B. Riley Financial restructures debt and leadership By Investing.com

B. Riley Financial, Inc. has announced a significant financial restructuring and leadership changes. On Monday, the company filed an SEC filing disclosing changes to its credit agreements, including an increase in the interest rate.

The Los Angeles-based investment firm, which specializes in diversified financial services, signed the fourth amendment to its credit agreement on September 17, 2024. As a result, approximately $85.9 million of its loan was repaid, reducing the outstanding principal amount to $388.1 million. At the same time, the $100 million revolving credit facility was terminated.

The key changes include an increase in the interest rate on SOFR loans to a margin of 7.00% in cash or, alternatively, 6.00% in cash plus 1.50% payment-in-kind (PIK) interest. The base rate loans will bear interest at the base rate plus a margin of 6.00% in cash or, optionally, 5.00% in cash plus 1.50% PIK interest. In addition, the Company must reduce the principal amount of its loan to a maximum of $100 million by September 30, 2025 and adjust its early repayment provisions and financial covenants.

In parallel with the financial restructuring, B. Riley Financial also announced the resignation of Kenny Young from his leadership positions. Young will retire as President of the company and CEO of B. Riley Principal Investments, LLC effective September 20, 2024.

Young will continue to serve the Company as a consultant under a one-year contract with an annual fee of $250,000. His service agreement with Babcock & Wilcox Enterprises, Inc., where he served as CEO of a subsidiary of B. Riley Financial, was also terminated on the same day.

These strategic steps are aimed at optimizing the operations and financial commitments of B. Riley Financial. The company’s stock is traded on the Nasdaq Global Market under the symbol RILY.

In other recent developments, B. Riley Financial is navigating a number of significant challenges. For the second quarter of 2024, the company reported an estimated net loss of between $435 million and $475 million, reflecting non-cash impairments and depreciation. Despite these burdens, B. Riley was able to maintain operating adjusted EBITDA of between $50 million and $55 million, underscoring the resilience of its core businesses.

B. Riley Financial also announced plans to sell a majority stake in its Great American Group and secure financing for its portfolio of brands, with the goal of significantly reducing debt by the end of 2024. At the same time, founder, chairman and co-CEO Bryant Riley has launched a tender offer to take the company private, offering to purchase all outstanding shares not already owned by him for $7.00 each.

In terms of personnel changes, B. Riley Securities, a subsidiary of B. Riley Financial, recently appointed Brendon Philipps as Managing Director to lead the Capital Structure Advisory and Liability Management practice. Philipps brings nearly 15 years of experience in the field and previously worked at Guggenheim Partners.

InvestingPro Insights

Given the recent financial restructuring and leadership change at B. Riley Financial, investors may find InvestingPro’s current data and insights valuable. Over the trailing twelve months through the first quarter of 2024, the company’s market capitalization was $169.35 million, reflecting the scope of its investment services operations. Despite challenging market conditions, B. Riley has maintained its commitment to creating value for shareholders and, according to the latest data, boasts a respectable dividend yield of 34.48%, which is particularly notable given the broader economic context.

InvestingPro Tips suggests that while the stock has high price volatility, it has paid dividends continuously for 11 years in a row, highlighting a certain level of reliability in shareholder returns. In addition, the company’s cash and cash equivalents exceed its short-term obligations, indicating a solid liquidity position. This reassures investors who may be concerned about the company’s ability to meet its immediate financial obligations.

For investors seeking more in-depth analysis and InvestingPro Tips, 9 additional tips are available that could provide deeper insights into B. Riley Financial’s performance and potential investment opportunities. These tips can be explored on the company-specific page.

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