reasonably possible outcomes, particularly to the extent that the income (loss) allocation under the HLBV method is materially sensitive to changes in one or more key assumptions.
We note that this disclosure is important in light of the magnitude of the Solaris West tax-equity investment ($280,000,000), the extended period before the expected partnership-flip event (2028), and the significance of the HLBV method to the Company's consolidated results of operations. We further note that the HLBV methodology was the subject of extensive discussion in our first-round Comment Letter and that several of our prior comments (specifically, Comments 3, 4, and 5 of our letter dated May 2, 2022) addressed this topic. While we acknowledge the Company's revisions in Amendment No. 1, we believe that the additional disclosure requested in this comment and Comment 1 above is necessary for investors to assess the reliability and sensitivity of the Company's application of the HLBV method.
Management's Discussion and Analysis — Revenue Recognition; Business Section — Project Portfolio
Comment 3
3. We acknowledge the Company's revisions to its revenue recognition disclosure in Amendment No. 1, including the additional information provided in the Business section regarding the Company's project portfolio. However, we request further detail regarding revenue derived from power purchase agreements ("PPAs").
We note that the Company's 22 operating projects, with a combined generating capacity of approximately 3.8 GW, are described in relatively general terms in the Business section of Amendment No. 1, and that the revenue recognition disclosure in MD&A does not provide sufficient detail for investors to understand the proportion of the Company's revenue that is contracted under long-term PPAs versus the proportion that is exposed to merchant or spot-market pricing. Accordingly, please revise your disclosure to address each of the following:
• For each material PPA or, if appropriate, for each group of PPAs with substantially similar economic terms, disclose the contracted capacity (in MW), the pricing structure (e.g., fixed price per MWh, fixed price with annual escalation, merchant or spot-market exposure, hybrid or collar structure, or other pricing mechanism), the remaining contract term, and whether the PPA includes renewal or extension options held by either party. If the Company believes that disclosure of individual PPA pricing terms would be competitively harmful, please provide this information on a supplemental basis and explain the basis for omitting such information from the registration statement, citing any applicable confidential treatment request or the basis for your position under Item 601(b)(10) of Regulation S-K.
• Disclose the percentage of total fiscal year 2021 revenue ($487.3 million) attributable to contracted PPA revenue versus merchant or spot-market revenue. To the extent that any portion of contracted PPA revenue includes a merchant or market-based component (for example, revenue above a contracted floor price), please describe how such amounts are classified.
• Disclose whether any single PPA or offtaker accounted for 10% or more of the Company's consolidated revenue in fiscal year 2021 or in any other period presented. If so, please identify the customer or, if the Company believes that identification would be competitively harmful, provide the basis for omitting the customer's identity and confirm that the concentration disclosure required by ASC 280, Segment Reporting, and Item 101(c)(1)(vii) of Regulation S-K has been provided. We also note that, to the extent the loss of a material offtaker would have a material adverse effect on the Company, appropriate risk-factor disclosure may be warranted.
Your revised disclosure should be sufficiently detailed to permit an investor to evaluate the predictability and stability of the Company's revenue streams and to understand the degree of market-price exposure inherent in the Company's project portfolio.
Prospectus Summary — Summary Financial Data; Management's Discussion and Analysis — Non-GAAP Financial Measures
Comment 4
4. We note that the Company presents Adjusted EBITDA as a key performance measure in both the Prospectus Summary and the MD&A section. For fiscal year 2021, the Company reports Adjusted EBITDA of $218.6 million, as compared to GAAP net income of $41.7 million, and provides a reconciliation of Adjusted EBITDA to GAAP net income in Amendment No. 1. We have the following comments regarding the reconciliation and presentation of this non-GAAP financial measure.
Please revise the Adjusted EBITDA reconciliation to separately label and quantify each adjustment from GAAP net income to Adjusted EBITDA. We note that the reconciliation in Amendment No. 1 includes the following adjustment categories, but that certain of these categories appear to be insufficiently disaggregated:
• Interest expense;
• Income tax provision (benefit);
• Depreciation and amortization;
• Stock-based compensation expense;
• Transaction-related costs;
• Loss on debt extinguishment (if applicable); and
• Non-cash items related to tax-equity partnerships (including HLBV-related adjustments).
