B. Riley Financial Inc. has acquired 29 percent of struggling mall-based retailer Bebe Stores Inc. for $16.9 million, the company announced last week.

The Woodland Hills–based financial services company converted its existing loan to the Los Angeles-based apparel retailer into shares of Bebe common stock on Jan. 16. The conversion price was $6 per share, a premium of 35 percent over Bebe’s trading price at the close of business on Jan 12.

Bebe is a once vibrant brand that has shrunk in recent years as online sales have eroded customer traffic at malls and the stores that rely heavily on it. Bebe exited brick-and-mortar retail altogether last year and now licenses its brand to retailers.

“This investment reflects the core strategy of B. Riley Principal Investments, which is to invest in companies or corporate assets that present attractive cash flows to generate dividends for shareholders,” Bryant Riley, chief executive of B. Riley Financial, said in a statement.

B. Riley also will have two out of five seats on Bebe’s board of directors.

Shares of B. Riley Financial (RILY) closed Tuesday down 15 cents, or less than a percent, to $18.80 on the Nasdaq in the immediate wake of the deal, and rebounded to $19.35 as of Jan. 18.

– Staff Reports