B. Riley Financial has had an eventful month, and it appears shareholders have taken note.
The financial firm’s stock price has surged 99% from $2.91 at close on June 17 to $5.79 at close on Thursday.
The Sawtelle-based firm is coming up on one year since its stock tanked in August after B. Riley disclosed that it was under investigation by the U.S. Securities and Exchange Commission due to its prior business dealings with Franchise Group Inc.
Most recently, B. Riley struck a deal with an institutional investor to shave off about $18 million of the firm’s total debt, which stood at $1.8 billion at the end of last year.
The undisclosed investor will exchange $43 million in outstanding senior notes between September 2026 and August 2028 for $25 million in new 8% senior secured lien notes, which will be due in January 2028. B. Riley will also allow the investor to purchase around 98,000 common shares for $10 each.
“This marks the fifth bond exchange BRF has negotiated in four months, reducing total outstanding debt by approximately $126 million,” Bryant Riley, chair and co-chief executive, said in a statement. “We continue to address our capital structure and expect to utilize the remaining capacity under our senior secured second lien facility to improve our balance sheet further.”
Striking deals
B. Riley entered into another similarly structured debt exchange agreement earlier this month, also with an unnamed institutional investor, which the firm said will reduce debt by $15 million.
Other recent moves include an amended loan agreement, which was first executed in February, between B. Riley and Oaktree Capital Management, a downtown investment firm.
“The amended term loan facility provides incremental flexibility, including a new investment basket that enables an incremental $100 million to facilitate transactions using B. Riley Financial’s balance sheet (and) a $30 million investment basket for parent company investments upsized from $20 million,” according to a July 9 press release.
Additionally, the new arrangement will allow B. Riley to put up to $25 million in cash toward lowering “other indebtedness,” the release said. This includes repurchasing the firm’s unsecured notes.
At the end of June, the firm sold GlassRatner Advisory & Capital Group – its advisory services entity which does business as B. Riley Advisory Services – and B. Riley Farber Advisory Inc. for $117.8 million. The business lines were sold to funds managed by TorQuest Partners, an investment firm in Canada.
In light of the sale, Riley said the firm was prioritizing B. Riley Securities and B. Riley Wealth Management. B. Riley first acquired GlassRatner, which provides advisory solutions, restructuring and bankruptcy services, and forensic accounting, in 2018.
“Divesting GlassRatner will provide additional capital to support growth initiatives and strengthen our capital structure,” Riley said in a statement. “Maximizing shareholder value through ongoing reinvestment in our business remains a critical priority.”