In particular, we note that the reconciliation includes an adjustment labeled "Other non-cash items" in the amount of $27.4 million for fiscal year 2021. This amount appears material, representing approximately 12.5% of Adjusted EBITDA for that period. Please disaggregate this line item and separately describe each component, including the nature of the non-cash item, the reason for the adjustment, and why management believes the exclusion of each component is appropriate and useful to investors. To the extent that any component of "Other non-cash items" relates to HLBV adjustments within the Solaris West tax-equity partnership or other tax-equity structures, please disclose that fact and explain how the HLBV-related adjustment is calculated.
We remind the Company of the requirements under Item 10(e) of Regulation S-K and the Commission's Compliance & Disclosure Interpretation ("C&DI") 100.01 regarding non-GAAP financial measures. Among other things, a registrant presenting a non-GAAP financial measure must provide a reconciliation to the most directly comparable GAAP measure, must not present the non-GAAP measure with greater prominence than the GAAP measure, and must disclose the reasons why management believes the non-GAAP measure provides useful information to investors.
Please also confirm that the Adjusted EBITDA reconciliation for each period presented — fiscal year 2019 ($138.7 million), fiscal year 2020 ($179.2 million), fiscal year 2021 ($218.6 million), and the first quarter of 2022 ($59.8 million) — will be updated and presented on a consistent basis in any amended filing. To the extent that the composition or definition of Adjusted EBITDA has changed between any of the periods presented, please disclose that fact and present the reconciliation on a basis that permits period-to-period comparability.
Prospectus Summary — Summary Financial Data
Comment 5
5. Related to Comment 4 above, we note that the Prospectus Summary presents Adjusted EBITDA figures prominently, including in tabular format, in the "Summary Financial Data" section of the Prospectus Summary. We note that Adjusted EBITDA is presented before GAAP net income in the table, and that the Adjusted EBITDA figures are presented in bold typeface while the GAAP net income figures are not.
Please revise the Prospectus Summary to present GAAP net income (loss) with equal or greater prominence than Adjusted EBITDA, consistent with Item 10(e) of Regulation S-K and C&DI 100.01. This includes, at a minimum, presenting the GAAP net income (loss) figure before the Adjusted EBITDA figure in the "Summary Financial Data" table and giving the GAAP measure formatting (e.g., typeface, type size, and placement) that is at least as prominent as that given to the non-GAAP measure.
In addition, please include a reconciliation table in the Prospectus Summary itself, or, alternatively, include a clear and prominent cross-reference to the full Adjusted EBITDA reconciliation in the MD&A section, so that an investor reviewing the Prospectus Summary can readily identify the most directly comparable GAAP measure and the nature and amount of each adjustment made in arriving at Adjusted EBITDA. If the Company elects to include a cross-reference rather than the full reconciliation, the cross-reference should identify the specific page number of the MD&A section where the reconciliation appears.
Underwriting Section; Shares Eligible for Future Sale
Comment 6
6. We note the disclosure in the "Underwriting" section and the "Shares Eligible for Future Sale" section of Amendment No. 1 regarding the lock-up provisions applicable to the Company's officers, directors, and certain stockholders. The lock-up agreements provide for a 180-day lock-up period following the date of the final prospectus, subject to certain carve-outs. Based on our review of the disclosure, the carve-outs include, among others: (i) transfers to affiliates; (ii) estate-planning transfers; (iii) adoption (but not execution) of Rule 10b5-1 trading plans during the lock-up period; and (iv) pledges of shares to lenders.
Please revise your disclosure to address each of the following:
• Describe each carve-out from the lock-up restrictions with specificity, including the conditions or limitations applicable to the exercise of each carve-out. For example, with respect to the estate-planning transfer carve-out, disclose whether such transfers are limited to transfers to trusts for the benefit of the lock-up party or the lock-up party's immediate family members, and disclose any notice requirements that must be satisfied prior to or following the transfer. With respect to the pledge carve-out, disclose whether there are any limitations on the identity of the lender or the circumstances under which the pledgee may foreclose on or otherwise dispose of the pledged shares during the lock-up period.
• Clarify whether shares transferred to affiliates under the affiliate-transfer carve-out remain subject to the lock-up restrictions in the hands of the transferee for the remainder of the 180-day lock-up period. If the transferee is not bound by the lock-up restrictions, disclose that fact and explain how the affiliate-transfer carve-out operates in practice, including whether the transferred shares could be resold by the transferee during the lock-up period.
