Item 1.01 Entry into a Material Definitive Agreement
On November 20, 2020, Front Yard Residential Corporation, a Maryland corporation
(the "Company"), Pretium Midway Holdco, LP, a Delaware limited partnership
("Parent"), and Midway AcquisitionCo REIT, a Maryland real estate investment
trust ("Merger Sub") entered into the First Amendment (the "Amendment") to that
certain Agreement and Plan of Merger, dated as of October 19, 2020 (the "Merger
Agreement," and, together with the Amendment, the "Amended Merger Agreement"),
by and among the Company, Parent and Merger Sub.
The Amended Merger Agreement increases the merger consideration payable to
holders of the Company's common stock, par value $0.01 per share (the "Company
Shares" and each, a "Company Share"). Pursuant to the Amended Merger Agreement,
holders of Company Shares will now receive, for each Company Share held, $16.25
in cash, without interest. Prior to entering into the Amended Merger Agreement,
the merger consideration payable to each holder of Company Shares for each share
held was $13.50 in cash, without interest. The Amendment also increases the
termination fee payable by the Company in connection with the termination of the
Merger Agreement under specified circumstances, including in the event the
Company's board of directors makes a Change in Recommendation (as defined in the
Merger Agreement), and the termination fee payable by Parent in connection with
the termination of the Merger Agreement under specified circumstances, from
$24 million to $40.245 million. The Amendment also removes the "burdensome
condition" limitation with respect to Parent's obligation to obtain a consent to
the transaction under the Company's credit facility with the Federal Home Loan
Mortgage Corporation and the related termination fee.
All other material terms of the Merger Agreement, which was previously filed by
the Company as Exhibit 2.1 to the Current Report on Form 8-K dated October 22,
2020, remain the same.
The foregoing description of the Amendment does not purport to be complete and
is qualified in its entirety by the terms and conditions of the Amendment and
any related agreements. The Amendment has been attached to provide investors
with information regarding its terms. It is not intended to provide any other
factual information about the Company, Parent or any other party to the
Amendment or any related agreement.
A copy of the Amendment is filed with this Current Report on Form 8-K as Exhibit
2.1 and is incorporated herein by reference, and the foregoing description of
the Amendment is qualified in its entirety by reference thereto.
Item 8.01. Other Items.
On November 23, 2020, the Company issued a press release announcing that it had
entered into the Amendment following the receipt by the Company of an
unsolicited binding proposal from an unaffiliated third party to acquire all
outstanding Company Shares. A copy of the press release is included as Exhibit
99.1 to this Current Report on Form 8-K.
Forward-Looking Statements
This Form 8-K 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
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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 our 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.
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits
2.1 First Amendment to Agreement and Plan of Merger, dated November 20, 2020,
by and among Front Yard Residential Corporation, Pretium Midway Holdco, LP
and Midway AcquisitionCo REIT
99.1 Press Release, dated November 23, 2020
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