DEFA14A: Great Ajax Corp. Announces Strategic Transaction with Rithm Capital Corp.

Great Ajax Corp. will enter into a strategic transaction with Rithm Capital Corp., including a term loan, potential management change, and securities purchase agreement, pending stockholder approval.

Summary

• Great Ajax Corp. (AJX) and Rithm Capital Corp. (RITM) have announced a strategic transaction.
• Great Ajax will enter into a one-year term loan agreement with a Rithm subsidiary for up to $70 million to repay outstanding convertible notes.
• Subject to stockholder approval, Great Ajax will enter into a management agreement with a Rithm affiliate, replacing Thetis Asset Management LLC.
• Great Ajax will issue five-year warrants to Rithm based on amounts drawn under the loan facility, subject to a minimum.
• Rithm will purchase $14 million in Great Ajax common stock.
• Stockholders representing over 40% of Great Ajax's common stock have entered into support and exchange agreements.
• The transaction aims to shift Great Ajax's strategic direction towards commercial real estate investment opportunities.

Sentiment

Score: 7

Explanation: The document presents a strategic transaction with potential benefits for both companies, suggesting a positive outlook. However, it also acknowledges risks and uncertainties, preventing a higher score.

Positives

• The transaction enables Great Ajax to shift its strategic direction and capitalize on commercial real estate investment opportunities.
• Great Ajax's stockholders will have the opportunity to benefit from the experience and track record of the Rithm team going forward.

Risks

• The transaction is subject to Great Ajax stockholder approval.
• Forward-looking statements are subject to numerous assumptions, risks, and uncertainties.

Future Outlook

Great Ajax is expected to be well-positioned to execute on a commercial real estate-focused strategy and generate significant value for shareholders.

Management Comments

• Michael Nierenberg (Rithm): 'We are excited to grow our asset management platform through this strategic transaction with Great Ajax, which represents another step forward in our evolution as a global alternative asset manager. We believe Great Ajax will be well-positioned to execute on a commercial real estate-focused strategy and generate significant value for shareholders.'
• Lawrence Mendelsohn (Great Ajax): 'We are pleased Great Ajax's stockholders will have the opportunity to benefit from the experience and track record of the Rithm team going forward. We look forward to working closely with Rithm to complete the transaction promptly and reposition Great Ajax to execute on unique investment opportunities in a dynamic commercial real estate market.'

Industry Context

This announcement reflects a trend of consolidation and strategic partnerships within the real estate investment and asset management industries, as companies seek to enhance their capabilities and market position.

Comparison to Industry Standards

• The strategic shift towards commercial real estate investment aligns with trends seen among other REITs seeking higher yields in a changing market environment.
• The external management structure is common in the REIT sector, with companies like AGNC Investment Corp. and Annaly Capital Management also utilizing external managers.
• The size of the term loan facility is comparable to other financing arrangements within the REIT sector for similar-sized companies.

Management Changes

Related Party Transactions

• The transaction involves related parties, including Rithm Capital Corp. and its affiliates, as well as Thetis Asset Management LLC.

Stakeholder Impact

• Shareholders: Potential benefits from the experience and track record of the Rithm team.
• Employees: Potential changes due to the management transition.
• Customers: Potential impact from the shift in strategic direction towards commercial real estate investment opportunities.

Next Steps

• Great Ajax will seek stockholder approval of the transaction at an annual and special meeting.
• Great Ajax plans to work closely with Rithm to complete the transaction promptly.
• Great Ajax will reposition to execute on unique investment opportunities in a dynamic commercial real estate market.

Key Dates

Keywords

Great Ajax Corp, Rithm Capital Corp, strategic transaction, term loan, convertible notes, management agreement, warrants, common stock, stockholder approval, commercial real estate, Thetis Asset Management, RCM GA Manager