Negotiating Sale of Majority Stake in Great
American Group at $380 Million
Enterprise Value and Financing of Brands Portfolio for $236 Million
Anticipates Receiving Approximately
$410 Million of Gross Cash Proceeds
from Two Transactions
Intends to Use Majority of Proceeds to Reduce
Nomura Senior Secured Debt to Approximately $125 Million by End of 2024; Anticipates Using
Cash on Hand and Proceeds from Other Asset Sales to Repay All 2025
Maturities
Cumulative Actions, If Completed, Would Result
in Strengthened Balance Sheet with Next Senior Notes Maturing in
2026, Providing Company with Enhanced Ability to Invest in Core
Operating Businesses
Expects to Announce Amended and Restated
Credit Agreement Shortly
LOS
ANGELES, Sept. 9, 2024 /PRNewswire/ -- B.
Riley Financial, Inc. (NASDAQ: RILY) ("B. Riley" or the "Company"),
a diversified financial services platform, today announced proposed
strategic and financing initiatives intended to enhance shareholder
value by accelerating debt repayment.
The Company is pleased to report that it has:
- Entered into a non-binding commitment for a debt financing of
the B. Riley and bebe brands businesses. It is expected that the
debt financing transaction will be effected through a special
purpose vehicle collateralized by the brands assets and
non-recourse to B. Riley. If completed, the transaction is expected
to generate approximately $236
million of proceeds, which the Company plans to use to pay
down its senior secured debt. B. Riley acquired the portfolio of
brands (excluding bebe and Brookstone) for a total of approximately
$222 million and received
$179 million in distributions
(excluding those received from bebe).
- Entered into exclusive negotiations with a global asset manager
to sell a 53% stake in its Appraisal and Valuation Services, Real
Estate and Retail, Wholesale & Industrial Solutions businesses
(collectively known as "Great American Group"). The proposed
transaction currently values the business at a total enterprise
value of approximately $380 million.
This business is currently carried on the Company's balance sheet
at a book value of approximately $35 million.
Both of these proposed transactions are subject to the
completion of due diligence and the negotiation and execution of
definitive agreements and there can be no assurance that any such
agreements will be executed or that either transaction will be
consummated.
Cumulatively, B. Riley expects these initiatives, if completed,
will fortify its balance sheet, thereby better positioning the
Company to focus on and invest in its core operating subsidiaries.
The Company intends to use the funds received from the potential
refinancing of the brands assets, along with proceeds from the
potential partial sale of Great American Group, to reduce the
amount outstanding debt under its Nomura Senior Secured Credit
Agreement to approximately $125
million by the end of 2024. Further, B. Riley anticipates
using cash on hand, combined with proceeds from other asset sales,
to repay its outstanding February
2025 Senior Notes. Upon completion of these repayments, the
Company's next Senior Notes maturity would be in 2026 when its 5%,
5.5% and 6.5% Senior Notes are due.
Bryant Riley, Chairman and
Co-Chief Executive Officer of B. Riley Financial,
commented: "We leveraged the diversity of our platform to
acquire quality businesses like Great American Group and our
portfolio of Brands, and are proud of the returns they have
delivered under our ownership. However, given the opportunities we
have in our core middle market financial services businesses, we
believe it is the right time to monetize these assets and leverage
the proceeds to accelerate debt repayment. As we have over the
course of our 27-year history, we remain focused on delivering for
our clients and partners in the small- and mid-cap space."
Senior Credit Agreement Amendment
The Company has
been engaging in negotiations with its senior lenders and expects
to announce an amended and restated credit agreement with Nomura
Corporate Funding Americas, LLC, in the coming days.
Take Private Proposal
On August 15, 2024, Mr. Riley submitted a
non-binding letter of proposal to acquire the outstanding shares of
the Company not currently owned by him at a proposed purchase price
of $7.00 per share. The B.
Riley Board of Directors has
established a Special Committee consisting of independent directors
to evaluate the proposal and determine the appropriate course of
action. The Special Committee is retaining advisors to assist in
its review. There can be no assurance that the proposal will result
in a transaction and the Company does not undertake any obligation
to provide any updates with respect to this or any other
transaction, except as required under applicable law.
About B. Riley Financial
B. Riley Financial is a
diversified financial services platform that delivers tailored
solutions to meet the strategic, operational, and capital needs of
its clients and partners. B. Riley leverages cross-platform
expertise to provide clients with full service, collaborative
solutions at every stage of the business life cycle. Through its
affiliated subsidiaries, B. Riley provides end-to-end financial
services across investment banking, institutional brokerage,
private wealth and investment management, financial consulting,
corporate restructuring, operations management, risk and
compliance, due diligence, forensic accounting, litigation support,
appraisal and valuation, auction, and liquidation services. B.
Riley opportunistically invests to benefit its shareholders, and
certain affiliates originate and underwrite senior secured loans
for asset-rich companies. B. Riley refers to B. Riley Financial,
Inc. and/or one or more of its subsidiaries or affiliates. For more
information, please visit www.brileyfin.com.
Forward-Looking Statements
Statements made in this press release that are not descriptions of
historical facts are forward-looking statements that are based on
management's current expectations and assumptions and are subject
to risks and uncertainties. If such risks or uncertainties
materialize or such assumptions prove incorrect, our business,
operating results, financial condition, and stock price could be
materially negatively affected. You should not place undue reliance
on such forward-looking statements, which are based on the
information currently available to us and speak only as of today's
date. Such forward-looking statements include, but are not limited
to, statements concerning the proposed Great American Group partial
sale, the proposed financing of the brand assets, and possible
other asset sales, statements regarding our ability to use the
proceeds to reduce outstanding debt, and statements regarding its
expectations of an amended and restated credit facility.
Actual future results, performance or achievements may differ
materially from those anticipated depending on a variety of
factors, some of which are beyond the control of the Company,
including, but not limited to, the fact that the proposed
transactions remain subject to due diligence, in the case of the
Great American Group and brands transactions, and finalization of
definitive documentation; we may not be able to reach definitive
documentation related to these transactions on the anticipated
terms or at all; and any such transactions may be subject to
conditions that may not be satisfied or waived; and we may be
unable to sell or monetize other assets on acceptable terms or at
all; as well as the risks described from time to time in the
Company's periodic filings with the SEC, including, without
limitation, the risks described in the Company's 2023 Annual Report
on Form 10-K and in B. Riley Financial's Quarterly Reports on Form
10-Q for the period ended March 31, 2024 under the captions
"Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" (as applicable).
These factors should be considered carefully, and readers are
cautioned not to place undue reliance on such forward-looking
statements. All information is current as of the date this press
release is issued, and the Company undertakes no duty to update
this information.
Contacts
Investors
ir@brileyfin.com
Media
press@brileyfin.com
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SOURCE B. Riley Financial