• Identify Hargrove Keating & Co., as lead-left book-running manager and representative of the underwriters, as the party with authority to grant early release from the lock-up, and disclose the standards, criteria, or conditions (if any) governing the exercise of that authority. If Hargrove Keating & Co. has sole discretion to grant early releases without the consent of the Company or other underwriters, disclose that fact. If there are no stated criteria or limitations on that discretion, disclose that fact as well.
• Disclose the "Change of Control" trigger for automatic release from the lock-up restrictions and provide the definition of "Change of Control" as used in the lock-up agreements, or include a cross-reference to the specific location in the registration statement or the lock-up agreement (filed as an exhibit) where the definition can be found. To the extent that the definition of "Change of Control" differs from the definition used elsewhere in the registration statement (for example, in the description of the Company's credit agreements or equity incentive plans), please note the difference.
We note that approximately 18 persons or entities are subject to the lock-up agreements, including all directors and executive officers of the Company and Pinnacle Vista Capital Partners III, LP. We further note that Pinnacle Vista Capital Partners III, LP holds approximately 62% of the Company's pre-IPO outstanding shares, or approximately 62,000,000 shares. Given the significance of these holdings and their potential effect on the trading market for the Company's common stock following the expiration or early release of the lock-up, we believe the disclosure described above is important to investors.
Underwriting Section — Issuer Lock-Up
Comment 7
7. Related to Comment 6 above, we note the issuer lock-up provision described in the "Underwriting" section of Amendment No. 1. The issuer lock-up restricts Calloway-Briggs Renewables Inc. from issuing, selling, or registering additional shares of its common stock for 180 days following the date of the final prospectus, subject to customary exceptions, including exceptions for issuances under employee equity plans and issuances in connection with acquisitions.
Please revise your disclosure to address each of the following:
• Quantify the maximum number of shares of common stock that could be issued during the 180-day lock-up period under the employee equity plan exception. We note that the Company has reserved 12,727,273 shares of common stock for issuance under the 2022 Omnibus Equity Incentive Plan, representing approximately 10% of post-IPO outstanding shares on a fully-exercised basis (based on 127,272,727 fully-exercised shares outstanding). We further note that the Company has reserved 2,545,455 shares of common stock for issuance under the 2022 Employee Stock Purchase Plan, representing approximately 2% of post-IPO outstanding shares on a fully-exercised basis. Please disclose the aggregate maximum number of shares issuable under these plans during the lock-up period and, to the extent that the Company expects to grant or sell a lesser number of shares during the lock-up period, disclose any limitations, caps, or vesting schedules that would limit the actual number of shares issued during the lock-up period.
• Clarify whether shares of common stock issued under the 2022 Omnibus Equity Incentive Plan or the 2022 Employee Stock Purchase Plan during the lock-up period are themselves subject to any transfer restrictions, holding-period requirements, or other limitations on resale beyond those set forth in the applicable plan terms. For example, if recipients of equity awards are required to agree to lock-up restrictions as a condition of the grant, or if awards are subject to vesting conditions that would prevent resale during the lock-up period, please disclose those facts.
• Describe the acquisition exception to the issuer lock-up with greater specificity. Disclose any limitations on the aggregate number or dollar value of shares of common stock that may be issued by the Company in connection with acquisitions during the 180-day lock-up period. If there are no such limitations, disclose that fact. In addition, disclose whether shares issued in connection with acquisitions during the lock-up period are subject to any lock-up or transfer restrictions in the hands of the recipients, and, if so, describe such restrictions.
•
Please respond to this letter within ten business days or tell us when you will provide your response. If you anticipate that the response will require additional time, please contact the undersigned to discuss a mutually agreeable timeline for the response.
Please file a revised draft registration statement (Amendment No. 2) reflecting any revisions to your disclosure that are responsive to the Staff's comments set forth in this letter. We may have additional comments upon review of your response and any amended filing.
You may contact David Kwan, Staff Attorney, Office of Energy & Transportation, at (202) 551-3489 with questions regarding legal comments, or Patricia Reyes, Accounting Branch Chief, Office of Energy & Transportation, at (202) 551-3611 with questions regarding accounting comments. In all correspondence, please refer to the Company's CIK No. 0001948372.
Sincerely,
/s/ David Kwan
David Kwan Staff Attorney Office of Energy & Transportation Division of Corporation Finance United States Securities and Exchange Commission
Reviewing Supervisor:
/s/ Patricia Reyes
Patricia Reyes Accounting Branch Chief Office of Energy & Transportation Division of Corporation Finance United States Securities and Exchange Commission
cc: Calderwood & Harkness LLP (via e-mail)

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