SecProbe.io

CORRESP
1
filename1.htm

              ROPES & GRAY LLP

              PRUDENTIAL TOWER

              800 BOYLSTON STREET

              BOSTON, MA 02199-3600

              WWW.ROPESGRAY.COM

    September 27, 2023

    VIA EDGAR

    U.S. Securities and Exchange Commission

    Division of Corporation Finance

    Office of Finance

    100 F Street, N.E.

    Washington, DC 20549-3628

    Attention: Madeleine Mateo, Christian Windsor

            Re:

            Sculptor Capital Management, Inc.

            Revised Preliminary Proxy on Schedule 14A

            Filed September 14, 2023

            File No. 001-33805

    Dear Ms. Mateo and Mr. Windsor:

    We are submitting this letter on behalf of Sculptor Capital Management, Inc. (the “Company”) in response to the written comments of the staff (the “Staff”) of the Division of Corporation Finance of
      the Securities and Exchange Commission (the “Commission”) dated September 20, 2023, with regards to the Company’s Amendment No. 1 to Preliminary Proxy Statement on Schedule 14A filed with the Commission on September 14, 2023 (the “Revised Preliminary
      Proxy Statement”) by the Company.

    We have attached hereto as Exhibit A a changed-pages-only redline showing the proposed revisions to the Revised Preliminary Proxy Statement that the Company will make in the Definitive Proxy Statement or an
      amendment to the Revised Preliminary Proxy Statement, to afford the Staff the ability to review such proposed language as soon as possible.

    For the Staff’s convenience, the text of the Staff’s comments is set forth below in italicized, bold type, followed in each case by the Company’s response. The
      page numbers in the headings below refer to pages in the Revised Preliminary Proxy Statement. Capitalized terms used in this letter but not otherwise defined have the meaning given to them in the Revised Preliminary Proxy Statement.

    Amendment No. 1 to Preliminary Proxy Statement filed August September 14, 2023

    Background of the Mergers, page 37

            1.

            We note your response to prior comment 5. Where you reference the level of client consents received for the Rithm Transaction to date, please quantify the level of clients
              you have received.

    Response to Comment 1:

    The Company acknowledges the Staff’s comment but believes, for the reasons described below, that reporting the level of client consents received at any time prior to closing of the Transactions could
      be misleading and result in materially misleading disclosure under Rule 14a-9.

    As described in the Revised Preliminary Proxy Statement, satisfaction of the Rithm Client Consent Condition is measured based on Closing Revenue Run Rate. Closing Revenue Run Rate may be impacted by,
      among other things, (1) clients terminating their relationships with the Company, (2) clients altering the amount of money being invested on their behalf by the Company (either through new subscriptions or redemptions), and (3) clients granting or
      revoking their consent to the Transactions, in each case at any time prior to the closing of the Transactions. Accordingly, the level of consenting client revenue run rate received in support of the Transactions will continue to fluctuate up until
      the closing of the Transactions. The Company believes that reporting interim levels of client consents received would be akin to reporting the in process results of a solicitation prior to a meeting, which is expressly identified as information that
      may be materially misleading under Rule 14a-9. However, in response to the Staff’s comment, the Company will supplement the disclosure under the heading “The Mergers — Background of the Mergers” appearing on pages 70 and 79 of the Revised Preliminary
      Proxy Statement to clarify that the level of client consents received for the Transactions is expected to fluctuate up until the closing of the Transactions and the reasons therefor.

            2.

            We note your response to prior comment 7. We note that the Special Committee and the Board appeared to place particular weight on what it viewed as contingencies in the
              financing for the bid by the Consortium. In particular you discuss the fact that the Consortium relied on equity guarantees from the parties as well as other funding contingencies, was apparently among the key factor that led the Special
              Committee and the Board to conclude that the Consortium’s bid presented significant risks and therefore was sufficiently unlikely to lead to a Superior Proposal. It appears that the identity of the Consortium’s key members, including the
              guarantor, is material to an investors understanding of the Special Committee’s and Board’s recommendation and to understand the Committee’s evaluation of subsequent updates to the proposal.

    Response to Comment 2:

    The Company acknowledges the Staff’s comment and in response will supplement the disclosure under the heading “The Mergers — Background of the Mergers” appearing on page 70 of the
      Revised Preliminary Proxy Statement to identify the members of the Consortium.

