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, September 9, 2023 - 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.
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