Front Yard Residential Corporation (“Front Yard” or the “Company”)
(NYSE: RESI), an industry leading provider of high-quality and
affordable rental homes, announced today that it has amended its
definitive merger agreement with a partnership led by Pretium and
including funds managed by the Real Estate Equity and Alternative
Credit strategies of Ares Management Corporation (NYSE: ARES)
(together, the “Pretium Partnership”) to increase the consideration
payable to holders of outstanding shares of Front Yard stock to
$16.25 per share in cash from $13.50 per share in cash, which
values the Company at approximately $2.5 billion, including debt to
be assumed or refinanced. The revised transaction price represents
a 63% premium over Front Yard’s closing share price on October 16,
2020, the last trading day prior to the date on which the Company
entered into the merger agreement.
Front Yard and the Pretium Partnership negotiated the amendment
following the receipt by Front Yard of an unsolicited binding
proposal (the “Proposal”) from an unaffiliated third party to
acquire all outstanding shares of Front Yard common stock. The
board of directors (the “Board”) of Front Yard, in consultation
with its legal and financial advisors, carefully considered the
terms of the Proposal and the amended Pretium Partnership
transaction and determined that entering into the amendment to the
Pretium Partnership merger agreement was in the best interests of
Front Yard and its stockholders. Front Yard’s Board approved the
amended merger agreement and recommends that Front Yard’s
stockholders vote in favor of the amended Pretium Partnership
merger agreement.
“We are confident in the strategic and financial rationale of
this transaction, and continue to believe it is the best way to
maximize immediate cash value for our stockholders,” said George
Ellison, Chief Executive Officer of Front Yard.
“After receiving a binding proposal reflecting a higher purchase
price for Front Yard, Front Yard advised the Pretium Partnership of
the proposal as required by the terms of the merger agreement,
which led to the Pretium Partnership increasing the price of our
transaction with them,” said Rochelle R. Dobbs, Front Yard’s Chair
of the Board. “Following these discussions, our Board approved the
amendment to the merger agreement. We believe the amended merger
agreement is a result of a well-run sales process that allows our
stockholders to realize higher value for their shares.”
“We believe in this Company and the Front Yard team and remain
committed to completing this transaction,” said Don Mullen,
Pretium’s Chairman and Chief Executive Officer.
Front Yard will file a current report on Form 8-K with the U.S.
Securities and Exchange Commission containing a summary of the
terms and conditions of the amendment to the definitive merger
agreement.
The transaction is expected to close in the first quarter of
2021, subject to the approval of the holders of a majority of Front
Yard’s outstanding shares and the satisfaction of customary closing
conditions.
Advisors
Deutsche Bank Securities Inc. is serving as financial advisor to
Front Yard and Weil, Gotshal & Manges LLP is serving as Front
Yard’s legal counsel.
RBC Capital Markets, LLC is serving as financial advisor to
Pretium. BofA Securities is serving as financial advisor to Ares.
Sidley Austin is serving as M&A legal counsel, Fried Frank as
partnership legal counsel, and Hunton Andrews Kurth as special tax
and financing counsel to Pretium. Latham & Watkins is serving
as legal counsel to Ares.
About Front Yard
Front Yard is an industry leader in providing quality,
affordable rental homes to America’s families. Our homes offer
exceptional value in a variety of suburban communities that have
easy accessibility to metropolitan areas. Front Yard's tenants
enjoy the space and comfort that is unique to single-family
housing, at reasonable prices. Our mission is to provide our
tenants with houses they are proud to call home. Additional
information is available at www.frontyardresidential.com.
About Pretium
Pretium is a specialized alternative investment management firm
focused on residential real estate, mortgage finance, and corporate
credit. Pretium was founded in 2012 to capitalize on secular
investment and lending opportunities arising as a result of
structural changes, disruptions, and inefficiencies within the
economy, the residential housing sector, and mortgage finance
markets. Pretium has built an integrated analytical and operational
ecosystem within the U.S. residential housing, mortgage, and
corporate credit markets, and believes that its insight and
experience within these markets create a strategic advantage over
other investment managers. Pretium’s platform has more than $16
billion of assets under management as of October 1, 2020 and
employs approximately 1,500 employees across 26 offices. Please
visit www.pretium.com for additional information.
