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SUBSEQUENT EVENTS
 9 Months Ended
Sep. 30, 2023
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS SUBSEQUENT EVENTS
 
These financial statements include a discussion of material events that have occurred subsequent to September 30, 2023 through the issuance of these Consolidated Financial Statements. Events subsequent to that date have not been considered in these financial statements.

On October 2, 2023, Rithm Capital entered into a definitive agreement with Computershare Limited to acquire Computershare Mortgage Services Inc. (“Computershare”) and certain affiliated companies, including SLS, for a purchase price of approximately $720 million.

On October 12, 2023, Rithm Capital and certain of its affiliates entered into Amendment No. 1 to the Merger Agreement (the “First Amendment”) with Sculptor and certain of its affiliates. Pursuant to the First Amendment, among other things, the transaction value was updated to approximately $676 million, which included $12.00 per Class A common share of Sculptor, and increased the termination fee payable by Sculptor to Rithm in certain circumstances pursuant to the Merger Agreement (the “Company Termination Fee”) from approximately $16.6 million to approximately $20.3 million.

Also, on October 12, 2023, Rithm Capital purchased from Delaware Life Insurance Company (“DLIC”) warrants to purchase an aggregate of 4,338,015 shares of Sculptor’s Class A Common Stock (the “Warrant Shares”) at an exercise price of $7.95 per share, for an aggregate purchase price of $27.6 million. Rithm Capital also agreed to pay certain additional amounts to DLIC in the event that Sculptor is acquired within 270 days of the closing of the purchase of the warrants. On October 12, 2023, Rithm Capital delivered to Sculptor an exercise notice pursuant to the terms of the warrants for the Warrant Shares, representing 12.8% of Sculptor’s outstanding Class A Common Stock, and on October 13, 2023 Sculptor issued the Warrant Shares. As a result of the ownership of the Warrant Shares, Rithm Capital controls approximately 6.5% of the total voting power of Sculptor’s outstanding voting stock.

Beginning on August 12, 2023, a consortium of bidders (the “Consortium”) sent several unsolicited, non-binding proposals to acquire Sculptor. Subsequently, on October 13, 2023, Sculptor received an updated unsolicited, non-binding proposal from the Consortium to acquire Sculptor for $13.50 per Class A common share of Sculptor in cash, provided that, among other things, Sculptor terminate the Merger Agreement in accordance with its terms. In such event, Sculptor would be obligated to pay Rithm Capital the Company Termination Fee.

While Rithm Capital was not party to the filed complaint, on September 11, 2023, stockholder Gilles Beachemin filed a purported class action against Sculptor and each of Sculptor’s directors in the Court of Chancery of the State of Delaware, captioned Gilles Beachemin v. Marcy Engel, et al., No. 2023-0921- (Del. Ch. September 11, 2023) (the “Beachemin Action”). The Beachemin Action alleges, among other things, that Sculptor’s board of directors (the “Sculptor Board”) and the special committee of the Sculptor Board (the “Special Committee”) violated their fiduciary duties by refusing to waive certain restrictions in the Consortium’s standstill.

On October 17, 2023, Sculptor stockholders Daniel S. Och, Harold A. Kelly, Jr., Richard Lyon, James O’Connor and Zoltan Varga (collectively, the “Specified Stockholders”) filed a purported class action complaint on behalf of themselves and all other similarly situated stockholders of Sculptor against each of Sculptor’s directors, Sculptor and certain of its subsidiaries and Rithm Capital and certain of its subsidiaries in the Court of Chancery of the State of Delaware, captioned Och, et al. v. Engel, et al., C.A. No. 2023-1043-SG (the “Former EMD Group Action”). The complaint in the Former EMD Group Action alleges, among other things, that the Sculptor Board and the Special Committee violated their fiduciary duties. The Former EMD Group Action complaint seeks, among other things, to enjoin the transaction with Rithm Capital and a court order (i) reducing the Company Termination Fee, (ii) prohibiting Rithm Capital from voting the Warrant Shares and (iii) declaring that the Majority of Unaffiliated Vote Condition, as defined in the Merger Agreement, be reinserted into the Merger Agreement. Sculptor, the
Sculptor Board, the Special Committee and Rithm Capital deny any alleged wrongdoing, and intend to oppose any request for a preliminary injunction.

The Former EMD Group Action and the Beachemin Action have been consolidated into In re Sculptor Capital Management, Inc. Stockholder Litigation, C.A. No. 2023-0921-SG (Del. Ch.) (the “Sculptor Stockholder Action”) in connection with a preliminary injunction hearing scheduled on November 9, 2023.

On October 26, 2023, Rithm Capital and certain of its affiliates entered into Amendment No. 2 to the Merger Agreement (the “Second Amendment”) with Sculptor and certain of its affiliates. Pursuant to the Second Amendment, among other things, the transaction value was updated to approximately $719.8 million, which includes $12.70 per Class A common share of Sculptor and the Company Termination Fee was increased to approximately $22.4 million. In connection with entering into the Second Amendment, on October 26, 2023, Rithm Capital entered into a Transaction Support Agreement (the “Transaction Support Agreement”) with each of the Specified Stockholders and the other signatories party thereto. Under the terms of the Transaction Support Agreement, each Specified Stockholder agreed, among other things, to vote all shares held by such Specified Stockholder in favor of the adoption of the Merger Agreement and the approval of the Sculptor Acquisition. The Specified Stockholders also agreed not to transfer or otherwise dispose of any common stock of Sculptor or other securities of Sculptor or its subsidiaries, other than certain permitted transfers, during the term of the Transaction Support Agreement. Furthermore, in accordance with the Transaction Support Agreement, counsel for the Specified Stockholders signed a stipulated order dismissing with prejudice the claims raised by the Specified Stockholders in the Sculptor Stockholder Action, solely with respect to the Specified Stockholders, which was submitted to the Court of Chancery for approval, and the Specified Stockholders have agreed to withdraw any demands under Section 220 of the General Corporation Law of the State of Delaware and to not commence any proceeding or pursue any claims relating to the Sculptor Acquisition prior to the closing of the Sculptor Acquisition.
On October 29, 2023, plaintiff filed a consolidated amended complaint under seal adding additional claims and defendants to the matter.