            3.

            We note your engagement of the Asset Management Consultant, who presented analysis to the Special Committee. Revise the proxy statement to identify the consultant.
              Disclose the material terms of all material agreements governing the relationship between the Company and the Asset Management Consultant, and any limitations placed on the Consultant’s evaluation by the Special Committee, Sculptor Management
              or other related party. Please refer to Item 14(a)(6) of Schedule 14A, and Item 1015(b) of Regulation S-K.

    Response to Comment 3:

    The Company acknowledges the Staff’s comment and in response will supplement the disclosure under the heading “The Mergers — Background of the Mergers” appearing on pages 70, 75 and
      79 of the Revised Preliminary Proxy Statement to include the identity of the consultant and to provide the other disclosures required by Item 14(b)(6) of Schedule 14A, and Item 1015(b) of Regulation S-K, including the terms of the engagement with the
      Asset Management Consultant and the limitations placed on its evaluation of the Consortium Client Consent Condition Risk (and the reasons therefor).

            4.

            We note your response to prior comment 1. Please clarify whether you requested client feedback to conduct the Consortium Client Consent Condition Risk analysis or whether
              such feedback was provided to the Company in another manner. If you requested client feedback, please disclose how you determined which clients should provide feedback. To the extent that you received client feedback from a material
              percentage of your client base that would be informative in evaluating the Committee’s evaluation of the Consortium Client Consent Condition, please clarify your disclosure.

    Response to Comment 4:

    The Company acknowledges the Staff’s comment and in response will supplement the disclosure under the heading “The Mergers — Background of the Mergers” appearing on pages 68, 70 and
      75 of the Revised Preliminary Proxy Statement to clarify the nature and scope of the client feedback received from the Client Feedback Sources, including the fact that the Asset Management Consultant did not engage directly with the Company’s clients
      as part of its engagement and the reasons therefor.

            5.

            We note your disclosure on page 75 of the steps taken by the Asset Management Consultant, including client feedback. Revise the disclosure to state whether the Consultant
              met with clients directly, or whether they were provided information collected by others. If the Consultant did not independently reach out to clients, clarify which parties conducted the outreach, and whether there was any limitation placed
              on the Consultant in seeking additional information. Please refer to Item 14(a)(6) of Schedule 14A and Item 1015 of Regulation S-K.

    Response to Comment 5:

    The Company acknowledges the Staff’s comment and in response will supplement the disclosure under the heading “The Mergers — Background of the Mergers” appearing on page 75 of the
      Revised Preliminary Proxy Statement to clarify the nature of client feedback received and reviewed by the Asset Management Consultant in connection with its work, as well as the fact that the Asset Management Consultant did not meet with clients
      directly and instead relied, in part, on the client feedback received from the Client Feedback Sources by the Company and provided to the Asset Management Consultant by the Company. Further, as noted in response to Comment 4 above, the Company will
      supplement the disclosure on pages 70 and 75 of the Revised Preliminary Proxy Statement to disclose the limitations placed on the Asset Management Consultant in seeking additional information from Company clients beyond the client feedback received
      from the Client Feedback Sources, including the reasons therefor.

            6.

            We note your disclosure on page 78, that discussed the conclusions presented by the Asset Management Consultant. Revise to clarify, whether the list of items discussed in
              the September 5 meeting were conclusions of the Asset Management Consultant, or were matters of discussion between the Consultant and the Special Committee. Similarly, on September 7, you disclose that the Consultant discussed the “typical”
              drivers of client loss. However, it is not clear whether the Consultant then reached a conclusion as to whether Sculptor’s clients would follow a similar pattern. If such a conclusion was reached, it is unclear the basis for this, including
              whether it was based on the collected feedback discussed on page 75, and whether the feedback was collected from a sufficient percentage of the client base to support the Consultant’s advice to the Special Committee.

    Response to Comment 6:

    The Company acknowledges the Staff’s comment and in response will supplement the disclosure under the heading “The Mergers — Background of the Mergers” appearing on pages 78 and 79
      of the Revised Preliminary Proxy Statement to clarify the nature of work conducted by the Asset Management Consultant, the fact that the Asset Management Consultant presented its conclusions to the Special Committee at the September 13 meeting of the
      Special Committee, and the conclusions reached by the Special Committee based, in part, on such conclusions of the Asset Management Consultant as well as its discussions with the Asset Management Consultant. Further, in response to the Staff’s
      comment, the Company will remove the discussion of the Asset Management Consultant’s observations of “typical” drivers of client loss from the Revised Preliminary Proxy Statement.