About Ares Management
Corporation
Ares Management Corporation (NYSE: ARES) is a leading global
alternative investment manager operating integrated groups across
Credit, Private Equity, Real Estate and Strategic Initiatives. Ares
Management’s investment groups collaborate to deliver innovative
investment solutions and consistent and attractive investment
returns for fund investors throughout market cycles. Ares
Management's global platform had approximately $179 billion of
assets under management as of September 30, 2020 with more than
1,400 employees operating across North America, Europe and Asia
Pacific. For more information, please visit:
www.aresmgmt.com.
About Ares Real Estate Group
The Ares Real Estate Group manages comprehensive public and
private, equity and debt strategies with approximately $14.4
billion of assets under management and approximately 80 investment
professionals, as of September 30, 2020. The real estate team
maintains a time-tested and consistent investment approach across
equity and debt strategies focusing on major property types that
have value creation opportunities, located in liquid markets with
diversified economies.
About Ares Alternative Credit
Ares’ Alternative Credit strategy focuses on direct lending and
investing in assets that generate contractual cash flows and fills
gaps in the capital markets between credit, private equity and real
estate. Ares Alternative Credit targets investments across the
capital structure in specialty finance, lender finance, loan
portfolios, equipment leasing, structured products, net lease, cash
flow streams (royalties, licensing, management fees), fund
secondaries and other asset-focused investments. Co-Headed by Keith
Ashton and Joel Holsinger, Ares Alternative Credit leverages a
broadly skilled and cohesive team of approximately 40 investment
professionals as of September 30, 2020.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of
1934, as amended, regarding management’s beliefs, estimates,
projections, anticipations and assumptions with respect to, among
other things, the Company’s financial results, future operations,
business plans and investment strategies as well as industry and
market conditions. These statements may be identified by words such
as “anticipate,” “intend,” “expect,” “may,” “could,” “should,”
“would,” “plan,” “estimate,” “target,” “seek,” “believe” and other
expressions or words of similar meaning. We caution that
forward-looking statements are qualified by the existence of
certain risks and uncertainties that could cause actual results and
events to differ materially from what is contemplated by the
forward-looking statements. These risks and uncertainties include:
the occurrence of any event, change or other circumstances that
could give rise to the termination of the merger agreement; the
inability to complete the proposed merger due to the failure to
obtain stockholder approval for the proposed merger or the failure
to satisfy other conditions to completion of the proposed merger;
risks related to disruption of management’s attention from the
Company’s ongoing business operations due to the transaction; the
effect of the announcement of the proposed merger on the Company’s
relationships with its customers, operating results and business
generally; the risk that the proposed merger will not be
consummated in a timely manner; exceeding the expected costs of the
merger; our ability to successfully complete the transition plan
contemplated in connection with the termination of our Asset
Management Agreement with Altisource Asset Management Corporation
(“AAMC”), our external asset manager, pursuant to the Termination
and Transition Agreement dated August 13, 2020; our ability to
successfully internalize our asset management function; our ability
to successfully implement our strategic initiatives and achieve
their anticipated impact; our ability to implement our business
strategy; risks and uncertainties related to the COVID-19 pandemic,
including the potential adverse impact on our real-estate related
assets, financing arrangements, operations, business prospects,
customers, employees and third-party service providers; the effect
of management’s attention being diverted from our ongoing business
operations and costs associated with shareholder activism; the
impact of defending any litigation; our ability to make
distributions to stockholders; our ability to integrate newly
acquired rental assets into the portfolio; the ability to
successfully perform property management services at the level
and/or the cost that we anticipate; the failure to identify
unforeseen expenses or material liabilities associated with
acquisitions through the due diligence process prior to such
