Pretium Midway Investments, LP, a fund managed by affiliates of Pretium Partners, LLC and a group of its investors and funds managed by Ares Management Corporation (NYSE:ARES) (buyers) entered into a definitive merger agreement to acquire Front Yard Residential Corporation (NYSE:RESI) from STS Master Fund, Ltd., a fund managed by Deer Park Road Management Company, LP, The Vanguard Group, Inc., BlackRock, Inc. (NYSE:BLK), Pentwater Capital Management LP and others for approximately $980 million on October 19, 2020. Under the terms of the agreement, Front Yard stockholders will receive $13.5 in cash per share. The transaction is valued at $2.4 billion, including debt to be assumed or refinanced.

As per filing on November 23, 2020 the offer per share increased from $13.5 in cash per share to $16.25 per share and accordingly Pretium Midway Investments, LP, a fund managed by affiliates of Pretium Partners, LLC and a group of its investors and funds managed by Ares Management Corporation (NYSE:ARES) will pay approximately $970 million to acquire Front Yard Residential. Upon closing, Pretium will manage Front Yard. Pretium Partners has raised approximately $400 million in commitments for the transaction. Buyers have entered into debt commitment letter. Pursuant to which Royal Bank of Canada has committed to provide debt financing. Buyers have also received equity commitment letters to fund the transaction in an aggregate amount of not less than $814.9 million. Following the completion of the merger, Front Yard will cease to be a publicly traded company and the surviving Company will become a wholly owned subsidiary of Pretium. Front Yard will be required to pay a termination fee equal to $24 million and reimburse for any and all reasonable and documented out- of- pocket fees and expenses up to a maximum amount of $8.2 million.

The Merger Agreement also provides that the buyer will be required to pay Front Yard a reverse termination fee of $24 million and reimburse Parent for any and all reasonable and documented out- of- pocket fees and expenses up to a maximum amount of $8.2 million upon the termination of the merger agreement under specified conditions. As per amended agreement, termination fee payable by the Company in connection with the termination of the Merger Agreement increased from $24 million to $40.245 million. The merger agreement also provides that the buyer will be required to pay Front Yard a reverse termination fee of $40.245 million and reimburse Pretium for any and all reasonable and documented out- of- pocket fees and expenses up to a maximum amount of $8.2 million upon the termination of the merger agreement under specified conditions. Upon closing, Front Yard team will be retained by Pretium and Ares.

The transaction is subject to the approval of the holders of a majority of Front Yard's outstanding shares and the satisfaction of customary closing conditions. The Front Yard Board of Directors has unanimously approved the merger agreement and intends to recommend that Front Yard stockholders vote in favor of it at a Special Meeting of Stockholders, to be scheduled as soon as practicable. The board of directors of Pretium also approved the transaction. As of January 6, 2021, Front Yard Residential's majority stockholders voted on and approved a proposal to approve the merger. In connection with the merger agreement, Pretium has entered into a voting and support agreement with STS Master Fund representing approximately 14.8% of the outstanding Shares pursuant to which such stockholder has agreed to vote in favor of the merger. The transaction is expected to close in the first quarter of 2021.

Deutsche Bank Securities Inc. acted as financial advisor and fairness opinion provider while Michael J. Aiello and Sachin Kohli of Weil, Gotshal & Manges LLP acted as legal advisors to Front Yard. RBC Capital Markets, LLC acted as financial advisor to Pretium. BofA Securities is serving as financial advisor to Ares. Hunton Andrews Kurth LLP and Karen A. Dewis, Elizabeth Shea Fries, Kelly M. Dybala, Kelly A. Lazaroff, Christian Brause, Benjamin A. Rosemergy, James D. Weiss, John A. Chamberlin, Ash Nagdev, Anne Sutton, Jim Ducayet, Heather Palmer, Connie M. Friesen, Barbara Broussard, Karen Kazmerzaka and J. Gerard Cummins of Sidley Austin acted as legal advisors to Pretium Partners, LLC. Lee S. Parks, Steven Rudgayzer and Libin Zhang of Fried, Frank, Harris, Shriver & Jacobson LLP acted as legal advisors to Pretium Partners in connection with raising commitments and in the formation of a joint venture with Ares Management Corporation. Hunton Andrews Kurth acted as special tax and financing counsel to Pretium. Michelle Kelban, Julian Kleindorfer, Nadia Sager, Ann Buckingham and Pardis Zomorodi of Latham & Watkins LLP acted as legal advisors to Ares Management Corporation. Andrew Bab of Debevoise & Plimpton LLP acted as a legal advisor to Deutsche Bank Securities Inc. Malcolm K. Montgomery and Michael Pettingill of Shearman & Sterling acted as legal advisors to RBC Capital Markets in providing a bridge commitment to finance the acquisition. Innisfree M&A Inc. acted as information agent to Front Yard.

As compensation for Deutsche Bank's services in connection with the Merger, Front Yard has agreed to pay to Deutsche Bank the following fees: an opinion fee of $750,000, which became payable upon Deutsche Bank's delivery of its written opinion, dated as of October 19, 2020, to Front Yard; a supplemental opinion fee of $500,000, which became payable upon Deutsche Bank's delivery of its written opinion, dated as of November 20, 2020, to Front Yard and a sale transaction fee contingent on the consummation of the Merger of (i) a fixed fee, payable at the time of Closing, equal to $10,000,000 and (ii) an additional fee of $2,000,000, payable at the sole discretion of the Board based on its assessment of Deutsche Bank's performance of its services pursuant to the engagement letter; provided that the sale transaction fee shall be reduced by (w) a strategic review fee of $500,000 which became payable and was paid in June 2020; (y) any supplemental opinion fee of $500,000, payable upon Deutsche Bank's delivery of such additional opinion in connection with the Merger; and (z) any termination amount paid to Deutsche Bank in connection with the termination of the Amherst Transaction; and provided further, that notwithstanding anything to the contrary contained herein, the sale transaction fee shall not be reduced by the amount of the $750,000 opinion fee payable in connection with the written opinion, dated as of October 19, 2020.

Pretium Midway Investments, LP, a fund managed by affiliates of Pretium Partners, LLC and a group of its investors and funds managed by Ares Management Corporation (NYSE:ARES) (buyers) completed the acquisition of Front Yard Residential Corporation (NYSE:RESI) from STS Master Fund, Ltd., a fund managed by Deer Park Road Management Company, LP, The Vanguard Group, Inc., BlackRock, Inc. (NYSE:BLK), Pentwater Capital Management LP and others on January 11, 2021. Effective as of completion of the transcation, Donald R. Mullen, Jr. became the sole director of Front Yard, while Rochelle R. Dobbs, Leland Abrams, George G. Ellison, Michael A Eruzione, Leslie Fox, Wade J. Henderson, Lazar Nikolic and George Whitfield McDowell ceased to be directors of Front Yard Residential. Also, all of the incumbent officers of Front Yard Residential, as of immediately prior to the effectiveness of the transaction, were removed as officers. In addition, the following persons were appointed as officers of Front Yard Residential, Donald R. Mullen, Jr., Jeffrey Meriggi and Jonathan Ezrow.