    * * *

    Please do not hesitate to contact me at (617) 951-7802 if you have any questions.

            Sincerely,

            /s/ Craig Marcus

            Craig Marcus

            cc:

            Dava Ritchea, Sculptor Capital Management, Inc.

            David Levine, Sculptor Capital Management, Inc.

            Peter Harwich, Latham & Watkins LLP

            Alex Kelly, Latham & Watkins LLP

            Leah Sauter, Latham & Watkins LLP

    EXHIBIT A

    On August 12, 2023, representatives of J.P. Morgan and PJT Partners received an unsolicited, non-binding proposal from a consortium of bidders led by Boaz Weinstein, founder and chief investment officer of Bidder J, which consortium included Boaz Weinstein, Marc Lasry,
            Claudel I LLC and Claudel II LLC (affiliates of Bill Ackman) and Susquehanna International Group, LLPthe founder of Bidder J1 (the “Consortium”) offering to acquire the Company for $12.25 per share of Class A Common Stock (such proposal,
      as later supplemented by the August 14 Clarifications, the “August 12 Proposal”) but which proposal, from the Special Committee’s perspective, raised a number of questions as to the adequacy of committed financing and closing certainty, as described
      below. The August 12 Proposal contemplated the following:

            •

            unspecified portions of the Company’s CLO and CFO business lines would be sold to Bidder H in an asset sale (the “CLO Sale”), and then a newly-formed shell entity would acquire the Company on similar terms and conditions as contemplated in
              the Merger Agreement with Rithm, except with respect to the key differences noted below;

            •

            the Consortium stated that its newly-formed shell entity would be financed by a combination of: (a) $288 million of equity financing from four unaffiliated parties, (b) $50 million of debt financing from Bidder H, (c) approximately $210
              million in proceeds from the CLO Sale from Bidder H, and (d) cash on the Company’s balance sheet (collectively, the “Potential Funding Sources”);

            •

            the Consortium delivered five cross-conditioned commitment letters from four unaffiliated parties to fund up to a maximum amount of approximately $288 million (each of which conditioned the funding of the commitments in its letter upon the
              full funding of the commitments under all the other letters);

            •

            the Consortium did not deliver any commitment letters or other documentation from Bidder H in respect of the $260 million purported to be provided by Bidder H in respect of the debt financing or the CLO Sale;

            •

            the Consortium limited their monetary liability for damages (including damages arising from a failure to fund and close the transaction) to $19.6 million;

            •

            the closing of the proposed transaction would be conditioned upon the Company achieving an 80% client run-rate consent threshold for its CLO business line (which would require clients to consent to Bidder H acquiring the CLO business), an
              80% client run-rate consent threshold for its Real Estate business line, and a 50.1% client run-rate consent threshold in respect of the Company’s Multi-Strategy and Opportunistic Credit business lines (collectively, the “Consortium Client
              Consent Condition”);

            •

            the Consortium stated that it would offer a similar rollover option to Class A Unitholders as is offered under the Merger Agreement, but its rollover would not be conditioned upon a minimum percentage of Class A Unitholders electing to
              participate in the rollover;

            •

            the Consortium stated that it would be willing to employ certain key executives of the Company, including Mr. Levin and Mr. Orbuch, and provide a compensation package no worse than under the compensation package they would have in a
              proposed transaction with Rithm, but the Consortium did not specify the employment terms that the Consortium was prepared to offer to such key executives or the ongoing role these executives would have in the Company’s Investment Function
              going forward1; and

            •

            upon closing of the transaction outlined in the August 12 Proposal, the Company’s Investment Function would be overseen by an “Office of the CIO” which would include (without limitation) representatives of Bidder JMr. Weinstein, Mr. Levin, and certain third parties (Kieran Goodwin and Mike Jacobellistwo of whom had been previously identified by Bidder J)
              who were not currently employed by the Company or the Consortium but who the Consortium indicated would be selected and hired by Mr. Weinsteinthe founder of Bidder J.

    On August 13, 2023, at a meeting of the Special Comm