acquisitions; difficulties in identifying single-family properties
to acquire; the impact of changes to the supply of, value of and
the returns on single-family rental properties; our ability to
acquire single-family rental properties generating attractive
returns; our ability to sell non-core assets on favorable terms or
at all; our ability to predict costs; our ability to effectively
compete with competitors; changes in interest rates; changes in the
market value of single-family properties; our ability to obtain and
access financing arrangements on favorable terms or at all; our
ability to deploy the net proceeds from financings or asset sales
to acquire assets in a timely manner or at all; our ability to
maintain adequate liquidity and meet the requirements under its
financing arrangements; risks related to our engagement of AAMC as
our asset manager; the failure of our third party vendors to
effectively perform their obligations under their respective
agreements with us; our failure to qualify or maintain
qualification as a REIT; our failure to maintain our exemption from
registration under the Investment Company Act of 1940, as amended;
the results of our strategic alternatives review and risks related
thereto; the impact of adverse real estate, mortgage or housing
markets; the impact of adverse legislative, regulatory or tax
changes and other risks and uncertainties detailed in the “Risk
Factors” and other sections described from time to time in the
Company's current and future filings with the Securities and
Exchange Commission (“SEC”). In addition, financial risks such as
liquidity, interest rate and credit risks could influence future
results. The foregoing list of factors should not be construed as
exhaustive.
Forward-looking statements speak only as of the date hereof and,
except as required by law, we undertake no obligation to update or
revise these forward-looking statements. For additional information
regarding these and other risks faced by us, refer to our public
filings with the SEC, available on the Investors section of our
website at www.frontyardresidential.com and on the SEC’s website
at www.sec.gov.
Additional Information and Where to Find It
This release may be deemed solicitation material in respect of
the proposed acquisition of the Company by Pretium. In connection
with the proposed merger, the Company will file with the SEC and
furnish to the Company’s stockholders a proxy statement and other
relevant documents. This release does not constitute a solicitation
of any vote or approval. Stockholders are urged to read the proxy
statement when it becomes available and any other documents to be
filed with the SEC in connection with the proposed merger or
incorporated by reference in the proxy statement because they will
contain important information about the proposed merger.
Investors will be able to obtain free of charge the proxy
statement and other documents filed with the SEC at the SEC’s
website at www.sec.gov. In addition, the proxy statement and our
annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and amendments to those reports filed
or furnished pursuant to section 13(a) or 15(d) of the Securities
Exchange Act of 1934 are or will be available free of charge
through our website at www.frontyardresidential.com as soon as
reasonably practicable after they are electronically filed with, or
furnished to, the SEC.
The directors, executive officers and certain other members of
management and employees of the Company may be deemed
“participants” in the solicitation of proxies from stockholders of
the Company in favor of the proposed merger. Information regarding
the persons who may, under the rules of the SEC, be considered
participants in the solicitation of the stockholders of the Company
in connection with the proposed merger will be set forth in the
proxy statement and the other relevant documents to be filed with
the SEC. You can find information about the Company’s executive
officers and directors in the definitive proxy statement on
Schedule 14A in connection with Front Yard’s 2020 Annual Meeting of
Stockholders, filed with the SEC on May 28, 2020.
Front Yard ContactsInvestor RelationsPhone:
1-704-558-3068E-mail: IR@FYRHomes.com
Pretium Contacts
MediaProsek PartnersMike Geller, 646-818-9018 mgeller@prosek.com
Josh Clarkson, 646-818-9259jclarkson@prosek.com
InvestorsGenie Pusey, 917-942-7395gpusey@pretium.com
Ares Management Corporation Contacts
MediaMendel CommunicationsBill Mendel,
212-397-1030bill@mendelcommunications.com
InvestorsCarl Drake, 800-340-6597cdrake@aresmgmt.comPriscila
Roney, 212-808-1185proney@aresmgmt.comBrittany Cash,
212-301-0347bcash@aresmgmt.com
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